Core Insights - Yurun Food (01068.HK) reported a revenue of HKD 992 million for the fiscal year 2024, a decline of 29.67% compared to HKD 1.411 billion in 2023, continuing a trend of revenue decline [2] - The company recorded a loss attributable to equity holders of HKD 38.573 million, which represents a significant reduction of 73.87% year-on-year [2] Business Structure and Strategy - The company's transformation strategy has been crucial in reducing losses, focusing resources on the higher-margin "Harou Lian" brand, particularly in high-value products like low-temperature meat products [3] - This strategic focus led to an overall gross margin increase of 3.6 percentage points to 11.6%, with total gross profit slightly rising by 2.1% to HKD 115 million [3] Financial Challenges - As of the end of 2024, Yurun Food's net current liabilities reached HKD 872 million, with HKD 251 million of bank loans overdue [3] - A subsidiary of Yurun Food is facing litigation for failing to repay bank loans, with the bank demanding repayment of HKD 343 million or equivalent assets, and the court ruling for repayment of HKD 417 million including interest [3] - The company's cash and cash equivalents stood at only HKD 40.98 million in 2024 [3] Market Outlook - Investor sentiment regarding Yurun Food's long-term prospects is mixed, with some institutions believing that the company's brand focus and product upgrades demonstrate resilience, potentially regaining market confidence if it optimizes its asset structure amid industry recovery [3] - Conversely, there are concerns regarding the company's debt burden and loss of market share, which pose significant risks [3] - The ability of Yurun Food, once known as the "King of Pork," to emerge from its current challenges will depend on the efficiency of its strategic execution and the synergy with external market conditions [3]

Financial Performance - For the fiscal year ending December 31, 2024, the company reported total revenue of HKD 992,369,000, a decrease of 29.5% compared to HKD 1,410,943,000 in 2023[3] - The cost of sales for the year was HKD 877,027,000, resulting in a gross profit of HKD 115,342,000, which is a slight increase of 2.4% from HKD 112,990,000 in the previous year[3] - The company recorded a net loss of HKD 36,404,000 for the year, significantly improved from a net loss of HKD 201,293,000 in 2023, representing an 81.9% reduction in losses[4] - Basic and diluted loss per share was HKD 0.021, compared to HKD 0.081 in the previous year, indicating a 74.1% improvement[3] - The group reported total revenue of HKD 992,369,000 for the year ended December 31, 2024, a decrease of 30.5% from HKD 1,424,788,000 in 2023[16] - The group incurred a net loss of HKD 36,404,000 for the year 2024, an improvement from a net loss of HKD 201,293,000 in 2023[17] - The group recorded a loss attributable to equity holders of approximately HKD 39 million, compared to a loss of HKD 148 million in 2023[46] Assets and Liabilities - Total assets less current liabilities amounted to HKD (633,641,000) as of December 31, 2024, compared to HKD (605,416,000) in 2023[5] - The company’s current liabilities were HKD 1,278,594,000, down from HKD 1,617,367,000 in the previous year, reflecting