Financial Performance - Revenue for the year ended December 31, 2023, was RMB 13,926.5 million, representing a 9.0% increase from RMB 12,775.9 million in 2022[6] - Gross profit for the same period was RMB 8,294.3 million, up 7.7% from RMB 7,703.5 million in 2022[6] - Adjusted comparable EBITDA reached RMB 2,215.5 million, a 12.4% increase from RMB 1,971.9 million in the previous year[6] - Net profit for 2023 was RMB 581.8 million, a decrease of 4.9% compared to RMB 611.8 million in 2022[6] - The adjusted comparable net profit was RMB 778.3 million, reflecting a 6.4% increase from RMB 731.2 million in 2022[6] Revenue Breakdown - The revenue breakdown by product segment showed that nutritional supplements accounted for 31.6% of total revenue, while infant formula contributed 40.5%[7] - Revenue from pet nutrition and care products was 44.1% for the year ended December 31, 2023, compared to 35.7% in 2022[8] - The geographical revenue distribution indicated that mainland China accounted for 71.6% of total revenue, while North America contributed 12.9%[8] - High-margin nutritional supplements accounted for 60.4% of total revenue for the year, driven by strong demand post-COVID-19[12] - Revenue from the nutritional supplements segment grew by 28.6% year-on-year, accounting for 60.4% of total revenue[21] Market Growth and Strategy - The company plans to continue expanding its product offerings and market presence, focusing on innovation and strategic acquisitions[6] - North America contributed double-digit revenue growth for the first time, with significant growth also seen in Italy, Hong Kong, and Singapore[10] - The company is expanding into Southeast Asia, India, and the Middle East, achieving strong momentum in these new markets[10] - The company aims to achieve full B Corporation certification by 2025, reflecting its commitment to environmental and social governance[11] - The company is committed to investing in the pet nutrition and care segment to achieve future growth, particularly through expanding Zesty Paws' leading position in North America[18] Cost and Expenses - Selling and distribution costs increased by 7.6% to RMB 5,405.2 million, with the percentage of these costs relative to revenue decreasing from 39.3% to 38.8%[29] - Administrative expenses increased by 16.6% to RMB 848.5 million, with administrative expenses as a percentage of total revenue rising from 5.7% in 2022 to 6.1% in 2023[32] - Research and development expenses rose by 30.3% to RMB 206.1 million, accounting for 1.5% of total revenue, up from 1.2% in 2022[33] Debt and Cash Flow - Total debt decreased to RMB 8,933.7 million from RMB 9,363.4 million in 2022, while cash and cash equivalents decreased to RMB 1,364.3 million from RMB 2,303.7 million[45] - The net cash flow from operating activities was RMB 1,096.9 million, down from RMB 1,653.0 million before tax in the previous year[39] - The net leverage ratio improved to 3.42 times in 2023 from 3.58 times in 2022, calculated based on net debt divided by adjusted comparable EBITDA[45] Corporate Governance - The company emphasizes a strong corporate governance culture, aiming to deliver sustainable returns to stakeholders and maintain high ethical standards[63] - The board consists of nine members, including two executive directors, four non-executive directors, and three independent non-executive directors[66] - The board has established four committees: Nomination Committee, Audit Committee, Remuneration Committee, and Environmental, Social and Governance Committee[66] - The company has implemented a code of conduct for directors regarding securities trading, ensuring compliance with the standards set by the listing rules[65] Shareholder Engagement and Dividends - The board recommended a final dividend of HKD 0.18 per share, leading to a total annual dividend of HKD 0.62 per share, which represents approximately 46% of the adjusted net profit for the year ending December 31, 2023[48] - The company has adopted a dividend policy that maintains sufficient cash reserves to meet operational needs and future growth, without a predetermined payout ratio[117] - The company continues to maintain effective communication with shareholders and has adopted a shareholder communication policy to ensure timely information disclosure[112] Risk Management - The company has implemented a robust internal control and risk management system to monitor operational and financial performance[75] - The board of directors confirmed its responsibility for managing risk and internal control systems, which aim to manage rather than eliminate risks[96] - The company conducts annual enterprise risk assessments and holds risk workshops to gather management's insights on risks[101] E-commerce and Digital Strategy - The company aims to enhance its control and operational efficiency through these agreements, positioning itself for future growth in the e-commerce sector[182] - Mama 100 E-commerce operates under an O2O business model, utilizing its own website and mobile app for online sales[190] - The company has obtained registration for cross-border e-commerce operations, enhancing its B2C business capabilities[191] Management and Leadership - Akash Bedi appointed as CEO from November 2023, previously served as acting CEO from October 2022 to August 2023[58] - The management team includes individuals with extensive backgrounds in sales, marketing, and business development, enhancing the company's strategic capabilities[53] - The company has a commitment to research and development, particularly in product quality control and technical support, to drive innovation[52]

