Financial Performance - Revenue for 2021 reached RMB 25,230,613, an increase of 10.3% from RMB 22,761,822 in 2020[11] - Gross profit for the year was RMB 8,218,910, compared to RMB 8,065,931 in 2020, reflecting a growth of 1.9%[11] - Profit for the year decreased to RMB 1,500,715 from RMB 1,625,703 in 2020, representing a decline of 7.7%[11] - Total assets as of December 31, 2021, were RMB 22,065,346, a slight decrease from RMB 22,104,371 in 2020[13] - Total liabilities increased to RMB 8,300,045 from RMB 8,217,838 in 2020, marking a rise of 1.0%[13] - Total equity decreased to RMB 13,765,301 from RMB 13,886,533 in 2020, indicating a decline of 0.9%[13] - Cash and cash equivalents dropped significantly to RMB 285,573 from RMB 486,300 in 2020, a decrease of 41.3%[13] - Basic earnings per share for 2021 were RMB 34.74, down from RMB 37.64 in 2020, reflecting a decrease of 5.3%[11] - Dividends declared for the year amounted to RMB 1,800,859, an increase from RMB 1,625,703 in 2020, showing a growth of 10.8%[11] Revenue Breakdown - The Group achieved a record high revenue of RMB25,230.6 million in 2021, representing a 10.8% increase compared to the previous year[15] - The Group recorded a profit after tax of RMB1,500.7 million in 2021, a decrease of 7.7% due to one-off gains in the previous year and rising raw material prices[16] - The food business generated revenue of RMB9,524.9 million in 2021, reflecting a growth of 1.1% year-on-year[25] - The instant noodles business achieved revenue of RMB9,007.2 million in 2021, with significant improvement in brand power for key brands[27] - The beverage business recorded an annual revenue of RMB 14,737.8 million in 2021, representing a year-on-year increase of 17.3%[40] Product Innovation and Marketing - The Group focused on digitalization, utilizing tools like Alibaba's TMall Innovation Center to identify target groups and market opportunities[25] - The Group emphasized product innovation and consumer experience, leading to improved consumer satisfaction in the instant noodles segment[27] - The Group's strategy included enhancing brand loyalty through targeted marketing campaigns, such as a TV commercial featuring Generation Z[28] - The Group's operational strategy involved optimizing product mix and improving productivity to alleviate rising cost pressures[24] - The Group's focus on health-conscious and high-end trends in consumer behavior has shaped its product offerings and marketing strategies[24] Consumer Trends and Market Strategy - The consumption market in mainland China is expected to gradually recover, with a focus on quality and convenience in products becoming more popular among consumers[22] - The Group aims to provide safe, tasty, and healthy products to consumers while striving for higher operating performance and maximizing shareholder profits[22] - The Group's commitment to building a national brand aims to meet the diversified needs of consumers in the new consumption era[24] - The Group's juice business revenue reached RMB2,219.4 million in 2021, a year-on-year increase of 40.6%[52] - The Group's focus on freshness management will remain a key strategy to ensure product quality and consumer satisfaction[64] Financial Management and Risk - The Group maintained a conservative treasury policy, avoiding high-risk investments and speculative derivative products, with no significant bank borrowing during the year[110] - The Group's financial policy aims to minimize the impact of interest rate and exchange rate fluctuations on its overall financial position[108] - The Group's financial risk management policies are regularly reviewed by the internal audit and control departments[108] - The Group's total financial liabilities decreased by 71.9% to RMB149.7 million from RMB532.4 million year-on-year, due to sufficient short-term working capital allowing for the repayment of bank borrowings[95] - The net cash position as of December 31, 2021, was RMB(5,928.6) million, compared to RMB(5,536.0) million as of December 31, 2020[97] Corporate Governance - The board of directors consists of 7 members, including 2 executive directors and 5 independent non-executive directors, ensuring a diverse governance structure[191] - The company emphasizes the importance of good corporate governance to enhance investor confidence, complying with all relevant corporate governance codes[192] - The Company has received confirmations of independence from all independent non-executive Directors, ensuring their ability to make independent judgments[195] - The board regularly reports on the performance of the group, ensuring that strategic decisions align with the company's objectives[193] - The Company has established four committees under the board, including the Audit Committee and the Nomination Committee, to oversee various aspects of governance and performance[193] Leadership and Management - The Group's management team has extensive experience in the food and beverage industry, with the Chairman having over 36 years of experience[171] - The Group's leadership team includes directors with extensive experience in both the food and beverage industry and financial management[172][175][178] - Mr. Lo Chih-Hsien has over 36 years of experience in the food and beverage industry and is responsible for the overall strategic planning and management of the Group[172] - Mr. Liu Xinhua, with over 28 years of experience in strategic marketing, is the president of the Group and general manager of Uni-President China Investments[173] - The management team has extensive experience in marketing and operations within the food and beverage industry, contributing to strategic decision-making[189] Future Outlook - The Group plans to continue introducing new products and shorten product development cycles to adapt to changing consumer preferences[150] - The Group aims to maintain stable cash flow by launching new products, controlling costs, and sustaining a robust capital structure to mitigate risks from economic volatility[157] - The Group faces intense competition in the PRC, with competitors having larger market shares and stronger distribution networks, which may adversely affect sales volume[156] - The Group's future business development discussions are included in the "Chairman's Statement" and "Management Discussion and Analysis" sections of the annual report[168] - The Group's success relies on its ability to predict consumer preferences and provide products that meet those preferences[150]

[Corporate Information](index=4&type=section&id=Corporate%20Information) This chapter provides basic information about Uni-President China Holdings Ltd., including its registered office, head office, Hong Kong business address, website, and lists of executive, non-executive, and independent non-executive directors, along with key partners such as principal bankers, auditors, legal advisors, and share registrars [Corporate Information](index=4&type=section&id=Corporate%20Information) This chapter provides basic information about Uni-President China Holdings Ltd., including its registered office, head office, Hong Kong business address, website, and lists of executive, non-executive, and independent non-executive directors, as well as members of various committees (audit, nomination, remuneration), along with key partners such as principal bankers, auditors, legal advisors, and share registrars - The company is listed on the Hong Kong Stock Exchange, stock code **220**[8](index=8&type=chunk) - Mr Lo Chih-Hsien serves as Chairman and Executive Director, and Mr Liu Hsin-Hua serves as General Manager[8](index=8&type=chunk) - The company's auditor is **PricewaterhouseCoopers**[10](index=10&type=chunk) [Financial Summary](index=6&type=section&id=Financial%20Summary) This chapter outlines the company's key financial data from 2016 to 2020, showing robust revenue and profit growth in 2020, with total revenue up 3.4%, net profit up 19.0%, and a corresponding increase in basic earnings per share, while total assets and equity grew steadily and total liabilities slightly increased [Five-Year Financial Summary](index=6&type=section&id=Financial%20Summary) This chapter outlines the company's key financial data from 2016 to 2020, showing robust revenue and profit growth in 2020, with total revenue up 3.4%, net profit up 19.0%, and a corresponding increase in basic earnings per share, while total assets and equity grew steadily and total liabilities slightly increased 2019-2020 Annual Performance Summary (RMB thousands) | Indicator | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue** | 22,761,822 | 22,019,737 | +3.4% | | **Gross Profit** | 8,065,931 | 7,918,290 | +1.9% | | **Profit before income tax** | 2,326,459 | 1,971,360 | +18.0% | | **Profit for the year** | 1,625,703 | 1,366,212 | +19.0% | | **Basic earnings per share (RMB cents)** | 37.64 | 31.63 | +19.0% | 2019-2020 Year-End Balance Sheet Summary (RMB thousands) | Indicator | Dec 31, 2020 | Dec 31, 2019 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Assets** | 22,104,371 | 21,757,042 | +1.6% | | **Total Liabilities** | 8,217,838 | 8,124,112 | +1.2% | | **Total Equity** | 13,886,533 | 13,632,930 | +1.9% | [Chairman's Statement](index=7&type=section&id=Chairman's%20Statement) Chairman Lo Chih-Hsien reviews 2020 performance, highlighting 3.4% revenue growth and 19.0% after-tax profit growth despite COVID-19 challenges, driven by double-digit food business growth and multi-fold increase in 'Kai Xiao Zao' premium brand, with the board proposing a final dividend of RMB 37.64 cents per share [Chairman's Statement](index=7&type=section&id=Chairman's%20Statement) Chairman Lo Chih-Hsien reviews 2020 performance, highlighting 3.4% revenue