Financial Performance - Revenue for the year ended December 31, 2024, was RMB 1,016.8 million, a decrease of 8.4% compared to RMB 1,110.4 million in 2023[9] - Profit attributable to equity holders of the parent for 2024 was RMB 26.7 million, down 14.7% from RMB 31.2 million in 2023[9] - Basic earnings per share for 2024 were RMB 0.8, a decline of 20.0% from RMB 1.0 in 2023[9] - Total assets as of December 31, 2024, amounted to RMB 2,829.2 million, a decrease of 4.3% from RMB 2,957.3 million in 2023[9] - The company reported a net cash outflow from operating activities of RMB (143.3) million in 2024, compared to an inflow of RMB 176.4 million in 2023[9] - The group achieved significant growth in sales, production, and profit of medical collagen products, with a notable increase in the sales volume of medical collagen raw materials[18] - The sales revenue of collagen food, skincare products, and high molecular collagen medical biomaterials increased by approximately 83.2% compared to the previous year[29] - Medical collagen raw materials showed a remarkable growth of 542.7% compared to the previous year, with endotoxin levels at 0.01 EU/ml, significantly better than the FDA standard[30] - The group has a total of 114 patents, with 77 currently valid and 21 under review as of December 31, 2024[32] - The group has established stable customer relationships with leading meat processing and sausage manufacturers in China, Southeast Asia, South America, and the United States[37] Operational Efficiency - Inventory turnover days for raw materials increased by 23.4 days to 61.1 days in 2024, compared to 37.7 days in 2023[9] - The group has established a standardization management system for collagen casing equipment, aiming to reduce production costs and improve efficiency[27] - Sales costs reduced by approximately 10.0% from about RMB 939,600,000 to approximately RMB 845,700,000, with raw material costs decreasing by about 18.7% to approximately RMB 381,700,000[40] - Gross profit increased by approximately 0.1% from about RMB 170,900,000 to approximately RMB 171,100,000, with the gross margin rising from about 15.4% to approximately 16.8%[41] - The company aims to stabilize product quality and enhance management awareness while reducing unnecessary expenses in the upcoming year[17] - The company is focused on high-quality development and has achieved its operational goals for the year[17] Research and Development - The group has made significant advancements in research and development, including a joint publication with Huazhong University of Science and Technology on innovative collagen-based sound-absorbing materials[19] - The group plans to accelerate clinical trials and production license applications for other new products by 2025[18] - The company is committed to advancing the application of collagen in skincare products, including collagen masks, nourishing waters, and multi-effect creams, leveraging existing production capabilities[64] - The company aims to accelerate clinical trials and production license applications for medical collagen products, including collagen bone filler materials and oral medical collagen sponges, targeting to initiate clinical trials by 2025[64] Corporate Governance - The company emphasizes the importance of corporate governance to enhance performance, transparency, and accountability, adhering to the Hong Kong Stock Exchange's corporate governance code[66] - The board consists of nine members, including five executive directors, one non-executive director, and three independent non-executive directors, ensuring a high level of independence[68][70] - The company has adopted a board diversity policy to improve performance quality through diverse perspectives[82] - Independent non-executive directors have confirmed their independence and have no significant relationships that could impair their judgment[74] - The company has established a nomination policy for directors, emphasizing the importance of character, integrity, and relevant experience[84] - The company acknowledges the importance of compliance with governance codes and will continue to evaluate its practices[76] Shareholder Relations - The company has established procedures for shareholders to submit inquiries and propose resolutions for special meetings[126] - The company has a clear process for shareholders to nominate candidates for the board of directors, published on its website[127] - The board will consider various factors, including retained earnings and operational funding needs, when proposing dividends[93] - The company has adopted a dividend policy that allows for the payment of annual dividends, subject to shareholder approval and stable operating conditions[88] Market Environment - The GDP of China grew by 5.0% year-on-year, with final consumption expenditure contributing 76.2% to economic growth, indicating a positive market environment for collagen products[22] - Domestic demand fluctuations in China could adversely affect the company's performance and profitability, as sales in China account for a significant portion of total revenue[158] - The company’s operations are influenced by international competition and potential substitutes for its products, which may affect profitability[157] Human Resources - The company employed approximately 3,070 contract employees, with total compensation and employee benefits expenses of about RMB 236,100,000, up from RMB 219,500,000 in the previous year[59] - The company emphasizes the importance of human resources for long-term business success and development, ensuring competitive employee compensation and training[160] Risk Management - The company has a risk management and internal control system in place, with a clear governance structure and reporting mechanisms[117] - The risk management team identifies and assesses significant risks at least once a year, developing mitigation plans for major risks[117] - The board has confirmed that the group's risk management and internal control systems are effective and adequate, complying with relevant codes and regulations[118] Strategic Initiatives - The company is focusing on the development and marketing of new products, including collagen food, skincare products, and medical devices[137] - The company has a clear strategy for future growth, emphasizing innovation and product development in the collagen industry[137] - The company is committed to expanding its product offerings in the medical and healthcare sectors, particularly in collagen and medical devices[149]

Financial Performance - Revenue for the year ended December 31, 2024, was RMB 1,016.8 million, a decrease of 8.4% compared to RMB 1,110.4 million in 2023[2] - Profit attributable to equity holders of the parent was RMB 26.7 million, down 14.7% from RMB 31.2 million in the previous year[2] - Basic earnings per share decreased to RMB 0.8, a decline of 20.0% from RMB 1.0 in 2023[2] - The company reported a total comprehensive income of RMB 33.9 million for the year, down from RMB 35.5 million in 2023[3] - The company experienced a decrease in pre-tax profit to RMB 44.1 million from RMB 67.9 million in the previous year[3] - Other income and gains decreased to RMB 57.7 million from RMB 104.1 million in 2023[3] - The total tax expense for the year was RMB 15,247,000, a decrease of 60.3% from RMB 38,379,000 in the previous year[25] - The profit attributable to equity holders of the parent decreased by approximately 14.7% from RMB 31,200,000 to RMB 26,700,000, despite improved gross margins and strict cost control[69] Assets and Liabilities - Total assets as of December 31, 2024, were RMB 2,829.2 million, a decrease of 4.3% from RMB 2,957.3 million in 2023[2] - Non-current assets decreased from RMB 1,327,015 thousand in 2023 to RMB 1,289,642 thousand in 2024, a decline of approximately 2.8%[7] - Current assets decreased from RMB 1,630,281 thousand in 2023 to RMB 1,539,538 thousand in 2024, a decline of about 5.6%[7] - Total liabilities decreased from RMB 553,937 thousand in 2023 to RMB 508,356 thousand in 2024, a reduction of approximately 8.2%[7] - Cash and cash equivalents decreased significantly from RMB 824,006 thousand in 2023 to RMB 503,804 thousand in 2024, a decline of around 38.8%[7] - The company's net asset value decreased from RMB 2,376,216 thousand in 2023 to RMB 2,292,691 thousand in 2024, a decrease of about 3.5%[8] - The total equity attributable to owners of the parent decreased from RMB 2,382,646 thousand in 2023 to RMB 2,296,885 thousand in 2024, a decline of approximately 3.6%[8] Cash Flow - Net cash flow from operating activities was negative at RMB (143.3) million, compared to RMB 176.4 million in the previous year[2] - The