a decrease of 21%[5] - The company’s non-current assets decreased to HKD 238,720,000 from HKD 373,825,000 in the previous year, a decline of 36.1%[5] - Total liabilities decreased from HKD 1,170,268,000 in 2023 to HKD 908,023,000 in 2024, indicating a reduction in financial obligations[30] - Total assets as of December 31, 2024, were HKD 645 million, a decrease of HKD 367 million from HKD 1.012 billion as of December 31, 2023[64] - Total liabilities as of December 31, 2024, were HKD 1.353 billion, down HKD 348 million from HKD 1.701 billion as of December 31, 2023[64] Cash Flow and Financing - The company’s cash and cash equivalents stood at HKD 40,983,000 as of December 31, 2024, compared to HKD 39,298,000 in 2023, showing a slight increase[5] - The group successfully restructured bank loans totaling HKD 83,109,000, with part of the interest waived and repayment terms extended by five years until 2029[8] - The group is actively negotiating with banks for additional financing and restructuring of existing loans totaling HKD 343,553,000[9] - The group is involved in ongoing litigation with a bank regarding the repayment of HKD 343,553,000 (2023: HKD 437,069,000) [32] - The group successfully negotiated a settlement with one bank regarding an outstanding debt of HKD 83,109,000 and interest of HKD 55,363,000, resulting in a debt repayment benefit of HKD 56,152,000 [31] - The company is actively communicating with a state-owned commercial bank regarding the overdue bank borrowings of HKD 344 million, with no immediate repayment expected[63] Operational Performance - The cost of inventory for 2024 was HKD 877,027,000, down from HKD 1,297,953,000 in 2023, reflecting a reduction in operational costs[21] - The group reported a significant increase in bank loan interest expenses, which rose to HKD 50,351,000 in 2024 from HKD 35,918,000 in 2023[21] - The group successfully sold subsidiary assets generating HKD 17,710,000 in revenue in 2024, with no such sales reported in 2023[20] - The impairment loss on property, plant, and equipment was HKD 42,119,000 in 2024, down from HKD 56,495,000 in 2023, showing improved asset management[21] - The annual production capacity for upstream slaughtering decreased by approximately 1 million heads to 2.35 million heads as of December 31, 2024[45] - The overall gross profit increased by 2.1% to HKD 115 million, with the gross margin rising by 3.6 percentage points to 11.6% compared to 8.0% in the previous year[49] Governance and Compliance - The independent auditor's report indicated that due to multiple uncertainties regarding going concern, no opinion was expressed on the consolidated financial statements [33] - The independent auditor's report for the year ending December 31, 2024, contains a "disclaimer of opinion" regarding the group's ability to continue as a going concern[73] - The audit committee and the board of directors are aligned in their views regarding the "disclaimer of opinion" and the measures taken to address it[78] - The company has complied with the corporate governance code, except for the separation of the roles of chairman and CEO, which are currently held by the same individual[80] Future Outlook - The management plans to address the overdue