Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 1,535,704, a decrease of 16.9% from RMB 1,847,152 in the same period of 2022[11]. - Gross profit decreased by 26.9% to RMB 706,732, down from RMB 967,029 year-on-year[11]. - Operating profit increased significantly to RMB 260,740, compared to an operating loss of RMB 141,776 in the previous year, marking a 283.9% improvement[11]. - Profit for the period was RMB 200,353, a turnaround from a loss of RMB 233,031, representing a 186.0% increase[11]. - Adjusted profit attributable to equity holders of the Company was RMB 168,917, down 43.8% from RMB 300,800 in the prior year[11]. - Basic and diluted earnings per share improved to RMB 4.77, compared to a loss of RMB 9.71 in the same period last year[11]. - The gross profit margin decreased to 46.0%, down 6.4 percentage points from 52.4% in 1H 2022[25]. - Adjusted operating profit was approximately RMB276 million, representing a year-on-year decrease of 41.7% from RMB473 million in 1H 2022[27]. - Profit attributable to equity holders was approximately RMB154 million, a significant improvement from a loss of approximately RMB314 million in 1H 2022[25]. Market Trends - The tobacco industry in China saw a GDP growth of 5.5% year-on-year in the first half of 2023, exceeding the government's target of 5%[13]. - The company noted a cautious consumer spending trend due to the lingering effects of the pandemic and a decline in overseas market demand[13]. - In the first half of 2023, China's GDP grew by 5.5% year-on-year, exceeding the government's target of 5% for the entire year[14]. - The revenue of the catering industry reached RMB 2,432.9 billion in the first half of 2023, representing a year-on-year increase of 21.4%[24]. - The condiment industry is experiencing increased demand due to the recovery of the catering industry, prompting investments in product development and marketing[23]. Operational Efficiency - The Group implemented a "Lean Production" program to reduce operating costs and improve production efficiency across all business segments[15]. - The Group's digital transformation efforts have led to more subsidiaries inputting procurement, production, and sales data into the SAP ERP system, enhancing data analysis capabilities[70]. - The Group has been recognized with the "SAP Global Innovation Award" for its digital transformation initiatives[71]. - The Group is optimizing its supply chain and reducing operating costs to mitigate the impact of the global economic downturn on its operations[76]. Investment and Development - The cumulative amount dedicated for the Huabao TechInno Project was approximately RMB7.5463 million, representing an investment progress of 1.68%[39]. - The cumulative amount for the Huabao Digital Project was approximately RMB19.0878 million, with an investment progress of 31.81%[39]. - The balance of unused IPO proceeds amounted to approximately RMB1,648 million as of 30 June 2023[39]. - The Group is actively developing overseas markets, including Malaysia, Thailand, and Indonesia, to enhance revenue sources[33]. Research and Development - The R&D investment during the reporting period was approximately RMB 116 million, representing 7.6% of revenue, an increase of 1.6 percentage points compared to the same period last year[59]. - The Group's investment in innovative tobacco product R&D led to the application of 35 patents, consolidating its competitiveness in the field of innovative tobacco products[61]. - The Group launched a new product, "Chinese Chef's Bone Broth," aimed at diversifying the product mix and enhancing the efficiency and quality of dishes for chefs[54]. Employee and Management - As of June 30, 2023, the Group employed a total of 4,003 employees, an increase from 3,875 as of December 31, 2022[65]. - The Group has implemented targeted training programs to enhance employees' problem-solving skills and support business development[66]. - The Group emphasized sustainable development goals and organized training to raise employee awareness on ESG matters[15]. Financial Position - As of June 30, 2023, the net current asset value of the Group was RMB6,980,704,000, slightly up from RMB6,944,129,000 as of December 31, 2022[148]. - The total bank borrowings amounted to RMB466,850,000 as of June 30, 2023, down from RMB677,700,000 as of December 31, 2022[150]. - The Group's debt ratio decreased to 3.7% as of June 30, 2023, from 5.4% as of December 31, 2022[150]. - The average trade receivables turnover period increased to 102 days for the six months ended June 30, 2023, compared to 89 days for the last financial year[155]. Shareholder Information - Ms. CHU Lam Yiu holds 2,293,408,900 ordinary shares, representing 71.00% of the issued share capital of the Company[170]. - The total number of shares available for issue under the 2016 Share Option Scheme is 310,665,796 shares, approximately 9.62% of the issued shares as of the report date[174]. - The Share Award Scheme aims to recognize and motivate contributions from participants, enhancing the Group's long-term business objectives[186].

Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 1,535,704 thousand, a decrease of 16.9% compared to RMB 1,847,152 thousand for the same period in 2022[2]. - Gross profit for the same period was RMB 706,732 thousand, down 26.9% from RMB 967,029 thousand, resulting in a gross margin of 46.0% compared to 52.4% in 2022[2]. - Adjusted profit for the period attributable to equity holders was RMB 200,353 thousand, a significant increase of 186.0% from a loss of RMB 233,031 thousand in the previous year[4]. - Basic and diluted earnings per share for the period were RMB 4.77, compared to a loss of RMB 9.71 in the same period last year, reflecting a 149.1% increase[4]. - Operating profit for the period was RMB 260,740 thousand, a turnaround from an operating loss of RMB 141,776 thousand in the previous year[4]. - The net profit for the period was RMB 200,353 thousand, a significant recovery from a net loss of RMB 233,031 thousand in the previous year[16][21]. - The total liabilities decreased to RMB 1,544,783 thousand from RMB 2,061,584 thousand, reflecting a reduction of approximately 25%[18]. - The company reported a gross margin improvement in the flavor and food ingredients segment, with net segment revenue of RMB 680,934 thousand for the current period[17]. - The company recognized an impairment loss on goodwill of RMB 614,331 thousand for the six months ended June 30, 2023[2]. - The total expenses for the six months ended June 30, 2023, included depreciation of RMB 92,992,000, down from RMB 98,456,000 in the same period of 2022[26]. Dividends and Shareholder Returns - The company plans to declare an interim dividend of HKD 1.60 per share and a special dividend of HKD 1.90 per share[2]. - The interim dividend proposed for the six months ended June 30, 2023, is RMB 104,227,000, compared to RMB 95,840,000 for the same period in 2022[33]. - The company declared an interim cash dividend of HKD 0.016 per share and a special dividend of HKD 0.019 per share for the six months ended June 30, 2023[119]. Assets and Liabilities - Total assets as of June 30, 2023, were RMB 16,084,302 thousand, a decrease from RMB 16,619,022 thousand as of December 31, 2022[6]. - Cash and bank deposits decreased to RMB 3,384,516 thousand from RMB 4,747,978 thousand, indicating a reduction in liquidity[6]. - The total equity and liabilities as of June 30, 2023, stood at RMB 16,084,302 thousand, down from RMB 16,619,022 thousand at the end of 2022[18]. - The company reported a decrease in trade receivables to RMB 664,092,000 as of June 30, 2023, down from RMB 1,010,485,000 as of December 31, 2022[35]. - The total liabilities for trade and other payables were RMB 574,831,000 as of June 30, 2023, down from RMB 734,298,000 as of December 31, 2022[42]. - Total loans as of June 30, 2023, were RMB 466,850,000, down 31% from RMB 677,700,000 as of December 31, 2022[40]. Research and Development - The company plans to continue its focus on research and development in the flavor and food ingredients sector to drive future growth[13]. - Research and development expenses for the six months ended June 30, 2023, amounted to RMB 116,321,000, an increase from RMB 110,663,000 in the same period of 2022[26]. - The group invested approximately RMB 116 million in R&D, representing 7.6% of sales revenue, an increase of 1.6 percentage points compared to the first half of 2022[63]. Market and Industry Trends - The tobacco industry in China saw a production increase of 1.7% year-on-year, reaching 26.932 million boxes in the reporting period[45]. - The group is actively expanding its overseas market presence, particularly in Malaysia, Thailand, and Indonesia, with products receiving local regulatory approval[52]. - The group is shifting its focus in the personal care and oral care sectors due to decreased demand for incense and disinfection products post-pandemic[53]. - The group plans to develop overseas clients in the tobacco raw materials segment as domestic demand has saturated[67]. - In the flavor and food ingredients sector, the group aims to enhance product and service value by responding to market demand for healthy and natural products[67]. Corporate Governance and Compliance - The company has complied with the corporate governance code, except for certain provisions due to the circumstances surrounding a director's monitoring[117]. - The company is monitoring the ongoing arbitration and will provide updates as necessary[116]. - The audit committee, composed of independent non-executive directors, has reviewed and approved the unaudited interim financial information for the six months ended June 30, 2023[121]. - The company provided documents for an investigation by the Hong Kong Independent Commission Against Corruption related to a director's arrest[115]. Future Outlook - The group anticipates a cautious outlook for business in the second half of 2023, focusing on macro policy opportunities to stimulate consumer demand[67]. - The management expects continued growth in the restaurant industry, focusing on enhancing competitiveness in R&D, products, channels, and sales to increase market share[67]. - The group is committed to optimizing the supply chain and reducing operational costs to mitigate adverse impacts from external environments[67].

