Financial Performance - The company reported a net loss attributable to shareholders of approximately RMB 36.9 million for the first half of 2024, compared to a profit of RMB 16.5 million in the same period of 2023, indicating a significant decline in performance[7]. - Revenue for the first half of 2024 was approximately RMB 196.3 million, a decrease of about 41.6% from RMB 336.4 million in the same period of 2023[7]. - Gross profit fell by approximately 40.9% from RMB 179.1 million in the first half of 2023 to RMB 105.9 million in the first half of 2024, aligning with a total revenue decrease of about 41.6%[14]. - Operating loss for the six months was RMB 36,539 thousand, compared to an operating profit of RMB 38,801 thousand in the prior year, reflecting a significant shift in performance[86]. - Total comprehensive loss for the period amounted to RMB 37,055 thousand, compared to a total comprehensive income of RMB 16,360 thousand in the previous year[88]. - The company's net asset value decreased to RMB 519,160 thousand from RMB 562,226 thousand at the end of 2023, reflecting a decline of approximately 7.7%[91]. - The company's equity holders' share of the loss for the period was RMB 36,949,000, compared to a profit of RMB 16,447,000 in the same period last year, reflecting a challenging operating environment[96]. Research and Development - Research and development expenses for the first half of 2024 amounted to approximately RMB 57.1 million, significantly higher than RMB 24.0 million in the same period of 2023, reflecting the company's commitment to R&D[7]. - The company has 60 ongoing research projects, with 7 projects currently under review by the National Medical Products Administration, and expects to launch at least 20 new products in the next three years[9]. - Research and development expenses increased significantly to RMB 57,059 thousand, compared to RMB 24,028 thousand in the same period of 2023, marking an increase of approximately 137.5%[86]. Cost Management and Efficiency - The company plans to enhance production efficiency and reduce costs through upgrades to production equipment and the implementation of photovoltaic power generation projects[9]. - The total capital expenditures amounted to approximately RMB 46.0 million in the first half of 2024, down from RMB 73.3 million in the first half of 2023[27]. - The company anticipates that market demand will gradually recover, leading to improved sales performance as inventory levels normalize[9]. Shareholder Information - The major shareholders include Full Bliss Holdings Limited with 27.53% and Rayford with 24.03% of the shares[47]. - The largest shareholder, Mr. Cao Changcheng, holds 72.18% of the shares through controlled entities[39]. - The company has a stock option plan that was adopted on June 14, 2018, with no stock options granted during the six months ended June 30, 2024[49]. - The company has 16,000,000 unexercised stock options under the stock option plan, representing approximately 2.13% of the issued share capital[50]. Liquidity and Financial Position - Cash and cash equivalents decreased to approximately RMB 2.8 million as of June 30, 2024, from RMB 34.8 million as of December 31, 2023[29]. - The group has committed to enhancing collection efforts on receivables from government-related entities to improve liquidity[1]. - The group anticipates that, assuming the success of the measures taken, it will have sufficient funds to meet its liabilities for at least the next twelve months[1]. - As of June 30, 2024, cash and cash equivalents stood at RMB 2,823,000, a significant drop from RMB 78,299,000 at the end of June 2023, highlighting liquidity challenges[97]. Inventory and Receivables - Inventory as of June 30, 2024, totaled RMB 140,835,000, down from RMB 161,718,000 as of December 31, 2023, representing a decrease of approximately 12.9%[121]. - Trade receivables as of June 30, 2024, were RMB 155,749,000, a decrease from RMB 183,482,000 as of December 31, 2023, indicating a reduction of about 15.1%[122]. Financing and Debt - Financing costs net increased from RMB 2.2 million in the first half of 2023 to RMB 7.4 million in the first half of 2024, mainly due to increased loan interest[20]. - The debt-to-equity ratio increased from 60.9% as of December 31, 2023, to 67.0% as of June 30, 2024, primarily due to increased bank loans[30]. - Total bank and other loans amounted to RMB 347,944,000 as of June 30, 2024, compared to RMB 342,256,000 as of December 31, 2023, showing a slight increase[129]. Corporate Governance - The company has complied with all applicable corporate governance codes except for a specific provision regarding the company secretary[71]. - The company reported no significant events occurring after the reporting period[149].

Financial Performance - Revenue decreased by approximately 41.6% from RMB 336.4 million in the first half of 2023 to RMB 196.3 million in the first half of 2024[2] - Gross profit fell by about 40.9% from RMB 179.1 million in the first half of 2023 to RMB 105.9 million in the first half of 2024[2] - The company reported a loss attributable to equity holders of approximately RMB 36.9 million in the first half of 2024, compared to a profit of approximately RMB 16.5 million in the first half of 2023[2] - Operating loss for the first half of 2024 was RMB 36.5 million, a significant decline from a profit of RMB 38.8 million in the same period of 2023[3] - The group reported total revenue of RMB 196,322,000 for the six months ended June 30, 2024, compared to RMB 336,437,000 for the same period in 2023, representing a decrease of approximately 42%[12] - The group’s basic loss per share for the six months ended June 30, 2024, was RMB 36,941,000, compared to a profit of RMB 16,456,000 for the same period in 2023[17] - For the first half of 2024, the company reported a net loss attributable to shareholders of approximately RMB 36.9 million, compared to a net profit of 16.5 million in the same period of 2023, indicating a significant decline in profitability[27] - The company's revenue for the first half of 2024 was approximately RMB 196.3 million, representing a decrease of about 41.6% compared to RMB 336.4 million in the same period of 2023[27] - The gross profit margin for the first half of 2024 was 53.93%, slightly up from 53.24% in the same period of 2023, despite the overall decline in revenue[27] Assets and Liabilities - Total assets as of June 30, 2024, amounted to RMB 833.2 million, an increase from RMB 776.9 million as of December 31, 2023[4] - Cash and cash equivalents decreased to RMB 2.8 million from RMB 34.8 million as of December 31, 2023[4] - Trade receivables decreased from RMB 183.5 million in December 2023 to RMB 155.7 million as of June 30, 2024[4] - The company’s total liabilities increased to RMB 690.8 million as of June 30, 2024, compared to RMB 664.5 million as of December 31, 2023[4] - The net value of current liabilities was (RMB 186.6 million) as of June 30, 2024, compared to (RMB 97.7 million) as of December 31, 2023[4] - The company's net current liabilities as of June 30, 2024, were RMB 186,614,000, indicating potential liquidity challenges[8] - The total equity attributable to shareholders decreased from RMB 563,518,000 in 2023 to RMB 520,460,000 in 2024, a decline of 7.7%[5] - The company's net asset value decreased to RMB 519,160,000 from RMB 562,226,000, reflecting a decline of 7.7%[5] - The debt-to-asset ratio increased from 60.9% as of December 31, 2023, to 67.0% as of June 30, 2024, primarily due to an increase in bank loans[43] Research and Development - The company reported a significant increase in research and development expenses, totaling RMB 57.1 million in the first half of 2024 compared to RMB 24.0 million in the first half of 2023[3] - The company has 60 ongoing research projects, including 43 chemical drug formulation projects, 14 chemical raw material drug projects, and 3 traditional Chinese medicine projects[28] - The company expects to launch at least 20 new products in the next three years, covering major therapeutic areas