net cash inflow from investing activities was approximately RMB 161.7 million, primarily from reduced pledged deposits and unsecured time deposits[74] - The net cash outflow from financing activities was approximately RMB 162.1 million, mainly related to dividend payments and bank loan repayments[74] - Net cash position decreased to approximately RMB 406,000,000 from RMB 751,100,000, with a debt-to-equity ratio of 10.8%[73] Inventory and Costs - Inventory turnover days for raw materials increased by 23.4 days to 61.1 days, while finished goods turnover days increased by 66.7 days to 223.4 days[2] - The company reported an increase in inventory from RMB 504,482 thousand in 2023 to RMB 813,976 thousand in 2024, an increase of about 61.3%[7] - Sales cost reduced by about 10.0% from RMB 939,600,000 to RMB 845,700,000, with a significant inventory write-off of RMB 21,000,000[57] - Raw material costs decreased by approximately 18.7% to about RMB 381,700,000 compared to the previous year[57] - Energy expenses decreased by about 5.3% to approximately RMB 172,900,000[57] - Direct labor costs reduced by approximately 4.1% to around RMB 148,600,000[57] Dividends - The board recommended a final dividend of HKD 0.02 per share and a special final dividend of HKD 0.02 per share, unchanged from the previous year[2] - The company plans to declare a final dividend of HKD 0.02 per share, totaling RMB 119,330,000, compared to RMB 117,210,000 in the previous year[25] - The company has proposed a final dividend of HKD 0.02 per ordinary share, pending approval at the upcoming annual general meeting[92] Market and Product Development - The group successfully launched six new series of collagen protein casings, receiving unanimous praise from customers, which lays a solid foundation for market coverage and product upgrades[38] - Sales revenue from collagen protein food, skincare products, and high molecular collagen medical biomaterials increased by approximately 83.2% compared to the previous year[40] - Medical collagen protein raw materials sales grew by 542.7% year-on-year, with endotoxin levels at 0.01 EU/ml, significantly better than the FDA standard of 0.5 EU/ml[43] - The group has filed for Class III medical device registration for collagen bone filling materials, currently awaiting approval[43] - The group is enhancing production efficiency through standardized management of equipment and components, aiming to reduce maintenance and production costs[39] - The company is committed to enhancing the production efficiency of collagen-based food products, including beef tripe, beef tendons, rice noodles, collagen oatmeal, and ginger tea[89] - The company plans to accelerate clinical trials and production license applications for medical collagen products, aiming to initiate clinical trials by 2025[90] - The company expects significant sales growth in medical collagen and its semi-finished products, driven by increased sales efforts[90] Governance and Compliance - The audit committee has reviewed the group's consolidated annual performance for the year and confirmed compliance with applicable laws, accounting standards, and regulations[101] - The financial figures in the consolidated profit and loss statement and other comprehensive income statement have been verified by Ernst & Young, consistent with the draft financial statements[103] - The board of directors includes both executive and independent non-executive members, ensuring a diverse governance structure[105] - The company emphasizes the importance of separating the roles of the Chairman and CEO, currently held by the same individual[99] - The company will continue to consider the feasibility of appointing a CEO to enhance governance and operational effectiveness[100]

Company and Financial Overview [Company and Investor Information](index=1&type=section&id=Company%20and%20Investor%20Information) This section provides essential company and listing details for Shenguan Holdings (Group) Limited, including corporate structure, advisors, and share information - The company was listed on the Hong Kong Stock Exchange on **October 13, 2009**, with stock code **00829**[3](index=3&type=chunk) - As of June 30, 2024, the company had **3,230,480,000 shares** in issue, with a market capitalization of **HKD 872,229,600**[3](index=3&type=chunk) [Key Financial Highlights](index=4&type=section&id=Key%20Financial%20Highlights) Revenue declined by **11.2%** to **RMB 452 million**, while profit attributable to owners of the parent surged by **580.2%** to **RMB 8.2 million**, with operating cash flow turning negative Key Financial Indicators for H1 2024 | Indicator | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue (RMB Million) | 452.4 | 509.3 | -11.2% | | Profit Attributable to Owners of the Parent (RMB Million) | 8.2 | 1.2 | +580.2% | | Basic Earnings Per Share (RMB Cents) | 0.25 | 0.04 | +525.0% | | Net Cash (Outflow)/Inflow from Operating Activities (RMB Million) | (149.5) | 24.9 | N/A | Key Operational Efficiency Indicators | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Inventory Turnover Days - Raw Materials (Days) | 60.6 | 38.7 | | Inventory Turnover Days - Finished Goods and Work-in-Progress (Days) | 232.9 | 157.5 | | Accounts Receivable Turnover Days (Days) | 66.4 | 68.0 | Management Discussion and Analysis [Market and Business Review](index=5&type=section&id=Market%20and%20Business%20Review) The Group advanced its "One Body, Three Wings" health strategy, launching six new collagen casing series and achieving **327.0%** year-on-year revenue growth in collagen food, skincare, and medical biomaterials - The Group accelerated the development of its **"One Body, Three Wings"** grand health industry, encompassing three major sectors: collagen casings, collagen food, collagen skincare, and collagen medical biomaterials[6](index=6&type=chunk) - Successfully developed and launched **six new series** of collagen casing products, with annual collagen casing production capacity reaching **7 billion meters**[7](index=7&type=chunk) - Combined sales revenue from collagen food, skincare, and medical biomaterials increased by approximately **327.0%** year-on-year, with medical collagen raw material sales growing by **648.7%**[8](index=8&type=chunk)[9](index=9&type=chunk) [Operations Overview](index=7&type=section&id=Operations%20Overview) The Group achieved multiple certifications and honors, including trademark recognition and Halal certification, holds **113 authorized patents**, and benefited from eased raw material supply and reduced prices - The Group's **"Shenguan" trademark** was included in China's First Batch of Key Trademarks for Light Industry Protection, and Halal collagen casings obtained **"Halal Certification"**[10](index=10&type=chunk) - As of June 30, 2024, the Group held a total of **113 authorized patents** globally, with **78 valid**[11](index=11&type=chunk)[12](index=12&type=chunk) - The tight supply of bovine inner hide, a key raw material, **eased** during the period, and its price **decreased** compared to the previous period[16](index=16&type=chunk) [Financial Analysis](index=10&type=section&id=Financial%20Analysis) Revenue decreased by **11.2%** due to product upgrades, but cost of sales dropped **19.5%**, boosting gross profit by **72.5%** and gross margin to **17.5%**, with profit attributable to owners of the parent soaring **580.2%** to **RMB 8.2 million** Key Income Statement Item Changes | Item | H1 2024 (RMB) | H1 2023 (RMB) | Change | | :--- | :--- | :--- | :--- | | Revenue | 452.4 million | 509.3 million | -11.2% | | Cost of Sales | 373.3 million | 463.5 million | -19.5% | | Gross Profit | 79.0 million | 45.8 million | +72.5% | | Gross Margin | 17.5% | 9.0% | +8.5pp | | Profit Attributable to Owners of the Parent | 8.2 million | 1.2 million | +580.2% | - The revenue decrease was primarily due to the Group's **product upgrades**, shifting promotion focus from old products to **six new product series**, with product transition and customer adaptation periods impacting sales volume[18](index=18&type=chunk) - Gross margin significantly improved due to **expanded raw material supply channels**, **technological innovation**, **equipment upgrades**, and **infrastructure improvements**, leading to a notable **decrease in unit production costs**[20](index=20&type=chunk) - Other income and gains decreased by **54.5%** year-on-year, mainly due to a one-off gain of approximately **RMB 39.7 million** from the transfer of drug marketing authorization in the prior period[21](index=21&type=chunk) [Liquidity and Capital Resources](index=13&type=section&id=Liquidity%20and%20Capital%20Resources) The Group's net cash position was **RMB 550 million**, with a **RMB 150 million** net cash outflow from operations due to increased inventory, and capital expenditure of **RMB 73.3 million** for the period Capital Structure and Cash Position (June 30, 2024) | Indicator | Amount (RMB) | | :--- | :--- | | Cash and Cash Equivalents (including deposits) | 883.6 million | | Total Bank Borrowings | 333.3 million | | Net Cash Position | 550.3 million | | Debt-to-Equity Ratio | 15.1% | - Net cash outflow from operating activities was approximately **RMB 149.5 million**, primarily due to **increased raw material and finished goods inventory** to support the launch of new casing products[30](index=30&type=chunk) - Capital expenditure for H1 2024 was approximately **RMB 73.3 million**, with estimated full-year capital expenditure of approximately **RMB 240 million**, primarily for new production lines and equipment expansion[32](index=32&type=chunk) [Human Resources](index=15&type=section&id=Human%20Resources) As of June 30, 2024, the Group employed approximately **2,730 contract employees**, with total staff costs and benefits for the period amounting to approximately **RMB 124 million** Human Resources Overview | Indicator | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Number of Contract Employees | Approx. 