Financial Performance - Revenue for 2022 was RMB 3,828,984, a decrease of 1.4% from RMB 3,882,683 in 2021[5] - Gross profit for 2022 was RMB 1,877,563, resulting in a gross profit margin of 49.0%, down from 59.2% in 2021[5] - The company reported an operating loss of RMB 607,975 for 2022, compared to an operating profit of RMB 1,114,477 in 2021[5] - Adjusted profit for the year was RMB 606,660, while the loss attributable to equity holders was RMB 1,054,547[5] - Net cash generated from operating activities was RMB 798,746, a decline from RMB 1,413,246 in the previous year[5] - Total equity decreased to RMB 14,557,438 from RMB 15,718,819 in 2021[5] - Basic loss per share was approximately RMB 32.65 cents in 2022, compared to basic earnings per share of approximately RMB 21.70 cents in 2021[38] - The loss attributable to equity holders of the Company was approximately RMB 1,055 million in 2022, a significant decline from a profit of approximately RMB 675 million in 2021[38] - The gross profit margin decreased to 49.0% in 2022, down 10.2 percentage points from 59.2% in 2021[38] - The Group's overall performance was impacted by a weak consumer demand environment both domestically and internationally in 2022[17] Dividends and Equity - The final dividend per share increased to 5.1 HK cents from 2.0 HK cents in 2021, with a total dividend per share of 8.48 HK cents[5] - The company maintained a low debt ratio of 5.4%, down from 6.9% in the previous year[5] - Total goodwill impairment recognized during the Reporting Period was approximately RMB 1,508 million, significantly higher than RMB 293 million in 2021[39] - The balance of unused IPO proceeds amounted to approximately RMB 1,668 million as of December 31, 2022, with 39.0% of the total proceeds utilized[53] Operational Developments - The Group is engaged in R&D, production, and sales across multiple segments including flavours and fragrances, food ingredients, and tobacco raw materials[8] - The construction of the Group's first large-scale overseas plant in Indonesia was completed and commenced production, aimed at expanding into Southeast Asian and global markets[18] - Jiangxi Xianghai, the largest factory in the aroma raw material segment, was completed and operational in 2022, providing a modernized production facility for long-term development[19] - The Group's largest flavor raw material factory in Jiangxi completed construction and commenced operations in 2022, enhancing production scale and modernization[20] - The Group's digital transformation efforts began in 2022, aimed at improving operational efficiency across all business segments[21] Market and Industry Trends - The Group's condiment business underperformed in 2022 due to the Pandemic, but is expected to gradually return to normal operating levels following the lifting of prevention measures[19] - The introduction of national standards for electronic cigarettes is expected to lead to a more compliant and healthy development of the e-cigarette industry[28] - International tobacco companies are increasing investments in R&D and marketing for HNB cigarettes, creating opportunities for suppliers in the tobacco industry chain[30] - The Group anticipates a gradual rebound in domestic consumer demand as economic activities normalize post-pandemic[96] Research and Development - The Group's R&D investment was approximately RMB 266 million, accounting for 7.0% of revenue, an increase of 0.5 percentage points compared to the previous year[73] - The Group's R&D efforts in tobacco flavours have led to the development of various HNB tobacco flavours, improving user experience[43] - The establishment of the "Huabao Asia Pacific" R&D center in Singapore aims to enhance international business development, focusing on the Southeast Asian market[43] - The Group's R&D, production, marketing, and sales teams work closely to share cutting-edge technology and market trends in the development of innovative tobacco products[18] Challenges and Impairments - The Group's production technology and product quality in the tobacco raw materials field have reached advanced international levels, with Guangdong Jinye recognized for its leading production technology[11] - The Group's production volume of cigarettes in China reached 48.64 million cases, representing a year-on-year increase of 0.6%[26] - The revenue of the tobacco raw materials business decreased by 19.7% year-on-year to approximately RMB 454 million, accounting for 11.9% of the Group's total revenue[56] - The operating loss for the tobacco raw materials segment was approximately RMB 238 million, primarily due to goodwill impairment, compared to an operating loss of approximately RMB 80.09 million in the previous year[56] - The Group's conservative forecast