growth and 19.0% after-tax profit growth despite COVID-19 challenges, driven by double-digit food business growth and multi-fold increase in 'Kai Xiao Zao' premium brand, with the board proposing a final dividend of RMB 37.64 cents per share 2020 Performance Highlights (RMB millions) | Indicator | Amount (RMB millions) | YoY Growth | | :--- | :--- | :--- | | **Revenue** | 22,761.8 | +3.4% | | **After-tax Profit** | 1,625.7 | +19.0% | - Food business achieved double-digit growth, with premium Chinese cuisine brand “Kai Xiao Zao” revenue growing multi-fold; beverage business, “Uni-President Assam Milk Tea” maintained market leadership and achieved positive growth[16](index=16&type=chunk)[17](index=17&type=chunk) - The Board recommended a final cash dividend of **RMB 37.64 cents per share**, totaling approximately **RMB 1.626 billion** for the year ended December 31, 2020[18](index=18&type=chunk)[19](index=19&type=chunk) - Future Outlook: The Group will adapt to new consumption trends such as e-commerce and the stay-at-home economy, as well as health-oriented and family-focused consumption, to innovate and develop products for various consumption scenarios[20](index=20&type=chunk) [Management Discussion & Analysis](index=10&type=section&id=Management%20Discussion%20%26%20Analysis) This section provides an in-depth analysis of the Group's operational and financial performance, highlighting key business segment contributions, strategic initiatives, and financial health [Business Review](index=10&type=section&id=Business%20Review) In 2020, the Group's total revenue grew 3.4% to RMB 22.76 billion, driven by strong food business performance, up 10.9%, while the beverage business saw a slight 1.3% decline due to the pandemic, with milk tea showing robust 7.3% growth 2020 Segment Business Revenue (RMB millions) | Business Segment | 2020 Revenue | YoY Change | | :--- | :--- | :--- | | **Food Business** | 9,424.5 | +10.9% | | *of which: Instant Noodles* | 9,055.0 | +7.2% | | **Beverage Business** | 12,560.4 | -1.3% | | *of which: Milk Tea* | - | +7.3% | | **Total Group Revenue** | **22,761.8** | **+3.4%** | [Food Business](index=11&type=section&id=Food%20Business) Food business revenue reached RMB 9.425 billion in 2020, a 10.9% increase, with instant noodle revenue growing 7.2% to RMB 9.055 billion, and premium brand 'Kai Xiao Zao' achieving multi-fold revenue growth through celebrity endorsements and product innovation - Instant noodle business revenue increased by **7.2%** to **RMB 9.055 billion**[24](index=24&type=chunk) - “Tang Da Ren” brand achieved double-digit or higher revenue growth for **12 consecutive years**, demonstrating high market recognition[29](index=29&type=chunk) - Premium Chinese cuisine brand “Kai Xiao Zao” rapidly expanded brand awareness driven by brand ambassador Xiao Zhan, achieving **multi-fold revenue growth in 2020**[35](index=35&type=chunk) [Beverages Business](index=14&type=section&id=Beverages%20Business) Beverage business revenue was RMB 12.560 billion in 2020, a 1.3% decrease, with tea beverages gradually recovering post-pandemic, juice revenue at RMB 1.578 billion, and 'Uni-President Assam Milk Tea' showing strong performance with 7.3% growth, maintaining market leadership Revenue by Major Beverage Categories (RMB millions) | Category | 2020 Revenue | Notes | | :--- | :--- | :--- | | **Tea Beverages** | 5,444.0 | Gradually recovered post-pandemic | | **Juice** | 1,578.2 | Adapting to consumption upgrade trends | | **Milk Tea** | - | “Uni-President Assam Milk Tea” grew by 7.3% | - “Uni-President Assam Milk Tea” revenue increased by **7.3% in 2020**, enhancing brand recognition through multi-scenario consumption and collaborations with popular dramas[53](index=53&type=chunk) - Mid-to-high-end natural mineral water brand “ALKAQUA” continued to cultivate new generations and middle-class consumers by emphasizing the efficacy of “metasilicic acid”[55](index=55&type=chunk)[56](index=56&type=chunk) [Research and Development & Food Safety](index=20&type=section&id=Research%20and%20Development) The R&D center capitalized on new home consumption opportunities during the pandemic, launching 'Kai Xiao Zao' self-heating hotpot and 'Uni-President Na Jie Na Xiang' local specialty instant food series, holding 106 authorized patents by year-end 2020, and maintaining robust food safety controls across the supply chain - Launched “Kai Xiao Zao” self-heating hotpot and “Na Jie Na Xiang” series of local specialty food products for home consumption scenarios[63](index=63&type=chunk)[65](index=65&type=chunk) - As of December 2020, the R&D center held **106 authorized patents** with another **51 pending applications**, continuously building technological barriers[67](index=67&type=chunk) - The Group places high importance on food safety, with **28 subsidiaries certified with ISO9001** and **26 subsidiaries with ISO22000** food safety management system certification[69](index=69&type=chunk) [Financial Review & Analysis](index=25&type=section&id=Financial%20Review) In 2020, the Group demonstrated solid financial performance with a gross profit margin of 35.4%, operating profit up 16.7% to RMB 2.108 billion, and profit attributable to equity holders increasing 19.0% to RMB 1.626 billion, maintaining a healthy cash flow and a net cash position 2020 Key Financial Indicators (RMB millions) | Indicator | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue** | 22,761.8 | 22,019.7 | +3.4% | | **Gross Profit** | 8,065.9 | 7,918.3 | +1.9% | | **Gross Profit Margin** | 35.4% | 36.0% | -0.6pp | | **Operating Profit** | 2,108.3 | 1,806.3 | +16.7% | | **Profit attributable to equity holders** | 1,625.7 | 1,366.2 | +19.0% | | **Earnings per share (RMB cents)** | 37.64 | 31.63 | +19.0% | - Selling and marketing expenses slightly decreased to **RMB 5.350 billion**, and administrative expenses reduced to **RMB 958 million**, primarily due to government tax and fee reductions and social security contribution adjustments[71](index=71&type=chunk) 2020 Operational Efficiency Indicators (Days) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | **Trade receivables turnover days** | 9 | 9 | | **Inventory turnover days** | 45 | 41 | | **Trade payables turnover days** | 44 | 42 | - As of the end of 2020, the Group was in a **net cash position** with a net cash balance of **RMB 5.536 billion** and a capital gearing ratio of **-66.30%**[74](index=74&type=chunk) - As of December 31, 2020, the Group had a total of **30,430 employees**, with total employee costs of **RMB 3.372 billion**, a slight decrease from the previous year[81](index=81&type=chunk) [Report of the Directors](index=33&type=section&id=Report%20of%20the%20Directors) This section provides an overview of the company's principal activities, dividend policy, continuing connected transactions, and key risks and uncertainties affecting the Group's performance [Principal Activities and Dividends](index=33&type=section&id=Principal%20Activities%20and%20Dividends) This chapter states that the company's principal activities are the production and sale of beverages and instant noodles in China, with the Board proposing a final dividend of RMB 37.64 cents per share, totaling approximately RMB 1.626 billion, for the year ended December 31, 2020, subject to shareholder approval - The Group's principal activities are the production and sale of beverages and instant noodles in China[82](index=82&type=chunk) - The Board recommended a final dividend of **RMB 37.64 cents per share**, totaling approximately **RMB 1.626 billion**[82](index=82&type=chunk) [Continuing Connected Transactions](index=40&type=section&id=Continuing%20Connected%20Transactions) This chapter discloses the Group's continuing connected transactions with its controlling shareholder, Uni-President Enterprises Corporation, including framework agreements for sales, purchases, logistics, and technical support services, all within the annual caps and confirmed fair and reasonable by independent non-executive directors and auditors 2020 Summary of Continuing Connected Transactions (RMB millions) | Transaction Type | Actual Transaction Amount | Annual Cap | | :--- | :--- | :--- | | **Framework Sales Agreement** | 104.8 | 431.0 | | **Framework Purchase Agreement** | 3,641.5 | 5,950.0 | | **Framework Logistics Services Agreement** | – | 54.5 | | **Framework Technical Support Services Agreement** | 56.9 | 60.0 | - The company's independent non-executive directors and auditors have reviewed the continuing connected transactions, deeming them to be on normal commercial terms, in the overall interest of the company and shareholders, and within the annual caps[107](index=107&type=chunk)[108](index=108&type=chunk) [Business Review and Risk Factors](index=50&type=section&id=Business%20Review%20and%20Risks) This chapter provides a fair business review and identifies key risks and uncertainties affecting the Group's performance, including consumer preference, intense market competition, macroeconomic and financial market risks, and supply chain risks, while also outlining the company's dividend and environmental policies - Key risks include: - **Consumer Preference Risk**: Inability to predict or respond to changes in consumer tastes may lead to decreased demand - **Competition Risk**: The food and beverage industry is highly competitive, and competitors may have larger market shares or stronger resources - **Economic and Financial Market Risk**: Macroeconomic slowdowns may reduce consumer confidence and disposable income - **Supply Chain Risk**: Reliance on third-party suppliers for packaging materials, where supply disruptions could impact production[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - The company's dividend policy aims to distribute a final dividend of not less than **20%** of the Group's audited consolidated profit attributable to shareholders[130](index=130&type=chunk) [Directors' and Senior Management's Profile](index=56&type=section&id=Directors'%20and%20Senior%20Management's%20Profile) This section provides detailed biographical information for the company's directors and senior management, highlighting their extensive experience and roles within the Group and other organizations [Directors' and Senior Management's Profile](index=56&type=section&id=Directors'%20and%20Senior%20Management's%20Profile) This chapter details the backgrounds, experiences, and appointments of the company's executive, non-executive, independent non-executive directors, and senior management team members within the Group and other companies, highlighting the core management's extensive experience in the food and beverage industry - Chairman and Executive Director Mr Lo Chih-Hsien has over **35 years of experience** in the food and beverage industry[138](index=138&type=chunk) - General Manager Mr Liu Hsin-Hua joined the Group in 1994 and has **27 years of strategic marketing experience** in the food and beverage industry[138](index=138&type=chunk) - Chief Financial Officer Mr Liu Tzu-Chiang joined the Group in 1998 and has over **27 years of experience** in financial management[150](index=150&type=chunk) [Corporate Governance Report](index=64&type=section&id=Corporate%20Governance%20Report) This report details the company's corporate governance framework and practices, confirming compliance with regulatory codes and outlining the roles of the Board and its committees in overseeing risk management, internal controls, and shareholder engagement [Corporate Governance Overview](index=64&type=section&id=Corporate%20Governance%20Overview) This report outlines the company's corporate governance structure and practices, confirming compliance with all Code Provisions of the Corporate Governance Code in 2020, detailing the Board's composition, responsibilities, committee functions, and policies on risk management, internal control, and shareholder communication - The company complied with all Code Provisions of the Hong Kong Stock Exchange's Corporate Governance Code during the reporting year[158](index=158&type=chunk) - The Board is responsible for leading and overseeing the company, with four committees: Audit, Nomination, Remuneration, and Investment, Strategy and Development[160](index=160&type=chunk) - The Board is collectively responsible for maintaining sound and effective risk management and internal control systems for the Group, reviewing them annually, and deeming them effective and adequate[182](index=182&type=chunk)[183](index=183&type=chunk) 2020 Attendance at Board and Committee Meetings | Name | Board | Audit Committee | Nomination Committee | Remuneration Committee | | :--- | :--- | :--- | :--- | :--- | | **Lo Chih-Hsien** | 4/4 | – | 2/2 | 2/2 | | **Liu Hsin-Hua** | 4/4 | – | – | – | | **Chen Kuo-Hui** | 4/4 | – | – | – | | **Su Chung-Ming** | 4/4 | 3/3 | – | – | | **Chen Sheng-Te** | 4/4 | 3/3 | – | 2/2 | | **Chen Chih-Hung** | 4/4 | 3/3 | 2/2 | – | | **Fan Jen-Ta** | 4/4 | 3/3 | – | 2/2 | | **Lu Chia-Hsing** | 4/4 | 3/3 | 2/2 | – | [Independent Auditor's Report](index=84&type=section&id=Independent%20Auditor's%20Report) This section presents PricewaterhouseCoopers' unqualified opinion on the company's 2020 consolidated financial statements, confirming their true and fair presentation and detailing key audit matters such as revenue recognition and deferred income tax assets [Independent Auditor's Report](index=84&type=section&id=Independent%20Auditor's%20Report) PricewaterhouseCoopers issued an unqualified opinion on the company's 2020 consolidated financial statements, affirming they present a true and fair view of the Group's financial position and performance, with key audit matters including revenue recognition and deferred income tax assets - The auditor's opinion is **unqualified**, stating that the consolidated financial statements present a true and fair view of the Group's financial position and performance in accordance with Hong Kong Financial Reporting Standards[197](index=197&type=chunk) - Key Audit Matter One: **Revenue Recognition**. Due to the high volume of transactions, the auditor focused on testing internal controls, information systems, sampling supporting documents, and assessing whether revenue was recognized in the correct reporting period[198](index=198&type=chunk)[200](index=200&type=chunk) - Key Audit Matter Two: **Deferred Income Tax Assets**. As recognition involves significant judgment and estimation of future taxable profits, the auditor assessed the reasonableness of management's internal controls and profit forecasts, and verified the existence and amount of tax losses[198](index=198&type=chunk)[202](index=202&type=chunk) [Consolidated Financial Statements](index=93&type=section&id=Consolidated%20Financial%20Statements) This section presents the Group's comprehensive financial statements, including the income statement, balance sheet, cash flow statement, and detailed notes, providing a complete overview of its financial performance and position [Consolidated Income Statement](index=93&type=section&id=Consolidated%20Income%20Statement) The Consolidated Income Statement shows 2020 revenue of RMB 22.76 billion, up 3.4%, with gross profit at RMB 8.07 billion (35.4% margin), operating profit significantly increasing 16.7% to RMB 2.11 billion, and net profit attributable to equity holders rising 19.0% to RMB 1.63 billion 2019-2020 Consolidated Income Statement (RMB thousands) | Item | 2020 | 2019 | | :--- | :--- | :--- | | **Revenue** | 22,761,822 | 22,019,737 | | **Cost of sales** | (14,695,891) | (14,101,447) | | **Gross profit** | 8,065,931 | 7,918,290 | | **Operating profit** | 2,108,273 | 1,806,321 | | **Profit before income tax** | 2,326,459 | 1,971,360 | | **Income tax expense** | (700,756) | (605,148) | | **Profit for the year** | 1,625,703 | 1,366,212 | [Consolidated Balance Sheet](index=95&type=section&id=Consolidated%20Balance%20Sheet) As of December 31, 2020, the Group's total assets were RMB 22.10 billion, up 1.6% year-on-year, with total liabilities at RMB 8.22 billion and total equity at RMB 13.89 billion, characterized by a significant portion of non-current assets and current liabilities 2019-2020 Year-End Consolidated Balance Sheet (RMB thousands) | Item | 2020 | 2019 | | :--- | :--- | :--- | | **Total Assets** | **22,104,371** | **21,757,042** | | Non-current assets | 15,943,328 | 14,739,130 | | Current assets | 6,161,043 | 7,017,912 | | **Total Liabilities** | **8,217,838** | **8,124,112** | | Non-current liabilities | 551,817 | 483,010 | | Current liabilities | 7,666,021 | 7,641,102 | | **Total Equity** | **13,886,533** | **13,632,930** | [Consolidated Cash Flow Statement](index=98&type=section&id=Consolidated%20Cash%20Flow%20Statement) In 2020, the Group generated strong net cash inflow of RMB 3.22 billion from operating activities, with net cash outflows of RMB 1.70 billion from investing and RMB 2.08 billion from financing activities, resulting in a net decrease of RMB 570 million in cash and cash equivalents 2019-2020 Consolidated Cash Flow Statement (RMB thousands) | Item | 2020 | 2019 | | :--- | :--- | :--- | | **Net cash generated from operating activities** | 3,215,227 | 2,869,341 | | **Net cash used in investing activities** | (1,700,794) | (1,469,822) | | **Net cash used in financing activities** | (2,083,963) | (1,905,391) | | **Net decrease in cash and cash equivalents** | (569,530) | (505,872) | | **Cash and cash equivalents at beginning of year** | 1,056,780 | 1,563,945 | | **Cash and cash equivalents at end of year** | 486,300 | 1,056,780 | [Notes to the Consolidated Financial Statements](index=100&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes provide detailed explanations and supplementary information to the consolidated financial statements, covering accounting policies, key estimates, detailed analyses of financial statement items, related party transactions, commitments, and contingent liabilities Segment Revenue (RMB thousands) | Segment | 2020 | 2019 | | :--- | :--- | :--- | | **Beverages** | 12,560,400 | 12,730,490 | | **Food** | 9,424,487 | 8,500,711 | | **Others** | 776,935 | 788,536 | | **Total** | **22,761,822** | **22,019,737** | Segment Profit/(Loss) (RMB thousands) | Segment | 2020 | 2019 | | :--- | :--- | :--- | | **Beverages** | 1,814,524 | 1,614,295 | | **Food** | 517,079 | 490,015 | | **Others** | 72,620 | 48,964 | | **Unallocated** | (295,950) | (346,953) | | **Total** | **2,108,273** | **1,806,321** | - The Board recommended a final dividend of **RMB 37.64 cents per ordinary share**, totaling **RMB 1.626 billion** for the year ended December 31, 2020[399](index=399&type=chunk)

