Financial Performance - In the first half of 2023, the company recorded revenue of RMB 3,511.9 million, a slight decrease of RMB 133.7 million or 3.7% year-on-year[16] - The core business of self-owned brand formula milk powder recorded sales of RMB 2,765.8 million, a decline of RMB 200.8 million or 6.8% year-on-year[18] - The company's self-branded goat milk powder recorded sales of RMB 1,504.2 million, a decrease of RMB 230.7 million or 13.3% year-on-year, accounting for 42.8% of total revenue[21] - The profit attributable to equity holders decreased by 10.3% to RMB 184.6 million compared to the previous year[17] - Revenue for the six months ended June 30, 2023, was RMB 3,511,917 thousand, a decrease of 3.7% compared to RMB 3,645,604 thousand for the same period in 2022[84] - Gross profit for the same period was RMB 1,473,446 thousand, down from RMB 1,734,071 thousand, reflecting a gross margin decline[84] - Net profit attributable to equity holders was RMB 184,600 thousand, down from RMB 205,709 thousand, representing a decrease of 10.2%[84] Revenue Segmentation - The company's self-owned brand formula milk powder revenue increased by 2.4% year-on-year to RMB 1,261.6 million, contributing 36.0% to total revenue[19] - The nutrition products segment saw a revenue increase of 88.8% year-on-year to RMB 148.8 million, driven by the acquisition of Bioflag Nutrition Corporation Ltd. and a 36.3% increase in probiotic product sales[16] - Revenue from external customers in the dairy products segment was RMB 3,363,098 thousand, while the nutrition segment contributed RMB 148,819 thousand, totaling RMB 3,511,917 thousand[131] Cost and Expenses - The company's gross profit margin was pressured by high Dutch raw milk prices and the need to clear old inventory, but pre-tax profit increased by 3.3% to RMB 230.9 million[17] - Sales and distribution expenses as a percentage of revenue decreased to 27.4% from 31.3% in the same period last year, while administrative expenses fell to 9.5% from 10.5%[17] - The cost of raw materials and consumables used was RMB 1,627,933,000, an increase from RMB 1,405,322,000 in the previous year[135] Market and Product Development - The company aims to become the most trusted formula milk and nutrition health enterprise globally, focusing on sustainable value creation[10] - The company launched new products, including the "Hepinokai 1897" premium formula and the "Jiabai Aite" immune nutrition-focused goat milk powder, targeting post-pandemic health needs[25] - The company aims to focus on goat milk powder and high-end cow milk powder businesses to enhance user experience and achieve sales growth in China and globally[29] Strategic Initiatives - The company plans to increase investment in its probiotic division from 27.5% to approximately 61.1% to support continued growth[24] - The company aims to enhance its competitive edge and resource allocation through strategic adjustments and channel management[20] - The company plans to accelerate the development of the overseas goat milk powder market as part of its strategic initiatives[29] Financial Position - Total assets increased to RMB 10,603.1 million as of June 30, 2023, from RMB 9,796.1 million at the end of 2022, driven by investments in new facilities in the Netherlands[44] - The company's current ratio decreased to 1.28 times as of June 30, 2023, from 1.49 times at the end of 2022, primarily due to refinancing actions[45] - The company's interest-bearing bank loans and other borrowings increased to RMB 2,577.4 million as of June 30, 2023, compared to RMB 1,465.6 million as of December 31, 2022[50] Cash Flow and Financing - The net cash flow used in operating activities for the first half of 2023 was RMB (392,467) thousand, compared to RMB (489,085) thousand in the same period of 2022, indicating a decrease of approximately 19.7%[100] - The net cash flow from financing activities was RMB 924,549 thousand in the first half of 2023, a significant increase from RMB 272,387 thousand in the same period of 2022, reflecting a growth of approximately 239.5%[100] - The company issued new bank loans amounting to RMB 2,181,547 thousand in the first half of 2023, compared to RMB 247,544 thousand in the same period of 2022, indicating a substantial increase of approximately 780.5%[100] Governance and Compliance - The company has adopted corporate governance practices in line with the Hong Kong Stock Exchange's guidelines, ensuring accountability and transparency[68] - The audit committee has reviewed the interim financial statements for the first half of 2023, ensuring compliance with financial reporting standards[70] Employee and Management - The total employee cost for the first half of 2023 was RMB 714.7 million, compared to RMB 729.5 million in the same period of 2022[63] - The total number of full-time employees as of June 30, 2023, was 4,273, a slight increase from 4,290 as of December 31, 2022[63] Risk Management - The group is actively monitoring credit risk and has diversified its customer base to minimize concentration risk[59] - The company has implemented a hedging policy to manage foreign exchange risks associated with non-RMB denominated debts[57]

Financial Performance - Revenue for the six months ended June 30, 2023, decreased by RMB 133.7 million or 3.7% compared to the same period in 2022[2] - Gross profit decreased by RMB 260.7 million or 15.0%, resulting in a gross margin of 42.0%, down from 47.6%[3] - EBITDA increased by RMB 19.1 million or 5.5%, reaching RMB 363.7 million[3] - Profit attributable to equity holders of the company decreased by RMB 21.1 million or 10.3%, totaling RMB 184.6 million[3] - Total revenue for the six months ended June 30, 2023, was RMB 3,511,917 thousand, a decrease from RMB 3,645,604 thousand in the same period of 2022, representing a decline of approximately 3.7%[24] - The company reported a pre-tax profit of RMB 223,564 thousand for the period, reflecting operational efficiency despite revenue decline[21] - Profit attributable to equity holders of the company was RMB 184.6 million, a decrease of RMB 21.1 million or 10.3% compared to the first half of 2022, mainly due to a decline in gross margin[70] Assets and Liabilities - Total assets as of June 30, 2023, amounted to RMB 10,603.1 million, an increase from RMB 9,796.1 million as of December 31, 2022[8] - Non-current assets increased to RMB 4,815.8 million from RMB 4,433.6 million[8] - Current assets totaled RMB 5,787.3 million, up from RMB 5,362.5 million[8] - Total liabilities increased to RMB 4,713.8 million from RMB 4,231.0 million[9] - The company's equity attributable to equity holders increased to RMB 5,805.8 million from RMB 5,646.6 million[9] - The group’s total liabilities as of June 30, 2023, were RMB 4,713,849,000, with segment liabilities of RMB 2,071,799,000 in dairy products and RMB 486,332,000 in nutrition[20] - As of June 30, 2023, the group had outstanding borrowings of RMB 2,577.4 million, an increase from RMB 1,465.6 million as of December 31, 2022[78] Revenue Segmentation - For the six months ended June 30, 2023, total