Financial Performance - Revenue for the year ended December 31, 2023, was RMB 13,926.5 million, representing a 9.0% increase from RMB 12,775.9 million in 2022[2] - Gross profit increased to RMB 8,294.3 million, up 7.7% from RMB 7,703.5 million in the previous year[2] - Adjusted comparable EBITDA rose by 12.4% to RMB 2,215.5 million, compared to RMB 1,971.9 million in 2022[2] - Net profit decreased by 4.9% to RMB 581.8 million, down from RMB 611.8 million in 2022[2] - The adjusted comparable net profit was RMB 778.3 million, reflecting a 6.4% increase from RMB 731.2 million in the prior year[2] - Total revenue for the year ended December 31, 2023, reached RMB 13,926,470 thousand, an increase from RMB 12,775,914 thousand in 2022, representing a growth of approximately 9%[21] - The company reported a pre-tax profit of RMB 933,602 thousand for the year, compared to RMB 1,030,931 thousand in the previous year, indicating a decrease of about 9.4%[17][19] - The company reported a pre-tax profit of RMB 1,472,992 thousand for 2023, compared to RMB 1,324,163 thousand in 2022, reflecting an increase of approximately 11.2%[31] Assets and Liabilities - Total non-current assets amounted to RMB 14,908.6 million, a slight decrease from RMB 15,103.6 million in 2022[9] - Current assets totaled RMB 5,133.4 million, down from RMB 5,859.4 million in the previous year[9] - The company reported a net asset value of RMB 6,295.2 million, an increase from RMB 6,141.9 million in 2022[9] - As of December 31, 2023, the group recorded net current liabilities of RMB 3,307.8 million, primarily due to bank loans and preferred notes totaling RMB 4,722.1 million maturing within the next twelve months[11] - Total debt as of December 31, 2023, was RMB 8,933.7 million, a decrease from RMB 9,363.4 million in 2022, indicating a reduction of approximately 4.6%[88] - The net leverage ratio improved to 3.42 times as of December 31, 2023, down from 3.58 times in the previous year[87] Cash Flow and Financing - The net cash flow from operating activities for the year ended December 31, 2023, was RMB 1,096.9 million, derived from a pre-tax cash flow of RMB 1,653.0 million after deducting income tax payments of RMB 556.2 million[83] - Cash flow used in investing activities was RMB 52.1 million, primarily due to purchases of property, plant, and equipment, as well as intangible assets totaling RMB 91.0 million[84] - Cash flow used in financing activities was RMB 1,994.6 million, mainly related to repayment of bank loans and interest payments totaling RMB 1,842.6 million[85] - The company has not utilized its available revolving credit of USD 75.0 million as of the announcement date, indicating a strong liquidity position[86] - The company successfully issued RMB 500 million in guaranteed bonds at a 7.5% interest rate on March 20, 2024[90] Segment Performance - The infant formula segment generated revenue of RMB 5,179,961 thousand, while the probiotics and nutritional supplements segment contributed RMB 1,111,749 thousand for the year ended December 31, 2023[19] - Revenue from the pet nutrition and care segment was RMB 1,529,530 thousand, showing a significant contribution to the overall revenue[21] - The nutritional supplements segment generated revenue of RMB 8,415.3 million, representing a year-on-year growth of 35.3% and accounting for 60.4% of total revenue[58] - Revenue from the adult nutrition and care products segment in mainland China grew by 37.4%, contributing 66.0% to the total revenue of this segment[60] - The company achieved revenue growth of 9.0% in adult nutrition and care products and 8.2% in infant nutrition and care products[44] Market and Growth Strategy - The company plans to continue expanding its product offerings and market presence, particularly in the pet nutrition sector, as part of its growth strategy[19] - The company is expanding into Southeast Asia, India, and the Middle East, achieving strong momentum in these markets[46] - The company aims to optimize its capital structure and reduce leverage while maintaining healthy cash conversion levels[46] - The group plans to invest in the pet nutrition and care products segment to achieve future growth, including expanding Zesty Paws' market position in North America[56] - The group intends to stabilize the revenue level of its infant formula business with the support of innovative high-end products and a stable birth rate in China[56] Expenses and Costs - The cost of goods sold for the year was RMB 5,318,971 thousand, compared to RMB 4,823,197 thousand in the previous year, reflecting an increase of approximately 10.3%[31] - Sales and distribution costs increased by 7.6% to RMB 5,405.2 million, with the percentage of these costs relative to total revenue decreasing from 39.3% to 38.8%[70] - Administrative expenses rose by 16.6% to RMB 848.5 million, with the percentage of revenue increasing from 5.7% to 6.1%[75] - Research and development (R&D) expenses increased by 30.3% to RMB 206.1 million, representing 1.5% of total revenue, up from 1.2% in the previous year[76] Dividends and Shareholder Returns - The proposed dividend for the year is RMB 101.6 million, down from RMB 220.7 million in the previous year[9] - The