2,730 | Approx. 2,700 | | Staff Costs and Benefits (H1) | Approx. RMB 124 million | Approx. RMB 112.6 million | [Outlook and Strategies](index=16&type=section&id=Outlook%20and%20Strategies) The Group will continue its "One Body, Three Wings" strategy, focusing on stabilizing new casing product quality, expanding collagen food marketing, enhancing skincare sales, and accelerating medical biomaterial clinical trials and licensing - Core Strategy: Adhere to the **"One Body, Three Wings"** product diversification strategy, with collagen casings as the foundation and collagen food, skincare, and medical devices as the "three wings"[35](index=35&type=chunk) - Collagen Casings: Further stabilize the quality of **six new products**, improve production support, and accelerate the development of **marketing and technical service teams**[36](index=36&type=chunk) - Collagen Food and Skincare: **Adjust marketing strategies**, promote food through in-store experiences and online live streaming; simultaneously strengthen skincare advertising and fully advance both **online and offline sales**[36](index=36&type=chunk) - Collagen Medical Biomaterials: Accelerate **clinical trials** and **production license applications** for products such as "artificial bone," "post-oral surgery sponge," and "mini beauty needles," and expand the **medical collagen raw materials market**[37](index=37&type=chunk) Other Information [Shares and Dividends](index=19&type=section&id=Shares%20and%20Dividends) This section details the company's share option scheme, noting no grants since adoption, and confirms the Board's decision not to declare a **2024 interim dividend** - The company adopted a share option scheme in **May 2020**, but since its adoption, **no share options** have been outstanding, granted, exercised, cancelled, or lapsed[38](index=38&type=chunk)[39](index=39&type=chunk) - The Board does not recommend the payment of **no interim dividend** for the six months ended June 30, 2024[39](index=39&type=chunk) [Directors' and Major Shareholders' Interests](index=21&type=section&id=Directors'%20and%20Major%20Shareholders'%20Interests) This section discloses directors' and major shareholders' interests in the company's shares as of June 30, 2024, with Chairwoman Ms. Zhou Yaxian holding approximately **49.18%** through controlled corporations Major Directors' Shareholdings (June 30, 2024) | Director's Name | Capacity/Nature | Number of Shares Held (Long Position) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Ms. Zhou Yaxian | Interest in Controlled Corporation and Beneficial Owner | 1,591,811,510 | 49.28% (Total) | | Dato' Sri Liew Chze Kwang | Interest in Controlled Corporation | 414,906,424 | 12.84% | - Major shareholder **Fortunate Limited** (indirectly wholly-owned by Chairwoman Ms. Zhou Yaxian) beneficially holds **39.23%** of the company's shares[44](index=44&type=chunk) [Corporate Governance](index=25&type=section&id=Corporate%20Governance) The company largely complied with the Corporate Governance Code, with a deviation where the Chairman and CEO roles are combined, a structure the Board believes fosters strong leadership, and the Audit Committee has reviewed the interim results - The company **deviates from Corporate Governance Code provision C.2.1**, where the **Chairman and Chief Executive Officer roles combined** are not segregated and are held by Ms. Zhou Yaxian concurrently[46](index=46&type=chunk) - The Audit Committee, comprising **three independent non-executive directors**, has **reviewed unaudited interim results** and deemed them **compliant with accounting standards and Listing Rules**[48](index=48&type=chunk) Financial Statements and Notes [Independent Review Report](index=27&type=section&id=Independent%20Review%20Report) Ernst & Young, the auditor, issued an unmodified review report, concluding that the interim financial information is prepared in all material respects according to **HKAS 34** - Auditor Ernst & Young issued an **unmodified conclusion** in their review report, stating that the interim financial information is prepared in all material respects in accordance with **Hong Kong Accounting Standard 34**[51](index=51&type=chunk) [Condensed Consolidated Financial Statements](index=29&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section provides the condensed consolidated financial statements for the six months ended June 30, 2024, including the statement of profit or loss, financial position, changes in equity, and cash flows [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=29&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2024, revenue was **RMB 452 million** (-**11.2%**), gross profit **RMB 79.02 million** (+**72.5%**), and profit attributable to owners of the parent **RMB 8.23 million** (+**580.2%**) H1 2024 Income Statement | Item (RMB Thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 452,357 | 509,306 | | Gross Profit | 79,023 | 45,799 | | Profit Before Tax | 18,703 | 19,287 | | Profit for the Period | 8,979 | 140 | | Profit Attributable to Owners of the Parent | 8,231 | 1,210 | | Basic Earnings Per Share (RMB Cents) | 0.25 | 0.04 | [Condensed Consolidated Statement of Financial Position](index=31&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, total assets were **RMB 2.996 billion**, total liabilities **RMB 724 million**, and net assets **RMB 2.272 billion**, with inventory increasing **38.1%** to **RMB 696 million** Financial Position Statement Summary (RMB Thousand) | Item | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total Non-current Assets | 1,321,053 | 1,327,015 | | Total Current Assets | 1,675,073 | 1,630,281 | | **Total Assets** | **2,996,126** | **2,957,296** | | Total Current Liabilities | 696,158 | 553,937 | | Total Non-current Liabilities | 27,893 | 27,143 | | **Total Liabilities** | **724,051** | **581,080** | | **Net Assets** | **2,272,075** | **2,376,216** | [Condensed Consolidated Statement of Cash Flows](index=34&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Net cash outflow from operating activities was **RMB 150 million**, net cash inflow from investing activities **RMB 23.85 million**, and from financing activities **RMB 54.29 million**, with period-end cash and cash equivalents at **RMB 392 million** Cash Flow Statement Summary (RMB Thousand) | Item | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Net Cash (Used in)/From Operating Activities | (149,486) | 24,912 | | Net Cash From Investing Activities | 23,846 | 343,602 | | Net Cash From/(Used in) Financing Activities | 54,293 | (403,812) | | **Net Decrease in Cash and Cash Equivalents** | **(71,347)** | **(35,298)** | [Notes to the Condensed Interim Financial Information](index=36&type=section&id=Notes%20to%20the%20Condensed%20Interim%20Financial%20Information) These notes provide supplementary information on the financial statements, covering basis of preparation, accounting policies, segment information, revenue composition, related party transactions, and share capital - The Group is primarily engaged in the manufacturing and sale of **edible collagen casing products**, as well as **collagen food, skincare, and medical biomaterials**. As **over 90% of revenue from collagen casings**, **no separate operating segments** are presented[60](index=60&type=chunk)[66](index=66&type=chunk) Revenue from External Customers by Geographical Region (RMB Thousand) | Region | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Mainland China | 380,261 | 441,033 | | Asia (excluding Mainland China) | 48,162 | 30,197 | | Other Countries/Regions | 23,934 | 38,076 | | **Total** | **452,357** | **509,306** | - Multiple **related party transactions** occurred during the period, the largest of which was the purchase of bovine hide from a company controlled by a director of the company, amounting to **RMB 188 million**[82](index=82&type=chunk)[83](index=83&type=chunk) - The Board approved and authorized the publication of this interim financial information on **August 23, 2024**[87](index=87&type=chunk)