revenue reached RMB 3,511,917,000, with sales to external customers amounting to RMB 3,363,098,000 in the dairy products segment and RMB 148,819,000 in the nutrition segment[17] - Revenue from the dairy products segment was RMB 3,363,098 thousand, while the nutrition segment contributed RMB 148,819 thousand, indicating a significant reliance on dairy products for overall revenue[25] - The company's own brand formula milk powder revenue increased by 2.4% year-on-year to RMB 1,261.6 million, showing initial positive results from adjustments made in 2022[46] - The sales revenue of nutritional products grew by 88.8% year-on-year to RMB 148.8 million, driven by the acquisition of Bioflag Nutrition Corporation Ltd. and a 36.3% increase in sales of probiotic products[46] Expenses and Cost Management - Employee benefits expenses totaled RMB 714,737 thousand, slightly down from RMB 729,537 thousand in the previous year, showing cost management efforts[29] - The proportion of sales and distribution expenses to revenue decreased to 27.4% from 31.3% in the same period of 2022 (restated)[47] - The proportion of administrative expenses, including research and development costs, decreased to 9.5% from 10.5% in the same period of 2022 (restated)[47] - The group's net financial expenses increased to RMB 19.4 million in the first half of 2023 from RMB 11.2 million in the same period in 2022, mainly due to increased bank loans for capital expenditures[67] Taxation and Compliance - The company's income tax expense for the six months ended June 30, 2023, was RMB 54,807,000, compared to RMB 32,337,000 for the same period in 2022, representing a significant increase[32] - The effective tax rate rose to 23.7% in the first half of 2023, up from 14.5% in the same period last year, primarily due to the expiration of preferential tax rates for a key subsidiary[69] - The company has a tax rate of 25% for corporate income tax in mainland China, with a reduced rate of 15% for its subsidiary recognized as a high-tech enterprise until December 31, 2025[32] Corporate Governance - The board is committed to enhancing corporate governance standards to protect shareholder interests and improve performance[84] - The company has adopted the corporate governance code as per the listing rules, ensuring effective strategy formulation and implementation[85] - The audit committee, composed of three independent non-executive directors, oversees financial reporting, internal controls, and risk management effectiveness[87] Strategic Initiatives - The company plans to focus on high-end goat and cow milk powder businesses to enhance user experience and drive sales growth in China and globally[58] - The company aims to accelerate the development of its overseas goat milk powder market as part of its strategic initiatives[58] - The company is committed to reducing carbon emissions and establishing a sustainable green supply chain in response to global climate change[57] Market and Product Development - The company received FDA registration for its goat milk infant formula, which will be the first to meet U.S. nutritional and safety requirements, aiding future international expansion[46] - The company received the "2023 Innovative Technology" award for its MP108 strain, enhancing its R&D reputation and future probiotic business prospects[56] - The company implemented stricter inventory control measures for its goat milk powder brand to ensure long-term health and competitiveness[50]

Accounting Errors and Adjustments - The company identified and corrected eight accounting errors from previous years, impacting sales incentive plans, receivables, and inventory provisions[1]. - The adjustments related to error (i) were made in the interim financial statements for the six months ending June 30, 2022, following a detailed review of contract liability calculations[3]. - The audit committee confirmed that the adjustments for error (i) were correctly made and resolved all significant misstatements from prior years[5]. - The company has updated its accounting treatment for sales incentive plans to ensure compliance with relevant accounting standards[4]. - The adjustments made for error (i) reflect complex calculations and parameters that were not easily identifiable by the board[3]. - The company identified several errors in its financial statements, including understatements related to accounts receivable provisions and inventory reserves, which were attributed to credit losses and unsold products[7][8][9]. - The adjustments related to errors (ii) to (viii) were deemed not significant in nature and amount, leading the company to decide against restating prior financial statements[9][10]. - The audit committee confirmed that the adjustments related to errors (ii) to (viii) were correctly made and resolved all significant misstatements in prior financial reports[13]. Revenue and Profit Performance - The company reported a significant decline in revenue and profit performance due to market downturns, which was unexpected by the board[3]. Internal Control and Review - An internal control review has been initiated by the company, with an external consultant engaged to assess and improve the internal control and financial reporting systems, expected to take two to three months[14]. - The company is in the process of reviewing its internal controls[15]. - The company will provide updates regarding the internal control review results at an appropriate time[15]. Customer and Tax Adjustments - The company has reviewed the financial status of its customers and adjusted the expected credit loss amounts accordingly, ensuring no other anomalies were found in prior years' financial statements[11]. - The company has updated its calculations for income tax payable and deferred tax assets based on a review of past tax filings, ensuring compliance with tax regulations[12]. - The company has taken steps to ensure the accuracy of intercompany transaction eliminations, reviewing key assumptions and ensuring completeness[11]. - The company has reassessed long-term sick leave provisions for employees, updating estimates based on internal discussions and reviews[12]. - The company has conducted a thorough review of inventory to identify any significant inventory write-downs necessary due to nearing expiration dates[11]. Corporate Governance and Transparency - The company plans to correct all identified errors in its 2022 annual performance announcement and report, aiming for better corporate governance[10]. - The company is committed to transparency for shareholders and potential investors[15]. - No specific financial performance metrics or forecasts were disclosed in this announcement[15]. - Further details will be communicated to stakeholders in due course[15]. Board of Directors - The board of directors includes three executive directors and three independent non-executive directors[15]. - The chairman and CEO is Mr. Yan Weibin[15]. - The vice chairman is Mr. Sun Donghong[15]. - The board consists of a total of nine members[15]. - The announcement date is July 7, 2023[15].