bank loans and aims to remove the "disclaimer of opinion" in the auditor's report for the year ending December 31, 2025, if all plans are executed successfully[77] - The company plans to cautiously approve capital expenditures of approximately RMB 15 million for 2025, primarily for ongoing construction and equipment upgrades[68] - The company has no significant investments or acquisitions planned as of the announcement date[68] Market Conditions - In 2024, the total national GDP reached RMB 135 trillion, with a year-on-year growth of 5.0%[39] - The average price of live pigs in 2024 was approximately RMB 17.08 per kilogram, an increase of about 11.3% year-on-year[41]

香 港 交 易 及 結 算 所 有 限 公 司 及 香 港 聯 合 交 易 所 有 限 公 司 對 本 公 告 的 內 容 概 不 負 責 ， 對 其 準 確 性 或 完 整 性 亦 不 發 表 任 何 聲 明 ， 並 明 確 表 示 ， 概 不 對 因 本 公 告 全 部或任何部份內容而 產生或因倚賴該等內 容而引致的任何損失 承擔任何責任。 CHINA YURUN FOOD GROUP LIMITED 中 國 雨 潤 食 品 集 團 有 限 公 司* （於百慕達註冊成立之有限公司） （股份代號： 1068） 於 本 公 告 日 ， 本 公 司 之 執 行 董 事 為 祝 媛 及 楊 林 偉 ； 獨 立 非 執 行 董 事 為 高 輝 、 陳 建 國及徐幸蓮。 * 僅 供 識 別 中國雨潤食品集團有限公司（「本公司」）董事會（「 董事 會」）謹此 宣 佈 ， 本公司將於二零二五年三月二十五日（星期二）舉行董事會會議，藉以（其 中包括）批准本公司及其附屬公司截至二零二四年十二月三十一日止年度之 全年業績公告及其發佈，以及考慮派發末期股息之建議（如有）。 承董事會命 主席 祝媛 香港，二零二五年三月十日 董事會 ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確 性或完整性亦不發表任何聲明，並明確表示概不就因本公告全部或任何部份內容而產生或因 依賴該等內容而引致之任何損失承擔任何責任。 CHINA YURUN FOOD GROUP LIMITED 謹此提述本公司日期為二零二四年三月二十七日的二零二三年年報（「年報」）及日期為二 零二四年八月二十一日的二零二四年中期報告（「中期報告」），內容有關本集團於中國境 内兩家國有商業銀行（「銀行」）的逾期但未償還銀行借款。誠如年報及中期報告所披露， 本集團一直與銀行進行溝通，希望能夠就本金分期償還，減免前期的罰息和利息等事宜達成 共識。 本公司董事謹此更新，於二零二四年十二月二十三日本集團與一家銀行達成共識並簽署調解 協議（「協議」）。根據協議，若干以往年度已經計提的利息及罰息將可以被沖回，加上相 關調整，共約為人民幣5,200萬元（相等於約港幣5,600萬元）。該金額是基於本集團最近期之 未經審核管理賬目，並將由本公司之審計師作進一步審核。 本公司將適時在許可的情況下向公司的持份者進一步披露有關解決逾期銀行借款的最新情 況。 承董事會命 主席 祝 ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確 性或完整性亦不發表任何聲明，並明確表示概不就因本公告全部或任何部份內容而產生或因 依賴該等內容而引致之任何損失承擔任何責任。 CHINA YURUN FOOD GROUP LIMITED 中 國 雨 潤 食 品 集 團 有 限 公 司* （於百慕達註冊成立之有限公司） （股份代號：1068） 持續關連交易 生豬採購框架協議及生豬肉供應框架協議之補充資料 茲提述中國雨潤食品集團有限公司（「本公司」）日期為二零二四年十二月十二日內容有關 持續關連交易的公告（「該公告」）。除文義另有所指外，本公告所用詞彙與該公告所界定 者具有相同涵義。 1. 生豬採購框架協議 根據現行的採購框架協議下，二零二二年一月一日至二零二四年十二月三十一日各年度的年 度上限及實際交易額如下： | 年度上限（截至下列日期的財政年度） | 人民幣 | 等值港元（約數） | | --- | --- | --- | | 二零二二年十二月三十一日 | 11,000,000 | 13,500,000 | | 二零二三年十二月三十一日 | 14,000,000 | 17,1 ...

香 港 交 易 及 結 算 所 有 限 公 司 及 香 港 聯 合 交 易 所 有 限 公 司 對 本 公 告 的 內 容 概 不 負 責 ， 對 其 準 確 性 或 完 整 性 亦 不 發 表 任 何 聲 明 ， 並 明 確 表 示 概 不 就 因 本 公 告 全 部 或任 何部份內容而產 生或因依賴該等內容 而引致之任何損失承 擔任何責任。 CHINA YURUN FOOD GROUP LIMITED 中 國 雨 潤 食 品 集 團 有 限 公 司* （於百慕達註冊成立之有限公司） （股份代號： 1068） 於百慕達之主要股份登記及過戶總處之變更 中國雨潤食品集團有限公司 (「本公司」) 董事會(「董事會」) 謹此宣佈， 自二零二五年一月一日開始，本公司於百慕達之 主要股份登記及過戶總處將 更改為： Appleby Global Corporate Services (Bermuda) Limited Canon's Court, 22 Victoria Street PO Box HM 1179, Hamilton HM EX Bermuda 本公司於香港之股份登記及過戶分處仍然為卓佳證券登記有限公司， ...

生豬肉供應框架協議 由於現行的生豬肉供應框架協議將於二零二四年十二月三十一日到期屆滿，本公司 遂於二零二四年十二月十二日與該等生豬肉買方實體訂立了生豬肉供應框架協議， 在現行的生豬肉供應框架協議屆滿後，繼續向該等生豬肉買方實體及/或其各自的附 屬公司及/或聯繫人供應生豬肉。 香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚 賴該等內容而引致的任何損失承擔任何責任。 CHINA YURUN FOOD GROUP LIMITED 中 國 雨 潤 食 品 集 團 有 限 公 司* （於百慕達註冊成立之有限公司） （股份代號：1068） 持續關連交易 生豬採購框架協議及生豬肉供應框架協議 生豬採購框架協議 由於現行的採購框架協議將於二零二四年十二月三十一日到期屆滿，本公司遂於二 零二四年十二月十二日與該銷售實體訂立了生豬採購框架協議，在現行的採購框架 協議屆滿後，繼續向該銷售實體及／或其附屬公司及/或聯繫人採購生豬。 《上市規則》的涵義 於本公告日，祝先生是本公司的主要股東，間接擁有本公司已發行股份約 ...