for future sales of traditional RTL reflects expectations of continued oversupply in the market[109] Future Outlook - The Group aims to reward shareholders and improve business strategies in response to the recovering economic environment in 2023[22] - The Group plans to invest more resources in developing HNB tobacco flavors and increasing revenue from food flavors and fragrances[91] - The Group will enhance R&D capabilities for innovative tobacco products and assess overseas market opportunities to boost production capacity and market share[92] - The Group will monitor raw material prices closely and optimize product mix and pricing strategies to improve sales and profit growth amid macroeconomic uncertainties[93] - The Group will leverage the recovery of the catering industry to boost condiment sales and optimize distributor networks[95]

Financial Performance - Revenue for the year ended December 31, 2022, was RMB 3,828,984 thousand, a decrease of 1.4% from RMB 3,882,683 thousand in 2021[2] - Gross profit was RMB 1,877,563 thousand with a gross margin of 49.0%, down from RMB 2,296,662 thousand and 59.2% in the previous year, representing an 18.2% decline[2] - The company reported an operating loss of RMB 607,975 thousand compared to a profit of RMB 1,114,477 thousand in 2021, indicating a significant downturn[2] - Adjusted net profit attributable to equity holders was RMB 606,660 thousand, a decrease of 49.0% from RMB 1,189,054 thousand in the prior year[2] - Basic and diluted loss per share was RMB (32.65), compared to earnings of RMB 21.70 per share in 2021[4] - The company reported a pre-tax loss of RMB 720,210 thousand for the year, with a total loss of RMB 901,050 thousand after tax[18] - The company reported a net loss attributable to equity holders of RMB (1,054,547) thousand for the year ended December 31, 2022, compared to a profit of RMB 675,131 thousand in 2021, representing a significant decline[32] - The company's loss for the year ended December 31, 2022, was RMB 901,050,000, a decrease of RMB 1,796,834,000 compared to a profit of RMB 895,784,000 in the previous year[92] Dividends and Shareholder Returns - The company declared a special dividend of HKD 0.051 per share, up from HKD 0.020 per share in the previous year[2] - The company plans to distribute a special cash dividend of HKD 0.051 per share, totaling approximately RMB 147.1 million, pending shareholder approval[115] - The company did not declare any final dividend for the fiscal year ending December 31, 2022, compared to HKD 0.02 per share in 2021[115] Assets and Liabilities - Total assets as of December 31, 2022, were RMB 16,619,022 thousand, down from RMB 18,025,129 thousand in 2021[6] - Total equity decreased from RMB 15,718,819 thousand in 2021 to RMB 14,557,438 thousand in 2022, a decline of approximately 7.4%[7] - Total liabilities decreased from RMB 2,306,310 thousand in 2021 to RMB 2,061,584 thousand in 2022, a reduction of approximately 10.6%[7] - Cash and bank deposits increased to RMB 4,747,978 thousand from RMB 3,553,409 thousand in 2021, indicating improved liquidity[6] Goodwill and Impairments - The company incurred goodwill impairment of RMB 1,507,710 thousand, significantly higher than RMB 293,270 thousand in the previous year[4] - The company reported a significant impairment provision of RMB 139,000 thousand related to investments in associates[18] - Shanghai Yifang CGU recognized goodwill impairment of approximately RMB 43.84 million as of December 31, 2022[63] - The Reconstituted Tobacco Leaf CGU recognized goodwill impairment of approximately RMB 293.19 million as of December 31, 2022[66] - A goodwill impairment loss of approximately RMB 556.34 million was recognized for the Jiahao CGU for the year ended December 31, 2022, based on the recoverable amount being lower than the carrying amount[78] Segment Performance - The segment performance showed a loss of RMB 1,116,941 thousand in the flavor and food ingredients segment, while the other segments reported varying results[19] - The sales revenue from the flavor and food ingredients business was approximately RMB 1.877 billion, a decrease of 2.6% from RMB 1.927 billion in 2021[49] - The operating profit for the flavor and food ingredients segment was approximately RMB 824 million, down 25.4% from RMB 1.104 billion in 2021[49] - Huabao's sales revenue for tobacco raw materials was approximately RMB 454 million, a year-on-year decrease of 19.7%, accounting for 11.9% of the group's total revenue[54] - The sales revenue for the fragrance raw materials business was approximately RMB 924 million, a year-on-year increase of 29.5%, accounting for 24.1% of the group's total revenue[57] - The group's condiment business reported sales revenue of approximately RMB 