Financial Performance - In 2022, the revenue from self-owned brand formula milk powder was RMB 2,923.5 million, a decrease of 28.6% compared to RMB 4,095.0 million in 2021[11]. - The revenue from self-owned brand goat milk powder was RMB 133.0 million in 2022, down 24.9% from RMB 177.1 million in 2021[12]. - The revenue from nutritional products increased to RMB 1,148.0 million in 2022, up 23.1% from RMB 933.9 million in 2021[12]. - Revenue decreased by 9.1% year-on-year to RMB 7,795.5 million, with gross profit down 18.3% to RMB 3,392.8 million[23]. - The company's gross profit for 2022 was RMB 3,392.8 million, a decrease of RMB 760.6 million or 18.3% compared to 2021, with a gross margin decline from 48.4% to 43.5%[62]. - The net profit attributable to shareholders dropped to RMB 216.5 million in 2022, down 71.7% from RMB 763.8 million in 2021[14]. - The group reported a net profit for 2022 of RMB 216.5 million, down from RMB 763.8 million in 2021, reflecting challenges in the market[80]. - The company's profit attributable to equity holders for 2022 was RMB 216.5 million, a decrease of RMB 547.3 million or 71.7% from 2021, primarily due to reduced revenue from self-branded formula milk products[75]. Market Challenges - The company faced challenges due to the decline in birth rates and intense competition in the Chinese infant formula market[22]. - In 2022, the overall scale of China's infant formula milk powder industry decreased by a single-digit percentage year-on-year due to a declining birth rate[45]. - The company's self-branded formula milk powder revenue decreased by RMB 1,171.5 million or 28.6%, primarily due to a decline in China's birth rate and intense competition[55]. Strategic Initiatives - Strategic mergers and acquisitions, research upgrades, and new product launches were highlighted as key achievements despite the difficult market conditions[22]. - The company aims to enhance brand building and sustainable development practices moving forward[22]. - The company completed the acquisition of multiple goat milk assets in the Netherlands, adding approximately 45,000 tons of fresh goat milk supply annually[29]. - The company is investing €140 million in a new infant formula base powder facility, expected to be completed this year[29]. - The company has entered a strategic collaboration with Yili Group, focusing on serving the Chinese market and accelerating global development[24]. - The company aims to enhance its global leadership in goat milk products by maintaining a dual-engine strategy focused on brand and channel development[60]. Product Development - New product launches include a range of infant formula products and special medical foods, expanding the product matrix in the special medical food sector[28]. - The company launched several new products, including the first lactose-free medical infant formula "Zhi Shu" and the first HMO mixed formula milk powder "Future Version" to enhance its product portfolio[56]. - The ultra-high-end segment (average price per kilogram exceeding RMB 420) recorded double-digit year-on-year growth, indicating a trend towards premiumization in the market[46]. Operational Efficiency - The sales and distribution expenses accounted for 27.8% of revenue in 2022, slightly down from 28.1% in 2021, indicating stable expense management[64]. - The company's inventory provision decreased by RMB 59.8 million, partially offsetting the decline in gross profit[62]. - The current ratio of current assets to current liabilities improved to 1.49 times as of December 31, 2022, compared to 1.40 times in 2021[81]. - Inventory turnover days decreased to 183 days in 2022 from 189 days in 2021, indicating improved production planning and logistics[82]. Governance and Management - The board of directors consists of nine members, including three executive directors, three non-executive directors, and three independent non-executive directors, ensuring a balanced and independent governance structure[114]. - The company has adopted the corporate governance code as per the listing rules, aiming to enhance shareholder rights and corporate accountability[112]. - The board believes that the new leadership structure, with the chairman also serving as CEO, will enhance strategic decision-making and operational efficiency[112]. - The company has appointed a new CEO, Yan Weibin, to respond to increasing competition in the Chinese infant formula market, effective January 27, 2023[129]. Sustainability and Community Engagement - The company has committed to sustainable development, with its 2021 sustainability report awarded an A rating by MSCI[34]. - The group reported a significant commitment to sustainable development, donating over RMB 27 million in cash or materials to support communities in China[188]. - The company continues to focus on reducing carbon emissions and establishing a sustainable green supply chain in response to global climate change[188]. Financial Management - The company has established a hedging policy to manage foreign exchange risks associated with currency fluctuations, particularly with the Euro and Australian Dollar[98]. - The company has entered into interest rate cap agreements with a notional amount of EUR 150.0 million to mitigate floating interest rate risks[101]. - The company is focused on enhancing cash flow from operations and increasing bank financing to support business development, particularly in expanding its nutritional product segment[96]. Employee and Training Programs - As of December 31, 2022, the total number of full-time employees was 4,290, a decrease from 4,896 in 2021, representing a reduction of approximately 12.4%[107]. - The group has established employee training programs through platforms like "Dairy Academy" and "Ausnutria University" to enhance staff development[188]. - The company has established various retirement benefit plans for employees in different regions, including mandatory provident funds in Hong Kong and defined contribution plans in the Netherlands, Australia, and New Zealand[107].

