Core Viewpoint - The company Christine has filed for bankruptcy due to an inability to repay debts, contrasting sharply with the booming baking industry in China, which is expected to grow significantly in the coming years [1][2]. Company Summary - Christine has been accepted for bankruptcy proceedings by the Shanghai Third Intermediate People's Court, with the first creditors' meeting scheduled for May 8 [1]. - The company is currently involved in 907 legal cases, with a total amount of 106 million yuan at stake [1]. - Christine's peak saw it operating nearly 1,000 stores, but it has since closed all locations, with a reported debt of approximately 57 million yuan in unpaid rent, supplier payments, and employee salaries [3]. - The company has faced nine consecutive years of losses since 2013, leading to a significant reduction in store numbers from 1,000 to 246 by mid-2022 [2][3]. Industry Summary - The Chinese baking market is thriving, with a retail market size of 561.42 billion yuan in 2023, reflecting a year-on-year growth of 9.2% [1]. - The market is projected to expand to 859.56 billion yuan by 2029, driven by increasing consumer spending and changes in dining consumption patterns [1]. - New retail channels are emerging, with traditional baking shops losing market share to supermarkets and online platforms, which offer a wider variety of products at competitive prices [5][6]. - The demographic of primary consumers in the baking market is shifting to younger generations (ages 24-44), who prioritize health and variety in their food choices [6].

Revenue Performance - For the six months ended June 30, 2022, the Group's revenue was approximately RMB 46,509,000, representing a decrease of approximately 71.3% compared to RMB 161,829,000 for the same period in 2021[22]. - The decrease in revenue was mainly due to the prolonged COVID-19 pandemic in Shanghai, which severely impacted the retail sector[22]. - Revenue from the Shanghai area accounted for approximately 59.9% of the Group's revenue in the first half of 2022, down from 66.0% in the same period of 2021[28]. - Total revenue from all product categories decreased in the first half of 2022, with bread and cakes revenue down by approximately RMB92,780,000 or 72.0%, pastries down by approximately RMB17,197,000 or 73.3%, and other products down by approximately RMB5,343,000 or 55.9%[29]. - The revenue from bread and cakes was RMB 36,015,000, while pastries generated RMB 6,274,000, both showing a significant decline compared to the previous year[21]. Financial Performance - The gross profit for the six months ended June 30, 2022, was approximately RMB 9,209,000, down from RMB 71,977,000 in the same period of 2021, reflecting a significant decline[21]. - The Group's gross profit for the six months ended 30 June 2022 was approximately RMB9,209,000, representing a decrease of approximately 87.2% from RMB71,977,000 in the same period of 2021, with a gross profit margin of 19.8% compared to 44.5%[35]. - The loss attributable to owners of the Company increased by approximately RMB4,505,000 from RMB68,009,000 in the first half of 2021 to RMB72,514,000 in the first half of 2022[53]. - The total comprehensive loss for the period was RMB 72,514,000, compared to a loss of RMB 68,009,000 for the same period in 2021[169]. - Loss from operations increased to RMB 67,679,000, compared to a loss of RMB 62,277,000 in the prior year, reflecting a worsening operational performance[157]. Cost Management - Selling and distribution expenses decreased by approximately RMB53,575,000 or 47.4% from approximately RMB112,916,000 in the same period of 2021 to approximately RMB59,341,000[40]. - Administrative expenses decreased by RMB3,158,000 or 14.2% from approximately RMB22,250,000 in the same period of 2021 to approximately RMB19,092,000[46]. - Total staff costs during the period were approximately RMB61,252,000, accounting for approximately 131.7% of operating revenue, a significant increase from 50% in the corresponding period in 2021[129]. Store Operations - The Group closed 94 loss-making stores, reducing the number of operating stores from 340 at the end of June 2021 to 246 by the end of the first half of 2022[25]. - The Group's strategy to close underperforming stores was implemented to mitigate losses due to poor revenue performance and rising rental costs[25]. - Of the closed stores, 57 were located in Shanghai, 23 in Jiangsu, and 14 in Zhejiang[25]. Inventory and Receivables - Inventory turnover days increased to 76 days as of 30 June 2022, compared to 40 days as of 31 December 2021, primarily due to decreased production and sales volume[56]. - Trade receivables turnover days increased by 4 days, from 5 days for the year ended 31 December 2021 to 9 days for the six months ended 30 June 2022[62]. - The aging of trade receivables showed a significant decrease in the 0 to 30 days category, from RMB3,103,000 as of 31 December 2021 to RMB1,484,000 as of 30 June 2022[70]. Cash Flow and Liquidity - Cash (and bank card) sales amounted to approximately RMB26,247,000, accounting for 54.7% of total sales revenue, compared to RMB96,160,000 and 59.4% in the same period of 2021[30]. - Bank and cash balances amounted to approximately RMB21,452,000 as of 30 June 2022, representing an increase of approximately RMB3,550,000 compared to RMB17,902,000 as of 31 December 2021[99]. - The net increase in cash and cash equivalents for the period was RMB 3,550,000, down from RMB 6,622,000 in the prior year[175]. - The cash and cash equivalents at the end of the reporting period were RMB 21,452,000, compared to RMB 70,469,000 at the end of June 2021[175]. Future Outlook and Strategy - The Group is actively attempting to change its traditional marketing model, but new partnerships are still under negotiation and have not yet contributed to revenue growth[22]. - The Group's efforts to adapt to market needs through new marketing strategies are ongoing and require time for implementation[22]. - Management remains optimistic about the bakery industry's growth in China, citing continuous economic growth