Financial Performance - The Group's revenue increased to approximately RMB195.9 million during the Reporting Period, up from approximately RMB121.2 million for the six months ended June 30, 2022, representing a growth of 61%[20] - Gross profit for the Reporting Period was approximately RMB6.6 million, with a gross profit margin of 3.4%, compared to a gross profit of approximately RMB3.7 million and a margin of 3.0% for the same period in 2022[13] - The Group recorded a loss of approximately RMB38.1 million, an improvement from a loss of RMB40.3 million in the previous year[13] - Revenue increased from approximately RMB121.7 million for the six months ended 30 June 2022 to approximately RMB195.9 million for the six months ended 31 December 2023, representing an increase of about 60.8%[22] - Gross profit for the food business was RMB6.59 million with a gross profit margin of 3.4% for the six months ended 31 December 2023, compared to a gross profit of RMB3.12 million and a margin of 2.6% for the same period in 2022[28] - Total comprehensive loss for the period was RMB 40,312,000, compared to RMB 44,631,000 for the same period last year, showing a reduction in overall losses[105] - Basic and diluted loss per share was RMB 0.310, an improvement from RMB 0.356 in the previous period[105] - The total revenue for the group for the six months ended December 31, 2023, was RMB 195,916,000, compared to RMB 121,737,000 for the same period in 2022, reflecting a growth of 60.9%[140] - The total loss before taxation for the six months ended December 31, 2023, was RMB 38,127,000, compared to a loss of RMB 40,297,000 for the same period in 2022, showing a slight improvement[149] Business Operations - The Group offers over 100 types of dried seafood, 30 types of algae and fungi, and 60 types of seafood snacks, aiming to differentiate itself through a diverse product portfolio[14] - Revenue from the food business specifically increased from approximately RMB121.2 million for the six months ended June 30, 2022, to approximately RMB195.9 million during the Reporting Period[20] - The Group's products are sold through various channels, including supermarkets, trading companies, convenience stores, and e-commerce retailers[19] - The Group has engaged in the procurement and sales of fast-moving consumer goods since early 2020, expanding its business scope[12] - The Group sources high-quality raw materials and sub-contracts processing to third parties, enhancing operational efficiency[12] - The Group's brand "Wofan" is used for selling packaged products, contributing to brand recognition in the market[12] Financial Position - The Group's net current assets increased from approximately RMB226.2 million as at 30 June 2023 to approximately RMB229.8 million as at 31 December 2023[39] - As at 31 December 2023, cash and cash equivalents were approximately RMB42.0 million, down from approximately RMB66.5 million as at 30 June 2023[40] - The gearing ratio as at 31 December 2023 was 0.121, a slight decrease from 0.127 as at 30 June 2023[47] - The Group did not pledge any assets as at 31 December 2023[49] - Current assets increased to RMB 266,855,000 from RMB 271,430,000, showing a decrease of about 1.7%[108] - Total equity decreased to RMB 217,472,000 from RMB 219,445,000, a decline of approximately 0.9%[109] - Cash and cash equivalents decreased to RMB 41,982,000 from RMB 66,481,000, a decline of approximately 36.8%[108] Investments and Financing - There were no significant investments, material acquisitions, or disposals of subsidiaries during the Reporting Period[50] - A placing agreement was entered into on November 20, 2023, for the placement of up to 24,000,000 shares at a price of HK$1.80 per share, with estimated net proceeds of approximately HK$42.3 million[60] - As of December 31, 2023, approximately HK$30.0 million of the net proceeds from the placing has been utilized for general working capital[61] - The company raised RMB 38,338,000 from the issuance of new shares during the six months ended 31 December 2023, compared to RMB 14,490,000 in the same period of the previous year, reflecting a growth of 164.5%[116] Employee and Management - The Group had 397 full-time employees as of December 31, 2023, down from 405 on June 30, 2023[58] - Short-term benefits for key management personnel increased to RMB 2,554,000 for the six months ended December 31, 2023, compared to RMB 1,943,000 for the same period in 2022, reflecting a growth of 31.5%[181] - The total remuneration for key management personnel for the six months ended December 31, 2023, was RMB 2,568,000, an increase from RMB 1,984,000 in the same period of 2022[181] Governance and Compliance - The company has adopted the Corporate Governance Code and has complied with it, except for a deviation regarding meetings with Independent Non-executive Directors[94] - The Audit Committee has reviewed the interim results for the six months ended December 31, 2023, ensuring compliance and accuracy in financial reporting[98] Market and Industry Outlook - The Group expects a gradual recovery in industry demand and improvement in the operating environment of the food industry in 2024[68] - The Group plans to actively develop new business opportunities, particularly in the Internet sector, to diversify income sources[70] Inventory and Receivables - Trade payables rose significantly to RMB 20,736,000 from RMB 9,206,000, indicating an increase of approximately 125.5%[108] - Total inventories rose to RMB 92,524,000 as of December 31, 2023, from RMB 79,181,000 as of June 30, 2023, marking an increase of approximately 16.8%[164] - Trade receivables increased to RMB 114,971,000 as of December 31, 2023, up from RMB 105,833,000 as of June 30, 2023, representing an increase of approximately 8.5%[164] - The impairment loss on trade receivables decreased to RMB 250,000 as of December 31, 2023, compared to RMB 1,455,000 as of June 30, 2023, indicating an improvement in receivables quality[164]

智通财经APP获悉，中国升海集团(01676)绩后大跌超10%，2个交易日大跌32%，截至发稿，跌10.99%，报1.70港元，成交额223万港元。 消息面上，中国升海集团发布截至2023年12月31日止6个月中期业绩，收入1.96亿元(人民币，下同)，同比增长60.93%;公司拥有人应占亏损4031.2万元，同比收窄9.68%;每股亏损0.31元。 公告称，受到集团食品业务复苏所带动，报告期间集团收益增加至约1.96亿元。 海通证券指出，近期水产品价格表现不错，较春节前有明显上涨趋势，也将利于水产饲料销售。同时，在行业面临一定压力的背景下，行业格局或将进一步向龙头集中，且公司估值处于低位。 ...

Revenue and Profitability - Revenue for the six months ended 31 December 2023 was RMB 195,916,000, representing an increase of 60.8% compared to RMB 121,737,000 for the same period in 2022[5]. - Revenue for the six months ended December 31, 2023, was RMB 195,916,000, an increase of 61.5% compared to RMB 121,156,000 for the same period in 2022[27]. - Revenue from marine products sales accounted for the entirety of the revenue, with no contribution from fast-moving consumer goods during the reporting period[37]. - The Group's revenue increased to approximately RMB195.9 million for the six months ended December 31, 2023, up from approximately RMB121.2 million for the same period in 2022, representing a growth of 61.5%[65][67]. - Gross profit for the period was RMB 6,590,000, up from RMB 3,705,000, indicating a gross margin improvement[5]. - Gross profit for the Reporting Period was approximately RMB6.6 million, with a gross profit margin of 3.4%, compared to a gross profit of RMB3.7 million and a margin of 3.0% for the six months ended June 30, 2022[65][67]. - The Group's gross profit margin increased to approximately 3.4% for the six months ended 31 December 2023, compared to 3.0% for the same period in 2022, primarily due to an increase in average selling price[79]. Loss and Expenses - Loss for the period narrowed to RMB 38,127,000 from RMB 40,297,000, reflecting a reduction in losses by 5.4%[5]. - Total comprehensive loss for the period was RMB 40,312,000, compared to RMB 44,631,000 in the previous period, showing a decrease of 9.4%[5]. - The loss before taxation for the period was RMB 40,297,000, with corporate expenses amounting to RMB 8,748,000[40]. - The Group recorded a loss of approximately RMB38.1 million for the Reporting Period, an improvement from a loss of RMB40.3 million in the same period last year[65][67]. - Selling and distribution expenses rose slightly to RMB 35,406,000 from RMB 34,923,000, an increase of 1.4%[5]. - Administrative expenses decreased significantly to RMB 11,944,000 from RMB 16,458,000, a reduction of 27.3%[5]. Assets and Liabilities - Cash and cash equivalents decreased to RMB 41,982,000 from RMB 66,481,000, a decline of 36.9%[7]. - Trade receivables increased to RMB 114,721,000 from RMB 104,378,000, reflecting a growth of 9.3%[7]. - Non-current assets decreased to RMB 14,036,000 from RMB 14,885,000, a reduction of 5.7%[7]. - Net assets as of 31 December 2023 were RMB 217,472,000, down from RMB 219,445,000, a decrease of 0.9%[7]. - Trade receivables increased to RMB 114,971,000 from RMB 105,833,000, with an impairment loss of RMB 250,000[54]. - Trade payables aged 0-30 days rose to RMB 20,736,000 from RMB 9,206,000, indicating a significant increase in short-term liabilities[58]. - Net current assets rose from approximately RMB226.2 million as of 30 June 2023 to approximately RMB229.8 million as of 31 December 2023, mainly attributed to an increase in inventories[91]. - Cash and cash equivalents decreased to approximately RMB42.0 million as of 31 December 2023, down from approximately RMB66.5 million as of 30 June 2023, with no bank borrowings reported[92]. Business Operations - The Group's sales were entirely domestic, with all revenue generated from customers in Mainland China, and no major customers contributed 10% or more of the total revenue[30][34]. - The segment results for the packaging and sales of marine products segment showed a loss of RMB 35,079,000 for the six months ended December 31, 2023[37]. - The Group has identified two operating segments: packaging and sales of marine products, and all other segments, with a focus on resource allocation and performance assessment[21][25]. - The Group's products are distributed through various channels, including supermarkets, convenience stores, and e-commerce retailers, to maximize market reach[67][69]. - The food business accounted for 100% of the Group's revenue during the Reporting Period, while revenue from fast-moving consumer goods was nil, down from RMB581,000 in the previous year[75][71]. Future Outlook and Strategy - The outlook for 2024 indicates a clearer direction for demand improvement, with expectations of a gradual recovery in consumer confidence and easing of inventory pressures in the food industry[117]. - The company plans to actively develop new business opportunities, particularly in the Internet sector, to diversify income sources and stabilize financial performance[119]. - The Group's strategy includes sourcing high-quality raw materials and subcontracting processing to enhance product quality and market competitiveness[64][68]. Share Capital and Financing - The Group's issued and fully paid shares increased from 120,000,000 shares at the beginning of the period to 144,000,000 shares by December 31, 2023, reflecting a capital raising effort[62]. - The net proceeds from the placing of 24,000,000 shares at a price of HK$1.80 per share are approximately HK$42.3 million, aimed at strengthening the Group's financial position[63]. - The net proceeds from the placing are estimated to be approximately HK$42.3 million, with about HK$30.0 million utilized for general working capital as of 31 December 2023[108][115]. Compliance and Governance - The Group has not applied any new standards or interpretations that are not yet effective for the current accounting period, ensuring compliance with HKFRSs[18][23]. - The financial statements for the period ended June 30, 2023, were unaudited and prepared in accordance with the applicable disclosure provisions of the Listing Rules[2]. - The Group did not adopt formal hedging policies for foreign currency exchange risks during the Reporting Period[104]. - The Board did not recommend the payment of an interim dividend for the six months ended 31 December 2023[106].