Financial Performance - Revenue for the year ended December 31, 2022, decreased by RMB 779.7 million or 9.1% to RMB 7,795.5 million compared to RMB 8,575.2 million in 2021[2] - Gross profit decreased by RMB 760.6 million or 18.3%, resulting in a gross margin of 43.5%, down from 48.4%[3] - EBITDA decreased by RMB 673.9 million or 58.2%, from RMB 1,158.4 million in 2021 to RMB 484.5 million in 2022[2] - Profit attributable to equity holders of the company decreased by RMB 547.3 million or 71.7%, from RMB 763.8 million in 2021 to RMB 216.5 million in 2022[3] - The proposed final dividend per share for the year 2022 is HKD 0.06, a decrease of 78.6% from HKD 0.28 in 2021[3] - The company reported a total comprehensive income of RMB 352.8 million for the year 2022, compared to RMB 424.4 million in 2021[6] - The pre-tax profit for the year ended December 31, 2022, was RMB 251,277 thousand, compared to RMB 890,651 thousand in 2021, showing a significant decline of approximately 71.8%[17] - The company's profit attributable to ordinary shareholders for 2022 was RMB 216,526,000, a decrease of 71.6% compared to RMB 763,794,000 in 2021[34] - The basic earnings per share for 2022 was RMB 0.12, down from RMB 0.44 in 2021, reflecting a significant decline in profitability[36] Assets and Liabilities - Total assets as of December 31, 2022, increased to RMB 9,796.1 million from RMB 9,632.5 million in 2021[7] - Non-current assets increased to RMB 4,433.6 million in 2022 from RMB 4,033.5 million in 2021[7] - Total liabilities decreased to RMB 4,231,039 thousand from RMB 4,701,390 thousand, a reduction of approximately 10% year-over-year[8] - Current liabilities totaled RMB 3,600,614 thousand, down from RMB 3,997,140 thousand, representing a decrease of about 10%[8] - Total equity increased to RMB 5,565,056 thousand from RMB 4,931,111 thousand, reflecting an increase of about 13% year-over-year[8] - The company’s total assets amounted to RMB 9,796,095 thousand, up from RMB 9,632,501 thousand, indicating a growth of about 2%[8] - The total liabilities as of December 31, 2022, were RMB 4,231,039 thousand, an increase from RMB 4,701,390 thousand in 2021, reflecting a decrease of approximately 10%[18] Cash Flow and Investments - Net cash flow from operating activities was negative RMB 357,537 thousand, compared to positive RMB 1,071,319 thousand in the previous year[9] - Cash and cash equivalents decreased to RMB 1,861.9 million in 2022 from RMB 2,262.2 million in 2021[7] - The company reported a net cash outflow from investing activities of RMB 723,984 thousand, compared to RMB 606,566 thousand in the previous year[9] - The company issued new shares, generating proceeds of RMB 739,024 thousand during the year[9] - The group reported a net cash outflow from operating activities of RMB 357.5 million in 2022, a significant decrease from a net inflow of RMB 1,071.3 million in 2021[85] - The group’s investment activities resulted in a net cash outflow of RMB 724.0 million in 2022, compared to RMB 606.5 million in 2021, primarily due to property, plant, and equipment purchases totaling RMB 571.5 million[86] Market and Product Performance - Revenue from the Dairy Products and Related Products segment was RMB 7,662,551 thousand, while the Nutrition segment generated RMB 132,961 thousand for the year ended December 31, 2022[17] - Revenue from the Chinese market for dairy products was RMB 6,436,059 thousand, while nutritional products generated RMB 127,497 thousand, leading to a total of RMB 6,563,556 thousand[23] - Revenue from the company's own brand formula milk powder decreased by RMB 1,171.5 million or 28.6%, primarily due to a decline in birth rates in China and intense competition[67] - Sales of the company's own brand goat milk powder increased by 6.6% year-on-year, with growth rates of 5.5% in China and 21.8% in overseas markets[50] - The company completed the acquisition of multiple goat milk assets in the Netherlands, adding approximately 45,000 tons of fresh goat milk supply annually[54] - The company launched several new products, including a range of infant formula and special medical foods, enhancing its product matrix in the special medical food sector[52][53] Challenges and Strategic Initiatives - The company faced challenges in 2022 due to the impact of the Russia-Ukraine conflict and declining birth rates in China[49] - Despite difficulties, the company achieved strategic acquisitions and launched new products during the year[49] - The overall market for infant formula in China has contracted, leading to intensified competition[49] - The company is committed to sustainable development practices and brand building as part of its long-term strategy[49] - The company plans to continue focusing on expanding its product offerings in the Dairy and Nutrition segments to enhance market presence[16] - The company is actively exploring opportunities for mergers and acquisitions to strengthen its market position and diversify its product portfolio[16] Corporate Governance and Compliance - The audit committee has reviewed the audited consolidated financial statements for the fiscal year 2022, including accounting principles and practices adopted by the company[104] - The company has confirmed compliance with the standard code for securities trading by all directors throughout 2022[102] - The board consists of three executive directors, three non-executive directors, and three independent non-executive directors as of the announcement date[110] - The company has established written guidelines for senior management and employees regarding securities trading to ensure compliance with insider information regulations[102] Future Outlook - The company anticipates a gradual recovery in the consumer market in 2023, driven by national pro-birth policies and the end of pandemic restrictions[62] - The new national standards for infant formula are expected to lead to a new round of market consolidation, improving market order and reducing price chaos[62] - The company aims to enhance cash flow from operations and increase bank financing to support business development, particularly in expanding its nutritional product segment and constructing new facilities in the Netherlands[91]