and an expanding consumer base, particularly in third- and fourth-tier cities[135]. - The Group aims to enhance brand image and product awareness while targeting young consumer groups for healthier and high-quality bakery products[143]. - In the second half of 2022, the R&D department will focus on developing new bakery products, improving existing product quality, and enhancing food therapy product development[142][143]. Financial Position - Total assets as of June 30, 2022, were RMB 417,420,000, down from RMB 448,409,000 at the end of 2021, indicating a decline in asset value[160]. - The Group's total equity showed a deficit of approximately RMB264,471,000 as of June 30, 2022, compared to a deficit of approximately RMB206,037,000 as of December 31, 2021[121]. - Current liabilities totaled RMB 668,782,000, an increase from RMB 634,225,000 at the end of 2021, indicating rising short-term financial obligations[163]. - The Group's current liabilities exceeded its current assets by approximately RMB 587,182,000, and total liabilities exceeded total assets by approximately RMB 264,461,000[190]. Financing Activities - The Group is in negotiations for external financing, including obtaining further bank facilities and various forms of capital raising[193]. - The Group raised approximately HKD 16,567,000 (equivalent to approximately RMB 14,158,000) from the issuance of 202,037,600 subscription shares at a price of HKD 0.082 per share[197]. - The net proceeds from the subscriptions are intended to be used entirely to supplement the general working capital of the Group[200].

Business Performance - The Group's total revenue in 2021 was approximately RMB292.0 million, a decrease of approximately RMB111.9 million or 27.7% compared to 2020[29]. - Net loss attributable to owners of the Company was approximately RMB170.1 million, an increase of approximately RMB59.7 million or 54.1% in loss compared to 2020[29]. - The continued impact of the COVID-19 pandemic and the closure of loss-making stores contributed to the overall revenue decline in 2021[46]. - The Group's gross profit for 2021 was approximately RMB122,916,000, a decrease of approximately RMB38,774,000 or 24.0% from RMB161,690,000 in 2020, with a gross profit margin of 42.1%[53][56]. - Other income, gains, and losses for 2021 amounted to approximately RMB6,188,000, a decrease of approximately RMB41,117,000 from RMB47,305,000 in 2020, primarily due to reduced gains from property disposals and COVID-19 related subsidies[54][57]. - The overall revenue decline was attributed to the pandemic's impact on store operations and customer traffic, affecting daily necessity products[49]. Store Operations and Strategy - The Group closed 55 loss-making stores in 2021, significantly reducing operating costs and eliminating outdated production facilities[30]. - The Group plans to focus on R&D of new products to align with current consumer trends, aiming to provide healthier and more aesthetically pleasing products[31]. - The Group will enhance its online sales channels and establish strategic partnerships with well-known online sales platforms to drive product traffic[37]. - The Group's strategy includes exploring new business forms such as online sales and OEM bakery products to improve future performance[102]. - The management remains optimistic about the bakery industry in China, citing continuous economic growth, low entry barriers, and an expanding customer base from first and second-tier cities to third and fourth-tier cities[105][108]. Financial Position - The current ratio as at 31 December 2021 was 14.4%, down from 25.5% as at 31 December 2020, primarily due to the decrease in bank and cash balances[87]. - The Group's gearing ratio increased to approximately 145.9% as at 31 December 2021 from 105.9% in 2020, attributed to decreased cash balances and increased borrowings[87]. - Total equity amounted to a deficit of approximately RMB206,037,000 as at 31 December 2021, compared to a deficit of approximately RMB35,912,000 in 2020[99]. - The Group's total distributable reserves as of December 31, 2021, were approximately RMB227,596,000, which includes share premium, reserves, and profits[170]. Human Resources and Management - As of December 31, 2021, the Group had a total of 2,018 employees, down from 2,604 employees as of December 31, 2020, reflecting a workforce optimization strategy[102]. - The management team includes experienced professionals with over 30 years in the bakery and trade industries, enhancing operational expertise[121]. - The Group's human resources work focuses on training and controlling labor costs[196]. - The remuneration of executive Directors is reviewed by the Remuneration Committee and is determined based on qualifications, experience, duties, responsibilities, and performance[192]. Research and Development - The R&D department is focused on enhancing mass production technology and developing a variety of new products, including themed cakes for various festivals[106][109]. - Ongoing research and development efforts are aimed at enhancing product offerings, with an investment of RMB 2 million allocated for new technology initiatives[115]. Market Expansion and Future Outlook - The company has outlined a positive outlook for the upcoming year, projecting a revenue growth of 10% to 15% based on current market trends and product demand[115]. - The company is actively pursuing market expansion strategies, targeting new regions with a projected increase in market share of 5% over the next year[115]. - A new strategic partnership has been established, expected to enhance distribution channels and improve customer access to products[115]. Corporate Governance - The Group's commitment to food safety remains a top priority amidst ongoing industry risks[139]. - The Group is committed to maintaining high standards of corporate governance through its audit and nomination committees[126]. - The composition of the Board and the summary of the work of all Board committees are included in the "Corporate Governance Report" section of the annual report[137].