board of directors proposed a final dividend of HKD 0.18 per share, leading to a total annual dividend of HKD 0.62 per share, which represents approximately 46% of the adjusted net profit for the year ending December 31, 2023[92] - The interim dividend paid for the year was HKD 0.44 per share, an increase from HKD 0.25 per share in 2022[38] Compliance and Governance - The financial statements have been prepared in accordance with International Financial Reporting Standards and Hong Kong Companies Ordinance disclosure requirements[11] - The company has adopted the corporate governance code as per the listing rules and has complied with all provisions for the year ending December 31, 2023[95] - The audit committee consists of three members, all of whom are non-executive directors, ensuring compliance with the listing rules[97] - The independent auditor has reviewed the preliminary performance announcement and confirmed consistency with the consolidated financial statements for the year ending December 31, 2023[99]

Group 1 - The company H&H International Holdings (01112) announced the full redemption of its outstanding 5.625% senior notes due in 2024 to reduce financing costs and optimize its capital structure [1] - As of the announcement date, the outstanding principal amount of the notes is $53.352 million [1] - The company has notified the relevant note trustee that the principal amount of $53.352 million will be redeemed on March 25, 2024, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest [1] Group 2 - Following the redemption, all redeemed notes will be canceled [1] - The company will continue to explore opportunities to lower financing costs and optimize its capital structure [1]

Investment Rating - The report maintains a Neutral rating for the company with a target price of HKD 10.40, indicating a potential downside of 10.8% from the current price of HKD 11.66 [2][7]. Core Insights - The company's 2023 net profit and cash balance fell below expectations, with sales growth meeting projections but net profit growth lagging significantly behind market expectations [1][2]. - The decline in net profit is attributed to several one-off factors, including inventory write-downs, goodwill impairment from past acquisitions, and increased financial costs due to currency depreciation [1]. - The cash balance decreased from RMB 2.1 billion in June 2023 to RMB 1.37 billion by the end of 2023, raising concerns among investors about the company's liquidity and refinancing needs in 2024 [1][2]. Financial Performance Summary - For 2023, the company reported a sales revenue growth of approximately 9%, aligning with expectations, while the adjusted net profit growth was in the low single digits, significantly below the anticipated 24% [1][5]. - The breakdown of revenue by segment showed strong double-digit growth in adult nutrition and pet nutrition, while infant nutrition experienced a decline of 10-20% due to intensified competition during the transition to new national standards [1][5]. - The company is projected to achieve revenues of RMB 13.79 billion in 2023, with a forecasted growth rate of 8% for 2024 and 7.4% for 2025 [5][8]. Market Context - The report highlights that the company's stock performance has been relatively resilient due to strong sales momentum in nutritional supplements during the first nine months of 2023, despite the overall weak performance in the infant nutrition segment [2][8]. - The company is expected to hold an analyst briefing on March 27, 2024, which may provide further insights into its performance and strategic direction [2].

智通财经APP讯，H&H国际控股(01112)公布，于2023年，按呈报及同类比较基准，该集团均实现高单 位数的收入增长。该增长主要受来自其所有三大战略业务支柱(包括成人营养及护理用品、婴幼儿营养 及护理用品以及宠物营养及护理用品)的高利润及快速增长营养补充品收入的双位数增长所带动。 其中，成人营养及护理用品分部实现强劲双位数增长，有关增长受下列因素带动：各地区的消费者在新 冠肺炎后对保健品的殷切需求，以及该集团致力推出创新品类，如SwissePlus+系列及软糖，配合集团 的高端优质、科学验证、令人向往及参与互动(PPAE)模式。值得注意的是，SwissePlus+于2023年在中 国内地成人营养及护理用品的收入总额带来可观的双位数贡献。此外，该集团SwissePlus+中的NAD+系 列在抗衰老品类取得顶尖地位，抢占极高市场份额，而Swisse净肝片则保持其在中国内地高端蓟分部市 场的领先地位。Swisse重夺澳洲整体维生素、草本及矿物补充剂市场的榜首地位，并在复合维生素、口 服美容、消化及肝脏健康以及肌肉健康等主要分类中稳居第一。 婴幼儿营养及护理用品分部收入取得低双位数降幅。尽管市况不利，惟该集团于2 ...

Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 6,980.8 million, representing a 17.2% increase from RMB 5,955.4 million in the same period of 2022[8]. - Gross profit for the same period was RMB 4,262.4 million, up 15.5% from RMB 3,691.5 million year-on-year[8]. - Adjusted comparable EBITDA for the six months ended June 30, 2023, was RMB 1,309.5 million, a 24.0% increase from RMB 1,056.1 million in the prior year[8]. - Net profit for the six months ended June 30, 2023, was RMB 608.0 million, reflecting a 28.0% increase compared to RMB 475.1 million in the same period of 2022[8]. - The company reported a significant increase in EBITDA of 29.5% to RMB 1,397.9 million compared to RMB 1,079.4 million in the prior year[8]. - The adjusted comparable net profit margin for the six months ended June 30, 2023, was 7.4%, down from 8.1% in the previous year[8]. Revenue Breakdown - The revenue breakdown by product segment shows nutritional supplements at 60.1%, infant formula at 31.7%, and others at 8.2% for the six months ended June 30, 2023[9]. - The infant nutrition and care segment saw a revenue contribution of 44.6% for the six months ended June 30, 2023[10]. - The revenue from high-margin and fast-growing nutritional supplements accounted for 60.1% of total revenue in the first half