Financial Performance - During the reporting period, the Group's revenue from the food products business increased by 530.8% to RMB 530.2 million from RMB 84.1 million in 2021[15]. - Segment gross profit rose by 124.2% to RMB 16.7 million from RMB 7.5 million in 2021[15]. - The Group's loss for the reporting period expanded to approximately RMB 151.5 million due to increased selling and distribution costs[15]. - Revenue from the food business increased by 530.8% from RMB 84.1 million in 2021 to RMB 530.2 million[18]. - Segment gross profit rose by 124.2% from RMB 7.5 million in 2021 to RMB 16.7 million[18]. - The group's loss expanded to approximately RMB 151.5 million during the reporting period due to increased sales and distribution costs[18]. - The gross profit margin dropped sharply from 11.4% in 2021 to 3.2% in 2023, mainly due to a decrease in average selling prices resulting from the Group's flexible pricing[56][58]. - The Group's capital expenditure during the Reporting Period was approximately RMB 0.5 million, significantly lower than approximately RMB 3.0 million in the year ended December 31, 2021[80]. - The Group reported an income tax credit of approximately RMB 0.8 million during the Reporting Period, compared to an income tax expense of RMB 1.3 million in 2021[63]. Economic Environment - The household savings rate has broadly returned to pre-epidemic levels, indicating a shift in consumer behavior[16]. - Domestic consumer demand for seafood has weakened recently due to the impact of the Fukushima nuclear incident in Japan[16]. - China's GDP growth is forecasted to be 5.1% in 2023, indicating a transition in economic growth[16]. - The momentum of industrial production growth is expected to be restored due to demand recovery and supply-side support policies[16]. - The economic transition is expected to shift from investment and export-oriented to consumption-oriented[16]. - The current economic transition in China is expected to slow growth but improve quality, shifting from investment and export-driven to consumption-driven[19]. - The Mainland economy has not shown significant improvement post-COVID-19 recovery, affecting consumer spending power[41]. Marketing and Business Strategy - The Group plans to strengthen marketing efforts in supermarkets and adopt flexible pricing strategies to combat market competition[15]. - The Group's attempts to enhance marketing efforts have yielded some results, although gross profit remains under pressure[15]. - The Group aims to actively develop new businesses, particularly in the Internet sector, to diversify income sources and stabilize financial performance[21]. - The integration of marketization and informationization is driving the transformation of traditional industries, creating opportunities in the Internet economy[23]. - The Group will continue to monitor market changes to identify opportunities for new business development[23]. - The Group has suspended its procurement services in the fast-moving consumer goods business due to a slowdown in consumer spending post-epidemic[47]. - The Group's revenue increased by approximately 512.9% from approximately RMB 86.5 million in 2021 to approximately RMB 530.2 million in 2023, primarily due to enhanced marketing efforts in supermarkets and flexible pricing strategies[53]. Financial Position - As of June 30, 2023, net current assets decreased to approximately RMB 226.2 million from approximately RMB 334.9 million as of December 31, 2021, primarily due to a reduction in cash and cash equivalents and trade receivables[66]. - Cash and cash equivalents amounted to approximately RMB 66.5 million as of June 30, 2023, down from approximately RMB 176.4 million as of December 31, 2021, with no bank borrowings reported[67]. - Trade receivables as of June 30, 2023, were approximately RMB 104.4 million, a decrease from approximately RMB 115.6 million as of December 31, 2021, with an average credit period of 30 to 90 days[78]. - Inventories increased to approximately RMB 79.2 million as of June 30, 2023, from approximately RMB 61.7 million as of December 31, 2021, with inventory turnover days reduced to approximately 75 days[77][84]. - The gearing ratio as of June 30, 2023, was 0.127, compared to 0.059 as of December 31, 2021, indicating a slight increase in financial leverage[76]. - As of June 30, 2023, trade payables amounted to approximately RMB 9.2 million, an increase from approximately RMB 2.5 million as of December 31, 2021[86]. Corporate Governance - The Board did not recommend the payment of a final dividend for the reporting period[93]. - The Group's distributable reserves as of June 30, 2023, amounted to approximately RMB 70.0 million, down from approximately RMB 85.1 million as of December 31, 2021[139][146]. - The Group's financial results and overall financial condition will be considered when proposing any future dividend payouts[120][123]. - The Group recognizes employees as valuable assets and provides competitive remuneration packages to attract and motivate them[127][133]. - The Group has established long-standing relationships with suppliers and conducts annual appraisals[128][133]. - The company has received confirmations of independence from all Independent Non-executive Directors, ensuring compliance with the Listing Rules[156]. - There were significant changes in the board of directors, including the resignation of the CEO on August 18, 2023, and the appointment of a new CEO on the same date[152]. Shareholder Information - As of the final report date, Precisely Unique Limited holds 52,500,000 shares, representing 43.75% of the company's total shareholding[182]. - Lau Shek Yau is a beneficial owner of 8,000,000 shares, accounting for 6.67% of the total shareholding[182]. - The largest customer accounted for approximately 6.9% of the total revenue for the fiscal year 2023, while the top five customers represented about 26.7% of total revenue[147]. - The largest supplier contributed approximately 12.7% to the total procurement amount for the fiscal year 2023, with the top five suppliers accounting for around 46.4%[147]. Risk Management - The Group has implemented a risk management system covering financial security, production, logistics, technology, and compliance to address operational risks[126][132]. - The company did not redeem or purchase any of its listed securities during the reporting period[190]. - There were no connected transactions or continuing connected transactions during the reporting period[187]. - No related party transactions or continuing related party transactions were conducted during the reporting period that required compliance with the listing rules[195].

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佈的內容概不負 責，對其準確性或完整性亦不發表任何聲明，並明確表示概不就因本公佈全部 或任何部分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。 中 國 升 海 集 團 有 限 公 司 China Shenghai Group Limited （於開曼群島註冊成立的有限公司） （股份代號：1676） 截至二零二三年六月三十日止十八個月之末期業績 之澄清公佈 謹此提述中國升海集團有限公司（「本公司」）日期為二零二三年九月二十九 日之公佈，內容有關截至二零二三年六月三十日止十八個月末期業績（「該公 佈」）。除另有界定者外，本公佈所用之詞彙與該公佈所界定者具備相同涵 義。 本公司謹此澄清本集團之核數師長青（香港）會計師事務所有限公司（「長 青」）已就該公佈所載之數字與本集團截至二零二三年六月三十日止十八個月 之經審核綜合財務報表所載之金額核對一致。由於長青就此進行之工作並非根 據香港會計師公會頒佈之香港核數準則、香港審閱聘用準則或香港核證聘用準 則而進行之核證聘用，因此，長青並無對該公佈發出任何核證。 除本公佈所披露者外，該公佈所載的所有資料維持不變。 ...

Revenue Performance - The Group's revenue surged 3 times to approximately RMB 348.4 million during the reporting period[15] - Total revenue for the Group increased to approximately RMB348.4 million, up from approximately RMB86.5 million in the previous year[25] - Revenue for the twelve months ended December 31, 2022, was RMB 348,438,000, a significant increase from RMB 86,506,000 in 2021, representing a growth of approximately 303%[107] - Revenue from marine products sales reached RMB 347,834,000 in 2022, a significant increase from RMB 84,055,000 in 2021, representing a growth of 314%[143] - The Group's revenue from food business surged threefold from approximately RMB84.1 million in 2021 to approximately RMB347.8 million during the Reporting Period[21] Profitability and Loss - Gross profit recorded approximately RMB 11.0 million, with a gross profit margin plummeting to 3.1% compared to 11.4% in the previous year[15] - The Group reported a greater loss of approximately RMB 103.5 million, an increase from a loss of RMB 97.7 million in the previous year[15] - The company reported a loss before income tax of RMB 104,366,000 for the twelve months ended December 31, 2022, compared to a loss of RMB 96,321,000 in 2021, reflecting a deterioration of approximately 8.5%[107] - For the twelve months ended December 31, 2022, the total comprehensive loss amounted to RMB 108,744,000, compared to a loss of RMB 97,101,000 in 2021, representing an increase of approximately 11.9%[109] - The loss attributable to the owners of the Company for the period was RMB 103,523,000, up from RMB 97,446,000 in the previous year, indicating a year-over-year increase of about 6.5%[109] Expenses and Costs - Selling and distribution expenses increased due to higher sales incentives and promotional activities during the Reporting Period[33] - Selling and distribution expenses increased to RMB 107,205,000 from RMB 31,380,000 in 2021, marking an increase of approximately 242%[107] - Administrative expenses rose primarily due to increased headquarters expenses during the period[34] - Costs of inventories for 2022 amounted to RMB 337,464,000, significantly higher than RMB 73,302,000 in 2021[159] Assets and Liabilities - Net current assets decreased from approximately RMB334.9 million as of December 31, 2021, to approximately RMB258.2 million as of December 31, 2022[43] - Cash and cash equivalents significantly dropped from RMB 176,402,000 in 2021 to RMB 90,404,000 in 2022, a decrease of around 48.9%[112] - Total liabilities increased from RMB 31,185,000 in 2021 to RMB 50,079,000 in 2022, marking an increase of approximately 60.7%[112] - Net assets decreased from RMB 358,992,000 in 2021 to RMB 264,738,000 in 2022, a decline of about 26.3%[113] Share Capital and Financing - The company issued new shares resulting in net proceeds of RMB 14,490,000 in 2022, an increase from RMB 9,976,000 in 2021, showing a positive trend in capital raising efforts[120] - The issued and fully paid share capital increased to RMB 10,383,000 in 2022 from RMB 9,388,000 in 2021, reflecting new share subscriptions[189] - The company completed a subscription of 12,000,000 shares at a price of HK$1.5 per share, raising net proceeds of approximately HK$17.4 million on April 14, 2022[191] Employee and Management Information - The Group had 389 full-time employees as of December 31, 2022, an increase from 313 employees as of December 31, 2021[60][65] - The remuneration for directors in 2022 totaled RMB2,398,000, a decrease from RMB5,249,000 in 2021, reflecting a reduction in short-term benefits[197] - The company’s total short-term benefits for key management personnel decreased significantly from RMB5,207,000 in 2021 to RMB2,374,000 in 2022[197] Corporate Governance and Compliance - The company has complied with the Corporate Governance Code throughout the six months ended December 31, 2022[98] - The Audit Committee, consisting of three independent non-executive directors, has reviewed the interim results for the twelve months ended December 31, 2022[103] - The company plans to seek compliance with code provision A.2.1 by appointing a suitable candidate for the chief executive officer position in the future[99] Strategic Initiatives - The Group aims to diversify its sources of income to stabilize financial performance amid improving sales in the food business[75] - The company aims to enhance promotional efforts and expand sales channels to solidify growth momentum due to improved food sales[77] - The group is focused on expanding its existing food business layout through strategic partnerships and market opportunities[77] Market and Customer Insights - All revenue was generated from domestic sales within the PRC, Hong Kong, and South Korea, with no customer contributing 10% or more of the Group's revenue during the twelve months ended December 31, 2022[144][145] - The Group's major customers did not contribute significantly to revenue, with no single customer accounting for 10% or more of total revenue in 2022[144] Research and Development - Research expenditure increased to RMB 780,000 in 2022 from RMB 652,000 in 2021, indicating a focus on innovation[159]