573 million, a decrease of 15.3% compared to RMB 676 million in 2021, accounting for 15.0% of total revenue[58] Expenses and Costs - Total sales costs, selling and marketing expenses, and administrative expenses increased to RMB 3,121,785 thousand in 2022 from RMB 2,719,928 thousand in 2021, reflecting a growth of approximately 14.8%[24] - Research and development expenses rose to RMB 266,233 thousand in 2022, up from RMB 250,788 thousand in 2021, indicating an increase of about 6.1%[24] - Employee and welfare expenses increased to RMB 608,149 thousand in 2022 from RMB 557,962 thousand in 2021, marking an increase of about 8.9%[24] - The company incurred a total tax expense of RMB 180,840 thousand in 2022, down from RMB 251,593 thousand in 2021, a decrease of approximately 28.1%[28] Investments and Acquisitions - The company acquired a 40% stake in Shanghai Yifang Agricultural Technology Co., Ltd. for RMB 180,000,000 in August 2021 and further increased its stake to 67% for RMB 121,500,000 in March 2022[9] - The company acquired an additional 27% stake in Shanghai Yifang for RMB 121.5 million, increasing its total ownership to 67%[111] - The cumulative investment in the Huabao Yingtan project reached approximately RMB 210 million, with an investment progress of 20.3% as of December 31, 2022[53] - The cumulative investment in the Huabao Digital Transformation project was approximately RMB 17.59 million, with an investment progress of 29.3% as of December 31, 2022[53] Future Outlook and Strategies - The company aims to enhance its technology and product innovation capabilities while actively expanding into overseas markets[44] - The group aims to diversify its revenue sources and strengthen its competitive position in the food industry chain through the acquisition of Shanghai Yifang[52] - The group anticipates a rebound in the condiment market as the restaurant industry recovers, with strategies to optimize distributor layouts and increase customer engagement[62] - The group will closely monitor raw material prices and optimize product structures to enhance price competitiveness amid economic uncertainties[62] Corporate Governance and Compliance - The company has maintained normal production and business operations despite ongoing investigations involving key executives[110] - The company has complied with the corporate governance code, except for certain provisions due to the chairman's legal issues[113] - The audit committee has been established by the board of directors to review and monitor the company's financial reporting procedures and internal controls[119] - The audit committee has reviewed the group's audited year-end results for the year ended December 31, 2022[120]

Financial Performance - Revenue for the six months ended June 30, 2022, was RMB 1,847,152,000, representing a 4.7% increase from RMB 1,763,675,000 in the same period of 2021[8] - Gross profit decreased by 8.2% to RMB 967,029,000, down from RMB 1,053,981,000, resulting in a gross profit margin of 52.4% compared to 59.8% in 2021[8] - The company reported an operating loss of RMB 141,776,000, a significant decline from an operating profit of RMB 733,573,000 in the previous year, marking a 119.3% decrease[8] - Net cash generated from operating activities fell by 77.0% to RMB 111,799,000, down from RMB 485,403,000 in the same period last year[8] - The loss attributable to equity holders of the company was RMB 313,531,000, a 165.2% decline from a profit of RMB 481,129,000 in 2021[8] - Adjusted profit for the period was RMB 381,300,000, down 34.4% from RMB 581,465,000 in the previous year[8] Market Conditions - The management highlighted challenges from declining consumer confidence and rising production costs due to geopolitical conflicts and inflation pressures[11] - The overall economic environment remains challenging, impacting both global and Chinese markets significantly[11] - The catering industry revenue in the first half of 2022 was RMB 2,004 billion, a decrease of 7.7% year-on-year, and a decrease of 5.8% compared to 2019[22] - The Chinese government implemented stringent measures to control the Pandemic, negatively impacting various sectors, but the food and beverage industry still recorded growth[17] Industry Trends - The demand for frozen and prepared foods increased due to the Pandemic, highlighting the importance of strong supply chain management[18] - The food and beverage industry is increasingly focusing on health, nutrition, and taste, leading to intensified competition[19] - The Pandemic has led to a shift in consumer preferences towards products labeled as "natural" and "probiotic," influencing purchasing decisions[18] Segment Performance - Revenue from the F&F and food ingredients business amounted to