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 452.4 million, a decrease of 11.2% compared to RMB 509.3 million in the same period of 2023[1] - Profit attributable to equity holders of the parent increased significantly to RMB 8.2 million, up 580.2% from RMB 1.2 million in the previous year[1] - Basic earnings per share rose to RMB 0.25, representing a 525.0% increase from RMB 0.04 in the same period last year[1] - The company reported a gross profit of RMB 79.0 million, an increase from RMB 45.8 million in the same period last year[2] - The total comprehensive income for the period was RMB 13.3 million, compared to RMB 7.7 million in the previous year[3] - Revenue decreased by approximately 11.2% from RMB 509.3 million to RMB 452.4 million due to underperformance of lower-end products and a transition to six new product series[37] - Gross profit increased by approximately 72.5% from RMB 45.8 million to RMB 79 million, with gross margin rising from about 9.0% to 17.5%[39] Cash Flow and Assets - Operating cash flow showed a significant outflow of RMB 149.5 million, compared to an inflow of RMB 24.9 million in the previous year[1] - Total assets as of June 30, 2024, amounted to RMB 2,996.1 million, compared to RMB 2,957.3 million in the previous year[1] - Non-current assets totaled RMB 1,321.1 million, slightly down from RMB 1,327.0 million at the end of the previous year[4] - As of June 30, 2024, cash and cash equivalents, along with pledged and time deposits, totaled approximately RMB 883,600,000, a decrease of about RMB 258,400,000 from the end of 2023[48] Revenue Breakdown - Revenue from products transferred at a point in time was RMB 452,323,000, while revenue from services transferred over time was RMB 34,000[14] - Revenue from the mainland China market was RMB 380,261,000, down from RMB 441,033,000 in the previous year, representing a decline of 13.8%[11] - Revenue from Asia (excluding mainland China) increased to RMB 48,162,000 from RMB 30,197,000, reflecting a growth of 59.7%[11] - Revenue from bank interest was RMB 17,156,000, down from RMB 21,854,000 in the previous year[15] Expenses and Liabilities - Total tax expenses for the period amounted to RMB 9,724,000, a significant decrease from RMB 19,147,000 in the previous year, reflecting a reduction of approximately 49.3%[19] - The total amount of accounts payable and notes payable was RMB 105,880,000 as of June 30, 2024, compared to RMB 101,658,000 as of December 31, 2023, showing an increase of approximately 4.3%[25] - Financing costs decreased by approximately 37.3% from RMB 5.9 million to RMB 3.7 million[43] Research and Development - The company will continue to increase R&D investment to build a new productive development platform and promote collaborative development of the industrial chain[56] - The company aims to expand its market presence in collagen food products, including rice noodles and collagen oatmeal, through enhanced marketing strategies and team expansion[57] - The company plans to deepen research on collagen applications in skincare and continue to develop new daily skincare and cleansing products[58] Market and Product Development - The company launched six new series of collagen protein casings, enhancing its market leadership and expanding into collagen protein food, skincare, and medical biomaterials[27] - Sales revenue from collagen protein food, skincare, and medical biomaterials increased by approximately 327.0% compared to the same period last year[29] - Medical-grade collagen raw materials showed a remarkable sales increase of 648.7%, with endotoxin levels at 0.01 EU/ml, significantly better than the FDA standard[30] Corporate Governance and Compliance - The company has adhered to all corporate governance codes as per the listing rules during this period[65] - The audit committee, consisting of three independent non-executive directors, has reviewed the unaudited interim financial results and confirmed compliance with applicable accounting standards[67] Employee and Operational Metrics - The group employed approximately 2,730 contract employees as of June 30, 2024, an increase from 2,700 employees in the previous year[55] - Total employee compensation and benefits expenses amounted to approximately RMB 124,000,000, compared to RMB 112,600,000 in the prior period[55] Dividends and Shareholder Returns - The company declared a final dividend of HKD 0.02 per share for the year 2023, totaling RMB 58,725,000, slightly down from RMB 59,569,000 in the previous year[21] - The board of directors does not recommend the payment of an interim dividend for this period due to anticipated capital expenditures and market expansion[63]

Financial Performance - Revenue for 2023 reached RMB 1,110.4 million, an increase of 7.6% compared to RMB 1,032.2 million in 2022[11]. - Profit attributable to equity holders of the parent company was RMB 31.2 million, up 32.6% from RMB 23.6 million in the previous year[11]. - Basic earnings per share increased to RMB 1.0, representing a growth of 42.9% from RMB 0.7 in 2022[11]. - Net cash flow from operating activities was RMB 176.4 million, a significant increase of 66.4% compared to RMB 106.0 million in 2022[11]. - The group’s pre-tax profit for the year was RMB 67,922,000, up from RMB 35,682,000 in the previous year, indicating a significant growth of 90%[150]. - Other income and gains increased by approximately 67.1% to about RMB 104,100,000, primarily due to the transfer of drug licenses generating revenue of approximately RMB 39,700,000[95]. - The income tax expense for the year was approximately RMB 38,400,000, up from RMB 14,200,000 in the previous year[78]. Assets and Liabilities - Total assets decreased to RMB 2,957.3 million, down 11.8% from RMB 3,354.4 million in the previous year[11]. - The group’s cash and cash equivalents decreased by approximately RMB 339,600,000 to about RMB 1,024,000,000 as of December 31, 2023[103]. - The group’s bank borrowings decreased to approximately RMB 272,800,000 from RMB 535,200,000 in the previous year[81]. - The debt-to-equity ratio as of December 31, 2023, was 11.7%, a decrease from 21.5% on December 31, 2022[104]. - The company reported a decrease in total reserves to RMB 2,354,839,000 as of December 31, 2023, down from RMB 2,496,366,000 in the previous year[149]. Operational Efficiency - Inventory turnover days for raw materials improved to 37.7 days, a decrease of 2.1 days from 39.8 days in 2022[11]. - Days sales outstanding (DSO) for accounts receivable improved to 64.0 days, down 6.2 days from 70.2 days in 2022[11]. - Days payable outstanding (DPO) increased to 72.1 days, up 21.1 days from 51.0 days in 2022[11]. - The gross profit would have increased by approximately RMB 52.7 million if not for the trial production costs incurred during the year[35]. Production and Capacity Expansion - The company expanded its production lines from 200 to 300 during the year, enhancing production capacity and standardizing equipment to improve efficiency and reduce costs[35]. - The company invested approximately RMB 110.7 million in capital expenditures for capacity expansion and equipment upgrades during the year[35]. - The company plans to add 50 new production lines in 2024 to meet the demand for large-caliber products[29]. - Estimated capital expenditure for 2024 is approximately RMB 240 million, primarily for the addition of 50 production lines and expansion of packaging and collagen extraction equipment[107]. Market and Sales Performance - In 2023, the total sales volume of collagen casings increased by approximately 9.0% due to a recovery in both domestic and international markets[32]. - The total sales revenue of collagen-based food, skincare products, and medical devices grew by about 23.0% compared to the previous year[36]. - Export sales of casings grew by 16.9%, while total sales volume of casings in both domestic and international markets rose by about 9.0%[70]. - The average cost of casing products increased by approximately 10.6% compared to the beginning of the previous year due to rising prices of raw materials, auxiliary