Financial Performance - For the first half of 2022, the company reported revenue of RMB 3,630.2 million, a decrease of RMB 645.8 million or 15.1% compared to RMB 4,276.0 million in the same period of 2021[15]. - Gross profit for the first half of 2022 was RMB 1,709.0 million, down RMB 432.9 million or 20.2% from RMB 2,141.9 million in the first half of 2021[15]. - Profit attributable to equity holders was RMB 222.0 million, a decline of RMB 376.9 million or 62.9% from RMB 598.9 million in the same period of 2021[15]. - The revenue decline was primarily due to strategic adjustments in the sales of its own brand milk powder and increased support to distributors during challenging market conditions[38]. - The gross margin decreased from 50.1% in 2021 to 47.1% in 2022, attributed to increased discounts offered to distributors amid intense market competition[39]. - The profit attributable to equity holders for the first half of 2022 was RMB 222.0 million, a decrease of RMB 376.9 million or 62.9% compared to the same period in 2021[49]. - The company reported a total comprehensive income of RMB 221,988,000 for the six months ended June 30, 2022, compared to RMB 203,188,000 for the same period in 2021, showing an increase of 9.0%[106]. Sales and Market Trends - The core business of the company's own brand formula milk powder generated sales of RMB 2,951.2 million, a decrease of RMB 795.3 million or 21.2% year-on-year[16]. - Sales of the company's own milk powder decreased by RMB 770.7 million or 37.6% to RMB 1,279.3 million compared to RMB 2,050.0 million in the first half of 2021[17]. - The overall market demand for infant formula milk powder in China declined by 4.0% year-on-year in the first half of 2022, according to AC Nielsen data[15]. - The company's own brand formula milk powder accounted for 81.3% of total revenue, down from 87.6% in the same period of 2021[16]. - Revenue from the Chinese market was RMB 3,063,014 thousand, down 19% from RMB 3,775,940 thousand in the previous year[140]. Product Development and Innovation - 海普诺凯1897推出首款母乳低聚糖奶粉，标志着产品结构的重大升级[23]. - 佳贝艾特推出多款新产品，包括儿童成长营养配方羊奶粉，进一步拓展市场[23]. - The company has submitted a patent for goat milk protein peptides with DPP-V inhibition function, which won the "China Patent Award Excellent Award" and supports the development of diverse goat milk powder products[26]. - The company holds over 70 domestic and 50 international projects, with goat milk powder-related patents accounting for 50% of China's goat milk powder patents[26]. Strategic Initiatives - The company is actively adjusting sales strategies for its core brand, Haipinokai 1897, to provide fresher and higher-quality products while reducing inventory pressure on distributors[17]. - The company aims to strengthen its global supply chain and enhance brand competitiveness despite the challenges faced in the market[15]. - The company believes that the adjustments made to the distribution strategy will yield long-term benefits for its business[17]. - The company aims to reduce carbon emissions and establish a sustainable green supply chain as part of its commitment to corporate social responsibility[31]. - The company will continue to adhere to its core strategy of "Golden Decade" to drive growth and innovation in the market[34]. Financial Position and Assets - Total assets as of June 30, 2022, were RMB 9,377.4 million, a decrease of RMB 147.8 million from RMB 9,525.2 million at the end of 2021[50]. - The net asset value increased by RMB 504.2 million to RMB 5,963.5 million as of June 30, 2022, compared to RMB 5,459.3 million at the end of 2021[50]. - The current ratio improved to 2.03 times as of June 30, 2022, compared to 1.68 times at the end of 2021, mainly due to new shares issued[52]. - Cash and cash equivalents decreased to RMB 1,764.3 million from RMB 2,262.2 million at the end of 2021[56]. - The group had outstanding borrowings of RMB 1,271.9 million as of June 30, 2022, down from RMB 1,303.0 million as of December 31, 2021, with 47.7% of the borrowings due within one year[59]. Corporate Governance and Compliance - The company has adopted the corporate governance code as per the listing rules to enhance shareholder value and accountability[72]. - The audit committee has reviewed the interim report and the unaudited financial statements for the period[74]. - The company has established written guidelines for securities trading by senior management and employees to ensure compliance with regulations[73]. - The new share option plan was conditionally approved on May 26, 2022, allowing the board to grant options to selected participants, including employees and directors, for a total of up to 10% of the issued shares as of the approval date, equating to 180,854,584 shares[81]. Community Engagement and Social Responsibility - The company donated RMB 17.6 million worth of materials to support local communities and was awarded the "2021 Corporate Social Responsibility Industry Model Award" for the fourth consecutive year[31]. - The company remains cautiously optimistic about the industry outlook despite challenges, focusing on strengthening core business and brand, and enhancing global supply chain efficiency[32].

Financial Performance - In the fiscal year 2021, the company's revenue increased from RMB 7,985.8 million to RMB 8,873.3 million, representing a year-on-year growth of 11.1%[23] - Gross profit rose from RMB 3,982.0 million to RMB 4,470.7 million, reflecting a year-on-year increase of 12.3%[23] - Net profit attributable to the parent company increased from RMB 1,004.1 million to RMB 1,040.3 million, showing a year-on-year growth of 3.6%[23] - The company's revenue for the year 2021 was RMB 8,873.3 million, an increase of 11.1% compared to 2020, driven by effective marketing strategies and the trend towards product premiumization in mainland China[54] - The revenue from the company's self-branded formula milk products in China increased by 12.1% to RMB 7,762.3 million, contributing 85.0% to the total revenue[54] - The revenue from the self-branded formula milk products was RMB 4,414.1 million, a year-on-year increase of 15.5%[55] - The Haipinokai 1897 business unit, focusing on the ultra-premium market, recorded revenue of RMB 3,181.5 million, a year-on-year increase of 17.9%[55] - The Nengliduo business unit achieved revenue of RMB 1,019.3 million, a year-on-year increase of 23.3%[55] - The revenue from the nutrition products segment was RMB 177.1 million in 2021, a year-on-year increase of 24.5%, driven by sales of gastrointestinal health products and probiotics[59] - The company's private label and other businesses generated revenue of RMB 211.6 million and RMB 722.3 million respectively, contributing 10.5% to total revenue[57] Market Position - The company's market share in the offline sales of infant formula in mainland China increased to approximately 6.9%, ranking 5th in the industry[23] - The core self-owned brands of infant formula, including Jia Bei Ai Te, Hai Pu Nuo Kai, and Neng Li Duo, achieved double-digit growth, outperforming the overall industry performance[23] - The company maintained its leading position in the goat milk powder segment, with Jia Bei Ai Te holding over 60% market share in imported infant goat milk powder since 2018[23] - The infant formula industry in China is expected to see increased market concentration, with the top three and top ten brands holding market shares of 43.7% and 82.1%, respectively[49] Investments and Expansion - The company received approval for two green factories in the Netherlands and two in Australia, enhancing its global supply chain and product quality[24] - In 2021, the company invested in a new research center in Changsha, China, leading to 45 patent applications and 30 published academic papers, including 7 in SCI journals[25] - The company plans to complete the second formula registration work in 2022, ensuring 100% compliance for core products[37] - The