Economic Performance - In the first half of 2020, the gross domestic product (GDP) of the People's Republic of China increased by 3.2% year on year[19]. - Various economic indicators rebounded in the second quarter of 2020, indicating a stable progression and gradual recovery of the overall national economy[19]. - The company anticipates that domestic demand recovery will face certain restrictions due to the ongoing COVID-19 pandemic[19]. - The board of directors is optimistic about the company's performance in the second half of the year, given the government's measures for epidemic prevention and economic development[19]. - The company continues to monitor the economic environment closely to adapt its strategies accordingly[19]. Company Strategy and Operations - The company is focused on resuming work, production, and trading activities in the market as part of its recovery strategy[19]. - The company is committed to accelerating the resumption of operations and enhancing consumer confidence in the market[19]. - The company aims to adapt to the "otaku economy" by increasing online shopping demand and developing high-end nutritious meals in response to market changes[39]. - The Group plans to enhance online sales channels and community services to adapt to changing consumer behaviors post-pandemic[87]. - The Group will focus on value marketing to create brand values and maintain steady growth, emphasizing "Integrity," "Brand," and "Taste"[94]. Financial Performance - The Group recorded a revenue of RMB11,816.5 million during the Period under Review, representing an increase of 3.0% compared to RMB11,469.5 million in the first half of 2019[22]. - Profit attributable to equity holders of the Company was RMB1,065.1 million, representing an increase of 6.8% compared to RMB997.5 million in the corresponding period last year[25]. - Operating profit for the Period was RMB1,389.3 million, increasing by 6.4% from RMB1,305.3 million in the first half of 2019[22]. - Revenue for the six months ended June 30, 2020, was RMB 11,816,519 thousand, an increase of 3.02% compared to RMB 11,469,537 thousand in the same period of 2019[134]. - Comprehensive income for the six months ended June 30, 2020, is RMB 1,063,156 thousand, compared to RMB 997,501 thousand for the same period in 2019, representing a growth of 6.2%[147]. Revenue Breakdown - The food business recorded a revenue of RMB5,206.8 million for the first half of 2020, representing a significant increase of 22.0% compared to the previous year[26]. - The beverage business recorded a revenue of RMB 6,290.5 million in the first half of 2020, a decrease of 7.4% compared to the same period last year, but with a quarter-on-quarter growth of 46.7%[42]. - "Soup Daren" achieved a revenue growth of 29.7% compared to the corresponding period last year, reflecting strong market recognition[32]. - The tea beverage segment generated revenue of RMB 2,897.3 million in the first half of 2020, with a doubling of quarter-on-quarter growth[41]. - Revenue from the juice business for the first half of 2020 was RMB793.5 million, showing substantial quarter-on-quarter positive growth[50]. Expenses and Cost Management - Selling and marketing expenses rose to RMB2,624.2 million, an increase of 3.6% from RMB2,531.9 million in the first half of 2019, mainly due to enhanced brand promotion efforts[22]. - Administrative expenses decreased by 4.9% to RMB458.1 million from RMB481.5 million in the first half of 2019, primarily due to the PRC government's adjustment of social insurance[22]. - Promotion and advertising expenses increased to RMB 906,726 thousand, compared to RMB 736,166 thousand in the previous year, reflecting a growth of approximately 23.2%[199]. Cash Flow and Financial Position - As of June 30, 2020, the Group's total cash and bank balances were RMB6,103.8 million, a decrease from RMB6,483.5 million as of December 31, 2019[64]. - The Group's net cash inflow from operating activities was RMB1,097.2 million, while net cash outflow from investing activities was RMB1,760.8 million for the first half of 2020[72]. - The net decrease in cash and cash equivalents for the period was RMB (761,077) thousand, an improvement from RMB (1,345,541) thousand in the same period of 2019[153]. - Total liabilities increased to RMB 8,683,383 thousand as of June 30, 2020, up from RMB 8,124,112 thousand at the end of 2019, an increase of 6.87%[143]. Governance and Compliance - The interim condensed consolidated financial information for the six months ended June 30, 2020, has been reviewed by the audit committee and independent auditors[18]. - The Company has complied with all provisions of the Corporate Governance Code during the review period[117]. - The Audit Committee reviewed the unaudited interim results for the period and recommended their adoption by the Board[121]. - The Company confirmed that all Directors fully complied with the Model Code for Securities Transactions throughout the review period[118]. - The Group's commitment to brand building and product innovation is expected to drive continuous growth and maximize benefits[98].

Corporate Information This section provides essential company details, including listing information, key addresses, board and committee members, and professional advisors - The company's basic information includes its listing on the **Hong Kong Stock Exchange (code 220)**, registered address, principal place of business, board and committee members, principal bankers, auditors, and legal advisors[9](index=9&type=chunk)[10](index=10&type=chunk) Financial Summary This section presents a five-year financial overview, including key performance indicators and balance sheet summaries Five-Year Performance Summary (As at December 31) | Indicator | 2019 | 2018 | 2017 (Restated) | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue (RMB '000)** | 22,019,737 | 21,772,240 | 20,821,949 | 20,985,532 | 22,101,871 | | **Gross Profit (RMB '000)** | 7,918,290 | 7,288,599 | 6,576,938 | 7,227,800 | 8,140,733 | | **Profit Before Income Tax (RMB '000)** | 1,971,360 | 1,539,774 | 1,276,824 | 1,067,972 | 1,170,761 | | **Profit for the Year (RMB '000)** | 1,366,212 | 1,029,704 | 878,216 | 607,329 | 834,505 | | **Basic Earnings Per Share (RMB Cents)** | 31.63 | 23.84 | 20.33 | 14.06 | 19.32 | Five-Year Balance Sheet Summary (As at December 31) | Indicator | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Assets (RMB '000)** | 21,757,042 | 21,732,558 | 20,036,552 | 20,705,427 | 21,606,419 | | **Total Liabilities (RMB '000)** | 8,124,112 | 8,510,251 | 7,221,075 | 8,665,316 | 10,004,016 | | **Total Equity (RMB '000)** | 13,632,930 | 13,222,307 | 12,815,477 | 12,040,111 | 11,602,403 | Chairman's Statement The Chairman's statement highlights steady growth driven by value marketing and product innovation, with a proposed dividend and a forward-looking strategy addressing the COVID-19 pandemic 2019 Performance Overview | Indicator | Amount (RMB Million) | Year-on-Year Growth | | :--- | :--- | :--- | | **Revenue** | 22,019.7 | +1.1% | | **Profit After Tax** | 1,366.2 | +32.7% | - The company maintained steady growth amidst intense industry competition by adhering to **"value marketing"** and **"healthy operations,"** stabilizing channel prices, continuously investing in brands, and managing product freshness; star products **"Uni-President Assam Milk Tea"** and **"Master Kong Soup Noodle"** achieved sustained **double-digit revenue growth**, becoming key growth engines[15](index=15&type=chunk) - The company actively innovated, developing new product formats such as **"Tea King" sugar-free tea** and **"Kai Xiao Zao" self-heating meals**, and expanded the boundaries of convenience food by applying **self-heating technology**[15](index=15&type=chunk) - The Board recommended a final cash dividend of **RMB 31.63 cents per share** for the year ended December 31, 2019, totaling approximately **RMB 1,366.2 million**[16](index=16&type=chunk) - Looking ahead to 2020, in response to the **COVID-19 pandemic**, the Group actively cooperated with epidemic prevention measures and strived for work resumption, while also seizing opportunities from the **"stay-at-home economy"** driven shift in e-commerce consumption patterns[16](index=16&type=chunk) [Management Discussion & Analysis](index=10&type=section&id=Management%20Discussion%20%26%20Analysis) This section provides an in-depth analysis of the company's operational and financial performance, strategic initiatives, and market outlook [Economic Environment](index=10&type=section&id=Economic%20Environment) In 2019, China's GDP grew by 6.1%, with economic growth slowing due to US-China trade friction, but government stimulus measures stabilized livelihoods; the food industry saw increased competition due to lower raw material costs and favorable policies, with consumption trends driven by product richness and innovation, while the early 2020 COVID-19 pandemic had no significant impact on the Group's business at the time of reporting - In 2019, China's GDP grew by **6.1%**, a **0.5 percentage point decrease** from the previous year, with government measures like tax cuts stabilizing the national economy and the food industry continuing to thrive[21](index=21&type=chunk) - The food industry experienced declining raw material prices, easing cost pressures, but faced intensified market competition, fluctuating channel prices, and diversified marketing strategies[21](index=21&type=chunk) - As of the annual report release date, the Group had not identified any significant impact from the early 2020 **COVID-19 pandemic** on its business and will closely monitor its long-term effects[21](index=21&type=chunk) [Business Review](index=11&type=section&id=Business%20Review) In 2019, the Group's total revenue reached **RMB 22,019.7 million**, a **1.1% year-on-year increase**, with both food and beverage businesses growing by **0.9%**; the company achieved steady operational improvements by focusing on brand building, value marketing, "healthy operations" to stabilize market prices, and optimizing product structure 2019 Segment Business Revenue | Business Segment | Revenue (RMB Million) | Year-on-Year Growth | | :--- | :--- | :--- | | **Food Business** | 8,500.7 | +0.9% | | **Beverages Business** | 12,730.5 | +0.9% | | **Total** | **22,019.7** | **+1.1%** | [Food Business](index=11&type=section&id=Food%20Business) The food business addressed new consumer demands for quality and convenience by applying self-heating technology and developing