materials, and energy[71]. - The group achieved a notable growth of approximately 164.5% in sales of medical collagen raw materials and related products[61]. Research and Development - The company is advancing clinical trials for its medical devices, including oral collagen sponges and wound dressings, with production license applications underway[40]. - The company is progressing with the production license for Class III medical devices, specifically collagen bone filler materials, and aims to complete clinical trial preparations for several products[130]. - The company aims to implement an innovation-driven strategy focusing on collagen applications in food, skincare, and medical devices, promoting a coordinated development across the entire industry chain[29]. - The company is advancing its research on medical collagen applications and accelerating clinical trials for new products, aiming for clinical trials to begin in 2024[130]. Corporate Governance and Diversity - The company is focused on enhancing its governance practices in line with the Hong Kong Stock Exchange's corporate governance code[132]. - The company is committed to diversifying its board to improve performance quality and ensure a balance of skills and experiences[146]. - The board consists of nine directors, including one female, confirming the achievement of gender diversity within the board[200]. - The board will actively consider including female senior management members in the future, despite currently having only male senior management[200]. - The board has received annual independence confirmations from all independent non-executive directors, ensuring compliance with listing rules[179]. Future Outlook - The group plans to advance its three major industry developments in 2024, celebrating significant anniversaries in product development and company establishment[52]. - The group aims to promote diversified product development centered around collagen-based products, despite challenges faced during the transformation process[127]. - The group will continue to expand its marketing strategies for collagen food products, including rice noodles and collagen oatmeal, to improve sales performance[129].

Financial Performance - For the year ended December 31, 2023, the company reported a revenue of RMB 1,110,412 thousand, an increase from RMB 1,032,155 thousand in 2022, representing a growth of approximately 7.6%[26]. - The company's profit before tax for 2023 was RMB 67,922 thousand, significantly higher than RMB 35,682 thousand in 2022, indicating an increase of approximately 90.2%[3]. - The net profit for the year was RMB 29,543 thousand, up from RMB 21,470 thousand in the previous year, reflecting a growth of about 37.7%[26]. - Total comprehensive income for the year was RMB 35,480 thousand, compared to RMB 29,614 thousand in 2022, marking an increase of approximately 19.8%[4]. - Basic and diluted earnings per share for 2023 were RMB 1.0, compared to RMB 0.7 in 2022, showing a growth of approximately 42.9%[5]. - The group reported a pre-tax profit of RMB 182,665 thousand, a decrease from RMB 206,975 thousand in 2022, reflecting a decline of 11.7%[46]. - The total tax expense for the year was RMB 38,379 thousand, compared to RMB 14,212 thousand in the previous year, indicating a substantial increase[44]. - The company reported a basic earnings per share of RMB 0.0097 in 2023, up from RMB 0.0073 in 2022, indicating a growth of 32.9%[71]. - Profit attributable to equity holders increased by 32.6% to RMB 31.2 million from RMB 23.6 million[168]. Revenue Breakdown - Revenue from mainland China was RMB 961,553 thousand, up 6.9% from RMB 898,956 thousand in the previous year[39]. - Revenue from Asia (excluding mainland China) increased significantly by 46.7% to RMB 99,064 thousand from RMB 67,483 thousand[39]. - The group's total revenue for 2023 reached RMB 1,110,412 thousand, an increase of 7.6% from RMB 1,032,155 thousand in 2022[39]. - The total sales revenue of collagen protein products, skincare products, and medical devices increased by approximately 23.0% compared to the same period last year[82]. Assets and Liabilities - The total assets decreased to RMB 2,403,359 thousand in 2023 from RMB 2,548,685 thousand in 2022, a decline of about 5.7%[6]. - The total equity attributable to equity holders of the parent decreased to RMB 2,376,216 thousand in 2023 from RMB 2,519,442 thousand in 2022, a decrease of approximately 5.7%[7]. - Total liabilities increased to RMB 101,658,000 in 2023 from RMB 85,003,000 in 2022, reflecting a rise of 19.6%[75]. - The net cash position as of December 31, 2023, was approximately RMB 751,200,000, down from RMB 828,400,000 at the end of 2022, with a debt-to-equity ratio of 11.7%[104]. - The group’s total bank borrowings as of December 31, 2023, amounted to approximately RMB 272,800,000, a decrease of approximately RMB 262,400,000 from RMB 535,200,000 as of December 31, 2022[128]. Cash Flow and Expenses - Cash inflow from operating activities was approximately RMB 176,400,000, while cash outflow from financing activities was about RMB 455,200,000[105]. - Employee benefits expenses increased to RMB 219,489,000 in 2023 from RMB 185,554,000 in 2022, representing a growth of 18.3%[5]. - The cost of goods sold rose to RMB 841,693,000 in 2023, compared to RMB 766,286,000 in 2022, marking an increase of 9.8%[5]. - Sales costs increased by approximately 7.8% to RMB 939,600,000, with raw material costs rising by about 8.1% to RMB 469,600,000[119]. - Sales and distribution expenses rose by approximately 3.6% to about RMB 35,000,000, with the ratio of these expenses to revenue decreasing from about 3.3% to approximately 3.1%[94]. - Administrative expenses decreased by approximately 0.7% to about RMB 152,000,000 this year[95]. - Financing costs decreased by approximately 1.5% to about RMB 9,100,000 this year[97]. Production and Operations - The group has established a stable customer base, continuing to provide quality casing products to several well-known food suppliers in China[61]. - The group is preparing for large-scale production of collagen protein products, including collagen noodles and drinks, and plans to expand product promotion and sales channels[55]. - The group has faced increased production costs due to rising raw material prices and electricity costs, impacting gross profit margins[52]. - The average production unit cost increased due to trial production expenses, which, if excluded, would have resulted in a gross profit increase of approximately RMB 52,700,000[81]. - The group plans to construct an additional 50 production lines to expand capacity to meet the demand for larger caliber products in the sausage casing industry[135]. - The company is conducting clinical trials for products such as oral medical collagen sponges and wound dressings, with some products already completing trials in multiple hospitals[84]. Dividends and Shareholder Information - The company plans to distribute a final dividend of HKD 0.02 per share and a special final dividend of HKD 0.02 per share[25]. - The board proposed a final dividend of HKD 0.02 per ordinary share and a special final dividend of HKD 0.02 per ordinary share, subject to shareholder approval[138]. - The company will hold its annual general meeting on June 3, 2024, with a record date for dividend entitlement set for June 13, 2024[161]. Strategic Initiatives - The company plans to focus on technological innovation and expanding domestic demand as part of its strategy for 2024[111]. - The company aims to drive the healthy development of the health industry by establishing a solid foundation for collagen protein raw material production[60]. - The company has established a diversified product development strategy centered around collagen protein, including collagen-based food, skincare products, and medical devices[156]. - The company aims to promote innovative applications of collagen protein in the food sector, providing high-value health food products[157]. - The company plans to expand its marketing strategies and teams to improve performance, utilizing both in-store experiences and online live broadcasts[157]. Compliance and Governance - The company has confirmed compliance with all applicable laws, accounting standards, and regulations during the fiscal year[146]. - The company is considering the feasibility of appointing a separate CEO to ensure compliance with governance standards[144]. - The company did not engage in any significant investments, acquisitions, or disposals of subsidiaries during the year[109]. - The company has not engaged in any purchases, redemptions, or sales of its listed securities during the fiscal year[163].