company aims to expand its global layout for probiotics and enhance its product offerings in nutritional and special medical use products[37] - The company intends to invest in enhancing processing and logistics capabilities in China, as well as brand-building activities[44] - The company plans to expand its operations by constructing a new milk powder facility in the Netherlands, supported by increased financing[90] Shareholder and Governance - The company welcomed Inner Mongolia Yili Industrial Group as its largest shareholder, marking a significant merger in the Chinese dairy industry aimed at strategic collaboration[32] - The total consideration for the share purchase agreement with Yili Group was HKD 5,340,097,116, equating to HKD 10.06 per share[44] - The board of directors consists of nine members, including three executive directors, three non-executive directors, and three independent non-executive directors, ensuring a balanced and independent governance structure[109] - The company has established a nomination committee to review board composition and oversee the nomination and appointment processes[118] - The board has adopted a diversity policy, recognizing the benefits of a diverse and inclusive board, and aims to enhance diversity across various dimensions such as gender, age, and professional skills[136] Sustainability and Corporate Responsibility - The company is committed to sustainable development and has established a green supply chain to contribute to environmental protection[35] - The company has identified 8 out of 17 United Nations Sustainable Development Goals relevant to its operations[172] - The company is actively reducing reliance on natural gas and transitioning to electric heating to achieve zero nitrogen emissions[172] - The company established a Sustainability Committee in 2018 to support the board in implementing sustainability strategies across subsidiaries[172] - The company made charitable donations totaling RMB 22,283,000 in 2021, a decrease from RMB 35,016,000 in 2020[181] Financial Position and Cash Flow - The company's operating cash inflow for the year was RMB 1,071.3 million[17] - The company's total assets increased to RMB 9,514.2 million, while net assets reached RMB 5,493.6 million[17] - The net cash balance as of December 31, 2021, was RMB 1,214.4 million, maintaining a strong liquidity level[37] - The net cash flow from operating activities for the year 2021 was RMB 1,071.3 million, a decrease of 5.2% from RMB 1,130.2 million in 2020, primarily driven by a pre-tax profit of RMB 1,233.7 million[82] - The net cash flow used in investing activities increased to RMB 606.5 million in 2021 from RMB 402.5 million in 2020, mainly due to the acquisition of property, plant, and equipment amounting to RMB 442.3 million[83] Risk Management and Compliance - The company has established a risk management and internal control framework based on COSO ERM and ISO 31000, adopting a "three lines of defense" model to manage risks effectively[152] - The board conducted an annual review of the effectiveness of the risk management and internal control systems, finding them to be effective and sufficient without any significant deficiencies identified[159] - The company emphasizes the importance of compliance with regulatory requirements and has provided guidelines to employees regarding legal compliance[171] - The company has implemented policies to mitigate risks, including anti-fraud measures and reporting procedures, to ensure compliance and proper conduct[154] Employee and Director Information - The total employee cost for the year 2021 was RMB 1,485.5 million, up from RMB 1,380.7 million in 2020, reflecting adjustments based on individual performance and current market salary levels[98] - The company employed a total of 4,896 full-time employees as of December 31, 2021, down from 5,202 in 2020, mainly due to restructuring in the formula milk powder business unit[98] - The company has established various retirement benefit plans for its employees in different regions, including mandatory provident funds in Hong Kong and defined contribution plans in the Netherlands, Australia, and New Zealand[98] - The company has adopted a share option scheme as a reward for directors and employees, with specific details outlined in the board report[191] Audit and Financial Reporting - The company has engaged Ernst & Young as the independent auditor for the consolidated financial statements, ensuring compliance and accuracy in reporting[115] - The total remuneration paid to external auditor Ernst & Young amounted to RMB 11,757,000, which includes RMB 6,640,000 for annual audit services and RMB 3,757,000 for non-audit services[151] - The internal audit department reports directly to the audit committee and conducts audits at least twice a year to enhance oversight and management functions[157]

Financial Performance - For the six months ended June 30, 2021, the company recorded revenue of RMB 4,270.5 million, an increase of RMB 411.2 million or 10.7% compared to the same period last year[13]. - Profit attributable to equity holders was RMB 594.0 million, a year-on-year increase of RMB 185.2 million or 45.3%[13]. - Gross profit for the first half of 2021 was RMB 2,136.4 million, up RMB 114.0 million or 5.6% from RMB 2,022.4 million in the same period of 2020[33]. - The gross margin decreased to 50.0% in the first half of 2021 from 52.4% in the same period of 2020, primarily due to increased inventory provisions[33]. - The company's profit before tax was RMB 698,210 thousand, up from RMB 549,462 thousand in the previous year, reflecting a growth of approximately 27.0%[79]. - The net profit attributable to the owners of the parent company was RMB 593,990 thousand, compared to RMB 408,761 thousand in 2020, marking an increase of around 45.3%[79]. - Basic earnings per share for the period were RMB 34.60, up from RMB 25.37 in the same period last year, representing an increase of approximately 36.5%[79]. Revenue Breakdown - The company's proprietary brand formula goat milk powder, "佳貝艾特," generated revenue of RMB 1,688.2 million, reflecting a year-on-year growth of 2.0%[13]. - The sales revenue of the company's own brand formula milk powder reached RMB 2,052.8 million, an increase of RMB 297.5 million or 16.9% year-on-year[21]. - The sales revenue of the company's own brand formula goat milk powder was RMB 1,688.2 million, with a year-on-year increase of RMB 32.6 million or 2.0%[22]. - The private label and other businesses saw sales increase by 20.6% to RMB 461.2 million, accounting for 10.8% of the total revenue[24]. - Revenue from external customers in the dairy products segment was RMB 4,202,258 thousand, while the nutrition segment generated RMB 68,288 thousand[99]. - Revenue from the Chinese market was RMB 3,770,455 thousand for the first half of 2021, an increase from RMB 3,423,756 thousand in the same period of 2020, representing a growth of about 10.1%[100]. Market Position and Strategy - The company's market share in China's infant formula market was 6.3%, ranking fifth in 