Revenue and Profitability - The Group's revenue surged 1.3 times to approximately RMB121.7 million in the Reporting Period from approximately RMB53.0 million for 2021H[10] - Gross profit for the Reporting Period fell to approximately RMB3.7 million, down from approximately RMB10.1 million in 2021H, resulting in a gross profit margin of 3% compared to 19.1% in 2021H[10] - The Group recorded a greater loss of approximately RMB40.3 million in the Reporting Period, compared to a loss of RMB31.4 million in 2021H[10] - Revenue from the food business surged 1.5 times from approximately RMB47.5 million in 2021H to approximately RMB121.1 million during the Reporting Period[14] - The gross margin for the food business decreased from 9.9% in 2021H to 2.6% in 2022H[14] - Total revenue for the Group increased 1.3 times to approximately RMB121.7 million from RMB53.0 million in the first half of 2021, mainly due to the rise in food business sales[22] - Revenue from fast moving consumer goods decreased to RMB581,000 from RMB5.3 million in the first half of 2021, reflecting a significant decline in orders from Hong Kong and the cessation of procurement services to Korea[19] - The Group's gross profit for the food business was RMB3.1 million, with a gross profit margin of 2.6% during the reporting period[26] - Revenue from the sale of food products reached RMB121,156,000 in the first half of 2022, a significant increase of 154.5% compared to RMB47,534,000 in the same period of 2021[106] - Total revenue for the Group in the first half of 2022 was RMB121,737,000, up 130.5% from RMB52,793,000 in the first half of 2021[106] Expenses and Financial Management - Selling and distribution expenses rose by 63.2% to RMB34.9 million from RMB20.7 million in the first half of 2021, as the Group enhanced promotional activities for its food business[30] - Administrative expenses increased by 27.1% to RMB16.5 million from RMB12.9 million in the first half of 2021, attributed to higher staff costs in the food business[31] - The cost of inventories recognized as expenses for the six months ended June 30, 2022, was RMB118,032,000, significantly higher than RMB42,713,000 in the same period of 2021[118] - Contributions to retirement benefit schemes increased to RMB1,943,000 in 2022 from RMB1,204,000 in 2021, representing a growth of 61.2%[160] Cash Flow and Assets - Cash and cash equivalents decreased to approximately RMB84.9 million as of June 30, 2022, down from approximately RMB176.4 million as of December 31, 2021[35] - The company reported a net cash used in operating activities of RMB(109,429,000), significantly higher than RMB(16,356,000) for the same period in 2021, reflecting an increase in cash outflow of approximately 570%[98] - The company generated net cash from financing activities of RMB17,697,000 for the six months ended June 30, 2022, compared to RMB1,880,000 in the same period of 2021, marking an increase of about 839%[98] - As of June 30, 2022, the company's net assets decreased to RMB328,851,000 from RMB358,992,000 as of December 31, 2021, representing a decline of approximately 8.4%[81] - The Group's trade receivables increased to RMB177,404,000 as of June 30, 2022, from RMB115,623,000 at the end of 2021, marking a rise of 53.5%[80] - The Group's total inventories as of June 30, 2022, included raw materials of RMB2,168,000 and finished goods of RMB90,525,000, totaling RMB92,693,000, compared to RMB61,737,000 as of December 31, 2021[126] Strategic Initiatives and Market Position - The recovery in sales was attributed to slowed industry consolidation in the fast-growing snack market in China, which is projected to grow at a CAGR of 6.7% by 2027[14] - The Group continues to differentiate itself by providing a broad and convenient choice of safe and quality products[12] - The Group plans to enhance promotional activities and broaden sales coverage to support growth in the food business[18] - A potential cooperation memorandum was signed with Zhonghong Pingbo for long-term strategic collaboration to provide high-quality agricultural products globally[18] - The Chinese snack market is projected to grow at a compound annual growth rate of 6.7% until 2027, which may provide further opportunities for the Group's food business[15] Corporate Governance and Compliance - The Company has complied with the Corporate Governance Code throughout the six months ended June 30, 2022[64] - The roles of chairman and chief executive are currently held by the same individual, which deviates from the Corporate Governance Code, but the Board believes this facilitates business strategy execution[66] - The Company may seek to comply with the Corporate Governance Code by appointing a suitable candidate for the chief executive officer position in the future[66] - The Company has adopted the Model Code for securities transactions by Directors, and all Directors confirmed compliance during the Reporting Period[69] Share Capital and Financing - The Company entered into a Subscription Agreement on March 28, 2022, to issue 12,000,000 Subscription Shares at a price of HK$1.5 per share, raising approximately RMB15 million[46] - The net proceeds from the 2021 Subscription amounted to approximately HK$11.6 million, with specific allocations for staff expenses and professional fees[41] - The total utilized amount from the 2022 Subscription is RMB8.20 million, leaving RMB6.80 million unutilized[45] - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2022, consistent with the previous year where no dividend was paid[144] - The company completed a subscription of 12,000,000 new shares at a price of HK$1.5 per share, resulting in net proceeds of approximately HK$17.5 million after deducting share issue expenses of about HK$0.5 million[150] Employee and Operational Metrics - The Group had 492 full-time employees as of June 30, 2022, up from 313 employees as of December 31, 2021, reflecting a growth of 57.3%[73] - Staff costs for the six months ended June 30, 2022, totaled RMB3,492,000, down from RMB9,145,000 in the previous year[118] - The Group's non-current liabilities increased to RMB25,734,000 as of June 30, 2022, from RMB15,803,000 as of December 31, 2021, representing an increase of approximately 62.6%[81] Related Party Transactions - Related party transactions included rental expenses of RMB60,000 for cost of sales and RMB40,000 for administrative expenses with Xiamen Yehong Foodstuffs Company Limited[156] - The company confirmed that purchases from related parties were conducted under trading terms similar to those with third parties, with costs of sales amounting to RMB107,000 and RMB59,000 for Mr. Liu Rongjian and Mr. Liu Rongzhong respectively[157]

Financial Performance - The Group's revenue from food business decreased by approximately 46.0% from approximately RMB 155.6 million in 2020 to approximately RMB 84.1 million during the Reporting Period[13]. - Gross profit from the food segment fell 68.3% from RMB 23.6 million in 2020 to RMB 7.5 million during the Reporting Year[13]. - Gross profit from the fast-moving consumer goods business decreased to RMB 2.5 million from RMB 7.2 million in 2020[14]. - The Group's revenue for the year ended December 31, 2021, fell by approximately 46.8% to approximately RMB 86.5 million from approximately RMB 162.7 million in 2020[46]. - Gross profit for the Reporting Year decreased by 67.8% to approximately RMB 9.9 million, with a gross profit margin dropping to 11.5% from 18.9% in 2020[46]. - The Group recorded a loss of approximately RMB 97.7 million for the Reporting Year, compared to a loss of RMB 32.3 million in 2020[46]. - The gross profit margin for the Group was approximately 11.4% during the Reporting Period, down from approximately 18.9% in the previous year[60]. - The Group's gross profit from the food business was approximately RMB 7.5 million, representing a gross profit margin of 8.9%[60]. Market Conditions - The economic outlook remains uncertain due to sporadic COVID-19 outbreaks and intensified competition in the domestic snack market[13]. - Consumer spending is expected to be further impacted by shrinking spending, supply shocks, and weakening expectations[15]. - The Group's target market includes mid-to-high-end customers, which may be affected by weakened consumer confidence[15]. - The geopolitical tensions and policy reforms in certain industries have significantly impacted the employment rate and income of the middle class[15]. - The Group's food business is expected to face extensive impacts on sales due to the ongoing effects of the Omicron variant[15]. - Domestic consumer spending may become increasingly unstable due to shrinking expenditure and supply chain disruptions[18]. - The ongoing geopolitical tensions from the Russia-Ukraine conflict are anticipated to impact the economic landscape, although China's economy is expected to remain relatively stable[18]. Strategic Initiatives - The Group has attempted to enhance marketing efforts and adopted a flexible pricing strategy to address declining orders[13]. - The Group aims to diversify its income sources to stabilize financial performance amid market uncertainties[21][24]. - The Group maintains a cautiously optimistic view on its low-cost fast-moving consumer goods business despite weakening consumer confidence[20]. - The Group's strategic focus aligns with the government's emphasis on domestic demand and economic dual circulation[20][23]. - The Group plans to enhance its supply chain capacity and has entered into a joint venture for high-demand mobile phones and electronic components[50]. Operational Insights - The Group offered over 100 types of dried seafood, 30 types of algae and fungi, and 60 types of seafood snacks during the Reporting Period[46]. - The Group's products are sold through various channels, including supermarkets, trading companies, convenience stores, and e-commerce retailers[46]. - The Group sources high-quality raw materials and sub-contracts processing to third parties, packaging products under its own brand "Wofan"[46]. - Selling and distribution expenses decreased due to tightened cost control on promotion and advertising activities during the Year[66]. Financial Position - As of December 31, 2021, net current assets decreased to approximately RMB 334.9 million from RMB 391.7 million as of December 31, 2020, primarily due to an increase in inventories and cash equivalents[71]. - Cash and cash equivalents as of December 31, 2021, were approximately RMB 176.4 million, down from RMB 213.5 million as of December 31, 2020, with no bank borrowings reported[71]. - The gearing ratio increased to 0.059 as of December 31, 2021, compared to 0.029 as of December 31, 2020[71]. - Inventories as of December 31, 2021, amounted to approximately RMB 61.7 million, with inventory turnover days increasing to approximately 327 days from 214 days in 2020[71]. - Trade receivables as of December 31, 2021, were approximately RMB 115.6 million, with turnover days increasing to approximately 526 days from 264 days in 2020[71]. - Trade payables decreased to approximately RMB 2.5 million as of December 31, 2021, from approximately RMB 16.4 million in 2020[73]. Governance and Compliance - The Company has adopted the Corporate Governance Code as its own code of corporate governance and has complied with it, except for certain deviations[148]. - The Board currently comprises three executive Directors and three independent non-executive Directors, ensuring that independent non-executive Directors represent 50% of the Board[148]. - The Company has maintained the prescribed public float under the Listing Rules as of the date of this annual report[146]. - The Company is committed to enhancing its corporate governance practices to meet evolving regulatory requirements and shareholder expectations[152]. - The Company has received annual confirmations of independence from all Independent Non-executive Directors, ensuring compliance with Listing Rules[159]. Shareholder Information - The Company did not recommend the payment of a final dividend for the year ended December 31, 2021[76]. - No dividend has been declared or proposed for the year ended December 31, 2021[81]. - The Company has adopted a dividend policy that allows for the declaration and distribution of dividends at the Board's discretion[82]. - Shareholders holding at least one-tenth of the paid-up capital can request the Board to convene an extraordinary general meeting[191]. - The forthcoming Annual General Meeting (AGM) is scheduled for May 2021, with notices sent at least 20 business days in advance[193]. Audit and Risk Management - The audit identified key audit matters, particularly the impairment assessment on trade receivables[199]. - The financial statements were prepared in compliance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance[197]. - The audit was conducted in accordance with Hong Kong Standards on Auditing, ensuring independence and ethical compliance[198]. - The Audit Committee oversees internal control and risk management procedures of the Company[178]. - An external independent consultant was engaged to assess the Group's risk management and internal control systems, with findings reported to the Audit Committee and the Board[186].