such as anti-infectives, cardiovascular, central nervous system, blood diseases, and anti-tumor[28] - R&D expenses increased from RMB 24.0 million in the first half of 2023 to RMB 57.1 million in the first half of 2024, driven by continued investment in new product development[36] - The company has 7 projects currently under review by the National Medical Products Administration, with 6 projects submitted for review in the first eight months of this year[28] Cash Flow and Financing - As of June 30, 2024, the company's cash and cash equivalents were only RMB 2,823,000, raising concerns about its ability to meet operational and financial needs in the next twelve months[8] - The company successfully renewed bank loans amounting to RMB 20,000,000 to alleviate liquidity pressure[8] - The company is negotiating with creditors to restructure existing payables and loan terms to ease cash flow pressures[8] - The total trade payables as of June 30, 2024, were RMB 61.7 million, a decrease from RMB 129.5 million at the end of 2023, indicating improved cash flow management[22] - The net financing cost increased from approximately RMB 2.2 million in the first half of 2023 to approximately RMB 7.4 million in the first half of 2024, primarily due to an increase in loan interest[37] Taxation - The effective corporate income tax rate for the group’s Chinese subsidiaries remained at 25% for the six months ended June 30, 2024[15] - The group’s subsidiary, Henan Fusen Pharmaceutical Co., Ltd., benefited from a preferential income tax rate of 15% due to its high-tech enterprise status[16] - Income tax expenses decreased from approximately RMB 6.4 million in the first half of 2023 to a negative RMB 8.4 million in the first half of 2024, mainly due to the recognition of deferred tax benefits[39] Shareholder and Dividend Information - The company has not declared any dividends for the six months ended June 30, 2024, consistent with the previous year[24] - The company does not recommend declaring any interim dividend for the six months ended June 30, 2024, compared to zero dividend for the same period in 2023[57] Other Information - The group did not apply any new accounting standards or interpretations that would have a significant impact on the financial performance for the current period[11] - There were no significant events after June 30, 2024, that would materially affect the group's operations and financial performance[58]

Internal Control Improvements - The company has identified multiple deficiencies in its internal controls, including the lack of a related party transaction identification record and guidelines[3] - The company has committed to improving its internal control systems, including the establishment of a review committee composed of three independent non-executive directors[5] - The company has engaged an external consultant to conduct an internal control review and provide recommendations for strengthening related party transaction monitoring[10] - The company has taken remedial actions following the identification of non-compliance records in 2019 and 2020, enhancing its internal control systems[6] - The board has reviewed the internal control system and strengthened procedures to improve risk management and internal controls[14] - After implementing remedial measures, the company maintains appropriate and effective risk management and internal control systems[14] Related Party Transactions Management - The company has implemented measures to ensure compliance with listing rules regarding related party transactions, including regular updates of the related party list[11] - The company has revised its related party transaction management policy to ensure adherence to listing rules, including annual confirmations of related party information[12] - The company has established a financial department responsible for reviewing all transactions to determine if they require disclosure under listing rules[13] - The company has arranged training courses for directors and relevant staff to improve understanding of related party transactions and disclosure requirements[10] - The company has committed to more frequent reviews of related party transaction ledgers and monthly confirmations from related parties[12] - The company has implemented a system to ensure that all transactions are reviewed by the financial department and reported to the board if they require disclosure[13] Financial Oversight - The company has prepared an annual investment budget and will regularly review it[14] - The finance department and financial supervisor will continue to monitor compliance with listing rules and regulations[14]

Governance and Management - The board consists of eight directors, including three independent non-executive directors, promoting strict review and monitoring processes[5] - The company has established a risk management and internal control policy, with an annual review of the effectiveness of the internal control system conducted by the board[12] - The independent non-executive directors believe that the risk management and internal control systems are sufficient and effective, with adequate resources allocated for accounting, internal audit, and financial reporting functions[13] - The company has adopted a governance code that includes recommendations on the remuneration of individual executive directors and senior management[1] - The company has a diverse board in terms of gender, age, educational background, professional experience, skills, knowledge, and tenure[5] - The company has implemented strict measures to prevent unauthorized use of confidential or insider information, ensuring compliance with governance standards[42] Stakeholder Engagement - The company encourages shareholders to actively participate in the annual general meeting and other shareholder meetings, ensuring they have sufficient time to consider the resolutions presented[16] - The company has confirmed its main stakeholders, including employees, consumers, suppliers, distributors, shareholders, investors, government, and the broader community, and has established multiple communication channels for them[28] Environmental Management - The company has implemented a three-tier environmental management network to ensure environmental management decisions and systems are fully implemented at all levels[31] - The company is committed to addressing ESG issues, evaluating their importance from both business impact and stakeholder perspectives[25] - The company achieved ISO 14000 environmental management system certification in 2022 and was recognized as a national "Green Factory" in 2023, with a total of 1,491 companies receiving this honor nationwide[33] - The company is actively pursuing various environmental management certifications to enhance its core competitiveness in energy-saving and low-carbon operations[33] - The total wastewater discharge in 2023 was 195,285.9 tons, a decrease from 251,062.1 tons in 2022, representing a reduction of approximately 22.2%[89] - The company reported a total greenhouse gas emissions of 6,948.888 tons of CO₂ in 2023, an increase from 4,572.734 tons in 2022, reflecting a rise of approximately 52%[78] - The average water consumption intensity in 2023 was 3.74 tons per ten thousand yuan of output, down from 5.68 tons in 2022, indicating a reduction of approximately 34.2%[74] - The company has established a specialized energy management team to oversee energy consumption, with a focus on reducing energy usage and improving efficiency[70] - The total solid waste generated includes various categories, with general solid waste primarily sent to landfills, while some are utilized for agricultural fertilizer[67] - The company has implemented advanced wastewater treatment technologies, including an IC reactor, to ensure compliance with environmental standards[60] - The nitrogen oxide emissions in 2023 were recorded at 1.063 tons, a decrease from 1.792 tons in 2022, showing a reduction of approximately 40.6%[65] - The company aims to achieve carbon neutrality by transitioning from coal-fired