Business Performance - The Group's total revenue in 2021 was approximately RMB292.0 million, a decrease of approximately RMB111.9 million or 27.7% compared to 2020[29]. - Net loss attributable to owners of the Company was approximately RMB170.1 million, an increase of approximately RMB59.7 million or 54.1% compared to 2020[29]. - Revenue from bread and cakes was RMB215.7 million in 2021, down from RMB286.7 million in 2020, representing a decline of approximately 24.8%[44]. - The Group's gross profit for 2021 was approximately RMB122.9 million, down from RMB161.7 million in 2020, reflecting a decrease of about 24%[44]. - The decline in revenue was attributed to the ongoing COVID-19 pandemic, the closure of loss-making stores, and the slow realization of new marketing strategies[46]. - In 2021, revenue from Shanghai decreased by approximately RMB64,727,000 to RMB182,754,000, accounting for 62.6% of total revenue, compared to 61.3% in 2020[49]. - Sales revenue from major products such as bread and cakes decreased by approximately RMB71,032,000 or 24.8% compared to 2020, while sales from pastries decreased by approximately RMB13,276,000 or 24.6%[49]. - Other income, gains, and losses for 2021 amounted to approximately RMB6,188,000, a decrease of approximately RMB41,117,000 from RMB47,305,000 in 2020, mainly due to reduced gains from property disposals and COVID-19 related subsidies[57]. - The overall revenue decline was attributed to the pandemic and the temporary closure of stores, impacting sales of daily necessities significantly[49]. Strategic Focus and Future Plans - The Group aims to establish "Christine" as a reputable food brand by providing safe, tasty, and healthy products[23]. - The Group plans to focus on the research and development of new products to align with current consumer trends, emphasizing health and aesthetics[31]. - The Group aims to establish strategic cooperation with Chinese medicine colleges to integrate food therapy and health care elements into its products[39]. - The Group will enhance its online sales channels and collaborate with well-known online platforms to expand brand influence[37]. - The Group's strategy includes exploring new business forms such as online sales and OEM for bakery products to improve future performance[102]. - The management plans to recruit high-level business personnel to inject new talent into the Group and enhance its operational capabilities[102]. - The Group's management remains optimistic about the bakery industry's growth in China, citing continuous economic growth, low entry barriers, and an expanding customer base from first and second-tier cities to third and fourth-tier cities[105][108]. Financial Management and Structure - The Group's gearing ratio increased to approximately 145.9% as at 31 December 2021 from 105.9% in 2020, attributed to decreased cash balances and increased borrowings[87]. - As of December 31, 2021, the Group had bank borrowings of approximately RMB130,000,000, up from RMB100,000,000 in 2020[90][91]. - The Group aims to improve its financial structure and replenish working capital before considering dividend distribution in the future[140]. - The Group's total distributable reserves as of December 31, 2021, were approximately RMB227,596,000, which includes share premium, reserves, and profits[170]. - The Group's unused net proceeds balance as of December 31, 2021 was approximately HK$5.5 million, held as short-term deposits[155]. Operational Changes and Challenges - The Group closed 55 loss-making stores in 2021, significantly reducing operating costs and eliminating outdated production facilities[30]. - Cash sales (including bank cards and third-party payment platforms) accounted for 51.1% of total sales in 2021, down from 54.7% in 2020, while sales through coupons and prepaid cards accounted for 48.9%[49]. - The Group is currently implementing store-closure plans and staff downsizing, which will lead to job rotation, multi-skills training, and legal severance[196]. - The Group continues to face ongoing risks including intense competition, rising labor costs, and raw material prices, leading to a strategy of closing loss-making stores[139]. Human Resources and Management - As of December 31, 2021, the Group had a total of 2,018 employees, down from 2,604 employees as of December 31, 2020, following the closure of loss-making stores and workforce optimization[102]. - The remuneration of executive Directors is reviewed by the Remuneration Committee and is determined based on qualifications, experience, duties, responsibilities, and performance[192]. - The Group's human resources focus includes training and controlling labor costs[196]. - The independent non-executive director, Ms. Hong Xue, has extensive experience in the financial system, having served as the president of Zhenjiang Branch of China Everbright Bank, which adds financial acumen to the board[127]. Governance and Compliance - The Group's principal activity is investment holding, with no significant changes in the nature of its principal activities during the year ended December 31, 2021[137]. - The annual report includes a section on "Management Discussion and Analysis," which provides a fair review of the Group's business and performance using financial key performance indicators[137]. - The composition of the Board and the summary of the work of all Board committees are included in the "Corporate Governance Report" section of the annual report[137]. - The Group's financial risk management objectives and policies are detailed in note 6 of the consolidated financial statements[137]. Market and Product Development - The Group is focused on improving operational efficiency and leveraging technology to drive growth in the upcoming fiscal year[121]. - The company is actively involved in the development of new technologies and products, focusing on expanding its market presence[117]. - The Group aims to enhance brand image and product awareness while targeting young consumer groups for healthier and high-quality bakery products[106][109]. - The Group's research and development department focused on improving products and optimizing mass production technology, including the development of new bread, cakes, and desserts[106][109].