quick-cook fresh noodles; instant noodle revenue reached **RMB 8,500.7 million**, a **0.9% year-on-year increase**, primarily driven by the sustained double-digit growth of the mid-to-high-end brand **"Master Kong Soup Noodle"**, while innovative products like **"Kai Xiao Zao" self-heating meals** and **"Q Xiaoxian" fresh noodles** expanded the product line Instant Noodle Business Performance | Indicator | 2019 | Year-on-Year Growth | | :--- | :--- | :--- | | **Revenue (RMB Million)** | 8,500.7 | +0.9% | - Instant noodle business growth was primarily attributed to the mid-to-high-end brand **"Master Kong Soup Noodle,"** which continued to achieve **double-digit revenue growth**[22](index=22&type=chunk)[34](index=34&type=chunk) - The company launched a series of innovative products, such as **"Teng Jiao" rattan pepper beef noodles**, **"Du Hui Xiao Guan" spicy fatty intestine noodles**, **"Uni-President Qie Huang" tomato and egg noodles**, and the premium lifestyle noodle **"Man Han Da Can"**[23](index=23&type=chunk)[29](index=29&type=chunk)[31](index=31&type=chunk)[36](index=36&type=chunk) - In other food categories, the **"Kai Xiao Zao" self-heating meal series** was well-received and expanded with new flavors, while **"Q Xiaoxian" fresh noodles** entered the Shanghai market, catering to the needs of middle-class families[37](index=37&type=chunk)[38](index=38&type=chunk) [Beverages Business](index=16&type=section&id=Beverages%20Business) The beverages business generated **RMB 12,730.5 million** in revenue in 2019, a **0.9% year-on-year increase**, by adhering to value marketing, stabilizing channel prices, and focusing on brand building; milk tea business achieved **double-digit growth for three consecutive years**, up **13.1%**, fruit juice business grew by **1.3%**, and tea beverage business met high-end market demands with new products like **"Tea King" sugar-free tea**, while the company continued youth-oriented marketing through collaborations with popular media like e-sports and idol endorsements Beverage Business Segment Performance | Business Segment | 2019 Revenue (RMB Million) | Year-on-Year Growth | | :--- | :--- | :--- | | **Total Beverage Business** | 12,730.5 | +0.9% | | **Tea Beverages** | 5,616.3 | - | | **Juice** | 1,746.6 | +1.3% | | **Milk Tea** | - | +13.1% | - In the tea beverage business, **"Uni-President Iced Tea"** and **"Uni-President Green Tea"** performed stably, **"Xiao Ming Tong Xue"** sales were weaker, and newly launched **"Tea King" sugar-free tea** and **"Tea Instant Fresh" refrigerated tea** jointly met high-end market demands[42](index=42&type=chunk) - The juice business achieved **1.3% growth** by signing idol **Wang Yuan** as the endorser for **"Uni-President Fresh Orange"**, attracting a new generation of consumers[51](index=51&type=chunk)[53](index=53&type=chunk) - The milk tea business achieved **double-digit growth for three consecutive years**, with **"Uni-President Assam Milk Tea"** maintaining its position as a category leader and continuing to be favored by consumers[63](index=63&type=chunk)[64](index=64&type=chunk) - In other beverages, the company focused on operating **"ALKAQUA" natural mineral water** and launched new products such as the premium refrigerated coffee **"Left Bank Coffee"** and sweet sake **"Qian Bai Du"**[71](index=71&type=chunk)[74](index=74&type=chunk)[84](index=84&type=chunk) [Research and Development](index=29&type=section&id=Research%20and%20Development) The Group's R&D center, guided by consumer demand, integrates innovation resources and focuses on value and category innovation; as of December 2019, it held **81 authorized patents** and **49 pending patent applications**, with food R&D deepening in Chinese cuisine, sterilization and preservation, and self-heating technologies, leading to new flavors for **"Kai Xiao Zao"** and the upgraded **"Master Kong Soup Noodle Extreme Flavor"** series, while beverage R&D aligned with health trends by upgrading **"Tea King" sugar-free tea**, and core technologies like original broth processing and segmented sterilization were successfully applied to new products - As of December 2019, the R&D center held **81 authorized patents** and **49 pending patent applications**, continuously building technological barriers[86](index=86&type=chunk) - Food R&D focused on extending the **"Kai Xiao Zao" self-heating meal product line**, launching the upgraded **"Master Kong Soup Noodle Extreme Flavor"** series, and the newly introduced **"Uni-President Qie Huang" tomato and egg noodles**[86](index=86&type=chunk)[87](index=87&type=chunk) - Beverage R&D prioritized health trends, comprehensively upgrading **"Tea King"** and launching two sugar-free teas[92](index=92&type=chunk) [Food Safety](index=32&type=section&id=Food%20Safety) The Group upholds the "Three Goods and One Fair" philosophy, establishing a Food Safety Committee and Center to promote a food safety culture; by improving supply chain oversight, managing suppliers at the source, and introducing third-party evaluations, the company ensures quality and safety from raw materials to finished products, with its Food Safety Testing Center accredited by CNAS, and **27 subsidiaries ISO9001 certified** and **25 ISO22000 certified**, guaranteeing product safety and deliciousness - The Group established a Food Safety Committee and Food Safety Center, dedicated to promoting food safety culture, building assurance systems, and formulating policies[95](index=95&type=chunk) - The Group continuously improved raw material supply chain oversight, implemented supplier qualification reviews and on-site evaluations, and actively promoted source management for suppliers[97](index=97&type=chunk)[98](index=98&type=chunk) - As of 2019, **27 subsidiaries** of the Group had obtained **ISO9001 certification**, and **25 subsidiaries** had obtained **ISO22000 certification**[99](index=99&type=chunk) [Production Strategies](index=33&type=section&id=Production%20Strategies) To achieve resource focus and maximize efficiency, the Group maintains its own production capacity while forming long-term strategic alliances with professional beverage co-manufacturers, including independent third parties and associated enterprises; this collaborative model allows the Group to flexibly adjust capacity through outsourced production beyond its basic capacity, thereby more effectively allocating resources to core operational areas such as product R&D, brand building, and sales channel development - In addition to its own production capacity, the Group maintains long-term strategic alliances with professional beverage co-manufacturers (including external independent third parties and associated enterprises) to adjust capacity, focusing resources and maximizing efficiency[99](index=99&type=chunk)[100](index=100&type=chunk) [Financial Results](index=34&type=section&id=Financial%20Results) For the year 2019, the Group reported revenue of **RMB 22,019.7 million**, a **1.1% year-on-year increase**; gross profit grew by **8.6%** to **RMB 7,918.3 million**, with gross margin improving from **33.5% to 36.0%** due to product structure optimization, lower raw material prices, and tax reduction policies; operating profit significantly increased by **35.6%** to **RMB 1,806.3 million**, and profit attributable to equity holders was **RMB 1,366.2 million**, up **32.7%**, with earnings per share at **RMB 31.63 cents** 2019 Key Financial Data | Indicator | 2019 (RMB Million) | 2018 (RMB Million) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **Revenue** | 22,019.7 | 21,772.2 | +1.1% | | **Gross Profit** | 7,918.3 | 7,288.6 | +8.6% | | **Gross Margin** | 36.0% | 33.5% | +2.5pp | | **Operating Profit** | 1,806.3 | 1,331.9 | +35.6% | | **Profit Attributable to Equity Holders** | 1,366.2 | 1,029.7 | +32.7% | | **Earnings Per Share (RMB Cents)** | 31.63 | 23.84 | +32.7% | - The increase in gross margin was primarily due to the Group's continuous optimization of product structure, a decline in raw material prices, and the implementation of a series of tax reduction and fee cut policies by the Chinese government[100](index=100&type=chunk) - Selling and marketing expenses increased to **RMB 5,367.6 million** due to increased channel and brand promotion investments, while administrative expenses decreased to **RMB 1,007.2 million** due to lower value-added tax and reduced surcharges[100](index=100&type=chunk) [Financial Analysis](index=35&type=section&id=Financial%20Analysis) As of the end of 2019, the Group's cash and bank balances increased to **RMB 6,483.5 million**, and total financial liabilities decreased by **39.3%** to **RMB 1,207.1 million**; the capital gearing ratio improved from **-31.78% to -63.14%**, indicating a further strengthened net cash position, with capital expenditure at **RMB 409.0 million** primarily for equipment upgrades, and inventory turnover days increasing from **33 to 41 days** mainly due to early stocking for increased production and sales during the Spring Festival Capital Gearing Ratio (As at December 31) | Indicator (RMB '000) | 2019 | 2018 | | :--- | :--- | :--- | | **Total Borrowings (including lease liabilities)** | 1,207,108 | 1,987,726 | | **Less: Cash and Bank Balances** | (6,483,500) | (5,176,478) | | **Net Cash** | (5,276,392) | (3,188,752) | | **Total Equity** | 13,632,930 | 13,222,307 | | **Capital Gearing Ratio** | (63.14%) | (31.78%) | Key Turnover Days (For the Year Ended December 31) | Indicator | 2019 (Days) | 2018 (Days) | | :--- | :--- | :--- | | **Trade Receivables Turnover Days** | 9 | 9 | | **Inventory Turnover Days** | 41 | 33 | | **Trade Payables Turnover Days** | 42 | 37 | - Capital expenditure in 2019 was **RMB 409.0 million**, a