boilers to natural gas boilers and investing in renewable energy sources[81] - The total energy consumption data for the past three years indicates a structured approach to energy management, with specific targets set for reduction[72] Financial Performance - The company's total revenue for the year ended December 31, 2023, was RMB 565.6 million, representing a 15.0% increase from RMB 491.8 million in the previous year[37] - The sales of the main product, Shuanghuanglian Oral Liquid, accounted for 48.9% of total revenue, with sales reaching RMB 275.8 million, up 16.7% from RMB 236.4 million[37] - The gross profit margin remained stable, with sales costs for the year ending December 31, 2023, approximately RMB 266.1 million, compared to RMB 266.7 million in the previous year[39] - The sales of Shuanghuanglian Injection increased by 32.7%, reaching RMB 98.0 million, contributing 17.3% to total revenue[37] - The company reported a significant increase of 104.9% in sales of Qingre Jiedu Oral Liquid, which generated RMB 48.6 million, accounting for 8.6% of total revenue[37] - Third-party product sales decreased by 34.3%, totaling RMB 15.0 million, which represented 2.6% of total revenue[37] - The company's revenue for 2023 was RMB 565.6 million, representing a 15% increase compared to RMB 491.8 million in 2022[112][121] - Gross profit for 2023 was RMB 299.5 million, up 33.1% from RMB 225.0 million in 2022, with a gross margin increase from 45.8% to 53.0%[112][119] - The net loss for 2023 was approximately RMB 36.3 million, an increase of about 4.6% compared to a net loss of RMB 34.7 million in 2022[118] Research and Development - Research and development expenses for 2023 were approximately RMB 65.2 million, significantly up from RMB 15.2 million in 2022, marking an increase of about RMB 50 million[119] - The company is currently working on 50 R&D projects, including 31 drug formulation projects and 12 chemical raw material projects, with plans to submit around ten product registration applications in 2024[119][120] - The company reported a significant increase in R&D expenditure, amounting to approximately RMB 65.2 million in 2023, up from RMB 15.2 million in 2022, representing an increase of about RMB 50 million[136] - Currently, the company has a total of 50 ongoing R&D projects, including 31 generic drug projects, 12 active pharmaceutical ingredient projects, and 7 traditional Chinese medicine projects[136] - The company anticipates submitting around 10 new drug applications in 2024, with 4 projects currently under review[136] Employee Management and Training - The company employs 1,148 staff members, with a balanced gender ratio and a significant portion (91%) of employees from the local area, supporting local employment[85] - The company has established a collective agreement with the labor union, covering aspects such as labor remuneration, working hours, and employee benefits[124] - The company emphasizes equal employment practices, adhering strictly to national labor laws and policies, ensuring no discrimination based on ethnicity, gender, or religion[123] - The company has implemented a comprehensive safety management system, including regular safety training and inspections to mitigate potential risks in production[138] - The company is committed to a diverse talent development strategy, utilizing various methods for talent acquisition and collaboration[133] - The company has established a safety production leadership team to oversee safety affairs and ensure compliance with safety regulations[139] - In 2023, the company invested RMB 643,300 in safety production and RMB 4,777,400 in employee occupational health and safety, achieving a 100% employee health check rate[172] - The company maintained a safety training rate of 100% in 2023, with 440 employees participating in safety training[179] - The company has not experienced any major occupational health incidents or work-related injuries in 2023, consistent with the previous two years[172] - The company emphasizes fair and transparent talent management, ensuring equal opportunities for all employees regardless of background[157] - The company implemented a comprehensive training plan for 2023, focusing on enhancing employees' professional skills and operational capabilities[196] - The company has established a three-tier safety education training system, ensuring all new employees undergo safety training before starting work[179] - The company allocated resources to psychological care training and labor protection training for female employees in 2023[174] - The company’s employee training participation has been categorized by gender and job level, reflecting a commitment to diversity in development[177][178] - The company’s safety management system is aligned with national laws and regulations, enhancing overall workplace safety awareness[160] - The company has a mechanism for continuous training and development, aimed at improving employee capabilities and contributing to corporate growth[196] - In 2023, the number of male employees receiving training increased to 576, up from 269 in 2022, representing a growth of 114%[198] - The number of female employees receiving training slightly decreased to 572 in 2023 from 590 in 2022, a decline of 3%[198] - Senior management training participation rose to 27 in 2023, compared to 26 in 2022, an increase of 3.8%[198] - The number of middle management employees receiving training decreased to 90 in 2023 from 103 in 2022, a decline of 12.6%[198] - Training hours for both male and female employees remained consistent at 48 hours in 2023[198] - Senior management maintained a consistent training duration of 60 hours across the years 2021 to 2023[198] - The company emphasizes ongoing safety production education to enhance employee awareness and compliance with regulations[199] - The company has established a comprehensive safety production management system that includes safety goals in production plans and requirements in work assignments[200]

Financial Performance - The company reported a net loss of approximately RMB 36.3 million for the year ended December 31, 2023, an increase of about 4.6% compared to the same period in 2022[14]. - The group's operating revenue for 2023 was approximately RMB 565.6 million, representing a 15.0% increase compared to the same period in 2022, marking the highest revenue year since the company's listing[15]. - Gross profit for 2023 was approximately RMB 299.5 million, an increase of 33.1% from RMB 225.0 million in 2022, with a gross margin rising from 45.8% in 2022 to 53.0% in 2023[23]. - The loss attributable to equity holders of the company for the fiscal year ending December 31, 2023, was approximately RMB 36.3 million, compared to a loss of approximately RMB 34.6 million for the fiscal year ending December 31, 2022[90]. - The company reported a pre-tax loss of RMB 29.4 million for the fiscal year ending December 31, 2023, compared to a pre-tax loss of RMB 31.0 million for the fiscal year ending December 31, 2022[87]. Research and Development - Research and development expenses for 2023 amounted to approximately RMB 65.2 million, up from RMB 15.2 million in 2022, reflecting an increase of approximately RMB 50.0 million[32]. - The company is currently conducting a total of 50 R&D projects, including 31 drug formulation projects, 12 API projects, and 7 traditional Chinese medicine projects, with plans to submit about ten product registration applications in 2024[17]. - Operating profit decreased compared to 2022 due to increased investment in research and development, aimed at enriching the company's product pipeline[14]. Cash Flow and Liquidity - The company’s cash and cash equivalents decreased to RMB 34,849 thousand from RMB 128,106 thousand, indicating a need for improved cash management[98]. - The group has sufficient funds to meet its operational funding obligations, expected capital expenditures, and debt responsibilities through December 31, 2024[106]. - The group has successfully renewed bank loans during the reporting period, contributing