Revenue Performance - For the six months ended June 30, 2021, the Group's revenue was approximately RMB161,829,000, representing a decrease of approximately 15.8% compared to RMB192,145,000 for the same period in 2020[18]. - The decrease in revenue was mainly due to the prolonged COVID-19 pandemic, which severely impacted the economy and consumer industry, leading to a direct decline in retail sales[18]. - Revenue from bread and cakes was RMB128,795,000, while pastries and other products generated RMB23,471,000 and RMB9,563,000 respectively, showing a decline across all product categories[17]. - Revenue from the Shanghai area accounted for approximately 66.0% of the Group's revenue in the first half of 2021, down from 70.8% in the same period of 2020, with a revenue decrease of approximately RMB23,660,000 or 18.1%[23]. - Revenue from bread and cakes decreased by approximately RMB20,752,000 or 13.9%, pastries decreased by approximately RMB4,361,000 or 15.7%, and other products decreased by approximately RMB5,203,000 or 35.2% in the first half of 2021 compared to the same period in 2020[28]. - For the six months ended June 30, 2021, total revenue from contracts with customers was RMB 161,829,000, a decrease of 15.7% from RMB 192,145,000 in the same period of 2020[200]. - Revenue from the sale of bakery products accounted for the entirety of the reported revenue, amounting to RMB 161,829,000, which is a decline from the previous year's figure[200]. Profitability and Financial Performance - The gross profit for the six months ended June 30, 2021, was approximately RMB71,977,000, down from RMB83,822,000 in the same period of 2020, indicating a decline in profitability[17]. - Gross profit for the six months ended June 30, 2021, was approximately RMB71,977,000, a decrease of approximately 14.1% from RMB83,822,000 in the same period of 2020, with an overall gross profit margin of approximately 44.5%[30]. - The loss attributable to owners of the Company increased from approximately RMB66,116,000 to approximately RMB68,009,000, an increase of approximately RMB1,893,000[46]. - Loss from operations was RMB 62,277,000, compared to a loss of RMB 57,334,000 in the previous year, indicating a deterioration in operational performance[147]. - The company reported a total comprehensive loss of RMB 67,009,000 for the six months ended June 30, 2021, compared to a loss of RMB 35,920,000 for the same period in 2020[158]. - The accumulated losses increased to RMB 767,805,000 as of June 30, 2021, from RMB 699,796,000 at the beginning of the year[158]. Cost Management - Selling and distribution expenses decreased by approximately RMB8,044,000 or 6.7% to approximately RMB112,916,000 for the six months ended June 30, 2021, compared to approximately RMB120,960,000 in the same period of 2020[36]. - Administrative expenses decreased by approximately RMB5,026,000 or 18.4% to approximately RMB22,250,000 for the six months ended June 30, 2021, due to improved management and streamlined human resources[38]. - Finance costs decreased by approximately RMB3,050,000 or 34.7% to approximately RMB5,732,000 for the six months ended June 30, 2021, primarily due to reduced interest expenses on lease liabilities[43]. Store Operations and Strategy - The Group implemented a strategy to close down loss-making stores, contributing to the reduction in the number of operating and new stores, which further affected revenue[18]. - The number of stores decreased from 398 at the end of June 2020 to 340 at the end of the first half of 2021, with 58 stores closed, including 39 in Shanghai, 8 in Jiangsu, and 11 in Zhejiang[22]. - Future strategies may include further adjustments to the store portfolio and exploration of new sales channels to enhance revenue generation[18]. - The Group continues to face challenges in the retail sector due to ongoing economic uncertainties and changing consumer behaviors[18]. Financial Position and Liquidity - As of June 30, 2021, the Group's bank and cash balances amounted to approximately RMB70,469,000, an increase of approximately RMB6,622,000 compared to RMB63,847,000 as of December 31, 2020, mainly due to a net cash inflow from operating activities of approximately RMB8,930,000[96]. - The current ratio as of June 30, 2021, was 18.5%, down from 25.5% as of December 31, 2020[98]. - The Group's total equity showed a deficit of approximately RMB103,921,000 as of June 30, 2021, compared to a deficit of approximately RMB35,912,000 as of December 31, 2020[117]. - The gearing ratio as of June 30, 2021, was approximately 119.3%, up from 105.9% as of December 31, 2020, primarily due to increased bank borrowings[118]. - The Group's current liabilities exceeded its current assets by approximately RMB 499.9 million as of June 30, 2021[173]. - Total liabilities exceeded total assets by approximately RMB 103.9 million as of June 30, 2021[173]. Employee and Operational Efficiency - Employee headcount as of June 30, 2021, was 2,255, a decrease of approximately 21.8% compared to the same period in 2020[139]. - Total staff costs during the period were approximately RMB 80,876,000, accounting for 50.0% of operating revenue, down from 52.7% in the previous year[139]. - The Group's management has identified streamlining the organization structure and formulating multi-tasking roles as key objectives[140]. Future Outlook and Strategic Plans - The management remains optimistic about the bakery industry in China, citing continuous economic growth and an expanding consumer base in lower-tier cities[144]. - The Group plans to enhance product offerings by developing new types of bread, cakes, and desserts, and improving the taste and texture of existing products[144]. - The management aims to target young consumer groups to enhance brand image and product awareness, focusing on healthier and high-quality bakery products[144]. - Significant uncertainties exist regarding the Group's ability to achieve its plans and measures for continued operations[182]. - The Group's ability to continue as a going concern depends on successful negotiations with banks for additional facilities and extending repayment due dates[182].