year-on-year decrease, primarily used for purchasing upgraded equipment and R&D equipment investments[109](index=109&type=chunk)[110](index=110&type=chunk) - The Group sold approximately **9%** of its equity in Wandashan Dairy in December 2019 for **RMB 334 million**, generating a post-tax gain of **RMB 92.1 million**[117](index=117&type=chunk) [Human Resources and Remuneration Policy](index=40&type=section&id=Human%20Resources%20and%20Remuneration%20Policy) As of the end of 2019, the Group had **29,494 employees**; the company adheres to a strategy of "lean staffing and merit-based employment," enhancing team capabilities through internal training and job rotation, primarily promoting from within, with remuneration policies determined by employee performance, qualifications, and market conditions, and a performance bonus plan in place, resulting in a total annual employee cost of **RMB 3,416.1 million** - As of December 31, 2019, the Group had a total of **29,494 employees**[119](index=119&type=chunk) - The total employee cost for the year (including directors' emoluments) was **RMB 3,416.1 million**[118](index=118&type=chunk)[119](index=119&type=chunk) [Report of the Directors](index=41&type=section&id=Report%20of%20the%20Directors) This report details the Group's principal activities, proposed dividend distribution, ongoing connected transactions with major shareholders, and the anticipated impact of the COVID-19 pandemic - The Group's principal businesses are the production and sale of beverages and instant noodles in China[120](index=120&type=chunk) - The Board recommended a final dividend of **RMB 31.63 cents per share** for the year ended December 31, 2019, totaling approximately **RMB 1,366.2 million**[120](index=120&type=chunk) - The report disclosed continuing connected transactions with major shareholder Uni-President Enterprises Corporation (UPE) and its group, including sales, procurement, logistics services, and technical support service agreements, confirming that transaction amounts did not exceed annual caps[139](index=139&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)[144](index=144&type=chunk)[146](index=146&type=chunk)[148](index=148&type=chunk) - Following the reporting period, the **COVID-19 pandemic** emerged, and the Group anticipates temporary and limited impacts on transportation and production costs in some regions, though no significant impact was identified as of the report date[181](index=181&type=chunk)[184](index=184&type=chunk) [Directors' Profile](index=62&type=section&id=Directors'%20Profile) This section provides detailed biographies of the executive, non-executive, and independent non-executive directors, including their age, position, industry experience, other listed company appointments, and educational backgrounds - This section provides detailed biographies of the executive directors, non-executive directors, and independent non-executive directors, including their age, position, industry experience, appointments in other listed companies, and educational backgrounds[187](index=187&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk) [Senior Management's Profile](index=69&type=section&id=Senior%20Management's%20Profile) This section provides detailed biographies of the company's senior management team members, including the general manager, CFO, heads of various business units, and the company secretary, covering their personal backgrounds, tenure within the Group, and professional experience - This section provides detailed biographies of the company's senior management team members, including the general manager, CFO, heads of various business units, and the company secretary, covering their personal backgrounds, tenure within the Group, and professional experience[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[200](index=200&type=chunk) [Corporate Governance Report](index=71&type=section&id=Corporate%20Governance%20Report) The company confirms compliance with all code provisions of the HKEX Corporate Governance Code for 2019, with a Board comprising eight directors meeting independence requirements, and details the composition, responsibilities, and meeting frequency of its Audit, Nomination, Remuneration, and Investment, Strategy & Development Committees, while also affirming the effectiveness of its risk management and internal control systems - The company confirmed its compliance with all code provisions of the **Hong Kong Stock Exchange's Corporate Governance Code** for the year 2019[202](index=202&type=chunk) - The Board comprises **8 directors**, including **2 executive directors**, **2 non-executive directors**, and **4 independent non-executive directors**, meeting the requirement that independent non-executive directors constitute at least one-third of the Board[203](index=203&type=chunk)[205](index=205&type=chunk) - The Board has established an Audit Committee, Nomination Committee, Remuneration Committee, and Investment, Strategy & Development Committee, with detailed explanations of each committee's composition, responsibilities, and annual meeting frequency[204](index=204&type=chunk)[211](index=211&type=chunk)[215](index=215&type=chunk)[221](index=221&type=chunk)[223](index=223&type=chunk) - The report outlines the company's risk management and internal control systems, which the Board has reviewed annually and deemed effective and adequate[226](index=226&type=chunk)[227](index=227&type=chunk) [Independent Auditor's Report](index=89&type=section&id=Independent%20Auditor's%20Report) PricewaterhouseCoopers, the auditor, concluded that the consolidated financial statements fairly and accurately reflect the Group's financial position as of December 31, 2019, and its financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance, while identifying revenue recognition from goods sales and deferred income tax assets as key audit matters due to their complexity and judgment involved - Auditor PricewaterhouseCoopers believes that the consolidated financial statements truly and fairly reflect the Group's consolidated financial position as of December 31, 2019, and its financial performance and cash flows for the year then ended, prepared in compliance with **Hong Kong Financial Reporting Standards** and the disclosure requirements of the **Hong Kong Companies Ordinance**[240](index=240&type=chunk)[242](index=242&type=chunk) - The report identified two key audit matters: 1. **Revenue recognition: sales of goods** - highlighted due to the significant volume of transactions, diverse product range, and numerous customers[244](index=244&type=chunk) 2. **Deferred income tax assets** - noted for complexity and judgment involved in confirming recognition, which requires forecasting future taxable income[247](index=247&type=chunk) [Consolidated Financial Statements](index=98&type=section&id=Consolidated%20Financial%20Statements) This section presents the Group's comprehensive financial statements, including the consolidated income statement, balance sheet, and cash flow statement, providing a detailed overview of its financial performance and position [Consolidated Income Statement](index=100&type=section&id=Consolidated%20Income%20Statement) For the year 2019, the company's revenue was **RMB 22.02 billion**, a **1.1% year-on-year increase**; gross profit was **RMB 7.92 billion**, up **8.6%**; operating profit was **RMB 1.81 billion**, a **35.6% increase**; and profit for the year was **RMB 1.37 billion**, growing by **32.7%** Consolidated Income Statement Summary | Item (RMB '000) | 2019 | 2018 | | :--- | :--- | :--- | | **Revenue** | 22,019,737 | 21,772,240 | | **Cost of Sales** | (14,101,447) | (14,483,641) | | **Gross Profit** | 7,918,290 | 7,288,599 | | **Operating Profit** | 1,806,321 | 1,331,925 | | **Profit Before Income Tax** | 1,971,360 | 1,539,774 | | **Income Tax Expense** | (605,148) | (510,070) | | **Profit for the Year** | 1,366,212 | 1,029,704 | [Consolidated Balance Sheet](index=102&type=section&id=Consolidated%20Balance%20Sheet) As of the end of 2019, the company's total assets were **RMB 21.76 billion**, largely consistent with the previous year; total liabilities decreased to **RMB 8.12 billion**, and total equity increased to **RMB 13.63 billion**, with non-current assets increasing and current assets decreasing Consolidated Balance Sheet Summary (As at December 31) | Item (RMB '000) | 2019 | 2018 | | :--- | :--- | :--- | | **Total Assets** | **21,757,042** | **21,732,558** | | Non-current Assets | 14,739,130 | 14,082,292 | | Current Assets | 7,017,912 | 7,650,266 | | **Total Equity** | **13,632,930** | **13,222,307** | | **Total Liabilities** | **8,124,112** | **8,510,251** | | Non-current Liabilities | 483,010 | 420,749 | | Current Liabilities | 7,641,102 | 8,089,502 | [Consolidated Cash Flow Statement](index=105&type=section&id=Consolidated%20Cash%20Flow%20Statement) In 2019, net cash inflow from operating activities was **RMB 2.87 billion**, net cash outflow from investing activities was **RMB 1.47 billion**, and net cash outflow from financing activities was **RMB 1.91 billion**; this resulted in a net decrease in cash and cash equivalents of **RMB 506 million**, with an ending balance of **RMB 1.06 billion** Consolidated Cash Flow Statement Summary | Item (RMB '000) | 2019 | 2018 | | :--- | :--- | :--- | | **Net Cash Generated from Operating Activities** | 2,869,341 | 2,563,204 | | **Net Cash Used in Investing Activities** | (1,469,822) | (3,389,508) | | **Net Cash (Used in) / From Financing Activities** | (1,905,391) | 33,085 | | **Net Decrease in Cash and Cash Equivalents** | (505,872) | (793,219) | | **Cash and Cash Equivalents at Beginning of Year** | 1,563,945 | 2,356,350 | | **Cash and Cash Equivalents at End of Year** | 1,056,780 | 1,563,945 |