Financial Performance - In the first half of 2024, China Yurun Food Group recorded revenue of HKD 539 million, a decrease of 30.0% compared to HKD 770 million in the same period of 2023[10]. - The group reported a loss attributable to equity holders of HKD 10 million, an improvement from a loss of HKD 20 million in the first half of 2023[10]. - Fresh meat sales amounted to HKD 270 million, down 39.0% from HKD 443 million in the same period last year, accounting for approximately 50% of total revenue before internal sales[8]. - The sales revenue from deep-processed meat products was HKD 227 million, a decrease of about 2.2% compared to the same period last year[13]. - The revenue from low-temperature meat products increased by approximately 9.5% to HKD 154 million, representing about 28% of total revenue[14]. - The overall gross profit margin improved from 9.0% to 14.0%, with total gross profit rising by approximately 9.4% to HKD 76 million[15]. - The gross profit margin for low-temperature meat products increased significantly by 5.2 percentage points to 37.2%[16]. - Operating expenses decreased by 33.5% to HKD 66 million, accounting for 12.2% of total revenue[18]. - The group's operating profit was approximately HKD 12 million, a turnaround from an operating loss of HKD 28 million in the same period last year[19]. - The net loss for the period was HKD 13,191,000, compared to a net loss of HKD 39,149,000 in the same period last year, indicating a 66% improvement[56]. - The company reported a basic and diluted loss per share of HKD 0.006, an improvement from HKD 0.011 in the previous year[55]. Economic Environment - The overall economic environment in China showed a GDP growth of 5.0% in the first half of 2024, with consumer price index (CPI) rising only 0.1% year-on-year[4]. Production and Sales - The group maintained annual production capacities of approximately 3.35 million heads for upstream slaughtering and 56,000 tons for downstream processed meat products as of June 30, 2024[9]. - The group's overall sales revenue from upstream operations decreased by 43.1% to HKD 312 million, with a slaughter volume drop of approximately 50.1% to about 149,000 heads[12]. - Fresh meat accounted for approximately 50% of total revenue and 86% of upstream revenue, generating HKD 270 million, a decrease of 39.0% year-on-year[12]. - The sales of frozen meat products increased by 9.5% to HKD 154 million, representing about 28% of total revenue before internal sales[8]. Assets and Liabilities - As of June 30, 2024, the total assets of the group were HKD 958 million, a decrease of HKD 54 million from HKD 1,012 million on December 31, 2023[30]. - The total liabilities of the group as of June 30, 2024, were HKD 1,695 million, down by HKD 6 million from HKD 1,701 million on December 31, 2023[30]. - The net current liabilities amounted to HKD 1,019 million, with net debt of HKD 737 million and bank borrowings of HKD 465 million[31]. - The group has approximately HKD 364 million in non-current assets to support its ongoing operations despite being in a net debt position[31]. - The total equity attributable to the owners of the company was HKD (727,067,000) as of June 30, 2024, compared to HKD (694,969,000) at the end of 2023[59]. Cash Flow and Financing - The net cash used in operating activities was HKD 33,000 for the six months ended June 30, 2024, compared to HKD 7,386,000 in the previous year[62]. - The net cash used in investing activities was HKD 5,882,000 for the six months ended June 30, 2024, compared to HKD 5,035,000 in the previous year[62]. - The net cash used in financing activities was HKD 1,469,000 for the six months ended June 30, 2024, compared to HKD 2,323,000 in the previous year[62]. - The company is actively negotiating with banks regarding the renewal and waiver of certain loan covenants and is optimistic about its financial outlook[31]. - The company is actively negotiating with banks to update financing terms and seek additional funding sources to alleviate liquidity pressure[67]. - Certain bank borrowings totaling HKD 433,956,000 have become overdue, and the company is facing litigation from banks for repayment[66]. Management and Governance - The board has resolved not to declare an interim dividend for the review period, consistent with the previous year[42]. - The company has not granted any stock options under the new stock option plan since its adoption[45]. - The total number of stock options authorized for grant under the new stock option plan is 182,275,565[45]. - The total remuneration for key management personnel was HKD 1,318,000 for the six months ended June 30, 2024, down from HKD 1,373,000 for the same period in 2023[99]. Legal and Compliance - As of June 30, 2024, the group faced litigation from banks demanding immediate repayment of approximately HKD 434 million in bank loans[34]. - The company has outstanding bank loans totaling HKD 433,956,000 as of June 30, 2024, which have not met certain covenants[75]. Investments and Acquisitions - The company has no significant investments or plans for major acquisitions or capital asset purchases as of the report date[33]. - The company entered into an asset transfer agreement to sell property in Shanxi Province for a total consideration of RMB 51 million[53]. - On August 5, 2024, the group agreed to sell land and property in Xinjiang County for a total consideration of RMB 51,000,000 (approximately HKD 55,590,000)[100].