Financial Performance - The company reported a significant increase in revenue, achieving a total of $150 million, representing a 25% growth year-over-year[12]. - The gross profit margin improved to 40%, up from 35% in the previous year[12]. - Operating expenses were reduced by 5%, contributing to overall profitability[12]. - The Group's total revenue in 2020 was approximately RMB403.9 million, representing a decrease of approximately RMB148.0 million or 26.8% compared to 2019[29]. - Net loss attributable to owners of the Company was approximately RMB110.4 million, a significant decrease of approximately RMB113.9 million or 50.8% in loss compared to 2019[29]. - The Group's gross profit for the year ended 31 December 2020 was approximately RMB161,690,000, a decrease of approximately RMB81,636,000 or 33.6% compared to approximately RMB243,326,000 for the year ended 31 December 2019[42]. - The gross profit margin for 2020 was approximately 40.0%, down from approximately 44.1% in 2019[42]. - The Group recorded a loss for the year ended December 31, 2020, with financial details available in the consolidated financial statements on pages 81 to 87[141]. - The Board does not recommend the payment of a final dividend for 2020 due to ongoing operating losses[142]. Market and Product Development - User data showed an increase in active users, reaching 1.2 million, which is a 15% increase compared to the previous year[12]. - New product launches are expected to contribute an additional $30 million in revenue over the next fiscal year[12]. - The Group will focus on the research and development of new products to align with current consumption concepts and habits[31]. - There will be an increase in integrated sales of health drinks and bakery products to enhance product competitiveness[31]. - The Group aims to provide healthy, trendy, and aesthetically pleasing products in the future[31]. - The Group plans to focus on developing new products, including various types of bread, cakes, and desserts, and improving the taste and softness of existing products in 2020[100]. - The Group aims to transform its business model by optimizing and expanding sales channels, establishing interconnected online and offline operations, and enhancing the "Christine" brand image[101]. Strategic Initiatives - The company provided a positive outlook for the next quarter, projecting a revenue growth of 20% to $180 million[12]. - Market expansion plans include entering two new countries, which are projected to increase market share by 10%[12]. - The company is considering strategic acquisitions to enhance its product offerings and market presence[12]. - A new marketing strategy is being implemented, aiming to increase brand awareness by 30% over the next year[12]. - The Group is exploring new business patterns by cooperating with renowned convenience store chains and establishing smarter online sales channels[33]. - The Group aims to establish strategic cooperation with colleges of Chinese medicine to integrate food therapy and health care elements into its products[33]. Cost Management and Efficiency - The Group implemented effective cost control measures to mitigate losses during the challenging year[29]. - The Group closed down about 100 loss-making stores, significantly reducing operating costs and eliminating outdated production facilities[30]. - Selling and distribution expenses decreased by approximately RMB75,679,000 from approximately RMB341,994,000 in 2019 to approximately RMB266,315,000 in 2020 due to store closures and reduced revenue[42]. - Administrative expenses for the year ended 31 December 2020 amounted to approximately RMB42,133,000, representing a significant decrease of approximately RMB32,175,000 or 43.3% compared to RMB74,308,000 for the year ended 31 December 2019[44]. Governance and Management - The company has a strong board of directors with diverse expertise in law, finance, and management, enhancing its governance structure[119]. - The company is committed to maintaining high standards of corporate governance with independent non-executive directors actively involved in key committees[121]. - The board's composition reflects a balance of experience in both the bakery industry and financial management, positioning the company for strategic growth[121]. - The Company has appointed experienced executives in sales and management, including Ms. Liping Huang, who oversees sales in Zhejiang, Wuxi, and Suzhou with approximately 16 years of experience[129]. Financial Position and Risks - As of December 31, 2020, the Group had bank borrowings of approximately RMB100,000,000, up from approximately RMB35,950,000 in 2019[79]. - The Group's gearing ratio increased to approximately 105.9% as of December 31, 2020, compared to approximately 89.5% as of December 31, 2019, primarily due to an increase in bank borrowings[79]. - The Group continues to face risks from intense competition and ongoing increases in labor and raw material costs, leading to a strategy of closing loss-making stores[141]. - Food safety remains a significant industry risk, and the Group is committed to ensuring food safety while adhering to environmental and social responsibilities[141]. Future Outlook - The Group is confident in pushing forward with business transformation to create long-lasting value for the Company and shareholders[33]. - The management remains optimistic about the bakery industry's growth in China, citing continuous economic growth, low entry barriers, and an expanding customer base from first and second-tier cities to third and fourth-tier cities[94][99]. - The Group plans to innovate diversified business forms and promote intelligent management to capture the consumer market post-economic recovery[102].