中國升海集團有限公 司 China Shenghai Group Limited ( formerly known as China Shenghai Food Holdings Company Limited ) ( 前稱中國升海食品控股有限公司) ( Incorporated in the Cayman Islands with limited liability ) ( 於開曼群島註冊成立之有限公司 ) Stock Code 股份代號 : 1676 2021 INTERIM REPORT 中期報告 CONTENTS 目錄 2 Corporate Information 公司資料 5 Management Discussion and Analysis 管理層討論與分析 14 Corporate Governance and Other Information 企業管治及其他資料 20 Consolidated Statement of Profit or Loss and Other Comprehensive Income – Unaudited 綜合損益及其他全面收益表－未經審核 22 Consol ...

Corporate Information [Board of Directors and Committees](index=3&type=section&id=Directors%20and%20Committees) This section outlines the Board of Directors' composition and the structure of its Audit, Nomination, and Remuneration Committees - Mr. Liu Rongru serves as Co-Chairman and Chief Executive Officer, responsible for the Group's development, positioning, and strategic planning[7](index=7&type=chunk) - Mr. Li Dongfan was appointed Non-Executive Director and Co-Chairman on January 14, 2020, providing advice on business development, management, and strategic planning[7](index=7&type=chunk) - Mr. Peng Weizheng chairs the Audit Committee, Mr. Liu Rongru chairs the Nomination Committee, and Mr. Liu Dajin chairs the Remuneration Committee[7](index=7&type=chunk) [Company Details](index=3&type=section&id=Company%20Details) This section provides key company details, including registration, principal bankers, share registrar, and contact information - The company's auditor is BDO Limited, Hong Kong[7](index=7&type=chunk) - The company's principal bankers include Xiamen Bank Huachang Sub-branch and China Construction Bank Xiamen Hubin Sub-branch[9](index=9&type=chunk) - The company's stock code is **1676**, and its website is www.chinashenghaigroup.com[9](index=9&type=chunk) Chairman's Statement [Business Review (Chairman's Statement)](index=5&type=section&id=Business%20Review%20%28Chairman%27s%20Statement%29) In 2020, the company's dried seafood product revenue significantly declined by 65.6% to RMB 162.7 million, resulting in a net loss of RMB 32.3 million, while a new fast-moving consumer goods business generated RMB 7.2 million in net revenue - The global economy in 2020 was severely impacted by the COVID-19 pandemic, leading to reduced consumption in China and negative effects on the company's business[12](index=12&type=chunk)[14](index=14&type=chunk) 2020 Key Financial Data (Chairman's Statement) | Indicator | 2020 (RMB million) | 2019 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Dried Seafood Product Revenue | 162.7 | 472.9 | -65.6% | | Gross Profit | 30.7 | 103.8 | -70.4% | | Net Loss | 32.3 | (30.8) | N/A (Loss incurred) | | FMCG Business Total Transaction Value | 132.9 | N/A | N/A | | FMCG Business Net Revenue | 7.2 | N/A | N/A | | FMCG Business Net Profit | 3.2 | N/A | N/A | - To mitigate single-business risk, the company launched a fast-moving consumer goods business in early 2020, primarily selling cosmetics, daily necessities, fashion, and accessories[12](index=12&type=chunk)[15](index=15&type=chunk) [Outlook (Chairman's Statement)](index=6&type=section&id=Outlook%20%28Chairman%27s%20Statement%29) The company plans to transform its traditional sales model by investing in e-commerce, diversifying beyond food products, and seeking M&A opportunities for growth - The pandemic accelerated the shift to e-commerce, prompting the company to increase investment in its e-commerce business[17](index=17&type=chunk)[19](index=19&type=chunk) - The company will expand beyond food products to diversify revenue streams and actively seek cooperation and M&A opportunities for growth[17](index=17&type=chunk)[19](index=19&type=chunk) [Appreciation](index=6&type=section&id=Appreciation) The Board expresses sincere gratitude to all employees, shareholders, investors, customers, and suppliers, committing to pragmatic operations and performance-driven returns - The Board thanks all employees, shareholders, investors, customers, and suppliers for their support[18](index=18&type=chunk)[19](index=19&type=chunk) - The company pledges to uphold its original mission, operate pragmatically, actively pursue development, and reward trust with tangible performance[18](index=18&type=chunk)[19](index=19&type=chunk) Biographical Details of Directors [Executive Directors](index=7&type=section&id=Executive%20Directors) This section details the backgrounds, education, careers, and responsibilities of Executive Directors Mr. Liu Rongru and Ms. Li Jiayin - Mr. Liu Rongru (53) is the Group's founder, CEO, Executive Director, and Co-Chairman, responsible for Group development, positioning, and strategic planning, with over 20 years of experience in the seafood business[22](index=22&type=chunk)[25](index=25&type=chunk) - Ms. Li Jiayin (37) is an Executive Director, responsible for business development, overall management, and strategic planning, holding a Bachelor's degree in Finance and having held senior management positions in various companies[28](index=28&type=chunk)[30](index=30&type=chunk) [Non-Executive Director](index=8&type=section&id=Non-Executive%20Director) This section introduces Mr. Li Dongfan, a Non-Executive Director and Co-Chairman appointed on January 14, 2020, who advises on business development, management, and strategic planning, holding a Ph.D. in Finance - Mr. Li Dongfan (36) was appointed Non-Executive Director and Co-Chairman on January 14, 2020, primarily advising on the Group's business development, management, and strategic planning[29](index=29&type=chunk)[31](index=31&type=chunk) - Mr. Li Dongfan holds a Ph.D. in Philosophy (Finance) from Brampton International University, Canada, and has served as a director for several listed companies[29](index=29&type=chunk)[31](index=31&type=chunk) [Independent Non-Executive Directors](index=9&type=section&id=Independent%20Non-Executive%20Directors) This section outlines the professional backgrounds and responsibilities of Independent Non-Executive Directors Mr. Liu Dajin, Mr. Liu Juntin, and Mr. Peng Weizheng, highlighting their roles in ensuring board independence and expertise - Mr. Liu Dajin (55) has been a practicing member of the Chinese Institute of Certified Public Accountants since 1996, holds a Bachelor's degree in Economics, has taught at several universities, and is currently a professor in the Management Department at Jimei University Chengyi College[33](index=33&type=chunk)[37](index=37&type=chunk) - Mr. Liu Juntin (31) was appointed on January 14, 2020, graduated from Beijing Institute of Technology, currently serves as Assistant Manager at Zhuhai Oasis Industrial Co., Ltd., and is an Independent Non-Executive Director of Mandi Technology Co., Ltd[34](index=34&type=chunk)[38](index=38&type=chunk) - Mr. Peng Weizheng (32) has been a member of the Hong Kong Institute of Certified Public Accountants since 2015, holds a Bachelor of Business Administration in Accountancy, possesses over 10 years of experience in accounting, auditing, and company secretarial matters, and is currently the Company Secretary of Xingfa Aluminium Holdings Limited[35](index=35&type=chunk)[36](index=36&type=chunk)[38](index=38&type=chunk) Management Discussion and Analysis [Business Review (MD&A)](index=10&type=section&id=Business%20Review%20%28MD%26A%29) In 2020, the company's total revenue significantly decreased by 65.6% to RMB 162.7 million, resulting in a net loss of RMB 32.3 million, while a new fast-moving consumer goods business generated RMB 7.2 million in net revenue - In 2020, the company's revenue and gross profit significantly declined, and it recorded a loss for the first time, severely impacted by the COVID-19 pandemic in China[40](index=40&type=chunk) 2020 Key Financial Data (Management Discussion and Analysis) | Indicator | 2020 (RMB million) | 2019 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 162.7 | 472.9 | -65.6% | | Gross Profit | 30.7 | 103.8 | -70.4% | | Gross Profit Margin | 18.9% | 21.9% | -3.0pp | | Net Loss | 32.3 | (30.8) | N/A (Loss incurred) | | Food Business Revenue | 155.6 | 472.9 | -67.1% | | FMCG Business Net Revenue | 7.2 | N/A | N/A | | FMCG Business Profit | 3.2 | N/A | N/A | - The revenue recognition method for the fast-moving consumer goods business was adjusted from a gross basis in the interim report to a net basis, resulting in a **RMB 66.3 million reduction** in both revenue and cost of sales[44](index=44&type=chunk)[46](index=46&type=chunk) [Outlook (MD&A)](index=12&type=section&id=Outlook%20%28MD%26A%29) The company plans to actively transform its traditional sales model by investing in e-commerce, diversifying beyond food products, and seeking M&A opportunities for growth - The pandemic accelerated e-commerce as a primary consumption method, leading the company to increase investment in its e-commerce business[48](index=48&type=chunk)[52](index=52&type=chunk) - The company will further expand beyond food products to diversify revenue sources and actively seek cooperation and M&A opportunities[48](index=48&type=chunk)[52](index=52&type=chunk) [Operating Results and Financial Review](index=12&type=section&id=Operating%20Results%20and%20Financial%20Review) In 2020, the company's revenue decreased by 65.6% to RMB 162.7 million, primarily due to lower sales volume and average selling prices, with gross profit margin falling to 18.9% and increased sales and administrative expenses as a percentage of revenue Revenue by Product Type | Product Type | 2020 (RMB thousand) | Share (%) | 2019 (RMB thousand) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Dried Seafood Products | 88,018 | 54.1% | 246,108 | 52.1% | | Algae and Fungi Products | 62,755 | 38.6% | 190,283 | 40.2% | | Marine Leisure Products | 4,780 | 2.9% | 36,497 | 7.7% | | FMCG and Other Businesses | 7,165 | 4.4% | – | N/A | | **Total** | **162,718** | **100%** | **472,888** | **100%** | Gross Profit and Gross Profit Margin | Business Type | 2020 Gross Profit (RMB thousand) | 2020 Gross Profit Margin (%) | 2019 Gross Profit (RMB thousand) | 2019 Gross Profit Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Food Business | 23,551 | 15.1% | 103,769 | 21.9% | | FMCG and Other Businesses | 7,165 | 100% | – | N/A | | **Total** | **30,716** | **18.9%** | **103,769** | **21.9%** | - Sales and distribution expenses as a percentage of revenue increased from **9.2% in 2019 to 22.0% in 2020**, and administrative expenses as a percentage of revenue increased from **3.0% in 2019 to 11.8% in 2020**, primarily due to the decrease in revenue[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) [Liquidity, Financial Resources, and Capital Structure](index=14&type=section&id=Liquidity%2C%20Financial%20Resources%2C%20and%20Capital%20Structure) In 2020, the company's net current assets decreased to RMB 391.7 million, with cash and cash equivalents at RMB 213.5 million and no bank borrowings, while the gearing ratio increased significantly and operating efficiency declined as evidenced by extended inventory and trade receivable turnover days Overview of Liquidity and Financial Resources | Indicator | 2020 (RMB million) | 2019 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Net Current Assets | 391.7 | 404.3 | -3.1% | | Cash and Cash Equivalents | 213.5 | 242.6 | -12.0% | | Bank Borrowings | 0 | 0 | 0 | | Gearing Ratio | 0.040 | 0.009 | +344.4% | | Inventories | 75.5 | 79.1 | -4.6% | | Inventory Turnover Days | 214 days | 74 days | +189.2% | | Trade Receivables | 