[Financial Statements and Summary](index=2&type=section&id=Financial%20Statements%20and%20Summary) [Consolidated Performance](index=2&type=section&id=Consolidated%20Performance) The Group's H1 2024 revenue declined by 29.9% year-on-year, yet improved gross margin and expense control significantly narrowed losses, with attributable loss to equity holders decreasing from HKD 20.2 million to HKD 10.07 million Consolidated Performance Overview (HKD Thousands) | Metric (HKD Thousands) | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 538,975 | 769,700 | -29.9% | | Gross Profit | 75,503 | 69,021 | +9.4% | | Operating Results | 11,606 | (27,942) | Turnaround to Profit | | Loss for the Period | (13,191) | (39,149) | -66.7% | | Loss Attributable to Equity Holders | (10,069) | (20,197) | -50.1% | | Basic Loss Per Share (HKD) | (0.006) | (0.011) | -45.5% | [Financial Position](index=4&type=section&id=Financial%20Position) As of June 30, 2024, the Group remained in a net liability position, which slightly worsened, with total liabilities stable but increased net current liabilities indicating ongoing liquidity pressure, alongside overdue bank borrowings and covenant breaches Financial Position Summary (HKD Thousands) | Metric (HKD Thousands) | June 30, 2024 | December 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Total Assets | 957,909 | 1,011,951 | -54,042 | | Total Liabilities | 1,695,408 | 1,701,330 | -5,922 | | Net Current Liabilities | (1,018,661) | (979,241) | -39,420 | | Net Liabilities | (737,499) | (689,379) | -48,120 | - As of June 30, 2024, the Group's total bank borrowings were **HKD 465 million**, with some overdue and in breach of covenants, and these debts are included in a consolidated restructuring plan[7](index=7&type=chunk)[15](index=15&type=chunk) [Cash Flow](index=5&type=section&id=Cash%20Flow) During the period, the Group's operating cash outflow significantly decreased, but continuous net outflows from investing and financing activities led to a decline in cash and cash equivalents from HKD 39.3 million at the beginning of the period to HKD 31.67 million Cash Flow Summary (HKD Thousands) | Metric (HKD Thousands) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (33) | (7,386) | | Net Cash Used in Investing Activities | (5,882) | (5,035) | | Net Cash Used in Financing Activities | (1,469) | (2,323) | | Net Decrease in Cash and Cash Equivalents | (7,384) | (14,744) | | Cash and Cash Equivalents at End of Period | 31,666 | 26,319 | [Going Concern Analysis](index=6&type=section&id=Going%20Concern%20Analysis) Auditors raised significant doubts about the Group's going concern ability due to substantial net current liabilities and net liabilities, along with overdue bank borrowings and litigation, while management's mitigation plans face significant uncertainties that may hinder asset realization and liability settlement in the normal course of business - As of June 30, 2024, the Group recorded a net loss of **HKD 13.19 million**, with net current liabilities reaching **HKD 1.019 billion** and net liabilities of **HKD 737 million**[7](index=7&type=chunk) - The Group has **HKD 434 million** in overdue bank borrowings and has breached several loan covenants, leading to litigation initiated by the relevant banks[7](index=7&type=chunk) - Management is taking measures to alleviate liquidity pressure, including negotiating renewals with banks, seeking waivers for default clauses, and expecting to resolve some debts through a consolidated restructuring plan; however, the success of these plans remains highly uncertain[7](index=7&type=chunk)[9](index=9&type=chunk) [Management Discussion and Analysis](index=15&type=section&id=Management%20Discussion%20and%20Analysis) [Industry and Business Review](index=15&type=section&id=Industry%20and%20Business%20Review) Facing challenges of insufficient domestic demand and declining pork consumption, the Group in H1 2024 focused on the 'Harbin Meat Union' brand, enhancing new product development and marketing, while strategically reducing production at low-profit facilities to improve overall profitability - Industry Background: In H1 2024, the domestic economy faced insufficient effective demand, with pork consumption projected to decline long-term, yet consumer trends are shifting towards high-quality, safe, and healthy products[31](index=31&type=chunk) - Business Strategy: The Group primarily operates under the 'Harbin Meat Union' brand, strengthening new