0 ® 克莉絲汀 克 莉 絲 汀 國 際 控 股 有 限 公 司 CHRISTINE INTERNATIONAL HOLDINGS LIMITED (於開曼群島註冊成立之有限公司) (Incorporated in the Cayman Islands with limited liability) 股份代號 Stock Code: 1210 INTERIM REPORT 2020 中期報告 CONTENTS 目錄 | --- | --- | --- | --- | --- | --- | |----------|----------------------|----------------------------------------|------------------------------------------------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 目錄 | | CONTENTS | | | | 公司資料 | | Corporate Information | | 2 | ...

Financial Performance - In 2019, the Group's revenue was approximately RMB 551,941,000, representing a decrease of approximately 16.88% compared to RMB 664,017,000 in 2018[25]. - The Group's overall same-store sales growth rate for the year was -10.07%, influenced by an outdated marketing model and declining brand efficiency[25]. - The gross profit for the Group in 2019 was RMB 243,326,000, down from RMB 295,900,000 in 2018, reflecting a decrease of approximately 17.73%[24]. - Cash and bank card sales amounted to approximately RMB284,692,000, a decrease of about 20.04% from RMB356,021,000 in 2018[31]. - Gross profit for the year ended 31 December 2019 was approximately RMB243,326,000, a decrease of about 17.77% from RMB295,900,000 in 2018[31]. - The gross profit margin for 2019 was approximately 44.09%, slightly down from 44.56% in 2018[31]. - Other income for the year ended December 31, 2019, amounted to approximately RMB4,953,000, an increase of approximately RMB53,626,000 compared to a loss of RMB48,673,000 for the year ended December 31, 2018[33]. - Net losses decreased by approximately RMB7,878,000 from approximately RMB232,175,000 for the year ended December 31, 2018, to approximately RMB224,297,000 for the year ended December 31, 2019[34]. - The Group recorded a loss for the year ended 31 December 2019, with financial details available in the consolidated financial statements on pages 88 to 94[125]. Store Operations - The total number of stores decreased from 586 at the end of 2018 to 476 at the end of 2019, resulting in a net reduction of 110 stores[25]. - The closure of 117 poorly-performing stores was part of a strategy to manage operating costs, despite opening 7 new stores[25]. - The number of closed stores in Shanghai was 43, accounting for 36.75% of total closures for the year[29]. - The Group's strategy includes closing down cost-ineffective stores that record frequent losses[125]. Revenue Breakdown - Revenue from moon cakes decreased from RMB 58,058,000 in 2018 to RMB 31,559,000 in 2019, a decline of approximately 45.70%[24]. - Revenue from bread and cakes was RMB 407,651,000 in 2019, down from RMB 475,354,000 in 2018, a decrease of approximately 14.23%[24]. - The total revenue from pastries was RMB 72,210,000 in 2019, down from RMB 80,309,000 in 2018, a decrease of approximately 10.00%[24]. - Sales revenue from bread and cakes decreased by approximately RMB67,703,000, or 14.24%, compared to 2018[28]. - Sales revenue from pastries decreased by approximately RMB8,099,000, or 10.08%, compared to 2018[28]. - The turnover of moon cakes decreased by approximately RMB26,499,000, representing a decrease of approximately 45.64%[28]. - Revenue from Jiangsu Province and Zhejiang Province decreased by approximately RMB67,690,000 and RMB23,741,000, representing decreases of 36.08% and 26.42%, respectively[29]. Marketing and Sales Strategy - The Group's marketing strategies and sales channels were ineffective, leading to a continuous decline in overall operating income for the year[25]. - Seasonal products like moon cakes faced reduced market demand and increased competition from alternative products, contributing to declining performance[25]. - The Group aims to explore new business forms such as online sales and OEM of bakery products to improve future performance[76]. - Product development will emphasize differentiation, personalization, and regionalization to meet market demands[78]. - Improvements in the delivery and sales process of cold chain products are underway to enhance taste and consumer experience[82]. Financial Management - The Group adopted a prudent financial management approach to maintain sound liquidity amid a year-on-year decline in cash positions[61]. - The current ratio as of December 31, 2019, was 22.36%, down from 65.94% as of December 31, 2018[63]. - The Group's gearing ratio was approximately 89.54% as of December 31, 2019, compared to 62.53% in 2018, primarily due to a decline in revenue and an increase in bank borrowings[63]. - The Group aims to improve its financial structure and replenish working capital before considering dividend distribution[125]. Human Resources - As of December 31, 2019, the total number of employees in the Group was 3,306, down from 4,345 as of December 31, 2018, with total staff costs approximately RMB 282,457,000[76]. - The majority of employees are sales staff in stores, and the Group is currently implementing store-closure plans and staff downsizing, affecting job rotation and multi-skills training[169]. - The Group's human resources focus includes training and controlling labor costs amid ongoing restructuring efforts[169]. Corporate Governance - The Company has maintained compliance with relevant laws and regulations that significantly impact its operations, as outlined in the Corporate Governance Report[123]. - The Company has received annual confirmations of independence from all independent non-executive Directors, affirming their compliance with independence guidelines[151]. - The Company has arranged appropriate directors' and officers' liability insurance coverage for its Directors and officers[165]. Shareholder Information - The largest supplier accounted for 11.27% of the Group's total purchases, while the top five suppliers represented 29.59% of total purchases[149]. - No single customer accounted for over 10% of the Group's total sales during the year ended December 31, 2019[149]. - The report highlights the ownership structure and interests of various shareholders, emphasizing the control by certain individuals and corporations[183].