[Chairman's Statement](index=7&type=section&id=Chairman's%20Statement) Uni-President China achieved robust 2018 performance with 4.6% revenue growth and 17.2% profit after tax increase, driven by innovation and strong core brands Key Financial Indicators | Indicator | 2018 (RMB) | YoY Growth | | :--- | :--- | :--- | | Revenue | 21.772 billion | +4.6% | | Profit After Tax | 1.030 billion | +17.2% | - To address consumption upgrades and lifestyle changes, the Group launched several innovative products in 2018, including self-heating hotpot and meals, casual snacks, chilled tea and juice, and entered the plant-based protein (soy milk) sector[15](index=15&type=chunk)[18](index=18&type=chunk) - Core brands performed strongly, with **Tang Da Ren** revenue showing stable growth and improving product structure; **Uni-President Assam** milk tea maintained its leading position in the category[16](index=16&type=chunk)[19](index=19&type=chunk) - The Board recommends a final cash dividend of **RMB 23.84 cents per share** for the year ended December 31, 2018, totaling approximately **RMB 1.030 billion**[20](index=20&type=chunk)[23](index=23&type=chunk) [Management Discussion and Analysis](index=9&type=section&id=Management%20Discussion%20%26%20Analysis) This section analyzes the 2018 macroeconomic environment, industry trends, and reviews the operational performance, brand strategies, and product innovations across the food and beverage segments [Economic Environment](index=9&type=section&id=Economic%20Environment) China's GDP grew by 6.6% in 2018, meeting targets, but quarterly growth slowed, while the food and beverage industry faced price adjustments and weakening demand - China's GDP grew by **6.6%** year-on-year in 2018, aligning with the annual target of approximately 6.5%, though quarterly growth showed a declining trend, with the fourth quarter at 6.4%[28](index=28&type=chunk) - The food and beverage industry adjusted channel prices in 2018 due to rising raw material costs in 2017; however, market demand weakened from the third quarter, slowing industry revenue growth[29](index=29&type=chunk) - Consumption trends exhibited polarization: the instant noodle market diversified towards both lower-end and higher-priced products, while the beverage market saw a renewed preference for classic products[29](index=29&type=chunk) [Business Review](index=10&type=section&id=Business%20Review) In 2018, the Group's total revenue reached RMB 21.772 billion, a 4.6% year-on-year increase, with food business revenue at RMB 8.425 billion (up 5.7%) and beverage business revenue at RMB 12.619 billion (up 3.6%) 2018 Business Segment Revenue | Business Segment | 2018 Revenue (RMB million) | YoY Growth Rate | % of Total Revenue | | :--- | :--- | :--- | :--- | | Food Business | 8,425.1 | +5.7% | 38.7% | | Beverages Business | 12,619.4 | +3.6% | 58.0% | | **Total** | **21,772.2** | **+4.6%** | **96.7%** | [Food Business](index=10&type=section&id=Food%20Business) Food business revenue reached RMB 8.425 billion in 2018, a 5.7% year-on-year increase, primarily driven by double-digit growth in the mid-to-high-priced brand "Tang Da Ren" - Instant noodle business revenue recorded **RMB 8.425 billion**, a **5.7%** year-on-year increase, with the **Tang Da Ren** brand continuing double-digit growth, becoming the primary engine for business expansion[38](index=38&type=chunk)[43](index=43&type=chunk) - The high-end brand **Man Han Da Can** focused on "Taiwanese semi-tendon and semi-meat beef noodles," aiming to develop the exquisite high-priced noodle market[45](index=45&type=chunk) - The Group entered the self-heating food sector, launching self-heating hotpot **Zhu Shi Guang** and self-heating meals **Kai Xiao Zao**, to meet consumer demand for convenient meals in various scenarios[48](index=48&type=chunk) [Beverages Business](index=13&type=section&id=Beverages%20Business) Beverage business revenue in 2018 was RMB 12.619 billion, a 3.6% year-on-year increase, with strong performance in milk tea driven by "Assam" 2018 Beverage Category Revenue | Beverage Category | 2018 Revenue (RMB million) | YoY Growth Rate | | :--- | :--- | :--- | | Tea Beverages | 5,943.7 | +2.0% | | Juice | 1,723.4 | N/A | | Milk Tea | N/A | +13.6% | | Packaged Water (Aqua) | N/A | +12.9% | - Classic tea beverages **Uni-President Iced Black Tea** and **Uni-President Green Tea** drove growth in the tea beverage segment through marketing activities aligned with youth trends[53](index=53&type=chunk)[56](index=56&type=chunk)[58](index=58&type=chunk) - The company actively expanded into new categories, launching plant-based protein beverage **Cheng Shi Dou** soy milk and high-end bottle can series (e.g., **Man Ya** coffee, **Chuan Qi** tea), exploring the high-end market[97](index=97&type=chunk)[98](index=98&type=chunk) [Research and Development](index=21&type=section&id=Research%20and%20Development) This section details the company's efforts in R&D innovation and food safety assurance, including patent achievements, new product development, and comprehensive quality control systems [R&D](index=21&type=section&id=R%26D) In 2018, the Group's R&D center continued to innovate, holding 59 authorized patents and 56 pending patent applications by year-end - As of December 2018, the R&D center held **59 authorized patents** and **56 pending patent applications**, continuously strengthening its technological advantage[105](index=105&type=chunk) - Innovative development of self-heating dishes **Kai Xiao Zao**, which authentically restore the "wok hei" of Chinese cooking by controlling five key processes[107](index=107&type=chunk)[109](index=109&type=chunk) - Launched a chilled cup series, including **Tea•Instant Fresh** and **Fruit Symphony**, with a shelf life of only 21 days and full cold chain transportation, maximizing product freshness and taste[113](index=113&type=chunk)[115](index=115&type=chunk) [Food Safety](index=23&type=section&id=Food%20Safety) The Group prioritizes food safety, establishing a Food Safety Committee and Center to build a comprehensive monitoring system from supply chain to finished products - The Group established a Food Safety Committee and Food Safety Center, dedicated to the construction of food safety assurance systems, policy formulation, and risk monitoring[119](index=119&type=chunk) - The Group's Food Safety Testing Center has annually passed expert reviews by the China National Accreditation Service for Conformity Assessment (CNAS) since 2005[125](index=125&type=chunk) - As of the end of 2018, **29** of the Group's subsidiaries had passed ISO9001 quality management system certification, and **27** subsidiaries had passed ISO22000 food safety management system certification[127](index=127&type=chunk) [Production Strategies](index=24&type=section&id=Production%20Strategies) The Group employs a strategy combining proprietary production capacity with outsourced manufacturing, forming long-term strategic alliances with professional co-packers to optimize resource allocation - The Group adopts a production strategy combining proprietary capacity with professional co-packing, forming strategic alliances with external independent third parties and affiliated enterprises to flexibly adjust production capacity[128](index=128&type=chunk) [Financial Review](index=24&type=section&id=Financial%20Review) This section provides a comprehensive review of the Group's 2018 financial performance, highlighting revenue and profit growth, improved gross margin, and a strong net cash position [Financial Results](index=24&type=section&id=Financial%20Results) For the year ended December 31, 2018, the Group's revenue was RMB 21.772 billion, a 4.6% year-on-year increase, with gross profit up 10.8% to RMB 7.289 billion Financial Performance Summary | Financial Indicator (RMB million) | 2018 | 2017 (Restated) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 21,772.2 | 20,821.9 | +4.6% | | Gross Profit | 7,288.6 | 6,576.9 | +10.8% | | Gross Profit Margin | 33.5% | 31.6% | +1.9 p.p. | | Operating Profit | 1,331.9 | 1,186.6 | +12.2% | | Profit Attributable to Equity Holders | 1,029.7 | 878.2 | +17.2% | | Earnings Per Share (RMB cents) | 23.84 | 20.33 | +17.3% | [Financial Analysis](index=25&type=section&id=Financial%20Analysis) As of the end of 2018, the Group held RMB 5.177 billion in cash and bank balances, with total financial liabilities of RMB 1.988 billion, maintaining a net cash position Key Financial Ratios | Indicator | 2018 | 2017 | | :--- | :--- | :--- | | Total Borrowings (RMB thousand) | 1,987,726 | 1,334,768 | | Net Cash (RMB thousand) | (3,188,752) | (1,447,963) | | Gearing Ratio | (31.78%) | (12.74%) | Turnover Days | Turnover Days | 2018 | 2017 | | :--- | :--- | :--- | | Trade Receivables | 9 | 9 | | Inventories | 33 | 30 | | Trade Payables | 37 | 32 | - Net cash inflow from operating activities in 2018 was **RMB 2.563 billion**, with capital expenditure of **RMB 986 million**, primarily for equipment upgrades, channel marketing asset deployment, and R&D investments[148](index=148&type=chunk) [Significant Investments and Future Plans](index=29&type=section&id=Significant%20Investments%20and%20Future%20Plans) As of the end of 2018, the Group held financial assets at fair value through other comprehensive income of RMB 219 million, primarily equity investments in Haishun Fruit Juice Holdings and Wandashan Dairy - The Group holds equity investments in Haishun Fruit Juice Holdings Co Ltd (listed) and Heilongjiang Wandashan Dairy Co Ltd (unlisted), with a total fair value of approximately **RMB 219 million**[164](index=164&type=chunk) - There were no significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the