of 2023[15]. - The adult nutrition and care products segment generated RMB 2,938.2 million, reflecting a 43.6% increase compared to the previous year[29]. - The infant nutrition and care segment faced challenges, with revenue declining by 10.1% to RMB 2,213.7 million, representing 31.7% of total revenue[29]. - The pet nutrition and care segment grew by 27.8% to RMB 926.7 million, contributing 13.3% to total revenue[29]. Market Presence and Expansion - The company plans to continue expanding its market presence and invest in new product development to drive future growth[6]. - H&H International Holdings achieved a strong financial performance with a double-digit revenue growth across its three strategic business pillars: adult nutrition and care products, infant nutrition and care products, and pet nutrition and care products, contributing to a positive EBITDA margin[15]. - The company is focusing on market expansion in high-profit regions such as Hong Kong and Singapore, with robust double-digit growth contributions from these markets[20]. - The company plans to expand its market share in the cross-border e-commerce sector in mainland China, targeting double-digit growth in the normal trade market[25]. - The company is focusing on expanding its presence in new markets, including mainland China, Canada, the UK, and Singapore for its Zesty Paws brand[25]. Geographical Revenue Distribution - The geographical revenue distribution indicates that mainland China accounted for 72.7%, Australia and New Zealand 11.9%, and North America 10.6% for the same period[11]. - Revenue from mainland China for the six months ended June 30, 2023, was RMB 5,076.1 million, an increase of 15.4% year-on-year, accounting for 72.7% of the group's total revenue[31]. - Revenue from the Australia and New Zealand market increased by 19.4% to AUD 177.4 million, representing 11.9% of the group's total revenue[33]. - North America revenue grew by 20.9%, accounting for 10.6% of total revenue, with Zesty Paws achieving a 30.1% increase in revenue[34]. Cost and Expenses - Sales and distribution costs, excluding depreciation and amortization, increased by 8.8% to RMB 2,538.7 million for the six months ended June 30, 2023, with the percentage of these costs to total revenue decreasing from 39.2% to 36.4%[37]. - Administrative expenses rose by 31.0% to RMB 412.4 million for the six months ended June 30, 2023, with the percentage of these expenses to total revenue slightly increasing from 5.3% to 5.9%[40]. - Research and development expenses increased by 23.9% to RMB 84.9 million, maintaining a stable percentage of 1.2% of total revenue[40]. - Financing costs increased by 41.9% to RMB 358.0 million for the six months ended June 30, 2023, primarily due to a 65.7% rise in interest on bank loans and preferred notes compared to the previous year[45]. Shareholder and Governance - The company has complied with all corporate governance codes as per the Hong Kong Stock Exchange regulations during the six months ending June 30, 2023[50]. - The Audit Committee, consisting of three non-executive directors, is responsible for overseeing the external auditor's appointment and reviewing the group's financial reporting[52]. - The Remuneration Committee is tasked with recommending remuneration policies for all directors and senior management, ensuring transparency and alignment with company performance[54]. - The Nomination Committee evaluates the board's composition and recommends candidates for directorship, considering diversity and qualifications[55]. - The company established an Environmental, Social, and Governance (ESG) Committee to enhance the management of sustainability issues and improve disclosure quality[56]. Cash Flow and Liquidity - Cash generated from operating activities was RMB 22.1 million for the six months ended June 30, 2023, after tax payments of RMB 337.6 million[47]. - Cash and cash equivalents amounted to RMB 2,137.7 million as of June 30, 2023, providing a strong liquidity position[47]. - The company's net leverage ratio decreased from 3.58 times at the end of 2022 to 3.40 times as of June 30, 2023, reflecting effective management of balance sheet risks[17]. - The company has established several liquidity measures to further manage debt costs following the hedging agreements signed in July 2023[45]. Environmental Initiatives - The company has initiated a greenhouse gas reduction plan and launched a recycling program for Swisse plastic bottles in China[26]. Financial Instruments and Hedging - The company’s hedging strategy has been assessed as highly effective, aligning with expected interest and principal payments[157]. - The fair value of cross-currency swaps is reported at RMB 50,487,000, highlighting the company's exposure to currency risk[196]. - The company’s financial instruments are subject to market fluctuations, with the fair value of derivatives being sensitive to changes in discount rates[194]. Employee Compensation and Share Options - The total remuneration paid to key management personnel for the six months ended June 30, 2023, was RMB 66,306,000, significantly higher than RMB 31,935,000 for the same period in 2022[187]. - The company has adopted three stock option plans, with two currently active as of June 30, 2023[64]. - The company aims to retain and motivate employees through the share award plan, contributing to its ongoing operations and development[76].

Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 6,980.8 million, representing a 17.2% increase from RMB 5,955.4 million in the same period of 2022[2]. - Gross profit for the same period was RMB 4,262.4 million, up 15.5% from RMB 3,691.5 million year-on-year[2]. - EBITDA increased by 29.5% to RMB 1,397.9 million compared to RMB 1,079.4 million in the previous year[2]. - Adjusted comparable EBITDA was RMB 1,309.5 million, a 24.0% increase from RMB 1,056.1 million in 2022[2]. - Net profit for the period was RMB 608.0 million, reflecting a 28.0% growth from RMB 475.1 million in the prior year[2]. - Adjusted comparable net profit was RMB 513.4 million, a 6.3% increase from RMB 482.9 million in the same period last year[2]. - The adjusted comparable net profit margin decreased to 7.4% from 8.1% year-on-year, a decline of 0.7 percentage points[2]. Assets and Liabilities - Non-current assets totaled RMB 15,219.1 million as of June 30, 2023, compared to RMB 15,103.6 million at the end of 2022[8]. - Current assets increased to RMB 6,155.6 million from RMB 5,859.4 million at the end of 2022[8]. - Current liabilities decreased slightly to RMB 5,102.7 million from RMB 5,134.9 million at the end of 2022[8]. - As of June 30, 2023, total assets minus current liabilities amounted to RMB 16,272,006 thousand, an increase from RMB 15,828,142 thousand as of December 31, 2022, representing a growth of approximately 2.8%[9]. - Non-current liabilities, including preferred notes, totaled RMB 2,001,509 thousand, up from RMB 1,886,148 thousand, indicating an increase of about 6.1% year-over-year[9]. - The company's net asset value reached RMB 6,662,462 thousand, compared to RMB 6,141,853 thousand in the previous year, reflecting a growth of approximately 8.5%[9]. - The total equity increased to RMB 6,662,462 thousand from RMB 6,141,853 thousand, marking an increase of around 8.5%[9]. - The issued share capital remained stable at RMB 5,519 thousand, with no changes reported[9]. Revenue Segmentation - The group reported total revenue of RMB 6,980,848 thousand for the six months ended June 30, 2023, with significant contributions from the infant formula segment and probiotics and nutritional supplements[18]. - The probiotics and nutritional supplements segment generated revenue of RMB 2,213,750 thousand, while the infant formula segment contributed RMB 2,938,215 thousand[18]. - Revenue from mainland China was RMB 5,076,109 thousand, representing a significant portion of total revenue[22]. - Sales from infant formula amounted to RMB 2,462,057 thousand, while probiotics and nutritional supplements generated RMB 499,132 thousand[21]. - Revenue from the infant nutrition and care products segment decreased by 2.1% year-on-year, partially offsetting growth in other segments[59]. - Revenue from infant formula milk powder in mainland China decreased by 10.2% year-on-year to RMB 2,138.8 million, primarily due to systemic challenges in the industry and a decline in overall sales[62]. - Revenue from infant probiotics and nutritional supplements in mainland China increased by 48.7% to RMB 735.7 million, driven by higher consumer demand and the introduction of new innovative products[62]. Expenses and Costs - The cost of goods sold for the six months ended June 30, 2023, was RMB 2,560,132 thousand, an increase of 20.2% compared to RMB 2,128,935 thousand for the same period in 2022[28]. - Employee benefits expenses increased to RMB 724,390 thousand, reflecting a rise of 18.4% from RMB 611,930 thousand in the prior year[28]. - Total tax expenses for the period amounted to RMB 295,138 thousand, a significant increase of 43.1% from RMB 206,291 thousand in the same period last year[29]. - Financing costs increased by 41.9% to RMB 358.0 million, primarily due to a 65.7% rise in interest on bank loans and preferred notes[79]. - Administrative expenses increased by 31.0% to RMB 412.4 million for the six months ended June 30, 2023, compared to RMB 314.9 million for the same period in 2022, representing 5.9% of total revenue[74]. Market and Strategic Initiatives - The company continues to engage in the production and sale of high-end children's nutrition products and adult nutrition products, indicating a focus on market expansion in these segments[10]. - The company plans to continue expanding its market presence and investing in new product development to drive future growth[21]. - The company is focused on continuous profitability growth through strategic investments in core growth areas, globalization, and diversification[43]. - The company aims to leverage its leading position in the adult nutrition and care products segment to drive growth, particularly in core markets like mainland China and Australia[54]. - The company is in the process of reapplying for high-tech enterprise status for its subsidiary, which is expected to significantly reduce its tax rate[30]. Cash Flow and Financing - Net cash generated from operating activities was RMB 22.1 million, after accounting for income tax payments of RMB 337.6 million[82]. - Cash flow used in investing activities was RMB 19.3 million, primarily due to purchases of property, plant, and equipment totaling RMB 47.2 million[83]. - Cash flow used in financing activities amounted to RMB 205.7 million, mainly related to the repayment of bank loans and interest payments totaling RMB 406.6 million[84]. - As of June 30, 2023, the company's cash and cash equivalents amounted to RMB 2,137.7 million[85]. - The outstanding interest-bearing bank loans totaled RMB 8,070.6 million, with a net leverage ratio decreasing from 3.93 to 3.57 compared to June 30, 2022[86][87]. Corporate Governance - The company continues to comply with corporate governance codes and will review its practices to ensure adherence to the latest developments[92]. - The Audit Committee is responsible for recommending the appointment, reappointment, and removal of external auditors to the Board, as well as approving their remuneration and terms of engagement[95]. - The interim financial statements for the six months ended June 30, 2023, have been reviewed by the independent auditor Ernst & Young according to the relevant standards[96].