Revenue Performance - For the six months ended June 30, 2019, the Group's operating revenue was approximately RMB 258,151,000, representing a decrease of approximately 17.5% compared to RMB 312,971,000 for the same period in 2018[12][13]. - The decline in revenue is attributed to high homogeneity of bakery products and fierce industry competition, leading to a continuous decrease in market share[12][13]. - The Group's overall revenue decline is linked to the closure of underperforming stores and reduced brand visibility in the market[12][13]. - The operating profit for bread and cakes was RMB 72,703,000 for the first half of 2019, down from RMB 93,593,000 in the same period of 2018, reflecting a decline of approximately 22.3%[11]. - Revenue from other products was RMB 23,437,000 in 2019, compared to RMB 27,817,000 in 2018, marking a decrease of approximately 15.7%[11]. - Operating revenue from bread and cakes decreased by approximately RMB 45,460,000 or 18.5% in the first half of 2019 compared to the same period in 2018[17]. - The Group's revenue decreased by approximately 8.2% for the six months ended June 30, 2019, compared to the end of the previous year[36]. - The Group's revenue for the six months ended June 30, 2019, was RMB 258,151,000, a decrease of 17.7% compared to RMB 312,971,000 in the same period of 2018[155]. Store Operations - The Group closed several loss-making stores, resulting in a year-on-year decrease in the number of stores[12][13]. - The number of stores decreased from 616 at the end of June 2018 to 533 at the end of the first half of 2019, with a net decrease of 83 stores, including 44 in Shanghai, 21 in Jiangsu, and 18 in Zhejiang[15]. - The number of closed stores in the Shanghai area represented 40.7% of the total closed stores in the first half of 2019, compared to 48.2% in the same period of 2018[17]. - The number of stores decreased by 59 during the six months ended June 30, 2019, leading to a reduction in receivables by approximately RMB 5,828,000 compared to December 31, 2018[48]. Financial Performance - The Group recorded a loss of approximately RMB 107,563,000, a decrease of approximately RMB 7,992,000 compared to a loss of approximately RMB 115,555,000 for the corresponding period in 2018[28]. - Gross operating profit for the six months ended June 30, 2019, was approximately RMB 110,936,000, a decrease of 17.4% from RMB 134,275,000 in the same period of 2018[19]. - The total payroll during the period amounted to approximately RMB 138.079 million, accounting for 53.5% of operating revenue, an increase of 6.2% compared to the previous year[141]. - The Group reported a loss before taxation of RMB 107,349,000 for the six months ended June 30, 2019, compared to a loss of RMB 115,763,000 in the prior year[155]. - The company recorded a loss and total comprehensive expense for the period of RMB (107,563) thousand for the six months ended June 30, 2019[162]. Brand and Market Position - The weakened brand recognition has negatively impacted the Group's operational performance, with most single stores recording lower operating revenue than previous periods[12][13]. - The competitive landscape in the bakery industry remains challenging, necessitating strategic adjustments to regain market share[12][13]. - The Group plans to optimize existing retail stores and maintain branding to capture further development opportunities in the bakery market[150]. - The Company aims to enhance its market position by selling finished or semi-finished products to various distributors and optimizing existing retail outlets[147]. Cash Flow and Liquidity - As of June 30, 2019, cash and bank deposits amounted to approximately RMB 78,122,000, a decrease of approximately RMB 104,010,000 compared to RMB 182,132,000 as of December 31, 2018, primarily due to a net cash outflow of approximately RMB 53,372,000 from operating activities[66]. - The current ratio as of June 30, 2019, was 28.74%, significantly lower than 65.94% as of December 31, 2018, due to decreased operating revenue affecting cash reserves[66]. - The total current liabilities exceeded total current assets by RMB 378,744 thousand as of June 30, 2019, indicating a liquidity concern[170]. - Cash and cash equivalents decreased by RMB 104,010 thousand, from RMB 182,132 thousand at the beginning of the period to RMB 78,122 thousand at the end of the period[168]. Accounting Policies and Standards - The Group has applied HKFRS 16 for the first time, which supersedes HKAS 17 Leases, impacting the accounting policies for leases[178]. - The Group recognizes right-of-use assets at the commencement date of the lease, measured at cost less any accumulated depreciation and impairment losses[180]. - The Group's financial statements for the six months ended 30 June 2019 reflect the impacts of the new accounting standards implemented[177]. - The Group's accounting policies have been updated to align with the latest HKFRSs, ensuring compliance and accuracy in financial reporting[174]. - The Group's transition to HKFRS 16 did not require restatement of comparative information[190]. Employee and Payroll Information - The Group had a total of 3,903 employees as of June 30, 2019, representing a decrease of 11.1% compared to the same period in 2018[141]. Future Plans and Investments - The Company plans to allocate 41% of the net proceeds (HK$146.288 million) for opening new retail outlets, with no funds remaining unutilized[138]. - 39% of the net proceeds (HK$139.152 million) is designated for expanding production capacity and improving information technology systems, with an expected completion timeline by the end of 2021[138]. - 10% of the net proceeds (HK$35.68 million) is allocated for R&D of new products, with HK$24.386 million already utilized[138].