product development and market promotion to meet diverse and quality-oriented consumer demands[32](index=32&type=chunk) [Segment Business Performance](index=16&type=section&id=Segment%20Business%20Performance) Upstream slaughtering revenue significantly declined due to strategic production cuts, but downstream processed meat products remained robust, with low-temperature meat products achieving counter-cyclical growth, becoming a core driver of stable revenue and profit, significantly enhancing the Group's overall gross margin Segment Revenue (HKD Millions) | Business Segment | H1 2024 Revenue (HKD Millions) | H1 2023 Revenue (HKD Millions) | YoY Change | | :--- | :--- | :--- | :--- | | Upstream - Chilled and Frozen Meat | 312 | 549 | -43.1% | | Downstream - Processed Meat Products | 227 | 232 | -2.2% | - High-value-added products performed prominently: - **Chilled meat** sales amounted to **HKD 270 million**, a 39.0% year-on-year decrease - **Low-temperature meat products** sales reached **HKD 154 million**, a 9.5% year-on-year increase, with their revenue contribution to downstream business rising from 61% to 68%[34](index=34&type=chunk)[40](index=40&type=chunk) [Financial Performance Analysis](index=17&type=section&id=Financial%20Performance%20Analysis) Despite a decline in total revenue, the Group's financial performance significantly improved, with overall gross margin substantially increasing from 9.0% to 14.0% driven by optimized high-margin downstream products, while operating expenses decreased by 33.5% year-on-year due to significant impairment provisions in the prior period, ultimately achieving a turnaround to operating profit Gross Margin by Segment | Gross Margin | H1 2024 | H1 2023 | Change (Percentage Points) | | :--- | :--- | :--- | :--- | | Group Overall | 14.0% | 9.0% | +5.0 | | Upstream Business | 1.4% | 1.1% | +0.3 | | Downstream Business | 31.4% | 25.8% | +5.6 | - Operating expenses were **HKD 66 million**, a 33.5% year-on-year decrease, primarily due to approximately **HKD 36 million** in non-current asset impairment losses recognized in the prior period[43](index=43&type=chunk) - Operating business achieved a profit of approximately **HKD 12 million**, compared to a loss of approximately **HKD 28 million** in the prior period, successfully turning losses into profits[44](index=44&type=chunk) - Net finance costs increased by 38.6% year-on-year to **HKD 25 million**, mainly due to increased accrued penalty interest from court judgments[45](index=45&type=chunk) [Financial Resources, Liquidity and Capital Structure](index=19&type=section&id=Financial%20Resources%2C%20Liquidity%20and%20Capital%20Structure) The Group's financial position remains severe with limited cash reserves and **HKD 434 million** in overdue bank borrowings and related litigation, which are part of a consolidated restructuring plan; management is actively communicating with banks and believes immediate repayment risk is low, yet significant uncertainty regarding going concern persists - As of June 30, 2024, cash and cash equivalents were approximately **HKD 32 million**, with total bank borrowings of **HKD 465 million**[48](index=48&type=chunk) - The Group failed to meet covenants for **HKD 434 million** in bank borrowings, which, along with **HKD 285 million** in interest, are overdue and included in a consolidated restructuring plan[49](index=49&type=chunk) - Management believes that despite defaults and litigation, ongoing communication with banks mitigates immediate repayment risk and will not materially adversely affect business operations[49](index=49&type=chunk) - The Group remains in a net liability position but possesses approximately **HKD 364 million** in non-current assets to support daily operations; management is confident in restoring a net asset position with economic improvement and internal efforts[50](index=50&type=chunk) [Human Resources and Environmental Responsibility](index=23&type=section&id=Human%20Resources%20and%20Environmental%20Responsibility) During the reporting period, the Group's total employee count decreased, while staff costs as a percentage of revenue remained stable; the company emphasizes protecting employee rights and actively fulfills environmental responsibilities by integrating green and low-carbon concepts into daily operations - As of June 30, 2024, the Group employed approximately **800 staff**, a decrease from approximately **1,000 staff** at the end of 