to its liquidity position[106]. Shareholder Information - The company did not declare any dividends for the current year, consistent with 2022[3]. - The company does not recommend declaring a final dividend for the year ending December 31, 2023, compared to no dividend in 2022[51]. - The board intends to declare a dividend of no less than 10% of distributable profits for any financial year, subject to board approval[50]. Assets and Liabilities - Total assets as of December 31, 2023, amounted to RMB 776,943 thousand, up from RMB 736,212 thousand in 2022, showing a growth of about 5.5%[98]. - Current liabilities were RMB 664,520 thousand, compared to RMB 722,082 thousand in the previous year, indicating a reduction of approximately 8%[98]. - The group's total equity attributable to shareholders was approximately RMB 563.5 million as of December 31, 2023, compared to RMB 614.2 million in 2022, while total liabilities amounted to approximately RMB 342.3 million, up from RMB 225.8 million in 2022[38]. Operational Efficiency - The company is enhancing production capacity and efficiency with the ongoing commissioning of new factories and production lines[14]. - The company has implemented photovoltaic renovations in its factories to utilize solar energy, reducing electricity costs and carbon emissions[14]. - The company has optimized its sales team and is actively utilizing new media for brand promotion and content marketing[14]. Joint Ventures and Impairments - The company has recognized impairment losses in accordance with accounting standards due to operational losses from its joint ventures[14]. - Share of losses from a joint venture decreased from a profit of approximately RMB 11.8 million in 2022 to a loss of approximately RMB 11.2 million in 2023, mainly due to a centralized procurement policy affecting sales of key products[34]. - Share of losses from another joint venture decreased slightly from approximately RMB 9.2 million in 2022 to approximately RMB 9.1 million in 2023[35]. Taxation - Income tax expenses increased from approximately RMB 3.7 million in 2022 to approximately RMB 6.8 million in 2023, with an effective tax rate of 23.3% in 2023 compared to 11.8% in 2022[36]. - The effective corporate income tax rate for the group's Chinese subsidiaries was 25%, consistent with the previous year[78]. - The group’s subsidiary in Henan received a preferential income tax rate of 15% for being recognized as a high-tech enterprise, valid until October 27, 2024[78]. Employee Costs - Total employee costs, including directors' remuneration and other benefits, were approximately RMB 103.9 million for the year ended December 31, 2023, compared to RMB 91.8 million in 2022[43]. - Employee costs rose to RMB 103,881,000, up from RMB 91,829,000, indicating an increase of about 13%[71]. Compliance and Governance - The company has adopted corporate governance standards and has complied with all applicable rules, except for a specific provision regarding the company secretary[52]. - The company’s board has fully complied with the standards for securities trading as of December 31, 2023[53]. - The financial statements have been prepared in accordance with International Financial Reporting Standards and comply with the disclosure requirements of the Hong Kong Companies Ordinance[105].

Joint Ventures Performance - The joint venture Weihai Life's operating situation significantly improved in the first half of 2023, with operating losses decreasing year-on-year, and it is expected to achieve profitability in 2023[20] - Jiangxi Yongfeng Kande Pharmaceutical Co., a joint venture, experienced operating losses in the first half of 2023, primarily due to the impact of national centralized procurement policies, leading to a substantial decline in both revenue and profit[20] - The company reported a significant reduction in losses from its joint venture, decreasing from RMB 3.10 million in the first half of 2022 to RMB 0.86 million in the first half of 2023[33] Product Development and Pipeline - The company is advancing multiple new products, including 21 new drug applications scheduled for submission between 2024 and 2027, targeting various medical conditions such as chronic kidney disease and hypertension[22] - The company plans to submit applications for 8 new products by 2024, including treatments for hypertension and epilepsy, indicating a strong pipeline for future growth[22] - The company is focusing on developing treatments for neurological conditions, with several products in the pipeline aimed at conditions like epilepsy and depression, expected to be submitted by 2025[22] - The company is prioritizing research and development in cardiovascular health, with new products targeting hypertension and heart failure expected to be submitted in the coming years[22] - The company is committed to addressing the needs of pediatric patients, with specific products aimed at treating chronic constipation in children scheduled for submission by 2025[22] - The company is actively pursuing market expansion strategies, with several products aimed at addressing urgent medical needs, such as acute pain management and chronic disease treatments[22] - The company is enhancing its portfolio with new formulations and delivery methods, including injectable and oral medications, to improve patient outcomes[22] - The company has set a timeline for the submission of new products, with key submissions planned for 2024 and 2025, reflecting a commitment to innovation and addressing unmet medical needs[22] Financial Performance - The company's revenue increased by approximately 103.1% from RMB 165.6 million in the first half of 2022 to RMB 336.4 million in the first half of 2023, driven by improved market demand and expanded sales networks[28] - Gross profit for the first half of 2023 was RMB 179.1 million, representing a 124.7% increase compared to the same period in 2022[41] - Revenue for the first half of 2023 reached approximately RMB 336.4 million, a 103.1% increase from RMB 165.6 million in the same period of 2022[49] - Sales of the product "Shuanghuanglian Oral Liquid" increased by 153.8% to approximately RMB 165.9 million, driven by increased market demand as COVID-19 conditions improved[52] - Gross profit rose to approximately RMB 179.1 million, a 124.7% increase from RMB 79.7 million in the first half of 2022, with a gross margin improvement of 5.1 percentage points to about 53.2%[52] - Operating profit increased to RMB 38,801 thousand from RMB 7,178 thousand, indicating a strong operational performance[186] - The net profit for the period was RMB 16,447 thousand, compared to a loss of RMB 7,077 thousand in the previous year, marking a turnaround in financial results[186] - The total comprehensive income for the period was RMB 16,360 thousand, compared to a loss of RMB 5,215 thousand in the same period last year[188] - Basic and diluted earnings per share for the period were both RMB 2, compared to a loss of RMB 1 per share in the previous year[188] Expenses and Liabilities - Research and development expenses increased by approximately RMB 14.0 million, contributing to a total of RMB 59.8 million in general and administrative expenses for the first half of 2023[31] - Sales and distribution expenses increased to approximately RMB 79.1 million in the first half of 2023, accounting for 23.5% of total revenue, compared to 26.9% in the same period of 2022[53] - The company’s tax expenses increased from approximately RMB 0.2 million in the first half of 2022 to RMB 6.4 million in the first half of 2023, primarily due to increased operating profits[34] - The company’s current liabilities amounted to approximately RMB 162.6 million as of June 30, 2023, compared to RMB 108.0 million at the end of 2022[36] - The total liabilities decreased to approximately RMB 691.4 million from RMB 737.4 million as of December 31, 2022, indicating a reduction of about 6.2%[85] - The debt-to-equity ratio increased from 36.8% as of December 31, 2022, to 46.8% as of June 30, 2023, primarily due to an increase in bank loans[87] - Total