Financial Performance - Revenue for the first half of 2023 reached RMB 509.3 million, an increase of 18.2% compared to RMB 430.8 million in the same period of 2022[35]. - Profit attributable to owners of the company was RMB 1.2 million, a significant decrease of 91.1% from RMB 13.5 million in the previous year[35]. - Basic earnings per share dropped to RMB 0.04, down 90.5% from RMB 0.42 in the same period last year[35]. - The company reported a profit before tax of RMB 19,287 thousand, a decrease of 11.8% from RMB 21,857 thousand in the previous year[157]. - The net profit for the period was RMB 140 thousand, a significant decrease from RMB 12,184 thousand in the same period of 2022[157]. - The total comprehensive income for the period was RMB 7,719 thousand, down from RMB 14,989 thousand year-on-year[158]. Revenue Sources - The company's revenue from the sale of calcium oxide was RMB 894,000, down from RMB 1,045,000 in the previous year[2]. - Revenue from external customers for the first half of 2023 reached RMB 118,954,000, a significant increase from RMB 54,405,000 in the same period of 2022, representing a growth of 118%[167]. - The company's revenue from Mainland China for the six months ended June 30, 2023, was RMB 441,033,000, up from RMB 377,676,000 in 2022, indicating a growth of about 16.8%[188]. - Revenue from contracts with customers for the six months ended June 30, 2023, was RMB 509,306,000, an increase from RMB 430,791,000 in the same period of 2022, representing a growth of approximately 18.2%[190]. - The revenue from regions outside Mainland China for the six months ended June 30, 2023, was RMB 68,273,000, an increase from RMB 53,115,000 in 2022, representing a growth of approximately 28.5%[188]. Cost and Expenses - Sales cost rose by approximately 32.9% to RMB 463,500,000, with raw material costs increasing by 37.8% to RMB 217,200,000 and energy costs up by 36.3% to RMB 92,100,000[49]. - Selling and distribution expenses rose by approximately 21.3% to RMB 16,900,000, with the expense ratio increasing from 3.2% to 3.3% of revenue[62]. - Administrative expenses decreased by approximately 3.2% to RMB 67,400,000, with foreign exchange losses reduced from RMB 6,600,000 to RMB 2,500,000[63]. - The total compensation and employee benefits expense for the period amounted to approximately RMB 112.6 million, compared to RMB 93.2 million in the previous period, reflecting an increase of approximately 20.5%[97]. Assets and Liabilities - Total assets as of June 30, 2023, amounted to RMB 2,906.6 million, a decrease from RMB 3,354.4 million in the previous fiscal year[17]. - The company's net cash position as of June 30, 2023, was approximately RMB 774.6 million, which decreased to RMB 657.7 million after accounting for dividends, representing a decline of about RMB 170.7 million from the end of 2022[68]. - The debt-to-equity ratio as of June 30, 2023, was 8.8%, down from 21.5% at the end of 2022, indicating improved financial leverage[68]. - The total equity attributable to owners of the company was RMB 2,354,256 thousand, compared to RMB 2,524,173 thousand at the end of 2022, reflecting a decrease of around 6.73%[145]. - Non-current liabilities decreased to RMB 24,332 thousand from RMB 29,243 thousand, a reduction of about 16.5%[145]. Investments and Capital Expenditures - The company invested RMB 45.5 million in capital expenditures to expand production capacity and upgrade equipment, with plans to increase production lines from 68 to 300 by the end of 2023[39]. - Estimated capital expenditure for 2023 is approximately RMB 100 million, aimed at upgrading production facilities and expanding new collagen product applications[82]. - The group’s capital expenditure during the period was approximately RMB 45.5 million, primarily for capacity expansion and equipment upgrades, with total capital commitments as of June 30, 2023, amounting to approximately RMB 145.2 million[80]. Market and Industry Trends - The overall economic growth in China for the first half of 2023 was 5.5%, significantly higher than the 3% growth for the entire previous year[19]. - The demand for collagen, identified as a strategic emerging industry, is rapidly growing in both domestic and international markets[19]. - The company plans to leverage the growing demand for collagen-based products as part of its future growth strategy[19]. Corporate Governance - The company has maintained compliance with the corporate governance code throughout the reporting period[130]. - The board structure is designed to ensure a balance of power and responsibilities between the board and management[121]. - The company is considering the feasibility of appointing a separate CEO to enhance governance[131]. - The company’s chairman and CEO roles are currently held by the same individual, which the board believes does not impair governance[121]. Research and Development - The company has obtained dual certifications of EU ISO13485 and ISO22442 for its collagen medical devices, enhancing regulatory feasibility for customers[29]. - Clinical trials for collagen bone filling materials have been successfully completed, achieving expected results[29]. - The company is actively developing new skincare products and enhancing existing formulations, with several new products set to launch soon[43]. - The company plans to launch all developed food-related new products, including collagen rice noodles and collagen oatmeal drinks, into the market within 2023[100]. - The company is advancing the production license work for Class III medical devices, specifically collagen bone filler materials, and aims to expedite clinical trials for medical beauty products[101].