2023[54](index=54&type=chunk) - Total staff costs for H1 were **HKD 35 million**, representing 6.4% of revenue (H1 2023: **HKD 51 million**, 6.6% of revenue)[54](index=54&type=chunk) - The Group actively promotes energy conservation, emission reduction, and circular economy, fostering green production methods through measures such as energy saving, recycling, and green packaging[55](index=55&type=chunk) [Corporate Governance and Other Matters](index=24&type=section&id=Corporate%20Governance%20and%20Other%20Matters) [Corporate Governance Practices](index=24&type=section&id=Corporate%20Governance%20Practices) The company generally complies with corporate governance codes, with one deviation: Ms. Zhu Yuan serves as both Board Chairman and CEO; the Board believes this arrangement currently facilitates efficient decision-making and business management, with long-term plans to identify a suitable CEO - The company deviates from the Corporate Governance Code's requirement for distinct roles between Chairman and CEO, as Ms. Zhu Yuan serves concurrently as Board Chairman and Chief Executive Officer[57](index=57&type=chunk) - The Board believes the current arrangement allows for more effective formulation and execution of business strategies, and with over half of the Board comprising independent non-executive directors, power balance is ensured[57](index=57&type=chunk) [Events After Reporting Period](index=14&type=section&id=Events%20After%20Reporting%20Period) Subsequent to the reporting period, an indirect non-wholly owned subsidiary of the Group signed an agreement to sell land and properties in Xinjiang County, China, for RMB 51 million (approximately HKD 55.59 million), with the transaction completed on August 5, 2024 - On August 5, 2024, Xinjiang Qixing, an indirect non-wholly owned subsidiary of the company, agreed to sell land and properties to Yuncheng Yuanhui Logistics Co Ltd for a total consideration of **RMB 51 million**[29](index=29&type=chunk)[61](index=61&type=chunk)

Financial Performance - In 2023, the company achieved revenue of HKD 1.411 billion, a decrease from HKD 2.162 billion in 2022, representing a decline of approximately 34.6%[19] - The loss attributable to equity holders was HKD 148 million, compared to a loss of HKD 15 million in 2022, indicating a significant increase in losses[19] - The sales revenue from deep-processed meat products was HKD 445 million, down from HKD 496 million in 2022, reflecting a decrease of about 10.3%[22] - The company recorded a net loss of approximately HKD 105 million from other activities, compared to a net income of HKD 27 million in 2022, primarily due to the assessment of certain non-operational facilities[23] - The sales revenue of chilled meat was HKD 835 million, a decrease of 43.1% compared to HKD 1.468 billion in 2022, accounting for approximately 59% of total revenue[36] - The revenue from low-temperature meat products was HKD 271 million, a decrease of 4.9% from HKD 285 million in 2022, representing about 19% of total revenue[36] - The slaughter volume decreased by approximately 19.8% to about 500,000 heads compared to the previous year[38] - Operating expenses for the year were HKD 177 million, accounting for 12.6% of total revenue, compared to 5.6% in 2022[43] - The total employee cost for the year was HKD 99 million, accounting for 7.0% of revenue, compared to HKD 106 million and 4.9% in 2022[52] - The group reported a loss attributable to equity holders of approximately HKD 695 million as of December 31, 2023[68] Production and Capacity - The production capacity for upstream slaughtering and downstream deep-processed meat products remained stable at approximately 3.35 million heads and 56,000 tons, respectively[18] - The domestic live pig output was 727 million heads in 2023, an increase of 3.8% year-on-year, while pork production reached 57.94 million tons, up 4.6%[10] - The average procurement price of live pigs was RMB 15.35 per kilogram, a year-on-year decrease of 19.3%[34] - The average procurement price of live pigs fluctuated between RMB 14.26 and 17.14 per kilogram during the review period[140] - The company has established a management mechanism to negotiate with at least three suppliers for the supply of live pigs and meat[138] Strategic Focus and Innovation - The company plans to continue focusing on innovation and quality management to enhance operational efficiency and competitiveness in 2024[8] - The company aims to develop new products that cater