year[174](index=174&type=chunk)[178](index=178&type=chunk) [Human Resources](index=31&type=section&id=Human%20Resources%20and%20Remuneration%20Policy) As of the end of 2018, the Group employed 29,192 individuals, with total annual staff costs of RMB 3.217 billion, emphasizing talent development and performance-based remuneration Human Resources Overview | Indicator | 2018 | 2017 | | :--- | :--- | :--- | | Total Employees | 29,192 | N/A | | Total Staff Costs (RMB million) | 3,217.4 | 3,025.2 | [Report of the Directors](index=32&type=section&id=Report%20of%20the%20Directors) This report outlines the company's principal activities, financial performance, dividend policy, directors' and shareholders' interests, connected transactions, corporate governance, and business risks [Principal Activities and Financial Overview](index=32&type=section&id=Principal%20Activities%20and%20Financial%20Overview) The company is an investment holding company, with the Group's primary business being the production and sale of beverages and instant noodles in China - The Group's principal activities are the production and sale of beverages and instant noodles in China[190](index=190&type=chunk) - The Board recommends a final dividend of **RMB 23.84 cents per share** for the year, totaling approximately **RMB 1.03 billion**[193](index=193&type=chunk) [Directors' and Substantial Shareholders' Interests](index=34&type=section&id=Directors'%20and%20Substantial%20Shareholders'%20Interests) This section discloses the shareholdings of directors and substantial shareholders in the company and its associated corporations Major Shareholders' Interests | Major Shareholder | Capacity | Number of Shares Held (Long Position) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Uni-President Enterprises Corporation | Interest in controlled corporation | 3,050,893,983 | 70.63% | | Cayman President Holdings Ltd. | Beneficial owner | 3,044,508,000 | 70.49% | [Continuing Connected Transactions](index=39&type=section&id=Continuing%20Connected%20Transactions) During the reporting period, the Group engaged in various continuing connected transactions with the controlling shareholder, Uni-President Enterprises Group, all conducted on normal commercial terms and within approved annual caps Continuing Connected Transactions with Uni-President Enterprises Group | Transaction Type (with Uni-President Enterprises Group) | 2018 Actual Transaction Amount (RMB million) | 2018 Annual Cap (RMB million) | | :--- | :--- | :--- | | Sales of Products | 79.4 | 296.0 | | Purchases of Goods | 3,547.4 | 4,920.0 | | Logistics Services | 19.5 | 39.0 | | Technical Support Services | 51.3 | 59.0 | [Business Review and Risk Factors](index=47&type=section&id=Business%20Review%20and%20Risk%20Factors) This section reviews the Group's business performance and identifies key risks and uncertainties, including changes in consumer preferences, intense market competition, macroeconomic fluctuations, and supply chain risks - The Group faces key risks including: changes in consumer preferences, market competition, economic and financial market fluctuations, and supply chain disruptions[304](index=304&type=chunk)[308](index=308&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk)[317](index=317&type=chunk) - The company adopted a dividend policy on December 31, 2018, targeting a final dividend payout of not less than **20%** of the consolidated profit attributable to shareholders[331](index=331&type=chunk)[335](index=335&type=chunk) [Corporate Governance Report](index=61&type=section&id=Corporate%20Governance%20Report) This report details the company's corporate governance practices in 2018, emphasizing adherence to the Corporate Governance Code and outlining the board's structure, responsibilities, and committee functions [Board of Directors and Committees](index=61&type=section&id=Board%20of%20Directors%20and%20Committees) The Board of Directors, comprising executive, non-executive, and independent non-executive directors, leads and oversees the company, supported by four specialized committees Board Committees and Key Responsibilities | Committee | Chairman | Key Responsibilities | | :--- | :--- | :--- | | Audit Committee | Mr. Fan Jen-Da (Independent Non-executive Director) | Oversees financial reporting, internal controls, and external auditors | | Nomination Committee | Mr. Lu Chia-Hsing (Independent Non-executive Director) | Reviews board structure, identifies, and nominates director candidates | | Remuneration Committee | Mr. Chen Sheng-Te (Independent Non-executive Director) | Formulates remuneration policies and structures for directors and senior management | | Investment, Strategy and Development Committee | Mr. Lo Chih-Hsien (Chairman) | Reviews the Group's investment and development plans and policies | - The company adopted a board diversity policy, considering various factors such as gender, age, cultural background, skills, and experience when selecting directors[430](index=430&type=chunk)[433](index=433&type=chunk) [Risk Management and Internal Control](index=72&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is responsible for maintaining a robust risk management and internal control system designed to identify and manage significant risks and safeguard assets - The Board is overall responsible for maintaining the Group's risk management and internal control systems, conducting annual effectiveness reviews[450](index=450&type=chunk)[457](index=457&type=chunk) - The Group established an internal audit unit, reporting to the Board, operating under the guidance of the Audit Committee, and regularly reporting audit findings and internal control recommendations to the Board[458](index=458&type=chunk) [Communication with Shareholders and Shareholders' Rights](index=75&type=section&id=Communication%20with%20Shareholders%20and%20Shareholders'%20Rights) The company communicates with shareholders through various channels, including annual general meetings, announcements, and its website, ensuring shareholders can effectively participate in corporate governance - Shareholders holding not less than **one-tenth** of the paid-up share capital may request to convene an extraordinary general meeting[471](index=471&type=chunk) [Financial Statements](index=78&type=section&id=Financial%20Statements) This section comprises the Independent Auditor's Report by PricewaterhouseCoopers, the Group's Consolidated Financial Statements (including income statement, comprehensive income statement, balance sheet, statement of changes in equity, and cash flow statement), and detailed notes [Independent Auditor's Report](index=78&type=section&id=Independent%20Auditor's%20Report) PricewaterhouseCoopers issued an unmodified opinion on the Group's consolidated financial statements for the year ended December 31, 2018, confirming their fair presentation and compliance with disclosure requirements - The auditor, PricewaterhouseCoopers, issued an **unmodified opinion** on the consolidated financial statements[492](index=492&type=chunk) - Key Audit Matters identified were: - Revenue recognition: sales of goods - Deferred income tax assets[499](index=499&type=chunk) [Consolidated Financial Statements](index=87&type=section&id=Consolidated%20Financial%20Statements) This section presents the Group's core financial statements for the year ended December 31, 2018, including the consolidated income statement, comprehensive income statement, balance sheet, statement of changes in equity, and cash flow statement Consolidated Income Statement Summary (RMB thousand) | Indicator | 2018 | 2017 (Restated) | | :--- | :--- | :--- | | Revenue | 21,772,240 | 20,821,949 | | Gross Profit | 7,288,599 | 6,576,938 | | Operating Profit | 1,331,925 | 1,186,611 | | Profit for the Year | 1,029,704 | 878,216 | Consolidated Balance Sheet Summary (RMB thousand) | Indicator | December 31, 2018 | December 31, 2017 | | :--- | :--- | :--- | | Total Assets | 21,732,558 | 20,036,552 | | Total Liabilities | 8,510,251 | 7,221,075 | | Total Equity | 13,222,307 | 12,815,477 | Consolidated Cash Flow Statement Summary (RMB thousand) | Indicator | 2018 | 2017 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 2,563,204 | 2,452,763 | | Net Cash Used in Investing Activities | (3,389,508) | (782,159) | | Net Cash Generated From/(Used In) Financing Activities | 33,085 | (1,384,336) | | Net (Decrease)/Increase in Cash and Cash Equivalents | (793,219) | 286,268 | [Notes to the Consolidated Financial Statements](index=94&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations and supplementary information to the consolidated financial statements, covering key accounting policies, estimates, segment information, asset and liability breakdowns, and related party transactions - The Group adopted Hong Kong Financial Reporting Standard 9 "Financial Instruments" and Standard 15 "Revenue from Contracts with Customers" effective January 1, 2018; Standard 15 was adopted using the full retrospective method, and comparative figures for 2017 were restated accordingly[577](index=577&type=chunk)[613](index=613&type=chunk) Segment Revenue (RMB thousand) | Segment Revenue (RMB thousand) | 2018 | 2017 (Restated) | | :--- | :--- | :--- | | Beverages | 12,619,416 | 12,179,014 | | Instant Noodles | 8,425,149 | 7,974,498 | | Others | 727,675 | 668,437 | | **Total** | **21,772,240** | **20,821,949** | - Significant transactions were conducted with related parties (primarily the controlling company Uni-President Enterprises and its subsidiaries), including raw material purchases (approximately **RMB 4.20 billion**) and finished product sales (approximately **RMB 84 million**)[1230](index=1230&type=chunk)