133.5 | 102.3 | +30.5% | | Trade Receivables Turnover Days | 264 days | 82 days | +221.9% | | Trade Payables | 16.4 | 8.7 | +88.5% | - The company's capital expenditure increased from **RMB 5 million in 2019 to RMB 7.2 million in 2020**[66](index=66&type=chunk) - As of December 31, 2020, the company had no assets pledged and no significant investments, acquisitions, or disposals of subsidiaries[67](index=67&type=chunk)[68](index=68&type=chunk) [Other Information (MD&A)](index=15&type=section&id=Other%20Information%20%28MD%26A%29) The company primarily operates in China with most transactions settled in RMB, resulting in minimal foreign exchange exposure and no formal hedging policy, while the number of full-time employees decreased in 2020, and no final dividend is recommended - The company primarily operates in China, with transactions settled in RMB, and the Board anticipates that future currency fluctuations will not severely impact operations, thus no formal hedging policy is adopted[69](index=69&type=chunk)[74](index=74&type=chunk) - As of December 31, 2020, the company had **486 full-time employees**, a decrease from **554 in 2019**[70](index=70&type=chunk)[75](index=75&type=chunk) - The Board does not recommend the payment of a final dividend to shareholders for the year ended December 31, 2020[71](index=71&type=chunk)[75](index=75&type=chunk) Report of the Directors [General Business and Financial Information](index=16&type=section&id=General%20Business%20and%20Financial%20Information) The company's principal business is investment holding, with subsidiaries primarily engaged in seafood packaging and sales, and no dividends were declared or recommended during the reporting period - The company's principal business is investment holding, with its subsidiaries primarily engaged in packaging and selling seafood products[77](index=77&type=chunk) - The Board did not declare or recommend any dividends for the year ended December 31, 2020[77](index=77&type=chunk) - The Group's business review, key financial performance indicators, and outlook are provided in the Chairman's Statement and Management Discussion and Analysis[77](index=77&type=chunk) [Environmental and Social Governance](index=16&type=section&id=Environmental%20and%20Social%20Governance) The company is committed to sustainable development and environmental protection through energy conservation and emergency plans, has adopted a dividend policy to share profits while retaining sufficient reserves, and values stakeholder relationships by offering competitive employee remuneration, fostering long-term supplier partnerships, and providing quality products to customers - The company is committed to promoting sustainable development and environmental protection by conserving electricity and implementing emergency plans to reduce environmental impact[77](index=77&type=chunk) - The company has adopted a dividend policy, with dividend recommendations at the Board's discretion, considering factors such as the Group's financial performance, financial position, liquidity, and capital requirements[77](index=77&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) - The company values stakeholder relationships, offering competitive remuneration to employees, establishing long-term partnerships with suppliers, and striving to provide quality products to customers[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) [Risk Management and Compliance](index=17&type=section&id=Risk%20Management%20and%20Compliance) The company has implemented a comprehensive risk management system covering financial security, production, logistics, technology, and compliance, overseen by the Audit Committee, and no significant breaches of applicable laws or regulations were identified during the year - The company has implemented a risk management system covering financial security, production, logistics, technology, and compliance, with the Audit Committee responsible for oversight[85](index=85&type=chunk)[92](index=92&type=chunk) - No significant breaches or non-compliance with applicable laws and regulations were identified during the year[81](index=81&type=chunk)[83](index=83&type=chunk) - The company faces operational risks related to its business and identifies, assesses, and controls potential risks through a systematic risk management system[85](index=85&type=chunk)[92](index=92&type=chunk) [Share Capital and Reserves](index=18&type=section&id=Share%20Capital%20and%20Reserves) Details of the company's share capital changes are in Note 23 to the consolidated financial statements, and reserve changes are in the consolidated statement of changes in equity, with distributable reserves decreasing to approximately RMB 85.1 million in 2020 - Details of the company's share capital changes are provided in Note 23 to the consolidated financial statements[91](index=91&type=chunk)[94](index=94&type=chunk) - Details of the company's reserve changes are provided in the consolidated statement of changes in equity[96](index=96&type=chunk)[101](index=101&type=chunk) Distributable Reserves | Year | Amount (RMB million) | | :--- | :--- | | 2020 | 85.1 | | 2019 | 92.7 | [Major Customers and Suppliers](index=19&type=section&id=Major%20Customers%20and%20Suppliers) In 2020, sales to the company's largest and top five customers accounted for 8.9% and 36.8% of total turnover, respectively, while purchases from the largest and top five suppliers accounted for 14.7% and 44.6% of total purchases, with no beneficial interests held by directors or major shareholders in these key parties 2020 Major Customer and Supplier Proportions | Type | Proportion (%) | | :--- | :--- | | Sales to Largest Customer | 8.9% | | Sales to Top Five Customers | 36.8% | | Purchases from Largest Supplier | 14.7% | | Purchases from Top Five Suppliers | 44.6% | - No directors, their associates, or shareholders holding 5% or more of the company's shares had any beneficial interest in the Group's top five customers or suppliers[99](index=99&type=chunk)[103](index=103&type=chunk) [Directors' Information and Corporate Actions](index=20&type=section&id=Directors%27%20Information%20and%20Corporate%20Actions) This section lists the Board members for 2020 and up to the report date, confirms the independence of all independent non-executive directors, notes the adoption of a share option scheme with no options granted, discloses directors' and major shareholders' interests, and confirms directors' liability insurance and no significant related party transactions or conflicts of interest during the year - The Board of Directors includes Executive Directors Mr. Liu Rongru and Ms. Li Jiayin, Non-Executive Director Mr. Li Dongfan, and Independent Non-Executive Directors Mr. Liu Dajin, Mr. Peng Weizheng, and Mr. Liu Juntin[105](index=105&type=chunk) - The company has received confirmations of independence from all independent non-executive directors in accordance with Rule 3.13 of the Listing Rules[105](index=105&type=chunk) - The company has adopted a share option scheme, but no share options have been granted under the scheme as of the date of this annual report[108](index=108&type=chunk)[112](index=112&type=chunk)[115](index=115&type=chunk) - Mr. Liu Rongru and his spouse, Ms. Lin Yueying, are deemed to have an interest in **52.5% of the company's shares**[119](index=119&type=chunk)[123](index=123&type=chunk) - The company has purchased and maintains directors' and officers' liability insurance, and there were no significant related party transactions or conflicts of interest during the year[126](index=126&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) Corporate Governance Report [Compliance with Corporate Governance Code](index=27&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The company has generally complied with the Corporate Governance Code in Appendix 14 of the Listing Rules during the reporting period, despite deviations regarding the number of board meetings, the combined roles of Chairman and CEO, and committee chairs' attendance at the AGM - The company has adopted the Corporate Governance Code set out in Appendix 14 of the Listing Rules[145](index=145&type=chunk)[147](index=147&type=chunk) - The Board held **three meetings in 2020**, fewer than the minimum of four required annually by Code Provision A.1.1[145](index=145&type=chunk)[147](index=147&type=chunk) - The roles of Co-Chairman and Chief Executive Officer are combined in Mr. Liu Rongru, deviating from Code Provision A.2.1, which requires separation of these roles[146](index=146&type=chunk)[148](index=148&type=chunk) - The chairmen and members of the Audit, Remuneration, and Nomination Committees were unable to attend the 2020 Annual General Meeting due to business commitments, deviating from Code Provision E.1.2[150](index=150&type=chunk)[154](index=154&type=chunk) [Board of Directors (Corporate Governance)](index=28&type=section&id=Board%20of%20Directors%20%28Corporate%20Governance%29) The Board is responsible for leading and overseeing the company, including business, strategic decisions, internal control, and risk management, comprising two executive, one non-executive, and three independent non-executive directors to ensure diversity, and operates with regular meetings, adequate resources, and independent professional advice, guided by diversity and nomination policies - The Board is responsible for leading and overseeing the company, supervising the Group's business, strategic decisions, internal control, and risk management systems[153](index=153&type=chunk) - The Board comprises two executive directors, one non-executive director, and three independent non-executive directors, with independent non-executive directors constituting **one-half of the Board's total members**[157](index=157&type=chunk)[158](index=158&type=chunk) - The company has adopted a Board Diversity Policy, considering factors such as race, gender, age, educational background, and industry experience, and aims to increase the proportion of female members[159](index=159&type=chunk)[160](index=160&type=chunk) - The company has adopted a Nomination Policy, with selection criteria including integrity, business experience, time commitment, diversity, and professional qualifications[168](index=168&type=chunk)[170](index=170&type=chunk)[172](index=172&type=chunk) - All directors have confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers[165](index=165&type=chunk)[169](index=169&type=chunk) [Board Committees](index=33&type=section&id=Board%20Committees) This section details the responsibilities, composition, and meeting activities of the Nomination, Audit, and Remuneration Committees, which regularly convene to review board structure, identify suitable director candidates, oversee financial statements, internal controls, risk management, and formulate remuneration policies for directors and senior management - The Nomination Committee's primary responsibilities include regularly reviewing the Board's structure, identifying suitable director candidates, and assessing the independence of independent non-executive directors[167](index=167&type=chunk)[169](index=169&type=chunk) - The Audit Committee's primary responsibilities include advising on the appointment of external auditors, reviewing financial statements, and overseeing internal control and risk management procedures[176](index=176&type=chunk) - The Remuneration Committee's primary responsibility is to make recommendations