approximately RMB 888 million, a year-on-year decrease of 2.5%[32] - Revenue from the tobacco raw materials business was approximately RMB 192 million, a year-on-year decrease of 8.1%, accounting for approximately 10.4% of the Group's total revenue[44] - The condiment business revenue decreased by 10.8% year-on-year to approximately RMB 289 million, accounting for 15.7% of total revenue, with an operating loss of approximately RMB 586 million[53] Investments and Projects - As of June 30, 2022, the cumulative investment in the Huabao Yingtan Project was approximately RMB 191 million, representing an investment progress of 18.47%[42] - The cumulative investment in the Huabao TechInno Project was approximately RMB 2.13 million, with an investment progress of 0.47%[42] - The cumulative investment in the Huabao Digital Project reached RMB 8.03 million, representing an investment progress of 13.38%[42] Research and Development - The Group's R&D investment during the reporting period was approximately RMB 111 million, accounting for about 6.0% of revenue, a decrease of 0.2 percentage points compared to the same period last year[85] - A total of 14 patents were granted in the F&F business, reflecting the Group's technological R&D capabilities in tobacco, food, and daily-use chemicals[86] - In the tobacco raw materials business, the Group applied for 26 patents focused on HNB cigarette materials, demonstrating its competitiveness in this field[87] Corporate Governance - The company has established internal reporting practices to monitor operations and business development, ensuring timely capture of potentially price-sensitive information[184] - The Board has adopted corporate governance practices to enhance transparency and accountability, with regular discussions on business strategies and performance[183] - The company has complied with the Corporate Governance Code, except for certain provisions affected by the Chairman's situation[185] Shareholder Information - The Board has declared a special dividend of HK3.38 cents per share for the six months ended 30 June 2022, compared to an interim dividend of HK6.4 cents per share in the same period of 2021[197] - The special dividend represents approximately 31.0% of the adjusted earnings per share of RMB9.31 cents[197] - The register of members will be closed from 15 September 2022 to 20 September 2022 for determining shareholders eligible for the special dividend[199]

Financial Performance - Revenue for the six months ended June 30, 2021, was RMB 1,763,675,000, representing a 2.8% increase from RMB 1,715,710,000 in 2020[9] - Gross profit decreased by 3.2% to RMB 1,053,981,000, with a gross profit margin of 59.8%, down from 63.5% in 2020[9] - Operating profit surged by 294.9% to RMB 733,573,000, indicating strong operational efficiency improvements[9] - Profit for the period increased by 778.5% to RMB 581,465,000, compared to RMB 66,192,000 in the same period last year[9] - Basic and diluted earnings per share rose to RMB 15.48, a significant increase from a loss of RMB 1.46 per share in 2020[9] - The Group achieved sales revenue of approximately RMB1,764 million, representing a year-on-year increase of 2.8%[25] - Gross profit margin was approximately 59.8%, a year-on-year decrease of 3.7 percentage points[25] - Operating profit increased to approximately RMB734 million, a year-on-year increase of 294.9%, with an operating profit margin of approximately 41.6%, up 30.8 percentage points year-on-year[25] - Profit attributable to equity holders of the Company was approximately RMB481 million, representing a year-on-year increase of 1,159.0%[25] - Basic earnings per share increased to approximately RMB15.48 cents, reflecting a year-on-year increase of 1,159.0%[25] Market Trends - The trend towards innovative tobacco products is expected to continue, with international companies increasing R&D investments to capture market share[12] - The market for innovative tobacco products is expected to grow, with companies needing to adapt strategies to different regulatory environments[14] - The "dual circulation" strategy by the Chinese government is expected to enhance the outlook for the domestic catering and condiment markets[21] - The pandemic has led to increased consumer demand for personal protective products and room fragrance products, indicating significant market potential[19] - The food and beverage industry is experiencing fierce competition due to rapidly changing consumer demands and the influx of new brands[18] Operational Efficiency - The EBITDA margin improved to 49.4%, up from 47.6% in the previous year, indicating enhanced profitability[9] - The company reported a net cash generated from operating activities of RMB 481,129,000, a 6.9% increase from RMB 