Financial Performance - Revenue for the year ended December 31, 2022, was RMB 12,775,914 thousand, representing a 10.6% increase from RMB 11,547,825 thousand in 2021[6] - Gross profit for 2022 was RMB 7,703,488 thousand, up from RMB 7,247,982 thousand in 2021, reflecting a growth of 6.3%[6] - Adjusted comparable EBITDA for 2022 was RMB 1,971,876 thousand, compared to RMB 1,851,915 thousand in 2021, marking a 6.5% increase[6] - Net profit for 2022 was RMB 611,783 thousand, a 20.3% increase from RMB 508,484 thousand in 2021[6] - The company achieved an adjusted comparable net profit of RMB 731,172 thousand, down 23.3% from RMB 952,854 thousand in the previous year[6] - The adjusted comparable EBITDA margin decreased to 15.4% in 2022 from 16.0% in 2021, a decline of 0.6 percentage points[6] Strategic Focus - The company focused on three strategic pillars: core growth areas, globalization and diversification, and future strategic investments[10] - The company continues to attract new consumers in key markets through consumer-oriented innovations and aims to become a leader in global family nutrition and health[10] - The company continues to focus on consumer-driven innovation as a key strategy for growth in both adult and infant nutrition segments[16] Market Performance - The infant nutrition and care segment in mainland China has stabilized, with a positive growth trajectory in 2022, attributed to enhanced brand awareness and effective consumer education initiatives[11] - The ultra-premium infant formula series recorded positive retail sales growth, achieving a market share of 12.1%, compared to a market decline of 2.1%[11] - The probiotics business in mainland China has successfully returned to growth, maintaining a strong market share and becoming a key player in the children's probiotics market in Hong Kong[13] - In France, the company holds the number one position in the organic infant formula category with a market share of 41.7% and in the goat milk category with a market share of 41.5%[14] - The adult nutrition and care segment achieved a remarkable growth of 12.5% in 2022, with Swisse ranking first in the online vitamin, herbal, and mineral supplement market in mainland China[15] - Swisse's retail sales in the local market recorded a growth of 12.9%, surpassing the industry average growth of 7.4%[15] - The company is expanding its presence in new Asian markets, driven by online and offline channel distribution, with significant growth momentum expected[16] Product Development - The company plans to expand its product offerings in the infant formula segment, having submitted applications for eight series of infant formula products in mainland China[18] - The launch of the new Swisse Plus+ series and Swisse Me functional food series has been well-received, promoting health and wellness among consumers[16] - The company continues to focus on high-end pet food categories and innovative product development to capitalize on market trends in both China and North America[17] Financial Management - Over 98.5% of the adjusted comparable EBITDA for 2022 was converted into operating cash flow, enhancing the company's ability to manage its capital structure[10] - The company successfully refinanced all existing loan facilities, improving its capital structure and liquidity to better withstand currency fluctuations and higher interest rates[10] - The company has secured a $1.125 billion three-year term loan for refinancing existing loans, linked to sustainability targets[20] - The company maintains a stable dividend payout ratio of 50% of adjusted comparable net profit, ensuring returns to shareholders[20] Sustainability Initiatives - The company reduced water intensity in its production facilities by 18.9% compared to 2021, reflecting its commitment to sustainability[21] - 98% of the company's packaging materials are recyclable, biodegradable, or compostable, demonstrating a strong focus on circular economy initiatives[21] - The company is committed to resource conservation and waste management, participating in carbon offset programs in Australia to enhance its environmental initiatives[46] - The company received an "A" rating from MSCI for environmental, social, and governance performance, reflecting its commitment to responsible business practices[20] Governance and Management - The management team includes experienced professionals with over 20 years in their respective fields, enhancing the company's strategic direction and risk management[47][48] - The company emphasizes employee development through clear career planning and regular training programs[46] - The company has a strong commitment to corporate governance and risk management, led by its experienced board of directors[47] - The board consists of eight members, including two executive directors, three non-executive directors, and three independent non-executive directors[62] Risk Management - The company has established a robust risk management system, which is essential for corporate governance and commitment to environmental, social, and governance practices[90] - The company conducts annual risk assessments and holds risk workshops for middle and senior management to gather insights on risks, which are then presented to senior management and the audit committee for strategic decision-making[95] - The audit committee reviews risk and control management effectiveness every six months, ensuring the adequacy of resources for internal audit and risk management functions[101] Shareholder Communication - The company emphasizes effective communication with shareholders, holding dialogues through annual general meetings and other gatherings to enhance understanding of business performance and strategies[103] - The company has a shareholder communication policy to promote effective interaction with shareholders and encourage them to exercise their rights[110] - The company is committed to maintaining transparency and timely disclosure of information to facilitate informed investment decisions by shareholders[103] Corporate Social Responsibility - The company made charitable donations of RMB 4.2 million for the year ended December 31, 2022, consistent with the previous two years[118] - The company has established a charitable foundation in collaboration with the Red Cross, demonstrating its commitment to social responsibility[118] Audit and Compliance - The independent auditor, Ernst & Young, has issued an unqualified opinion on the consolidated financial statements for the year ended December 31, 2022[192] - The audit committee reviewed the interim and annual results for the periods ended June 30, 2022, and December 31, 2022, respectively[185] - The company has adopted its own code of conduct regarding securities trading by directors, which meets or exceeds the standards set out in the listing rules[186]