employee costs for the first half of 2023 amounted to approximately RMB 57.6 million, compared to RMB 38.3 million for the same period in 2022, reflecting a significant increase of 50.5%[88] Capital Structure and Shareholder Returns - The company confirmed that it has sufficient financial resources to meet its financial obligations in the foreseeable future[86] - The company is committed to maintaining an appropriate capital structure to maximize returns to shareholders[85] - The total equity attributable to shareholders was approximately RMB 622.2 million, an increase from RMB 614.2 million as of December 31, 2022, representing a growth of 1.3%[85] - The company has 16,000,000 unexercised stock options, representing approximately 2.11% of the issued share capital[121] - The maximum number of restricted share units (RSUs) that can be granted under the RSU plan is capped at 10% of the issued share capital, which amounts to 76,993,400 shares[125] - The number of stock options available for grant under the stock option plan remained constant at 64,000,000 as of January 1, 2023, and June 30, 2023, equivalent to about 8.44% of the total issued share capital[121] - The total number of restricted share units available for grant under the plan as of June 30, 2023, was 71,993,400, representing approximately 9.49% of the total issued shares of the company[107] - The board does not recommend any dividend for the six months ended June 30, 2023, consistent with the previous year's decision[181] Corporate Governance and Compliance - The audit committee has reviewed the interim financial report for the six months ended June 30, 2023, which was not audited but reviewed by KPMG[177] - The company has complied with all applicable code provisions of the corporate governance code during the reporting period[155] - Management believes that no further impairment or reversal of impairment is necessary for the six months ended June 30, 2023, as the mid-term performance of the subsidiary met expectations[82] - There were no significant events affecting the group's operations and financial performance after June 30, 2023, up to the report date[182] Employee and Operational Metrics - The company had 1,121 employees as of June 30, 2023, a slight decrease from 1,159 employees at the end of 2022, while maintaining competitive compensation packages[60] - The company repurchased a total of 8,230,000 shares at a total cost of approximately HKD 11.0 million during the six months ended June 30, 2023[199]

Revenue and Profitability - Revenue increased by approximately 103.1% from RMB 165.6 million in the first half of 2022 to approximately RMB 336.4 million in the first half of 2023[1] - Gross profit rose by approximately 124.7% from RMB 79.7 million in the first half of 2022 to approximately RMB 179.1 million in the first half of 2023[1] - The profit attributable to equity holders was approximately RMB 16.5 million in the first half of 2023, compared to a loss of approximately RMB 7.0 million in the first half of 2022[1] - Operating profit for the period was RMB 38.8 million, significantly up from RMB 7.2 million in the same period last year[16] - The total comprehensive income for the period amounted to RMB 16.36 million, compared to a loss of RMB 5.215 million in the previous year[3] - The company’s basic earnings per share for the period was RMB 2, compared to a loss per share of RMB 1 in the same period last year[3] - The basic earnings per share for the six months ended June 30, 2023, was RMB 16,456,000, compared to a loss of RMB 7,037,000 in the same period of 2022[34] Financial Position - The net asset value of the company was RMB 620.955 million as of June 30, 2023, compared to RMB 612.893 million at the end of 2022[4] - The company’s total liabilities decreased slightly from RMB 15.293 million to RMB 15.023 million[4] - As of June 30, 2023, the total equity attributable to shareholders was approximately RMB 622.2 million, an increase from RMB 614.2 million as of December 31, 2022[87] - The total liabilities amounted to approximately RMB 691.4 million as of June 30, 2023, down from RMB 737.4 million as of December 31, 2022[87] - The net current liabilities were approximately RMB 162.6 million as of June 30, 2023, compared to RMB 108.0 million as of December 31, 2022[102] - The asset-to-liability ratio increased from 36.8% as of December 31, 2022, to 46.8% as of June 30, 2023, primarily due to an increase in bank loans[103] Cash Flow and Financing - The company reported a net financing cost of RMB 2.241 million, down from RMB 9.931 million in the previous year[16] - The group reported a net current liability of RMB 162,593,000 as of June 30, 2023, with an operating cash outflow of RMB 46,348,000 for the six-month period[25] - The company’s cash and cash equivalents as of June 30, 2023, were RMB 116,430 thousand, down from RMB 177,802 thousand as of December 31, 2022, reflecting a decrease of 34.5%[50] - The group has the capability to raise funds through loans and equity financing to meet its operational and capital expenditure needs for at least the next 12 months[25] - The group has increased its bank borrowings, with collateral valued at approximately RMB 114.4 million as of June 30, 2023[107] Sales and Market Performance - The revenue from the main product, Shuanghuanglian oral liquid, was RMB 165,916,000, up from RMB 65,381,000 in 2022, indicating a growth of 153.5%[28] - Two customers accounted for over 10% of the group's revenue, with sales to these customers amounting to RMB 49,317,000 and RMB 39,925,000 respectively[44] - The company’s revenue from third-party products increased by 115.5% to RMB 17,630 thousand in the first half of 2023, compared to RMB 8,180 thousand in the same period of 2022[61] - Revenue increased by approximately 103.1% from approximately RMB 165.6 million in the first half of 2022 to approximately RMB 336.4 million in the first half of 2023, attributed to improved market demand and expanded sales networks[77] Research and Development - The group is currently conducting 32 research and development projects, with a total contract amount of RMB 160 million[43] - The company plans to submit a registration application for one additional product in the second half of 2023, following the approval of two products in the first half of 2023[74] - The company is actively planning a raw material drug construction project to ensure a stable and cost-effective supply of active pharmaceutical ingredients[74] - The group has made significant investments in research and development, reflecting its commitment to innovation and market expansion[43] Expenses and Cost Management - General and administrative expenses increased from approximately RMB 27.9 million in the first half of 2022 to approximately RMB 59.8 million in the first half of 2023, with R&D investment rising by approximately RMB 14.0 million[65] - Sales and distribution expenses increased from approximately RMB 44.6 million in the first half of 2022 to approximately RMB 79.1 million in the first half of 2023, accounting for approximately 26.9% and 23.5% of revenue respectively[80] - Employee costs totaled approximately RMB 57.6 million for the first half of 2023, compared to RMB 38.3 million for the same period in 2022[91] Taxation and Compliance - The group has maintained a corporate income tax rate of 25% for its subsidiaries in China for both 2023 and 2022[32] - The company’s deferred tax expense for the six months ended June 30, 2023, was RMB (2,347) thousand, compared to RMB (692) thousand in the same period of 2022[47] - Income tax expenses increased from approximately negative RMB 0.2 million in the first half of 2022 to approximately RMB 6.4 million in the first half of 2023, driven by operating profits in 2023[67] - The company’s subsidiary, Henan Fusen Pharmaceutical Co., Ltd., continues to benefit from a preferential income tax rate of 15% as a high-tech enterprise, applicable until October 27, 2024[47] Shareholder Returns - The company does not recommend declaring any interim dividend for the six months ended June 30, 2023, compared to zero dividend for the same period in 2022[116] - As of June 30, 2023, the company repurchased a total of 8,230,000 shares at a total cost of approximately HKD 11.0 million[114]