450,064,000 in 2020[9] - Selling and marketing expenses decreased by 15.8% to RMB135,821,000, accounting for approximately 7.7% of total revenue, down from 9.4% in the previous year[83] - Administrative expenses increased by 3.5% to RMB404,789,000, representing approximately 23.0% of total revenue, which is similar to 22.8% for the same period last year[85] Investment and R&D - The Group invested approximately RMB 109 million in R&D, accounting for about 6.2% of sales revenue, a slight decrease of 0.1 percentage point compared to the previous year[53] - The Group's R&D team collaborated with celebrity chefs to launch a series of sauce products, which have been well-received and resulted in doubled sales revenue[46] - The Group is focusing on enhancing R&D and manufacturing capabilities in natural aroma raw materials to provide high-quality products[70] - The Group aims to enhance R&D capabilities in functional raw materials and plant-based food, responding to the health trends in the food and beverage industry[66][67] Financial Position - As of June 30, 2021, the Group's net current asset value was RMB6,015,094,000, down from RMB7,145,001,000 at the end of 2020[94] - Bank borrowings decreased to RMB1,855,217,000 from RMB2,708,230,000 at the end of 2020, with a gearing ratio of 15.3%, down 7.5 percentage points from 22.8%[95] - The Group's cash and bank balances were RMB3,946,500,000, a decrease from RMB6,335,596,000 at the end of 2020, while bank wealth management products increased to RMB1,969,078,000 from RMB540,492,000[94] - The average trade receivables turnover period increased to 94 days for the six months ended June 30, 2021, compared to 91 days for the last financial year, but decreased by 5 days from 99 days in the corresponding period last year[98] - The average trade payables turnover period decreased to 66 days for the six months ended June 30, 2021, down from 73 days for the last financial year[100] Corporate Governance - The Company has complied with the corporate governance code provisions, except for A.2.1 and A.4.1, regarding the separation of roles of chairman and CEO, and the appointment terms of non-executive directors[127] - The Company has adopted the Model Code for securities transactions by directors, confirming compliance by all directors for the six months ended June 30, 2021[132] - The Audit Committee, comprising all Independent Non-Executive Directors, reviewed and approved the Group's unaudited condensed consolidated interim financial information for the six months ended June 30, 2021[138] - The Company emphasizes good corporate governance practices to enhance transparency and accountability[125] Future Outlook - For the second half of 2021, the Group plans to adhere to a concentric and diversified development strategy centered on the flavors and fragrances sector, aiming for organic growth and technological innovation[62] - The Group will implement the "Four Transformations" strategy, focusing on enterprise conceptualization, management digitalization, asset securitization, and business globalization to optimize its management system[63][64] - The Group is optimistic about the future market for HNB tobacco products, believing it will gradually become a growth point for the RTL business[38] - The signing of the Regional Comprehensive Economic Partnership is expected to facilitate closer economic cooperation in Southeast Asia, providing more convenient market access for the Group[68]

Financial Performance - Revenue for the six months ended June 30, 2020, was RMB 1,715,710, a decrease of 17.1% compared to RMB 2,069,317 in the same period of 2019[13]. - Gross profit decreased by 16.9% to RMB 1,088,700, with a gross profit margin of 63.5%, slightly up from 63.3% in 2019[13]. - Operating profit fell significantly by 77.0% to RMB 185,778, with an EBIT margin of 10.8%, down from 39.0% in the previous year[13]. - Profit for the period was RMB 66,192, representing an 89.1% decline compared to RMB 609,173 in 2019[13]. - The adjusted profit for the period was RMB 561,690, a decrease of 7.8% from RMB 609,173 in the prior year[13]. - The company reported a basic and diluted loss per share of RMB (1.46), a decline of 109.5% from earnings of RMB 15.45 per share in 2019[13]. - The interim dividend per share was not declared, compared to 8.8 cents in the previous year[13]. Impact of COVID-19 - The pandemic significantly impacted market demand and consumption sentiment, affecting all business segments of the group[16]. - The pandemic led to a significant negative impact on the catering industry, with total revenue dropping by 32.8% year-on-year to RMB 1,460.9 billion[26]. - The pandemic has prompted catering enterprises to consider shifting to online sales channels, impacting their business