Financial Performance - Revenue for the year ended December 31, 2022, was RMB 12,775.9 million, representing a 10.6% increase from RMB 11,547.8 million in 2021[2] - Gross profit for the same period was RMB 7,703.5 million, up 6.3% from RMB 7,248.0 million in the previous year[2] - Adjusted comparable EBITDA for 2022 was RMB 1,971.9 million, a 6.5% increase from RMB 1,851.9 million in 2021[2] - Net profit for the year was RMB 611.8 million, reflecting a 20.3% increase compared to RMB 508.5 million in 2021[2] - Adjusted comparable net profit decreased by 23.3% to RMB 731.2 million from RMB 952.9 million in the prior year[2] - The EBITDA margin for 2022 was 15.4%, down 0.6 percentage points from 16.0% in 2021[2] - Total revenue for the year ended December 31, 2022, was RMB 12,775,914 thousand, an increase from RMB 11,547,825 thousand in 2021, representing a growth of approximately 10.65%[22] - The pre-tax profit for the year was RMB 1,030,931 thousand, compared to RMB 850,213 thousand in the previous year, indicating a growth of approximately 21.3%[15][17] - The company reported a pre-tax profit of RMB 1,324,163 thousand for 2022, slightly down from RMB 1,326,327 thousand in 2021[30] Assets and Liabilities - Total non-current assets as of December 31, 2022, amounted to RMB 15,103.6 million, an increase from RMB 14,768.3 million in 2021[8] - Current assets totaled RMB 5,859.4 million, compared to RMB 5,513.5 million in the previous year[8] - The company reported a net current asset value of RMB 724.5 million, a significant improvement from a net current liability of RMB 1,308.5 million in 2021[8] - Non-current liabilities totaled RMB 9,686,289 thousand in 2022, up from RMB 7,574,628 thousand in 2021, indicating an increase of about 28%[9] - The company's equity increased to RMB 6,141,853 thousand in 2022 from RMB 5,885,186 thousand in 2021, representing a growth of approximately 4.4%[9] - Total assets minus current liabilities increased to RMB 15,828,142 thousand in 2022 from RMB 13,459,814 thousand in 2021, reflecting a growth of approximately 17.6%[9] Revenue Breakdown - The revenue breakdown by segment includes RMB 5,179,961 thousand from adult nutrition, RMB 4,559,212 thousand from infant formula, and RMB 1,529,530 thousand from pet nutrition, among others[15] - Revenue from mainland China reached RMB 9,565,867 thousand, up from RMB 9,084,641 thousand in 2021, reflecting a growth of about 5.3%[19] - The company reported a significant increase in revenue from North America, which rose to RMB 1,220,807 thousand from RMB 499,348 thousand, marking a growth of approximately 144.4%[19] - Revenue from infant formula in mainland China reached RMB 5,022,877 thousand, while adult nutrition and care products generated RMB 2,937,323 thousand in the same region[24] - Revenue from probiotics supplements in mainland China increased by 12.8% to RMB 1,079.1 million, driven by effective consumer education and channel expansion[62] - Revenue from the Australia and New Zealand market was AUD 297.3 million, reflecting a 10.1% increase and accounting for 10.9% of total group revenue[65] Expenses and Costs - The cost of goods sold for the year was RMB 4,823,197 thousand, compared to RMB 4,165,812 thousand in the previous year, indicating an increase of approximately 15.73%[30] - Selling and distribution costs increased by 4.8% to RMB 5,025.4 million, with the percentage of these costs to total revenue decreasing from 41.5% to 39.3%[70] - Administrative expenses increased by 4.6% to RMB 727.7 million, while the percentage of administrative expenses to total revenue decreased from 6.0% in 2021 to 5.7% in 2022[74] - Research and development expenses rose by 9.9% to RMB 158.2 million, maintaining a stable percentage of 1.2% of total revenue compared to the previous year[75] Dividends and Shareholder Returns - Proposed dividends rose significantly to RMB 220,717 thousand in 2022, compared to RMB 87,805 thousand in 2021, marking an increase of about 151%[9] - The proposed final dividend for the year is HKD 0.38 per share, compared to HKD 0.17 per share in the previous year, totaling HKD 220,717,000 for the proposed final dividend[38] - The company maintains a stable dividend payout ratio of 50% of adjusted comparable net profit, providing returns to shareholders[56] Market and Growth Strategies - The company is primarily engaged in the production and sale of high-end children's nutrition products, infant care products, adult nutrition and care products, and pet nutrition and care products[10] - The company plans to continue expanding its market presence and investing in new product development to drive future growth[27] - The company aims to become a global leader in family nutrition and health through high-quality products and desirable brands, aligning with its long-term profitability growth strategy[45] - The company is focusing on high-end infant formula products to adapt to changing demographics in mainland China, with positive growth in this segment[47] - The company has improved its capital structure and liquidity through refinancing existing loans, enhancing its ability to manage currency fluctuations and higher interest rates[45] Corporate Governance and Compliance - The financial statements were prepared in accordance with International Financial Reporting Standards, ensuring compliance and transparency in financial reporting[11] - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange rules and has complied with all provisions as of December 31, 2022[92] - The audit committee, established on November 25, 2010, consists of three members, all of whom are non-executive directors, ensuring oversight of the audit process and risk management[94] - The independent auditor has reviewed the preliminary performance announcement, which has been agreed upon for inclusion in the consolidated financial statements[95] Sustainability and ESG Initiatives - The company has secured a 3-year term loan of USD 1.125 billion linked to sustainability goals, with interest rate reductions tied to achieving ESG targets[57] - The company reduced its water intensity in production facilities by 18.9% compared to 2021, contributing to its sustainability goals[58] - The company has established an ESG committee to enhance governance and oversee sustainability strategies and reporting[58]