Revenue and Sales Performance - Revenue increased by 27.5% from RMB 385.7 million in 2021 to RMB 491.8 million in 2022[13] - Sales of Shuanghuanglian Oral Liquid grew by 6.1% to RMB 236.394 million, accounting for 48.1% of total revenue[13] - Sales of Shuanghuanglian Injection surged by 112.5% to RMB 73.864 million, representing 15.0% of total revenue[13] - Sales of Compound Ferrous Sulfate Granules decreased by 4.5% to RMB 20.682 million, accounting for 4.2% of total revenue[13] - Sales of other products increased by 36.4% to RMB 116.954 million, representing 23.8% of total revenue[13] - The company's product "Nifedipine Hydrochloride Injection" achieved sales revenue exceeding RMB 18.9 million in 2022[29] Cost and Profit Analysis - Cost of sales increased by 52.8% from RMB 174.5 million in 2021 to RMB 266.7 million in 2022[13] - The company's gross profit increased by RMB 13.9 million to RMB 225.0 million in 2022, with a gross profit margin of 45.8%, down 8.9% from 2021 due to increased depreciation and raw material procurement costs[40] - Income tax expense decreased from RMB 7.2 million in 2021 to RMB 3.7 million in 2022, primarily due to a decrease in taxable profit[24] - The company's net financing costs increased from RMB 7.1 million in 2021 to RMB 15.7 million in 2022, mainly due to increased foreign exchange losses and bank loan interest[41] Product and Market Strategy - Jiangxi Yongfeng Kant's core product Kaifuding sales are expected to recover this year[12] - The company plans to establish a chemical raw material production base this year to enhance cost competitiveness for future products participating in national centralized procurement[29] - The company expects to add 5 to 10 new product projects in 2023, focusing on chemical drugs and traditional Chinese medicine[29] - The company plans to expand into blank market regions by increasing sales personnel and distributors[29] - The company's product portfolio covers various therapeutic areas including heat-clearing and detoxifying, cardiovascular, antihypertensive and hypoglycemic, tonic, qi-regulating, anti-anemia, and anti-inflammatory. Notably, the heat-clearing product Shuanghuanglian Oral Liquid and Shuanghuanglian Injection have consistently ranked among the top three in national sales for similar products for many years[163] - The cardiovascular product Yansuan Fugui Liqin Capsule is the first generic product in China and has maintained the top sales position in the domestic market for five consecutive years[163] R&D and Innovation - The company's subsidiary, Jiaheng Pharmaceutical, will have its R&D laboratory operational in the second quarter of this year, with plans to expand the R&D team[29] - The company's R&D capabilities were strengthened in 2013 under the leadership of Executive Director Meng Qingfen, who was appointed to lead the R&D team[153] - The company has established Fosen (Shenzhen) Biopharmaceutical R&D Co., Ltd. and Fosen (Macau) Co., Ltd. as R&D centers for the development of innovative drugs, aiming to enhance R&D capabilities and expand the product portfolio[163] - The company adheres to the development strategy of "combining Chinese and Western medicine, long-term and short-term, and imitation and innovation," and follows the path of "producing one generation, reserving one generation, and researching and creating one generation" for new drug development[163] Financial Position and Liabilities - As of December 31, 2022, the company had a net current liability of approximately RMB 108.0 million (compared to a net current asset of RMB 20.0 million in 2021) and cash and cash equivalents of approximately RMB 128.1 million (compared to RMB 81.1 million in 2021)[43] - The company's total equity attributable to shareholders was approximately RMB 614.2 million as of December 31, 2022 (compared to RMB 658.2 million in 2021), with total debt of approximately RMB 225.8 million (compared to RMB 236.9 million in 2021)[43] - Capital commitments not provided for in the financial statements as of December 31, 2022, amounted to RMB 17,634 thousand, a significant increase from RMB 1,819 thousand in 2021[44] - The company's total equity attributable to shareholders as of December 31, 2022, was approximately RMB 612.9 million, down from RMB 656.9 million in 2021[90] - Total liabilities as of December 31, 2022, were approximately RMB 737.4 million, compared to RMB 582.4 million in 2021[90] Employee and Workforce Management - The company's employee turnover rate was 2.3% in 2022, indicating high employee stability[33] - The company's male employee turnover rate was 1.2% in 2022, while the female employee turnover rate was 1.1%[34] - The company's workforce as of December 31, 2022, consisted of 50.91% female and 49.09% male employees, reflecting the company's commitment to gender diversity[53] - In 2022, the number of male employees receiving training increased to 569, while female employees receiving training increased to 590, with both genders receiving 48 hours of training[103] - The company strictly adheres to labor standards, prohibiting child labor and forced labor, and ensures compliance with labor laws and regulations[105] - The company implemented a paid leave system starting in 2011 and ensures overtime compensation for employees[105] - The company provides competitive employee benefits, including housing subsidies, tuition subsidies, and equity incentives[82] - The company conducted regular employee forums, team-building activities, and communication mechanisms to enhance internal collaboration and employee engagement[99] Environmental, Social, and Governance (ESG) - The company is installing photovoltaic solar panels on existing factory roofs to reduce electricity costs and carbon emissions[30] - The company has increased its efforts in environmental, social, and governance (ESG) practices and disclosures, compiling the "2022 ESG Report" and initiating the formulation of ESG management policies and strategies[175] - The company established a three-level environmental management network led by the general manager, ensuring environmental management decisions and systems are implemented at all levels[176] - In September 2022, the company publicly released an environmental commitment letter, pledging to comply with environmental laws and regulations and take full responsibility for environmental protection[178] - The company installed pollution control devices at all exhaust outlets, ensuring emissions meet standards and do not affect surrounding residents[179] - Solid waste is strictly classified and disposed of according to legal requirements, minimizing waste generation and environmental pollution[181] - The company plans to establish an ESG management committee in 2023 to oversee ESG goals, risk assessments, and sustainable development initiatives[186] - Wastewater is treated at the plant's sewage treatment station and discharged into the municipal sewage network, ensuring no negative impact on the surrounding water environment[189] - Electricity consumption in 2022 was 7,542,243 kWh, a significant increase from 2,850,300 kWh in 2021[197] - Natural gas consumption in 2022 was 2,571,470 cubic meters, up from 1,045,940 cubic meters in 2021[197] - The company emphasizes water conservation through recycling processes, strict water usage plans, and employee education to reduce water waste[198] - The company focuses on reducing packaging materials, including glass, plastic, paper, PVC, and aluminum foil, in product design[200] Corporate Governance and Compliance - The company's board of directors consists of eight members, including three independent non-executive directors, with six male and two female directors, demonstrating diversity in gender, age, education, and professional experience[52] - The board of directors held six meetings, the audit committee held four meetings, the remuneration committee