models[48]. - The uncertainty in the catering industry's recovery is linked to the overall economic recovery in China and the pandemic control measures[49]. - The pandemic led to temporary suspensions of various business activities, significantly affecting the demand for condiment products from catering enterprises[44]. Acquisition and Goodwill Impairment - An impairment of goodwill of RMB 495,498,000 was recognized for the Cash-Generating Unit of Jiahao Foodstuff Limited during the Reporting Period[32]. - The impairment test conducted in June 2020 revealed that the recoverable amount of Jiahao's cash-generating unit was RMB 495,498,000 lower than its carrying amount, leading to the recognition of goodwill impairment of the same amount[43]. - The goodwill arising from the acquisition of Jiahao was approximately RMB 3,635,550,000, reflecting expected synergies and economies of scale post-integration[36]. - The acquisition of Jiahao was completed on September 4, 2018, for a cash consideration of approximately USD 695,985,000 (equivalent to approximately RMB 4,745,437,000) and is expected to enhance the Group's revenue sources and optimize its business structure[36]. Segment Performance - The sales revenue of the condiment business recorded a significant year-on-year decrease of approximately 52.9%, accounting for approximately 10.3% of the Group's total revenue[91]. - The sales revenue of the flavours and fragrances business amounted to approximately RMB 931 million, representing a year-on-year decrease of approximately 3.8% and accounting for approximately 54.3% of the Group's total revenue[72]. - The sales revenue of the tobacco raw materials business was approximately RMB 303 million, representing a year-on-year decrease of approximately 17.1% and accounting for approximately 17.7% of the Group's total revenue[81]. - The operating loss for the condiment segment was approximately RMB 525 million, primarily due to the recognition of impairment of goodwill of RMB 495.5 million[91]. Research and Development - The Group's R&D investment during the reporting period was approximately RMB 109 million, accounting for about 6.3% of sales revenue, representing a year-on-year decrease of 0.2 percentage points[101]. - The Group focused on R&D of meat flavours and extraction technologies for herbs and plants to align with market trends towards natural and healthy consumption[76]. - The Group plans to enhance its R&D in natural and functional food flavors and strengthen studies on food flavors in plant protein-based meat products[106]. - The Group's R&D team focused on popular flavors like "umami," "fragrance," and "spiciness," launching "Sour and Chilli Sauce" and "Rattan Pepper Sauce" to meet market demand[94]. Market Strategy and Operations - The Group's strategy focuses on "Concentric Diversification based on Consumers' Demand in the Taste-based Fast-moving Products Industry," which aligns with the acquisition of Jiahao[34]. - The Group's marketing strategy shifted to online communication during the first half of 2020, receiving positive feedback from catering customers[97]. - The Group aims to promote Jiahao's "Chinese tastes expert" brand image and establish reliable partnerships with distributors and users[106]. - The Group will continue to seek synergistic acquisition opportunities along the upstream and downstream industry chain to strengthen its competitiveness[106]. Financial Position and Assets - As of June 30, 2020, the net current asset value was RMB 6,664,835,000, down from RMB 6,957,179,000 as of December 31, 2019; cash and bank balances were RMB 5,854,355,000[129]. - Bank borrowings totaled RMB 2,856,898,000, down from RMB 2,998,776,000, with secured loans of RMB 1,860,474,000 and unsecured loans of RMB 996,424,000; the gearing ratio was 24.9%, a decrease of 0.5 percentage points from 25.4%[130][131]. - As of June 30, 2020, the Group's inventory balance was RMB 868,794,000, a decrease of RMB 62,591,000 from RMB 931,385,000 as of December 31, 2019[136]. - The total assets as of June 30, 2020, reflect a stable financial position despite fluctuations in specific asset categories[200]. Governance and Compliance - The Company has complied with the Corporate Governance Code during the Reporting Period, except for provisions A.2.1 and A.4.1[174]. - The roles of chairman and CEO are held by the same individual, Ms. CHU Lam Yiu, since April 9, 2013, which the Board believes does not impair the balance of power[175]. - The Company has adopted the Model Code for Securities Transactions by Directors, ensuring compliance by all Directors[180]. - The Audit Committee has reviewed and approved the Group's unaudited condensed consolidated interim financial information for the six months ended 30 June 2020[191].