Financial Performance - Revenue for the first half of 2023 increased by 18.2% to RMB 509.3 million, compared to RMB 430.8 million in the same period of 2022[19]. - Profit attributable to owners of the company decreased by 91.1% to RMB 1.2 million, down from RMB 13.5 million in the previous year[19]. - Basic earnings per share fell by 90.5% to RMB 0.04, compared to RMB 0.42 in the same period last year[19]. - Gross profit for the same period was RMB 45,799,000, down 44.2% from RMB 81,943,000 year-on-year[38]. - Other income and gains for the six months ended June 30, 2023, amounted to RMB 70,069,000, significantly up from RMB 30,876,000 in the previous year, representing a growth of 126.5%[38]. - The total comprehensive income for the period was 7,719,000, compared to 14,989,000 in the previous period, reflecting a decrease[57]. - The total equity attributable to the company's owners was 2,348,455,000, compared to 2,519,442,000 in the previous period[59]. Sales and Revenue Growth - The group's collagen protein sausage casings experienced a sales volume increase of approximately 15.2% compared to the same period last year, despite production cost increases[12]. - Revenue from other products, excluding collagen protein casings and traditional Chinese medicine, grew by approximately 115.3% year-on-year[14]. - Customer 1 generated revenue of RMB 118,954,000, a significant increase from RMB 54,405,000 in the previous period, representing a growth of approximately 118%[69]. - Revenue from customer contracts for the six months ended June 30, 2023, was RMB 509,306,000, an increase from RMB 430,791,000 in the same period of 2022, representing a growth of approximately 18.2%[85]. Cost and Expenses - Sales costs increased by approximately 32.9% to RMB 463,500,000, up from RMB 348,800,000 in the previous period[74]. - The cost of goods sold for the six months ended June 30, 2023, was RMB 416,623,000, up from RMB 308,453,000 in the same period of 2022, indicating an increase of approximately 35%[86]. - The cost of raw materials increased by approximately 37.8% to RMB 217,200,000[74]. - Energy costs rose by approximately 36.3% to RMB 92,100,000 during the period[74]. - Sales and distribution expenses increased by approximately 21.3% to RMB 16,900,000, representing about 3.3% of total revenue, up from 3.2% in the previous period[93]. Assets and Liabilities - The total assets as of June 30, 2023, were RMB 2,906.6 million, down from RMB 3,354.4 million in the previous year[19]. - The total accounts receivable and notes receivable as of June 30, 2023, was RMB 173,139,000, a decrease of 16.4% from RMB 206,975,000 at the end of 2022[41]. - Total accounts payable and notes payable as of June 30, 2023, was RMB 69,266,000, down 18.5% from RMB 85,003,000 at the end of 2022[36]. - The total liabilities as of June 30, 2023, were RMB 533,827,000, a decrease from RMB 805,726,000 at the end of 2022[41]. - The net cash and cash equivalents as of June 30, 2023, were RMB 849,238,000, a decrease from RMB 953,950,000 at the end of 2022[41]. Production and Quality Control - The group continues to focus on product quality, implementing strict quality control measures throughout the production process[3]. - The group has established stable customer relationships, providing high-quality sausage casing products to several well-known food suppliers in China and maintaining connections with leading meat processing companies in Southeast Asia, South America, and the United States[6]. - The group is preparing for large-scale production of new collagen protein products, including collagen protein rice noodles and drinks[14]. - The group’s subsidiary, Wuzhou Zhongguan, is capable of testing over 800 physical and chemical indicators, enhancing the group's capabilities in food safety testing services[4]. - The group has obtained various quality management certifications, including ISO9001 and ISO22000, ensuring compliance with food safety regulations and enabling exports to Southeast Asia, Europe, and the United States[3]. Research and Development - Clinical trials for collagen bone filler materials have been successfully completed in multiple hospitals, achieving expected results[15]. - The company is conducting animal trials for medical collagen sponges and aesthetic products, with clinical trial discussions ongoing[16]. - The company aims to accelerate clinical trials and production license applications for new medical collagen products, including collagen bone filling materials and aesthetic products[148]. - The group plans to develop new skincare and cleansing products to expand the "Luxeena" product line and increase the launch of multiple "Collagen Princess" product series[123]. Employee and Corporate Governance - The company has approximately 2,700 contracted employees as of June 30, 2023, compared to 2,690 on June 30, 2022[145]. - Total employee compensation and benefits expenses amounted to approximately RMB 112.6 million during the period, up from approximately RMB 93.2 million in the previous period[145]. - The company has adhered to all corporate governance codes during the period, with the board regularly convening to consider significant operational matters[154][155]. - The audit committee consists of three independent non-executive directors, ensuring professional accounting qualifications and relevant experience[157]. Future Outlook and Strategy - The group anticipates new opportunities arising from recent government policies aimed at promoting the development of the private economy[122]. - The company expects continuous growth in market demand for the meat processing industry in China[131]. - The company aims to adjust its marketing strategy and expand its marketing team to achieve better performance, including online live streaming initiatives[132]. - The company will continue to enhance its production facilities for collagen protein food products to meet market demand[132]. - The company plans to complete the upgrade of 68 production lines by the end of 2023, expanding to a total of 300 production lines[72].

Financial Performance - Revenue for the year ended December 31, 2022, was RMB 1,032.2 million, a decrease of 11.6% compared to RMB 1,168.1 million in 2021[7] - Profit attributable to owners of the company was RMB 23.6 million, down 80.8% from RMB 122.7 million in the previous year[7] - Basic earnings per share for 2022 were RMB 0.7, representing an 81.6% decline from RMB 3.8 in 2021[7] - Net cash flow from operating activities was RMB 106.0 million, a decrease of 41.0% from RMB 179.7 million in 2021[7] - Gross profit fell by approximately 48.3% from RMB 310,500,000 to RMB 160,500,000, with the gross margin declining from 26.6% to 15.5%[38] - Other income and gains increased by approximately 16.3% from RMB 53,600,000 to RMB 62,300,000, including a fair value gain of RMB 5,200,000 from derivative financial instruments[39] - Financing costs rose by approximately 73.4% from RMB 5,300,000 to RMB 9,200,000 due to increased bank borrowings and rising market interest rates[44] - The company recorded a foreign exchange loss of approximately RMB 16,900,000, compared to a loss of RMB 2,100,000 in the previous year[43] - The company’s attributable profit decreased by approximately 80.8% from RMB 122,700,000 to RMB 23,600,000[49] Operational Insights - The company plans to adopt a cautious approach in 2023, focusing on production and operational improvements despite facing pressures from high raw material prices and customer product upgrades[15] - The company will continue to explore opportunities in the collagen casing industry as the meat industry is expected to recover[15] - Inventory turnover days for raw materials increased to 39.8 days from 37.4 days, while finished goods turnover days decreased to 152.5 days from 159.6 days[7] - Accounts receivable turnover days increased to 70.2 days from 56.0 days, indicating a longer collection period[7] - The group aims to stabilize the quality of collagen protein casings and increase the sales proportion of new products in 2023[17] - The group plans to implement technical transformations to reduce input costs while improving output efficiency, alongside accelerating automation and smart upgrades of production equipment[18] - The group has completed several R&D and technical transformation projects to enhance production capacity without increasing facility space and to lower production costs[24] Research and Development - The group has obtained production permits for collagen protein oat milk and is preparing for large-scale production[25] - The group has received dual certifications (ISO13485 and ISO22442) for its medical collagen products, enhancing regulatory feasibility for customers[25] - The group holds a total of 109 patents as of December 31, 2022, with 75 valid patents in force[29] - The group is focusing on the development of new collagen-based products, including collagen food, skincare products, and medical devices, under a "one body, three wings" strategy[18] - The group is conducting clinical trials for its medical collagen products, including "artificial bone" materials, which have received ethical approval[25] - The company is advancing research on medical collagen products to improve purity, activity, and reduce costs, with ongoing clinical trials for collagen bone filling materials and beauty products[67] Market and Strategic Outlook - The group anticipates a recovery in the meat industry and collagen protein casing market as the Chinese economy stabilizes post-pandemic[17] - The company aims to enhance production capacity while maintaining quality, focusing on collagen products and improving production efficiency