to the Board on the overall remuneration policy and structure for all directors and senior management[176](index=176&type=chunk) Board and Committee Meeting Attendance | Director Name | Board Meetings | Audit Committee | Remuneration Committee | Nomination Committee | | :--- | :--- | :--- | :--- | :--- | | Mr. Liu Rongru | 6/7 | N/A | 3/3 | 3/3 | | Ms. Li Jiayin | 7/7 | N/A | N/A | N/A | | Mr. Li Dongfan | 6/7 | N/A | N/A | N/A | | Mr. Liu Dajin | 6/7 | 2/2 | 3/3 | 3/3 | | Mr. Liu Juntin | 5/7 | 2/2 | 2/3 | 2/3 | | Mr. Peng Weizheng | 7/7 | 2/2 | N/A | N/A | [Accountability and Audit](index=38&type=section&id=Accountability%20and%20Audit) The Board and Audit Committee have reviewed the Group's consolidated financial statements, with directors confirming their responsibility for account preparation, the use of appropriate and consistently applied accounting policies, and no material doubts about the company's going concern ability; the auditor is BDO Limited, Hong Kong, with 2020 audit service fees of HKD 1.08 million - The Board and Audit Committee have reviewed the Group's consolidated financial statements, and the directors confirm their responsibility for preparing the accounts[183](index=183&type=chunk)[185](index=185&type=chunk) - The Board believes that appropriate accounting policies have been selected and consistently applied, and there are no material doubts about the Group's ability to continue as a going concern[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) Auditor's Remuneration | Service Type | 2020 Amount (HKD thousand) | | :--- | :--- | | Review Services | 1,080 | [Risk Management and Internal Controls (Corporate Governance)](index=39&type=section&id=Risk%20Management%20and%20Internal%20Controls%20%28Corporate%20Governance%29) The Board is fully responsible for the company's internal control and risk management systems, aiming to enhance operational efficiency, safeguard shareholder investments and assets, and ensure compliance, with established procedures for handling inside information and external consultants assisting in risk identification and internal control review, which the Board deems effective and adequate - The Board is fully responsible for the company's internal control and risk management systems, aiming to enhance operational efficiency, safeguard shareholder investments and assets, and ensure compliance[189](index=189&type=chunk)[192](index=192&type=chunk) - The company has established and maintains procedures and internal controls for handling and disseminating inside information[190](index=190&type=chunk)[193](index=193&type=chunk) - The company engages external independent consultants to assist in identifying and assessing risks, and to independently review internal controls and evaluate system effectiveness, which the Board considers effective and adequate[191](index=191&type=chunk)[194](index=194&type=chunk) [Shareholders' Rights and Investor Relations](index=40&type=section&id=Shareholders%27%20Rights%20and%20Investor%20Relations) The company encourages shareholders to express opinions and ask questions via email, phone, or general meetings, allows shareholders holding at least one-tenth of the paid-up capital to requisition an extraordinary general meeting, ensures all resolutions at general meetings are voted by poll with results published on the company and HKEX websites, and maintains continuous communication with shareholders through its website - Shareholders can submit questions to the Board or senior management via email, phone, or at general meetings[196](index=196&type=chunk) - Shareholders holding not less than **one-tenth of the paid-up capital** can requisition the Board to convene an extraordinary general meeting[196](index=196&type=chunk) - All resolutions at general meetings are voted by poll, and the results are published on the company's and HKEX websites[196](index=196&type=chunk) - The company maintains continuous communication with shareholders through its website, www.chinashenghaigroup.com, and encourages participation in general meetings[198](index=198&type=chunk)[199](index=199&type=chunk)[201](index=201&type=chunk) Independent Auditor's Report [Opinion and Basis of Opinion](index=42&type=section&id=Opinion%20and%20Basis%20of%20Opinion) Independent auditor BDO Limited issued an unmodified opinion on China Shenghai Group Limited's consolidated financial statements for the year ended December 31, 2020, affirming they present a true and fair view of the company's financial position, performance, and cash flows in accordance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance, with the audit conducted under Hong Kong Standards on Auditing and the Code of Ethics for Professional Accountants - The auditor issued an unmodified opinion on the consolidated financial statements, deeming them to present a true and fair view of the company's financial position, performance, and cash flows[205](index=205&type=chunk)[209](index=209&type=chunk) - The audit was conducted in accordance with Hong Kong Standards on Auditing and the Code of Ethics for Professional Accountants issued by the Hong Kong Institute of Certified Public Accountants[206](index=206&type=chunk)[210](index=210&type=chunk) [Key Audit Matters](index=42&type=section&id=Key%20Audit%20Matters) The auditor identified revenue recognition and impairment assessment of trade receivables as key audit matters due to inherent management manipulation risk and significant judgment involved, addressing them by reviewing contracts, comparing transaction records, examining accounting entries, assessing internal controls, analyzing aging, and evaluating management estimates - Revenue recognition was identified as a key audit matter due to its significance as a key performance indicator for the Group and the inherent risk of management manipulating revenue recognition[211](index=211&type=chunk)[213](index=213&type=chunk) - The auditor's procedures for revenue recognition included understanding internal controls, sampling sales agreements, comparing sales records with supporting documents, comparing transactions before and after year-end, and examining accounting entries affecting revenue[213](index=213&type=chunk) - Impairment assessment of trade receivables was identified as a key audit matter due to its substantial amount (**RMB 133.5 million**, representing **27% of total assets**) and the significant judgment and estimation involved[215](index=215&type=chunk) - The auditor's procedures for impairment assessment of trade receivables included evaluating internal controls, examining aging reports, assessing the reasonableness of management's loss allowance estimates, and checking post-year-end cash receipts[215](index=215&type=chunk) [Responsibilities](index=45&type=section&id=Responsibilities) This section outlines the respective responsibilities of directors and auditors in the preparation and audit of consolidated financial statements, with directors responsible for preparing true and fair financial statements, ensuring effective internal controls, and assessing going concern, while auditors are responsible for obtaining reasonable assurance about material misstatements and communicating audit scope and findings to the Audit Committee - Directors are responsible for preparing true and fair consolidated financial statements in accordance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance, and for internal controls[219](index=219&type=chunk)[223](index=223&type=chunk) - Directors are responsible for assessing the Group's ability to continue as a going concern and disclosing related matters where appropriate[220](index=220&type=chunk)[223](index=223&type=chunk) - The auditor's objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error[225](index=225&type=chunk) - The auditor communicates with the Audit Committee regarding the audit scope, timing, and significant audit findings, including any significant deficiencies in internal control[227](index=227&type=chunk) Consolidated Statements of Comprehensive Income [Financial Performance Overview](index=48&type=section&id=Financial%20Performance%20Overview) For the year ended December 31, 2020, the company's total revenue significantly decreased to RMB 162.7 million, resulting in a pre-tax loss of RMB 30.3 million and a net loss of RMB 32.3 million, a reversal from the 2019 net profit of RMB 30.8 million, with basic and diluted loss per share at RMB 0.3226 Key Data from Consolidated Statements of Comprehensive Income | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 162,718 | 472,888 | | Cost of Sales | (132,002) | (369,119) | | Gross Profit | 30,716 | 103,769 | | Other Income and Other Gains/(Losses) – Net | 1,100 | 1,272 | | Selling and Distribution Expenses | (35,878) | (43,734) | | Administrative Expenses | (19,167) | (14,098) | | Expected Credit Losses on Financial Assets | (3,309) | (261) | | Finance Costs | (444) | (226) | | Other Expenses | (3,358) | (693) | | (Loss)/Profit Before Income Tax | (30,340) | 46,029 | | Income Tax Expense | (1,915) | (15,189) | | (Loss)/Profit for the Year Attributable to Owners of the Company | (32,255) | 30,840 | | Other Comprehensive Income for the Year | 841 | (13) | | Total Comprehensive (Expense)/Income for the Year Attributable to Owners of the Company | (31,414) | 30,827 | | (Loss)/Earnings Per Share – Basic and Diluted (RMB) | (0.3226) | 0.3084 | - In 2020, the company shifted from profit to loss, primarily due to a significant decrease in revenue and an increase in expected credit losses[229](index=229&type=chunk) Consolidated Statements of Financial Position [Financial Position Overview](index=49&type=section&id=Financial%20Position%20Overview) As of December 31, 2020, total assets slightly decreased to RMB 499.8 million, net current assets decreased to RMB 391.7 million, total liabilities increased to RMB 53.4 million due to higher trade payables and debentures, and total equity decreased to RMB 446.4 million Key Data from Consolidated Statements of Financial Position | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Property, Plant and Equipment | 56,979 | 67,356 | | Deferred Tax Assets | 731 | 372 | | Deposits Paid to Suppliers (Non-current) | 1,479 | 5,746 | | Inventories | 75,452 | 79,106 | | Trade Receivables | 133,482 | 102,278 | | Cash and Cash Equivalents | 213,479 | 242,578 | | Total Current Assets | 436,626 | 432,220 | | Trade Payables | 16,353 | 8,716 | | Debentures (Current) | 6,287 | – | | Lease Liabilities (Current) | 2,916 | 1,065 | | Total Current Liabilities | 44,901 | 27,950 | | Net Current Assets | 391,725 | 404,270 | | Debentures (Non-current) | 6,959 | 900 | | Lease Liabilities (Non-current) | 1,515 | 2,163 | | Net Assets | 446,417 | 477,831 | | Share Capital | 8,723 | 8,723 | | Reserves | 437,694 | 469,108 | | Total Equity | 446,417 | 477,831 | - Total assets and total equity both decreased, while total liabilities increased, reflecting financial pressure on the company[231](index=231&type=chunk) Consolidated Statements of Changes in Equity [Equity Changes Overview](index=50&type=section&id=Equity%20Changes%20Overview) For the year ended December 31, 2020, the company's total equity decreased from approximately RMB 477.8 million to RMB 446.4 million, primarily due to a net loss of RMB 32.3 million, despite other comprehensive income from exchange differences Key Data from Consolidated Statements of Changes in Equity | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Balance