held two meetings, and the nomination committee held one meeting during the year ended December 31, 2022[75] - The company established a Remuneration Committee on June 14, 2018, consisting of two independent non-executive directors and one executive director, responsible for recommending compensation policies and structures for directors and senior management[97] - The Remuneration Committee reviewed the company's compensation policies and structures for all directors and senior management since its establishment[98] - The company's external auditor, KPMG, was paid RMB 3,900 thousand for audit services in 2022[59] - No significant contingent liabilities were reported as of December 31, 2022[87] - The company maintains a strong liquidity position to capitalize on future growth opportunities[89] Supplier and Procurement Management - The company has 54 suppliers and adheres to strict supplier selection and evaluation processes in compliance with pharmaceutical regulations[117] - The company's procurement policy ensures that prices paid to Fosen Traditional Chinese Medicine are not higher than those offered by independent suppliers and are in line with market rates[81] - The company has a strict supplier management system, including a two-year comprehensive evaluation of suppliers based on factors such as product quality, delivery timeliness, and credit terms[131] - The company has a total of 54 suppliers across different regions, with the highest number (25) in the Central Plains region[130] - The annual procurement limit for Fosen Da Health was approximately RMB 12.9 million in 2022, within the range of the annual cap of RMB 15.0 million, RMB 17.0 million, and RMB 19.0 million for the three years ending December 31, 2023[45] - The annual procurement limit from Fosen Traditional Chinese Medicine for the years 2023, 2024, and 2025 is approximately RMB 40.0 million, RMB 44.0 million, and RMB 48.0 million, respectively[77] - The packaging material procurement agreement with Furen Health constitutes a continuing connected transaction under the listing rules, with all applicable percentage ratios exceeding 0.1% but below 5%[73] - If the price offered by Furen Health is inferior to that of independent suppliers, Henan Furen will not enter into transactions with Furen Health[72] - The company has a policy to review pricing every six months, and individual agreements or orders will be entered into with Furen Chinese Herbal Medicine for the purchase of herbs[71] Quality Assurance and Control - The company has maintained a 0% product return rate for the past three years (2020-2022)[135] - The company received 12 product complaints in 2022, an increase from 4 in 2021[144] - The company has a robust quality assurance system in place, adhering to GMP standards and conducting regular self-inspections[134][142] - The company has established a GAP planting base for Chinese medicinal materials to ensure product quality from the source[141] - The company has established a "Medical Consultation and Complaint Handling Procedure" to address user feedback on product quality, including non-clinical issues (e.g., packaging changes, minor damage) and severe adverse reactions affecting user health, managed by the Drug Safety Office Director[146] - The company established a Quality Control system with detailed procedures for material testing, product inspection, and quality risk management[113] - The company has formulated the "Quality Objective Management Regulations" to achieve quality policies and objectives, and established a "Quality Assurance System" and "Quality Control System" to ensure product and service quality[161] Shareholder and Equity Management - Two grantees were each awarded 2,500,000 restricted share units, with vesting conditions tied to business development performance metrics, including the number of business partners introduced and the successful launch of products[63] - The number of restricted share units (RSUs) available for grant under the RSU plan as of December 31, 2022, was 71,993,400 units[64] - The maximum number of shares that can be granted to each eligible person under the RSU plan and any other share plans of the company within any 12-month period is 1% of the total issued shares[64] - The RSU plan will be effective for ten years from the date of the first grant, subject to early termination by the board[67] - The weighted average number of shares issued or potentially issuable under all plans as of December 31, 2022, was 0.66% of the total issued shares[67] Operational Challenges and Achievements - In 2022, the company faced challenges due to the normalization of sporadic COVID-19 outbreaks, which led to restrictions or bans on the sale of cold, fever, and cough medicines in various regions, impacting business operations[175] - Despite challenges, the company completed the relocation and expansion of production facilities and related health industry construction in 2022, significantly improving production processes and management levels[175] - The company integrates social service into its corporate culture, strategic policies, and daily operations, actively practicing the concept of "health is happiness" and striving to be a leader in the health industry[175] Related Party Transactions - Furen Pharmaceutical Group's related party, Furen Chinese Herbal Medicine, is wholly owned by Furen Industrial Group, which is 35.08% owned by the company's executive director and chairman, Mr. Cao Changcheng[70] - The company's share of losses from a joint venture increased by approximately RMB 23.5 million, from a profit of RMB 11.7 million in 2021 to a loss of RMB 11.8 million in 2022, primarily due to a decline in sales of the main product, Kaifuding, and inventory write-downs[42] Employee Costs and Benefits - In 2022, the company's total employee costs, including directors' remuneration, retirement plan contributions, bonuses, and other benefits, amounted to approximately RMB 91.8 million, up from RMB 75.6 million in 2021[88] - As of December 31, 2022, the company had 1,159 employees, a decrease from 1,243 employees in 2021[88] Other Income and Expenses - Other income net increased by RMB 10.2 million from a net loss of RMB 2.8 million in 2021 to a net income of RMB 7.4 million in 2022[14] - General and administrative expenses increased by 7.2% from RMB 65.2 million in 2021 to RMB 69.9 million in 2022, mainly due to increased R&D costs[22] Risk Management and Compliance - The company has established a cross-currency swap contract to mitigate the impact of foreign exchange risk from USD-denominated bank loans[121] - No significant acquisitions or disposals were made during the year ended December 31, 2022[122] - No significant investments were made during the year ended December 31, 2022, apart from those disclosed in the report[123] - No significant events occurred after December 31, 2022, that would materially affect the company's operations and financial performance[124] Employee Development and Training - The company has established a "mentorship" mechanism, theoretical training mechanism, platform practice mechanism, and joint training mechanism to enhance the professional capabilities and management levels of various personnel[74] - The company promotes labor union development and ensures employee participation in major decisions through employee representative meetings[115] - The company maintains a transparent and democratic management system, with regular employee feedback collection and implementation of reasonable suggestions[115]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容 概不負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對 因本公告全部或任何部份內容而產生或因倚賴該等內容而引致的任何損 失承擔任何責任。 Fusen Pharmaceutical Company Limited 福 森 藥 業 有 限 公 司 （於開曼群島註冊成立的有限公司） （股份代號：1652） 截 至2022年12月31日 止 年 度 的 年 度 業 績 公 告 財務摘要 • 截至2022年12月31日止年度的收益約為人民幣491.8百萬元，較截至 2021年12月31日止年度約人民幣385.7百萬元增加約27.5%。 • 毛利由截至2021年12月31日止年度約人民幣211.1百萬元增加約6.6% 至截至2022年12月31日止年度約人民幣225.0百萬元。 • 截至2022年12月31日止年度的毛利率約為45.8%，較截至2021年12月 31日止年度約54.7%減少約8.9%。 • 截 至2022年12月31日 止 年 度 的 本 公 司 股 權 持 有 人 應 佔 虧 損 約 為 人 ...