2020[15]. - The company has actively adjusted its strategies to respond to market changes, contributing to the growth of its proprietary brand formula milk powder business[13]. - The company faced challenges due to declining birth rates and changing consumer shopping patterns, impacting the competitive landscape of the formula milk powder industry[13]. - The company remains committed to a multi-brand strategy, optimizing its product mix to meet the growing demand for high-end products in the market[20]. - The company plans to introduce its products to Southeast Asia by the end of the year, expanding its market presence[23]. Research and Development - The company has been actively expanding its international research and innovation platform, with over 30 and 40 ongoing goat milk-related research projects in China and overseas, respectively[16]. - The company launched its first probiotic product for infants, "Ai Yi Sen 'Little Orange Box'," using the newly approved MP108 Lactobacillus rhamnosus strain, aimed at enhancing immune and gut health[19]. - The company published three core research results in top international academic journals during the first half of 2021, focusing on the differences in digestibility between breast milk, cow, and goat milk[16]. - The company held two online seminars through the Aoyou Nutrition Research Institute, covering newborn nutrition and the prevention of infant allergies[17]. - The company introduced a tailored growth formula milk for children aged 3 to 12, based on ongoing research in child nutrition[18]. - The company has established partnerships with top global universities to enhance research innovation capabilities and apply findings to product development[17]. Operational Challenges - The company confirmed additional inventory provisions of RMB 122.4 million for certain non-core proprietary brand formula milk powder products[13]. - The company faced challenges in the European market due to ongoing COVID-19 impacts, resulting in negative gross margins for certain products[34]. - The company will continue to monitor the impact of the COVID-19 pandemic on operations and consumer behavior, particularly regarding birth rates[28]. Financial Position - Total assets as of June 30, 2021, were RMB 8,960.2 million, a decrease from RMB 9,248.0 million as of December 31, 2020[46]. - The group's current assets to current liabilities ratio was 1.61 times as of June 30, 2021, remaining stable compared to 1.58 times as of December 31, 2020[47]. - Cash and cash equivalents as of June 30, 2021, were RMB 1,428.9 million, down from RMB 1,857.5 million as of December 31, 2020[51]. - The group had outstanding borrowings of RMB 1,151.4 million as of June 30, 2021, an increase of 6.0% from RMB 1,086.3 million as of December 31, 2020[54]. - The group’s total liabilities decreased from RMB 3,392,668,000 to RMB 3,150,391,000, representing a reduction of approximately 7.1%[82]. Corporate Governance - The company has established an audit committee to provide independent opinions on financial reporting procedures, internal controls, and risk management effectiveness[64]. - The company confirmed compliance with the standards set forth in the securities trading code during the interim period of 2021[63]. - The company’s stock option plan aims to reward selected participants for their contributions to the group[66]. Sustainability and Social Responsibility - The company is focused on reducing carbon emissions and establishing a sustainable green supply chain in response to global climate change[27]. - The company received recognition as a "Social Responsibility Listed Company" and "Advanced Private Enterprise in Employment and Social Security" in China[27].

Financial Performance - Total revenue for 2020 reached RMB 7,985.8 million, representing a year-on-year increase of 18.6%[49] - Gross profit for 2020 was RMB 3,982.0 million, with a gross margin of 49.9%[49] - EBITDA for 2020 amounted to RMB 1,463.2 million, reflecting a growth of 13.3% compared to the previous year[49] - Net profit attributable to shareholders was RMB 1,004.1 million, an increase of 14.3% year-on-year[49] - Operating cash flow for 2020 was RMB 1,130.2 million, indicating strong cash generation capabilities[49] - The total assets of the company increased to RMB 9,248.0 million, up from RMB 8,343.2 million in 2019[49] - The company maintained a net cash position of RMB 983.3 million, reflecting a solid financial foundation[49] - The company reported a profit attributable to equity holders of RMB 1,004.1 million for 2020, an increase of RMB 125.7 million or 14.3% compared to 2019[64] - Adjusted profit attributable to equity holders was RMB 1,083.3 million, up RMB 141.3 million or 15.0% year-on-year[64] - The group's financial expenses for the year 2020 were RMB 289 million, a decrease from RMB 333 million in 2019, primarily due to reduced interest on bank loans and other borrowings[100] Business Expansion and Product Development - The company successfully expanded its business into Mexico and South Korea in 2020, enhancing its international presence[53] - New product launches included probiotics, children's milk powder, and adult milk powder, contributing to diversified offerings[53] - The self-owned brand formula milk business generated revenue of RMB 6,926.4 million, up RMB 903.0 million or 15.0% year-on-year, accounting for 86.7% of total revenue[61] - The company launched a gene chip and genetic testing service in November 2020, focusing on personalized nutrition services based on nutritional genomics[54] - The company launched new nutritional products, including immune-boosting milk powder, leveraging its strengths in research and development[72] Strategic Initiatives and Partnerships - The company established strategic partnerships with Jiangnan University and Wageningen University to enhance global breast milk research and development[54] - The company is advancing the construction of a new processing plant in the Netherlands with a capacity of 35,000 tons, which will be highly automated and environmentally compliant[54] - The company achieved recognition as a "National Green Supply Chain Management Demonstration Enterprise" by the Ministry of Industry and Information Technology of China[53] - The company has developed a personalized nutrition service platform based on a million Chinese gene data, currently in trial operation[73] Market Trends and Consumer Insights - In 2020, the overall retail scale of China's infant formula milk powder industry was RMB 176.3 billion, with a year-on-year growth of 4.4%[83] - The market share of domestic brands increased from 32.9% in 2019 to 38.2% in 2020, reflecting a growing consumer trust in local brands[83] - The concentration of the top three infant formula brands in China increased to 37.6% in 2020, up by 2.0 percentage points from 2019[83] - The company anticipates that the market growth rate for its unique sheep milk products will improve in the future[86] Corporate Governance and Management - The board of directors consists of nine members, including three executive