to changing consumer demands and trends, driving new growth points for performance[29] - The company is cautious in new product development, gradually introducing products that meet consumer demand through trial phases[142] Environmental and Social Responsibility - The group is committed to green low-carbon production methods and has increased investment in environmental protection and R&D[54] - The group aims to integrate energy-saving and green production concepts into its corporate culture for sustainable development[54] - The company is focused on reducing waste emissions during production processes to promote green transformation[54] - The group recognizes its responsibility as a public company and actively implements environmental protection measures[74] - The company has measures in place to minimize the impact of animal diseases or other epidemics on its business operations[130] Governance and Compliance - The company has adhered to the corporate governance code as per the Hong Kong Stock Exchange rules during the review year[78] - The board is responsible for approving and monitoring the overall strategy and policies of the group, including annual budgets and business plans[79] - The audit committee reviewed the group's annual and interim financial statements before submission to the board for approval[93] - The company has implemented a risk management and internal control system to ensure effective governance and compliance with the corporate governance code[89] - The company has established an audit committee, remuneration committee, and nomination committee to ensure compliance with the corporate governance code[88] Financial Risks and Debt Management - The company is currently in a net debt position as of December 31, 2023, with risks of failing to meet financial obligations[144] - The company has two overdue bank loans from state-owned commercial banks in China, and it is actively communicating with these banks to negotiate repayment plans and reduce penalties[196] - The board believes that the action plan to address overdue bank loans, if implemented as expected, will eliminate the auditor's uncertainty regarding the company's going concern status[198] - The company believes it has sufficient financial resources to support its operations and meet financial obligations due within the next twelve months[192] Shareholder Communication and Transparency - The company aims to provide high levels of information disclosure and financial transparency to shareholders and potential investors[158] - The company has adopted a shareholder communication policy to ensure shareholders can conveniently and timely access fair and understandable information[179] - The board of directors has reviewed the effectiveness of the shareholder communication policy, deeming it reasonable and effectively implemented[159] Quality Control and Supply Chain Management - The company has implemented a comprehensive quality control system with 21 inspection and quarantine processes for its products[148] - The company conducts regular assessments of supplier production sites to ensure the quality and supply capacity of raw materials[140] - The company emphasizes the quality and supply of raw materials, implementing measures to ensure supply chain stability, including contractual guarantees with suppliers[122] - The company has developed different strategies to cope with fluctuations in raw material prices, such as adjusting pig inventory based on expected price changes[124] Board Diversity and Effectiveness - The board consists of five members, including three independent non-executive directors, ensuring a diverse range of expertise in accounting, legal, and food engineering[96] - The board's gender diversity includes two female directors and three male directors, highlighting the company's commitment to gender representation[96] - The company emphasizes the importance of board diversity, considering factors such as gender, age, cultural background, and professional experience in its selection process[95] - The board has established a policy to review its diversity and effectiveness annually, ensuring continuous improvement in governance practices[95] Crisis Management - The company has established a crisis response procedure to quickly address any incidents that may affect consumer confidence[153] - The company has the capability to ensure product distribution and sales during disease outbreaks due to its nationwide layout[147]