Financial Performance - In 2018, the Group's revenue was approximately RMB664,017,000, representing a decrease of approximately 17.52% compared to RMB805,046,000 in 2017[14]. - The decline in revenue was primarily due to the closure of 66 poorly-performing stores, resulting in a net decrease of 62 stores from 648 at the end of 2017 to 586 at the end of 2018[14]. - The overall same-store sales growth rate for the Group in 2018 was negative 10.8%, attributed to factors such as outdated products and marketing channels[14]. - The gross profit for the year ended 31 December 2018 was approximately RMB295,900,000, representing a decrease of approximately 18.85% compared to RMB364,618,000 for the year ended 31 December 2017, with a gross profit margin of 44.56%[22]. - Net losses increased by approximately RMB103,521,000 from RMB128,654,000 in 2017 to RMB232,175,000 in 2018, with a net profit margin decrease from -15.98% to -34.97%[32]. - The Group recorded impairment losses of approximately RMB58,022,000 for the year ended 31 December 2018, an increase of approximately RMB55,455,000 compared to losses of RMB2,567,000 in 2017[26]. - The Group recorded a loss for the year ended 31 December 2018, with no final dividend recommended for 2018[156]. Revenue Sources and Trends - Revenue from retail outlets in Shanghai accounted for approximately 58.21% of the Group's total revenue for 2018, a slight decrease from 58.05% in 2017, with a revenue decline of approximately RMB80,756,000 or 17.28% compared to 2017[16]. - Sales revenue from major products, including bread and cakes, decreased by approximately RMB100,371,000 or 17.43% in 2018 compared to 2017, while sales of pastries decreased by approximately RMB16,563,000 or 17.10%[16]. - Revenue from moon cakes decreased by approximately RMB9,492,000 or 14.05% in 2018 compared to 2017, reflecting a sluggish traditional consumption market[16]. Store Operations and Strategy - The total number of retail outlets decreased from 648 to 586, impacting overall revenue negatively[14]. - The company plans to continue its strategy of closing underperforming stores to improve overall performance[14]. - The Group closed 34 stores in Shanghai during 2018, representing 51.52% of total store closures for the year[16]. Expenses and Cost Management - Sales expenses for the year ended 31 December 2018 were approximately RMB401,938,000, a decrease of approximately RMB30,117,000 from RMB432,055,000 in 2017, attributed to a reduction in operational scale and employee costs[27]. - Selling expenses decreased by approximately RMB30,117,000 from RMB432,055,000 in 2017 to RMB401,938,000 in 2018 due to the closure of certain stores[30]. - Administrative expenses increased by approximately RMB694,000 to RMB77,167,000 in 2018, primarily due to increased salary expenses for R&D and product manufacturing[32]. Cash Flow and Liquidity - As of December 31, 2018, cash and bank deposits amounted to approximately RMB182,132,000, a decrease of approximately RMB145,898,000 compared to RMB328,030,000 as of December 31, 2017, primarily due to a decline in revenue and sales of prepaid cards and coupons[61]. - The net cash outflow from operating activities during the year was approximately RMB135,936,000, attributed to the decline in revenue and sales of prepaid cards and coupons[61]. - The current ratio as of December 31, 2018, was 65.94%, down from 93.13% as of December 31, 2017, indicating a deterioration in liquidity[61]. Market and Consumer Insights - The domestic bakery market growth rate decreased from 15.2% in 2011 to 10% in 2017, indicating a slowing trend but still optimistic growth potential due to the large industry output value[86]. - The company aims to focus on product innovation and market forecasting to adapt to changing consumer preferences, particularly targeting younger demographics[88]. - The majority of new generation consumers are expected to be young women, with a rapid increase in demand for delicate desserts and pastries[89]. Research and Development - The company plans to enhance R&D in cold chain products to improve competitiveness in the new operating model of onsite mini bakery stores[97]. - The R&D department will develop occasion-themed products tailored for various festivals to attract customers and meet consumer needs[97]. - The company will focus on improving commercial packaging to enhance first impressions and increase sales chances[97]. Management and Governance - The company has appointed a diverse board of directors with expertise in finance, law, and healthcare, enhancing its strategic decision-making capabilities[124][125][128]. - The management team includes professionals with significant experience in auditing and corporate finance, ensuring robust financial oversight[133]. - The board's composition reflects a commitment to governance and compliance, with members holding relevant certifications and qualifications[127]. Risks and Challenges - The company faces risks from intense competition in the baking industry, which has led to continuous losses and the closure of unprofitable stores[151]. - Food safety remains a significant industry risk, and the company is committed to upholding food safety standards[151]. - The Group continues to face risks from intense competition, increasing labor costs, and raw material prices, leading to a strategy of closing loss-making stores[155]. Future Outlook - The company provided guidance for the next fiscal year, projecting revenue growth of BB% and aiming to reach a target of $CC million[106]. - Market expansion efforts are underway, with plans to enter new regions, potentially increasing market share by FF%[109]. - The company is considering strategic acquisitions to enhance its product offerings and market presence, with a budget of $GG million allocated for this purpose[110].