through technical upgrades[66] - The company plans to increase the sales proportion of new collagen food products, including collagen rice noodles and oatmeal drinks, by improving production facilities and marketing strategies[66] - The company is developing new skincare products under the "Loxsana" brand and expanding the "Collagen Princess" product line, with a strong emphasis on online and offline sales strategies[66] - The company is investing in R&D for new technologies, aiming to introduce at least two innovative products in the next 12 months[144] - Market expansion plans include entering two new international markets by the end of the next fiscal year, targeting a 10% increase in market share[144] - The company has completed a strategic acquisition of a competitor, which is expected to enhance production capacity by 20%[144] Governance and Management - The board of directors consists of eight members, including four executive directors, one non-executive director, and three independent non-executive directors, ensuring a high level of independence[71] - The board held five meetings during the year, with attendance rates for all directors being high, indicating strong governance practices[77] - The company has appointed a new independent non-executive director, Mr. Zhou Xiaoxiong, at the 2023 Annual General Meeting[79] - The board consists of eight directors, including one female, achieving gender diversity[88] - The company has established a nomination committee to recommend qualified candidates for the board, focusing on character, qualifications, and experience[83][90] - The independent non-executive directors have confirmed their independence according to the listing rules, ensuring no significant relationships with management or major shareholders[78] - The company is considering the feasibility of appointing a CEO to enhance operational oversight[81] - The board believes that the current structure does not impair the balance of power and responsibilities between the board and management[81] - The company has adopted a board diversity policy to improve performance quality through diverse perspectives[87] Shareholder Relations and Dividends - The company has adopted a dividend policy that allows for annual dividends to be paid to shareholders, subject to board approval and legal regulations, provided the group is profitable and stable[92] - The board will consider various factors, including the company's actual and expected financial performance, retained earnings, and any restrictions imposed by lenders on dividend payments when proposing dividends[94] - The company will regularly review its dividend policy and submit necessary amendments for board approval[96] - The board proposed a final dividend of HKD 0.02 per ordinary share and a special final dividend of HKD 0.04 per ordinary share, subject to shareholder approval[167] - The company emphasizes strong communication with investors through various channels, including seminars with media, analysts, and fund managers[132] - The company maintains a robust investor communication policy, providing timely updates on business performance through annual and interim reports[138] - Shareholders can submit inquiries to the board in writing, ensuring transparency and engagement[139] Risk Management - The company has established a risk management framework to effectively manage risks across its business areas[126] - The financial director is responsible for preparing financial statements in accordance with Hong Kong accounting principles and ensuring they accurately reflect the company's performance[123] - The company secretary is responsible for ensuring compliance with legal and regulatory requirements and facilitating communication with shareholders[125] - The board has confirmed that the group's risk management and internal control systems are effective and adequate[128] - The group conducts annual reviews of its risk management and internal control systems, including the ability to adapt to business and external environment changes[128] Employee and Compensation - The total employee compensation and benefits expense for the year was approximately RMB 185,600,000, down from RMB 192,900,000 in the previous year[63] - The company emphasizes the importance of human resources for long-term business success and development, ensuring employee compensation is market-competitive[166] - The group employed approximately 2,710 contract employees as of December 31, 2022, an increase from 2,650 employees at the end of 2021[63] Corporate Social Responsibility - The company made charitable donations totaling RMB 2,556,000 during the year[177] - The company is committed to promoting clean production and improving resource utilization efficiency to minimize environmental impact[165] - The company aims to enhance its sustainability practices, targeting a 50% reduction in waste by 2025[144]

Financial Performance - Revenue for the year ended December 31, 2022, was RMB 1,032.2 million, a decrease of 11.6% compared to RMB 1,168.1 million in 2021[7] - Profit attributable to the company's owners for 2022 was RMB 21.5 million, down 80.8% from RMB 122.7 million in 2021[7] - Basic earnings per share decreased to RMB 0.7, an 81.6% decline from RMB 3.8 in the previous year[7] - Gross profit for the year was RMB 160.5 million, down from RMB 310.5 million in 2021[8] - The company reported a pre-tax profit of RMB 35.7 million, a significant decrease from RMB 163.0 million in the previous year[8] - The company's net profit attributable to shareholders for the year was RMB 23,565,000, a decrease of 80.8% compared to RMB 122,652,000 in the previous year[56] - The total tax expense for the year was RMB 14,212,000, down from RMB 42,974,000 in the previous year, reflecting a significant reduction of 66.9%[60] Cash Flow and Assets - Net cash flow from operating activities was RMB 106.0 million, a decrease of 41.0% from RMB 179.7 million in 2021[7] - Total assets increased by 1.3% to RMB 3,354.4 million from RMB 3,312.1 million in 2021[7] - Cash and cash equivalents decreased from RMB 998,897 thousand in 2021 to RMB 953,950 thousand in 2022, a decline of approximately 4.5%[19] - The company's net asset value decreased from RMB 2,655,588 thousand in 2021 to RMB 2,519,442 thousand in 2022, a decrease of approximately 5.1%[21] - The net cash position as of December 31, 2022, was approximately RMB 828,400,000, a decrease of about RMB 112,800,000 from RMB 941,200,000 at the end of 2021, with a debt-to-equity ratio of 21.5% compared to 16.1% in the previous year[118] Liabilities and Equity - Total liabilities increased from RMB 618,021 thousand in 2021 to RMB 805,726 thousand in 2022, representing a rise of approximately 30.4%[19] - The total equity attributable to owners decreased from RMB 2,630,417 thousand in 2021 to RMB 2,496,366 thousand in 2022, a decrease of approximately 5.1%[21] - The total non-current liabilities decreased from RMB 38,461 thousand in 2021 to RMB 29,243 thousand in 2022, a decrease of approximately 24.0%[21] Revenue Sources and Customer Performance - Revenue from external customers in mainland China decreased to RMB 898,956 thousand in 2022 from RMB 1,056,900 thousand in 2021, representing a decline of approximately 15%[32] - Major customer 1 contributed RMB 185,654 thousand in 2022, down from RMB 200,676 thousand in 2021, a decline of approximately 7.5%[35] - Major customer 2's revenue decreased to RMB 149,546 thousand in 2022 from RMB 191,406 thousand in 2021, reflecting a drop of around 22%[35] Operational Challenges and Market Conditions - The company is facing challenges from the ongoing COVID-19 pandemic and geopolitical tensions, impacting both product sales and supply chain stability[60] - The supply of cow inner skin, a key raw material for collagen protein casings, has tightened this year, leading to increased costs[85] Research and Development - The company has completed several R&D and technical improvement projects aimed at increasing production capacity without expanding facilities, thereby reducing production costs[64] - The company aims to further develop medical collagen products, focusing on higher purity, better activity, and lower costs, while advancing clinical trials for collagen bone filler materials and aesthetic products[128] - The group has developed multiple new skincare products and upgraded product formulations, with new products set to launch soon[103] Dividends and Shareholder Returns - The company proposed a final dividend of HKD 0.02 per share and a special final dividend of HKD 0.04 per share, unchanged from the previous year[7] - The proposed final ordinary dividend per share is 2.0 HKD cents, consistent with the previous year, totaling RMB 56,279,000, an increase of 7.4% from RMB 52,521,000[55] - The proposed special final dividend per share is 4.0 HKD cents, totaling RMB 112,559,000, up 7.0% from RMB 105,042,000 in the previous year[55] Future Plans and Strategies - The company plans to enhance the production facilities for collagen protein products and adjust marketing strategies, including expanding the marketing team and utilizing online live streaming to improve performance[127] - The group plans to focus on stabilizing quality while expanding production capacity and enhancing efficiency in the collagen casing business in 2023[153] - The group aims to develop new products in the collagen skincare sector, including daily skincare and cleansing products, to broaden the product chain[154] - The company is committed to the continuous development of the health industry and further expanding the technical applications of collagen to provide better returns for shareholders[169]