Financial Performance - Total revenue for the year ended December 31, 2021, was RMB 11,547.8 million, representing a 3.2% increase from RMB 11,194.7 million in 2020[7]. - Gross profit for the same period was RMB 7,248.0 million, a slight increase of 0.8% from RMB 7,187.0 million in 2020[7]. - Net profit for 2021 was RMB 508.5 million, a significant decline of 55.3% compared to RMB 1,136.7 million in 2020[7]. - Adjusted comparable EBITDA decreased by 10.3% to RMB 1,851.9 million, with an adjusted EBITDA margin of 16.0%, down from 18.4%[7]. - Revenue from infant nutrition and care products decreased by 10.8% to RMB 6,157.6 million, with infant formula milk powder revenue from mainland China at RMB 4,983.3 million, down 2.7% year-on-year[22]. - The company reported a total comprehensive income of RMB 35,735 thousand for 2021, a significant decrease from RMB 1,404,167 thousand in 2020[195]. - The company’s net asset value decreased to RMB 5,885,186 thousand in 2021 from RMB 6,202,687 thousand in 2020[197]. - The company reported a foreign exchange loss of RMB 91,387,000, highlighting currency fluctuation challenges[198]. Revenue Segmentation - The infant nutrition and care segment accounted for the largest share of total revenue in 2021, despite challenges in the Chinese market due to declining birth rates[10]. - Revenue from the pet nutrition and care segment was 57.3% of total revenue for the year ended December 31, 2021[8]. - Revenue from mainland China accounted for 78.7% of total revenue, down from 82.8% in 2020[9]. - The adult nutrition and care products segment generated revenue of RMB 4,209.2 million, an increase of 8.8% compared to the previous year[20]. - The pet nutrition and care products segment saw a remarkable revenue increase of 2,668.1% to RMB 726.4 million, reflecting strong market demand[20]. Market Position and Growth - The retail sales of the ultra-premium infant formula series grew by 22.5% in 2021, capturing a market share of 11.1%[10]. - The probiotics supplement brand, Biostime, remains a leader in the global children's probiotics market, although it faced challenges due to high base effects in 2020[10]. - The infant nutrition and care segment achieved a market share of 40.3% in the organic infant formula category in France by the end of 2021[11]. - The adult nutrition and care segment in mainland China saw significant growth in both online and offline sales channels, contributing to a stable revenue increase[11]. - The company anticipates continued strong sales momentum in adult nutrition and pet nutrition segments, despite challenges in the infant nutrition segment due to low birth rates and regulatory impacts[13]. Acquisitions and Investments - The acquisition of Zesty Paws completed on October 4, 2021, is expected to enhance the pet nutrition and care segment's revenue[10]. - Zesty Paws generated revenue of RMB 190.1 million from October 4 to December 31, 2021, with annual sales reaching USD 105.0 million, a growth of 43.6%[26]. - The company completed the acquisition of Zesty Paws, LLC for approximately $610 million on October 4, 2021, making it a wholly-owned subsidiary[144]. Cost Management and Profitability - The company's revenue for the year ended December 31, 2021, reached RMB 11,547.8 million, representing a 3.2% increase compared to 2020, driven by growth in adult nutrition and pet nutrition segments, as well as the consolidation of Zesty Paws' revenue post-acquisition[19]. - The total EBITDA for the year was RMB 1,428.9 million, down 33.7% from RMB 2,156.8 million in 2020[33]. - Sales and distribution costs for the year ended December 31, 2021, increased by 7.3% to RMB 4,796.3 million compared to 2020, with the ratio of these costs to total revenue rising from 40.0% in 2020 to 41.5% in 2021[29]. - The company is closely monitoring inflationary pressures on profits and plans to optimize product mix and improve cost efficiency to mitigate impacts[14]. Dividends and Shareholder Returns - The annual dividend payout ratio for 2021 was set at 30% of adjusted net profit, maintaining a consistent dividend policy[12]. - The board proposed a final dividend of HKD 0.17 per share, bringing the total annual dividend to HKD 0.54 per share, which represents approximately 30% of the adjusted net profit[43]. - Proposed dividend for the year is RMB 209,345,000, reflecting a significant allocation of profits[198]. Governance and Management - The company aims to achieve Group-wide B Corporation certification by 2025, with plans to obtain certification in the Australia-New Zealand market in 2023[19]. - The management team includes Mr. Luo, who has held multiple positions within the company since 1999, focusing on sales and business development[51]. - The board consists of eight members, including three executive directors, two non-executive directors, and three independent non-executive directors[62]. - The company emphasizes high standards of corporate governance to enhance transparency and accountability to shareholders[61]. Risk Management and Compliance - The company is committed to maintaining and continuously optimizing a robust risk management system to ensure sustainable business development[85]. - The audit committee reviews the risk and control management framework semi-annually, ensuring adequate resources are allocated for effective risk management and internal auditing[90]. - The company has established arrangements for employees to report any suspected misconduct related to financial reporting and internal controls[80]. Sustainability and Corporate Responsibility - The company emphasizes resource conservation and waste management to enhance environmental protection[46]. - The company plans to establish a Sustainability Committee by the end of 2022 to enhance its environmental, social, and governance performance[62]. - Charitable donations for the years ending December 31 were RMB 3.9 million, RMB 4.1 million, and RMB 4.2 million for 2019, 2020, and 2021 respectively[106].