at Beginning of Year | 477,831 | 447,004 | | (Loss)/Profit for the Year | (32,255) | 30,840 | | Other Comprehensive Income for the Year | 841 | (13) | | Total Comprehensive (Expense)/Income for the Year | (31,414) | 30,827 | | Transfer to Statutory Reserve | – | (1,195) | | Balance at End of Year | 446,417 | 477,831 | - The company's total equity decreased in 2020, primarily due to the net loss incurred during the year[234](index=234&type=chunk) - Statutory reserves are amounts transferred from the net profit of subsidiaries in accordance with Chinese law until they reach **50% of the registered capital**[237](index=237&type=chunk)[238](index=238&type=chunk) Consolidated Statements of Cash Flows [Cash Flow Overview](index=52&type=section&id=Cash%20Flow%20Overview) For the year ended December 31, 2020, the company experienced a net cash outflow from operating activities of RMB 32.7 million, a reversal from the 2019 net inflow, primarily due to a pre-tax loss and increased trade receivables, while investing activities resulted in a net cash outflow of RMB 6.3 million, and financing activities generated a net cash inflow of RMB 9.5 million, mainly from debentures, leading to a decrease in cash and cash equivalents at year-end Key Data from Consolidated Statements of Cash Flows | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Net Cash (Used in)/Generated from Operating Activities | (32,652) | 5,634 | | Net Cash (Used in)/Generated from Investing Activities | (6,342) | 4,184 | | Net Cash Generated from/(Used in) Financing Activities | 9,516 | (1,480) | | Net (Decrease)/Increase in Cash and Cash Equivalents | (29,478) | 8,338 | | Cash and Cash Equivalents at End of Year | 213,479 | 242,578 | - Operating cash flow turned negative, reflecting a deterioration in the company's operating performance[240](index=240&type=chunk) - Financing cash flow turned into a net inflow, primarily driven by proceeds from debentures[242](index=242&type=chunk) Notes to the Consolidated Financial Statements [General Information and Accounting Standards](index=54&type=section&id=General%20Information%20and%20Accounting%20Standards) This section outlines the company's registration, principal activities, controlling shareholder, and adopted Hong Kong Financial Reporting Standards, noting its primary business as investment holding and seafood packaging/sales, with a new fast-moving consumer goods business in 2020, and no significant impact from newly adopted accounting standards - The company was incorporated in the Cayman Islands, and its shares have been listed on the Main Board of the Hong Kong Stock Exchange since July 18, 2017[244](index=244&type=chunk) - The company's principal activities are investment holding, with subsidiaries primarily engaged in packaging and selling seafood products, and procuring and selling fast-moving consumer goods and other products[244](index=244&type=chunk) - The company has adopted several newly revised Hong Kong Financial Reporting Standards, but they have no significant impact on the results or financial position for the current or prior periods[244](index=244&type=chunk) - The consolidated financial statements are prepared on a historical cost basis and presented in RMB[275](index=275&type=chunk) [Significant Accounting Policies](index=61&type=section&id=Significant%20Accounting%20Policies) This section details the company's accounting policies for revenue recognition, property, plant and equipment, leases, inventories, asset impairment, financial instruments, foreign currency, and income tax, noting revenue is recognized upon transfer of control, fast-moving consumer goods revenue is recognized on a net basis, and financial asset impairment uses an expected credit loss model - Revenue is recognized when control of goods or services is transferred to the customer, with fast-moving consumer goods business revenue recognized on a net basis[277](index=277&type=chunk)[279](index=279&type=chunk) - Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, and depreciated using the straight-line method[281](index=281&type=chunk)[284](index=284&type=chunk)[286](index=286&type=chunk) - All leases are capitalized as right-of-use assets and lease liabilities, except for short-term leases and leases of low-value assets[288](index=288&type=chunk)[290](index=290&type=chunk) - Inventories are recognized at the lower of cost and net realizable value, with cost calculated using the weighted average method[294](index=294&type=chunk) - Impairment losses on financial assets are measured using the expected credit loss (ECL) model, with trade receivables applying a simplified approach based on lifetime ECL[303](index=303&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk) - The company primarily operates in China, with most transactions settled in RMB, and foreign currency monetary assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period[322](index=322&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk) [Critical Accounting Estimates and Judgements](index=83&type=section&id=Critical%20Accounting%20Estimates%20and%20Judgements) This section outlines the company's critical accounting estimates and judgments regarding depreciation, impairment of receivables, current and deferred tax estimates, and determining whether it acts as a principal or agent in procurement services, all based on historical experience, relevant factors, and considering macroeconomic uncertainties from COVID-19, with management judging the company acts as an agent in fast-moving consumer goods sales, recognizing revenue on a net basis - Depreciation estimates are based on directors' judgment of assets' expected useful lives, with management reassessing at each reporting period end[341](index=341&type=chunk) - Impairment of receivables is based on assumptions about default risk and expected credit loss rates, considering customer historical data, market conditions, and forward-looking estimates[341](index=341&type=chunk) - Current and deferred tax estimates require significant judgment, and final tax outcomes may differ from initial records[343](index=343&type=chunk)[346](index=346&type=chunk) - Management judges the company acts as an agent in the fast-moving consumer goods sales business, recognizing revenue on a net basis, as the company does not bear price and inventory risks and does not obtain control of goods before sale[344](index=344&type=chunk)[345](index=345&type=chunk)[347](index=347&type=chunk) [Revenue and Segment Information](index=85&type=section&id=Revenue%20and%20Segment%20Information) In 2020, the company's total revenue was RMB 162.7 million, comprising RMB 155.6 million from food business and RMB 7.2 million from fast-moving consumer goods and other businesses, with revenue recognized when control of goods or services is transferred, and two reportable segments identified: packaging and selling seafood products, and all other businesses, with the food business segment recording a loss of RMB 25.9 million and the fast-moving consumer goods and other businesses segment recording a profit of RMB 3.2 million Revenue by Nature of Goods Sold or Services Provided | Product Type | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Sales of Aquatic Products | 155,553 | 472,888 | | Procurement and Sales of FMCG and Others | 7,165 | – | | **Total** | **162,718** | **472,888** | Revenue by Geographical Market | Region | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Mainland China | 155,553 | 472,888 | | Hong Kong | 236 | – | | South Korea | 6,929 | – | | **Total** | **162,718** | **472,888** | Segment Results | Segment | 2020 Results (RMB thousand) | 2019 Results (RMB thousand) | | :--- | :--- | :--- | | Sales of Aquatic Products | (25,887) | 51,045 | | All Other Segments | 3,179 | – | | **Total** | **(22,708)** | **51,045** | - In 2020, the food business segment shifted from profit to loss, while the newly launched fast-moving consumer goods and other businesses segment achieved profitability[355](index=355&type=chunk) [Other Income and Expenses](index=89&type=section&id=Other%20Income%20and%20Expenses) In 2020, the company's net other income and gains were RMB 1.1 million, primarily from bank interest, rental income, and government grants, while finance costs totaled RMB 0.444 million, mainly from lease liabilities and debenture interest, resulting in a pre-tax loss of RMB 30.3 million and income tax expense of RMB 1.9 million Other Income and Other Gains/(Losses) – Net | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Bank Deposit Interest Income | 857 | 866 | | Rental Income | 55 | 55 | | Government Grants | 145 | – | | **Total** | **1,100** | **1,272** | Finance Costs | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Interest Expense on Lease Liabilities | 215 | 221 | | Interest Expense on Debentures | 229 | – | | **Total** | **444** | **226** | Income Tax Expense | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Current Tax | 434 | 12,723 | | Under-provision in Prior Years | 149 | 744 | | Deferred Tax | 1,332 | 1,722 | | **Total** | **1,915** | **15,189** | - In 2020, the company received **RMB 0.145 million** in government grants under the Employment Support Scheme from the HKSAR Government's Anti-epidemic Fund[370](index=370&type=chunk)[372](index=372&type=chunk) [Earnings Per Share and Remuneration](index=91&type=section&id=Earnings%20Per%20Share%20and%20Remuneration) In 2020, the company reported a basic and diluted loss per share of RMB 0.3226, a reversal from the 2019 earnings per share of RMB 0.3084, with total remuneration for directors and employees amounting to RMB 3.9 million, including RMB 2.285 million for executive directors, and the five highest-paid individuals comprising three directors and two non-directors with total remuneration of RMB 3.9 million (Loss)/Earnings Per Share | Indicator | 2020 (RMB) | 2019 (RMB) | | :--- | :--- | :--- | | Basic and Diluted (Loss)/Earnings Per Share | (0.3226) | 0.3084 | | Weighted Average Number of Ordinary Shares (thousand shares) | 100,000 | 100,000 | - In 2020, the company shifted from earnings per share to loss per share, reflecting a deterioration in operating performance[380](index=380&type=chunk) Total Directors' Remuneration | Category | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Executive Directors | 2,285 | 2,371 | | Non-Executive Directors | 1,319 | – | | Independent Non-Executive Directors | 296 | 323 | | **Total** | **3,900** | **2,694** | - In 2020, the five highest-paid individuals included **three directors and two non-directors**, with their total remuneration amounting to **RMB 3.9 million**[396](index=396&type=chunk)[397](index=397&type=chunk) [Assets and Liabilities Details](index=96&type=section&id=Assets%20and%20Liabilities%20Details) This section provides detailed changes and composition of property, plant and equipment, deposits paid to suppliers, inventories, trade receivables, deposits, prepayments and other receivables, cash and cash equivalents, trade payables, and accrued expenses, deposits received and other payables, noting a decrease in net property, plant and equipment, an inventory write-down of RMB 2.105 million, and increases in both trade receivables and trade payables in 2020 Net Property, Plant and Equipment | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Electrical Equipment | 1,568 | 3,798 | | Plant and Machinery | 17,819 | 21,177 | | Motor Vehicles | 18 | 25 | | Furniture and Fixtures | 2,429 | 2,971 | | Leasehold Improvements | 30,226 | 36,150 | | Right-of-use Assets | 4,919 | 3,235 | | **Total** | **56,979** | **67,356** | - In 2020, the net value of property, plant and equipment decreased, and an impairment provision of **RMB 0.675 million** was made[405](index=405&type=chunk) - In 2020, inventories were written down by **RMB 2.105 million**, recognized as other expenses in the consolidated statement of comprehensive income[416](index=416&type=chunk) Aging Analysis of Trade Receivables | Aging | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | 0 – 30 days | 20,677 | 40,754 | | 31 – 60 days | 24,847 | 36,638 | | 61 – 90 days | 18,747 | 22,643 | | 91 – 120 days | 11,515 | 3,531 | | 121 – 365 days | 62,276 | – | | **Total** | **138,062** | **103,566** | - The provision for impairment losses on trade receivables increased to **RMB 4.58 million in 2020**[423](index=423&type=chunk) - Trade payables increased to **RMB 16.353 million in 2020**, primarily due to increased procurement of fast-moving consumer goods[427](index=427&type=chunk) [Deferred Tax Assets and Share Capital](index=102&type=section&id=Deferred%20Tax%20Assets%20and%20Share%20Capital) As of December 31, 2020, deferred tax assets totaled RMB 0.731 million, mainly from impairment losses on trade receivables, while the company's share capital remained unchanged despite a share consolidation on May 26, 2020, which merged every ten HKD 0.01 shares into one HKD 0.10 share, resulting in 100 million issued shares Movement in Deferred Tax Assets | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Balance at Beginning of Year | 372 | 281 | | (Charged to)/Credited to Profit or Loss for the Year | 359 | 91 | | Balance at End of Year | 731 | 372 | - Tax losses carried forward in Hong Kong generally have no time limit, while tax losses in China of **RMB 29.823 million** will expire between 2021 and 2025[439](index=439&type=chunk) - On May 26, 2020, the company conducted a share consolidation, merging every ten HKD 0.01 shares into one HKD 0.10 share, resulting in **100 million issued shares**, but the total share capital remained unchanged[441](index=441&type=chunk) [Holding Company Financial Position and Subsidiaries](index=104&type=section&id=Holding%20Company%20Financial%20Position%20and%20Subsidiaries) As of December 31, 2020, the holding company's total equity was RMB 91.979 million, with its principal subsidiaries, including Xiamen Wofeng Food Co., Ltd., Fujian Wofeng Food Co., Ltd., and Hanzhong Trading Co., Ltd., all wholly-owned and primarily engaged in seafood packaging and sales, and fast-moving consumer goods procurement and sales Key Data from Holding Company's Statement of Financial Position | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Investments in Subsidiaries | 347 | 694 | | Amounts Due from Subsidiaries | 107,381 | 104,763 | | Cash and Cash Equivalents | 186 | 141 | | Net Current Assets | 98,591 | 103,628 | | Net Assets | 91,979 | 104,322 | | Total Equity | 91,979 | 104,322 | - The holding company's total distributable reserves to shareholders amounted to **RMB 85.117 million**[447](index=447&type=chunk)[450](index=450&type=chunk) Principal Subsidiaries | Subsidiary Name | Place of Incorporation and Operation | Interest Held (%) | Principal Activities | | :--- | :--- | :--- | :--- | | Xiamen Wofeng Food Co., Ltd. | People's Republic of China | 100% indirectly held | Packaging and sales of seafood products | | Fujian Wofeng Food Co., Ltd. | People's Republic of China | 100% indirectly held | Packaging and sales of seafood products | | Hanzhong Trading Co., Ltd. | Hong Kong | 100% indirectly held | Procurement and sales of fast-moving consumer goods | [Related Party Transactions and Leases](index=107&type=section&id=Related%20Party%20Transactions%20and%20Leases) The company engaged in lease and procurement transactions with related parties, including right-of-use assets and lease liabilities with a company controlled by a major shareholder's spouse, and procurement transactions with Mr. Liu Rongru's cousins, all conducted on terms similar to those with independent third parties, with total lease liabilities of RMB 4.431 million and total cash outflow from leases of RMB 2.611 million in 2020 Related Party Transactions | Related Party | Transaction Type | 2020 Transaction Amount (RMB thousand) | 2019 Transaction Amount (RMB thousand) | | :--- | :--- | :--- | :--- | | Xiamen Yehong Food Co., Ltd. | Right-of-use Assets | 186 | 186 | | Xiamen Yehong Food Co., Ltd. | Lease Liabilities | 14 | 23 | | Mr. Liu Rongjian | Procurement – Cost of Sales | 576 | 622 | | Mr. Liu Rongzhong | Procurement – Cost of Sales | 644 | 696 | - All related party transactions were entered into on terms similar to those with independent third parties[453](index=453&type=chunk) Lease Liabilities | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Office and Factory Premises | 3,521 | 3,228 | | Motor Vehicles | 910 | – | | **Total** | **4,431** | **3,228** | - Total cash outflow from leases in 2020 was **RMB 2.611 million**, a decrease from **RMB 2.805 million in 2019**[467](index=467&type=chunk) [Debentures and Commitments](index=111&type=section&id=Debentures%20and%20Commitments) As of December 31, 2020, the company's total debentures amounted to RMB 13.246 million, with a current portion of RMB 6.287 million, new debentures of RMB 19.776 million issued during the year, and repayments of RMB 6.967 million, with interest rates ranging from 0.1% to 10%, and capital commitments of RMB 3.45 million primarily for property, plant and equipment Debenture Overview | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Balance at Beginning of Year | 900 | – | | Additions | 19,776 | 900 | | Repayments | (6,967) | – | | Interest Expense | 229 | – | | Exchange Difference | (692) | – | | **Balance at End of Year** | **13,246** | **900** | | Current Portion | 6,287 | – | | Non-current Portion | 6,959 | 900 | - Debenture interest rates range from **0.1% to 10%** (2019: **5%**), are unsecured, and have repayment periods ranging from **4 months to 8 years**[472](index=472&type=chunk) Capital Commitments | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Property, Plant and Equipment | 3,450 | – | [Capital Risk Management and Financial Instruments](index=112&type=section&id=Capital%20Risk%20Management%20and%20Financial%20Instruments) The company manages its capital structure by optimizing debt and equity balance to ensure continuous operation, with total equity of RMB 446.4 million as of December 31, 2020, and faces interest rate, credit, and liquidity risks, with all borrowings being fixed-rate, credit risk concentrated in trade receivables from top five customers, and liquidity risk managed by maintaining sufficient reserves and bank financing - The company manages capital by optimizing the balance between debt and equity to ensure continuous operation[475](index=475&type=chunk) Overview of Financial Assets and Liabilities | Category | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Total Financial Assets | 359,917 | 352,884 | | Total Financial Liabilities | 49,433 | 25,891 | - All of the company's borrowings are fixed-rate, thus no interest rate sensitivity analysis is provided[483](index=483&type=chunk)[484](index=484&type=chunk) - Credit risk is primarily concentrated in trade receivables from the **top five customers**, accounting for **35% of total trade receivables**[488](index=488&type=chunk) Expected Loss Rates for Trade Receivables | Aging | 2020 Expected Loss Rate | 2019 Expected Loss Rate | | :--- | :--- | :--- | | Current | 1.62% | 0.41% | | 1 – 30 days overdue | 1.72% | 1.14% | | 31 – 60 days overdue | 2.88% | 2.52% | | 61 – 90 days overdue | 3.01% | 3.78% | | 91 – 120 days overdue | 3.84% | N/A | | Over 120 days overdue | 7.81% | N/A | - Liquidity risk is managed by maintaining sufficient reserves and bank financing[502](index=502&type=chunk) [Events After Reporting Period and Effect of COVID-19](index=124&type=section&id=Event%20After%20Reporting%20Period%20and%20Effect%20of%20COVID-19) Subsequent to the reporting period, the company conditionally agreed to acquire a 51% equity interest in a target company for RMB 19.7 million on March 23, 2021, which is yet to be completed, while the COVID-19 pandemic negatively impacted the company's business through increased costs and reduced or delayed revenue, though the company believes these effects were reflected in 2020 and anticipates no further negative impact if the pandemic remains stable - On March 23, 2021, the company signed an agreement to conditionally acquire a **51% equity interest** in a target company for **RMB 19.7 million**, with the acquisition yet to be completed[510](index=510&type=chunk) - The COVID-19 pandemic led to increased costs in procuring and selling fast-moving consumer goods and other businesses, as well as reduced or delayed revenue from seafood sales[510](index=510&type=chunk) - The company believes the negative impact of COVID-19 on its business was reflected in 2020 and anticipates no further negative impact if the pandemic remains stable[510](index=510&type=chunk) Five-year Financial Summary [Summary of Results](index=125&type=section&id=Summary%20of%20Results) This section provides a summary of the company's results for the past five fiscal years, highlighting a significant decline in revenue to RMB 162.7 million in 2020 and a net loss of RMB 32.3 million, a reversal from profitability in 2016-2019, with earnings per share also turning from a profit of RMB 0.0308 in 2019 to a loss of RMB 0.3226 in 2020 Five-Year Summary of Results | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | 2018 (RMB thousand) | 2017 (RMB thousand) | 2016 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 162,718 | 472,888 | 667,958 | 644,407 | 468,039 | | Gross Profit | 30,716 | 103,769 | 169,094 | 163,506 | 118,397 | | Profit Before Income Tax | (30,340) | 46,029 | 104,415 | 104,385 | 85,416 | | Profit for the Year Attributable to Owners of the Company | (32,255) | 30,840 | 76,414 | 70,202 | 61,152 | | Earnings Per Share – Basic and Diluted (RMB) | 0.3226 | 0.0308 | 0.0764 | 0.0812 | 0.0815 | - In 2020, the company experienced a significant decline in both revenue and profit, shifting from profitability to a loss, marking its worst performance in the past five years[514](index=514&type=chunk) [Summary of Assets, Liabilities and Equity](index=125&type=section&id=Summary%20of%20Assets%2C%20Liabilities%20and%20Equity) This section provides a summary of the company's assets, liabilities, and equity for the past five fiscal years, showing that as of December 31, 2020, total assets were RMB 499.8 million, total liabilities were RMB 53.4 million, and total equity was RMB 446.4 million, with total assets and total equity decreasing and total liabilities increasing compared to 2019 Five-Year Summary of Assets, Liabilities and Equity | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | 2018 (RMB thousand) | 2017 (RMB thousand) | 2016 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 499,792 | 508,844 | 503,103 | 444,958 | 222,630 | | Total Liabilities | 53,375 | 31,013 | 56,099 | 73,981 | 67,044 | | Total Equity | 446,417 | 477,831 | 447,004 | 370,977 | 155,586 | - In 2020, both total assets and total equity decreased, while total liabilities increased, indicating challenges in the company's financial structure[514](index=514&type=chunk)