Financial Performance - In the first half of 2022, the company's revenue and gross profit were RMB 165.6 million and RMB 79.7 million, respectively, representing a decrease of approximately 22.7% and 32.6% compared to the same period in 2021 [22]. - Total revenue decreased by approximately 22.7% from RMB 214.2 million in the first half of 2021 to RMB 165.6 million in the first half of 2022, primarily due to a decline in sales volume [33]. - Gross profit decreased by approximately 32.6% from RMB 118.2 million in the first half of 2021 to RMB 79.7 million in the first half of 2022, consistent with the revenue decline [38]. - Operating profit decreased significantly to RMB 7,178 thousand, a decline of 84.7% from RMB 46,848 thousand in the previous year [112]. - The net loss for the period was RMB 7,077 thousand, compared to a profit of RMB 43,809 thousand in the same period last year [112]. - Total comprehensive income for the period was RMB (5,215) thousand, a decrease from RMB 43,254 thousand in 2021 [116]. - The company reported a basic loss per share of RMB (1) for the period, compared to earnings of RMB 6 in the same period last year [116]. - The company reported a basic loss of RMB 7,037,000 for the six months ended June 30, 2022, compared to a profit of RMB 43,919,000 for the same period in 2021, reflecting a significant decline in performance [165]. Sales and Product Performance - The sales decline was primarily due to COVID-19 control measures in China, which restricted the sales of cough and cold medications, leading to reduced sales of the product "Shuanghuanglian Oral Liquid" [22]. - The revenue from the main product, Shuanghuanglian Oral Liquid, was RMB 65,381,000, a decrease from RMB 123,102,000 in the same period last year [148]. - Sales revenue of the Double Huanglian Oral Liquid (10ml) dropped by approximately 50.2% from RMB 89.5 million in the first half of 2021 to RMB 44.6 million in the first half of 2022 [34]. - Sales revenue of the Double Huanglian Injection increased by approximately 42.0% from RMB 23.1 million in the first half of 2021 to RMB 32.8 million in the first half of 2022, attributed to promotional activities [34]. - The core product "Kaifuding" of the joint venture "Jiangxi Yongfeng Kande Pharmaceutical Co., Ltd." passed consistency evaluation in July, and sales are expected to gradually recover [28]. - The product "Atomoxetine Capsules," for treating attention deficit hyperactivity disorder, was approved for market launch in June and is expected to contribute to sales gradually [28]. Research and Development - The subsidiary "Jiaheng (Zhuhai Hengqin) Pharmaceutical Technology Co., Ltd." has obtained a drug production license and is currently working on 18 R&D projects, including 4 traditional Chinese medicine projects [27]. - The company plans to significantly increase R&D expenses this year, which is expected to bring new products and growth points for the company's medium to long-term development [27]. - Research and development costs increased to RMB 10,005,000 from RMB 6,070,000 year-on-year [156]. Financial Position and Liabilities - As of June 30, 2022, total short-term and long-term borrowings amounted to approximately RMB 281.3 million, an increase from RMB 236.9 million as of December 31, 2021 [49]. - The debt-to-equity ratio increased from 36.1% as of December 31, 2021, to 44.0% as of June 30, 2022, mainly due to increased bank borrowings [57]. - The company's total liabilities decreased to RMB 302,381 thousand as of June 30, 2022, from RMB 309,418 thousand at the beginning of the year, indicating improved financial stability [130]. - The company's current liabilities increased to RMB 487,890 thousand from RMB 489,266 thousand at the end of 2021 [121]. - The company's equity attributable to shareholders decreased to RMB 641,383 thousand from RMB 658,169 thousand at the end of 2021 [125]. Cash Flow and Investments - The company experienced a net cash outflow from operating activities of RMB (46,345) thousand for the six months ended June 30, 2022, compared to a cash inflow of RMB 35,801 thousand in the previous year [136]. - The net cash used in investing activities was RMB (11,799) thousand for the first half of 2022, a substantial improvement from RMB (254,374) thousand in the same period of 2021 [136]. - Financing activities generated a net cash inflow of RMB 28,536 thousand in the first half of 2022, contrasting with a cash outflow of RMB (23,925) thousand in the prior year [136]. - Cash and cash equivalents decreased to RMB 52,627 thousand from RMB 81,063 thousand at the end of 2021, indicating a liquidity contraction [182]. - The company incurred tax expenses of RMB 456,000 for the six months ended June 30, 2022, compared to RMB 4,840,000 for the same period in 2021, showing a substantial decrease in tax liabilities [160]. Shareholder Information and Corporate Governance - The major shareholder, Mr. Cao Changcheng, holds 495,374,000 shares, representing 65.75% of the equity [68]. - Full Bliss Holdings Limited and Rayford both hold 180,180,000 shares, each representing 23.91% of the equity [77]. - The company has a stock option plan adopted on June 14, 2018 [81]. - As of June 30, 2022, there are 16,000,000 unexercised stock options under the share option scheme, representing approximately 2.11% of the company's issued share capital [83]. - The board proposed to extend the exercise period of the unexercised stock options from the original expiry date of July 19, 2020, to June 13, 2028, to encourage long-term commitment from eligible participants [83]. - The company has complied with all applicable code provisions of the corporate governance code during the reporting period, except for one specific provision [88]. - The audit committee consists of three independent non-executive directors and has been active in overseeing the financial reporting process and internal controls [89].