directors, three non-executive directors, and three independent non-executive directors, ensuring a balanced and independent governance structure[129] - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange's listing rules, demonstrating its commitment to high governance standards[127] - The board is responsible for preparing the consolidated financial statements, ensuring they reflect the group's financial position and performance accurately[134] - The company has established various retirement benefit plans for employees in different regions, including mandatory provident fund contributions for Hong Kong employees[125] Sustainability and Community Engagement - The company has identified 8 out of 17 United Nations Sustainable Development Goals relevant to its operations[176] - The company has established a Sustainability Committee to oversee the integration of sustainability strategies into long-term business plans[176] - The company has committed over RMB 78 million in cash, medical supplies, and nutritional products to support community efforts against the pandemic[85] - The company made charitable donations totaling RMB 35,016,000 in 2020, compared to RMB 10,994,000 in 2019[184] Acquisitions and Investments - The acquisition of HypnoCare Biotechnology Group was completed for HKD 898.8 million, with 70 million new shares issued at HKD 12.84 per share[76] - The company completed the acquisition of land in Changsha for USD 11.5 million (approximately RMB 80.7 million) to expand production and storage facilities[80] - The Changsha land acquisition is strategically located adjacent to existing production facilities, enhancing operational capabilities[80] Employee and Workforce Development - As of December 31, 2020, the total number of full-time employees was 5,202, an increase from 4,689 in 2019, representing a growth of approximately 10.9%[125] - The total employee cost for the year 2020 was RMB 1,380.7 million, up from RMB 1,294.9 million in 2019, indicating an increase of about 6.6%[125] Financial Position and Assets - The total assets of the group as of December 31, 2020, were RMB 9,248.0 million, up from RMB 8,343.2 million in 2019[104] - Shareholders' equity rose to RMB 5,171.4 million in 2020, compared to RMB 4,015.7 million in 2019, reflecting an increase of about 28.8%[114] - The group's cash and cash equivalents amounted to RMB 1,857.5 million in 2020, up from RMB 1,674.5 million in 2019, indicating a growth of approximately 10.9%[117] Risk Management and Compliance - The company reported a focus on risk management and internal control systems to ensure business objectives are met, with regular assessments of key risks and mitigation plans in place[163] - The board of directors is responsible for reviewing the effectiveness of the risk management and internal control systems, with no significant deficiencies identified during the review period[163] - The company has established anti-fraud and whistleblowing procedures to encourage employees to report any misconduct related to financial reporting or internal controls[163]

Revenue and Profitability - The company recorded revenue of RMB 3,859.3 million for the first half of 2020, an increase of RMB 711.7 million or 22.6% compared to the same period in 2019[25]. - The self-owned brand formula milk business generated revenue of RMB 3,410.9 million, up RMB 681.4 million or 25.0%, accounting for 88.4% of total revenue[25]. - The profit attributable to equity holders increased by 56.9% to RMB 408.8 million, with an adjusted profit of RMB 574.7 million, up RMB 139.8 million or 32.1% compared to the same period in 2019[27]. - Revenue for the six months ended June 30, 2020, was RMB 3,859,336 thousand, representing a 22.6% increase from RMB 3,147,565 thousand in the same period of 2019[139]. - Total comprehensive income for the period was RMB 478,287 thousand, compared to RMB 272,774 thousand in the prior year, indicating a growth of 75.5%[143]. Acquisitions and Investments - The company completed the acquisition of the remaining 15% equity of the Hyproca Group, which primarily markets and distributes the Kabrita brand in China[26]. - The acquisition of the remaining 15.0% stake in Hyproca Biotechnology (Hong Kong) Limited was agreed upon for HKD 896.0 million, to be settled through the issuance of 70,000,000 new shares[50]. - The group completed the acquisition of HypnoCare Group in May 2018, with the consideration dependent on the subsequent performance of HypnoCare[53]. - The group acquired land in Changsha for USD 11.5 million (approximately RMB 79.3 million) to facilitate the expansion of production and storage facilities in Changsha, China[55]. Research and Development - Research and development (R&D) expenses increased by 72.5% during the first half of 2020 compared to the same period in 2019, leading to the successful launch of two new formula milk products[8]. - The company has established a comprehensive strategic cooperation agreement with Jiangnan University to enhance R&D capabilities in various product development areas[8]. - The company has invested continuously in R&D, publishing over 40 articles on international platforms, and established a research center in collaboration with Jiangnan University[63]. Market Position and Strategy - The company aims to become the most trusted formula milk and nutrition health enterprise globally[15]. - The company is formulating a global innovation strategy to be implemented over the next three to five years to strengthen its market position[44]. - The company has registered a total of 15 series and 45 formulas, covering ultra-high-end, high-end, and mid-range markets[35]. - The company is focused on enhancing its R&D capabilities and digitalizing its operational platforms to support long-term growth[59]. Operational Challenges and Responses - The management discussed the challenges faced in the first half of 2020, including the COVID-19 pandemic and ongoing US-China trade tensions[25]. - The company has adopted a conservative approach to adjust delivery volumes to distributors in response to slowing sales in certain brands due to the ongoing impact of the COVID-19 pandemic[33]. - The company has actively adjusted its marketing strategies, including online activities and live streaming, to empower distribution channels during the pandemic[38]. Financial Performance and Expenses - The gross profit for the first half of 2020 was RMB 2,022.4 million, an increase of RMB 383.3 million or 23.4% compared to the same period in 2019[73]. - Selling and distribution expenses accounted for 25.5% of revenue in the first half of 2020, down from 27.4% in the same period of 2019[77]. - Administrative expenses increased to 8.3% of revenue in the first half of 2020, compared to 7.8% in the first half of 2019, primarily due to rising operational scale and R&D costs[77]. - The total employee cost for the mid-2020 period was RMB 669.8 million, an increase from RMB 590.4 million in the mid-2019 period[110]. Cash Flow and Assets - The net cash flow generated from operating activities for the same period was RMB 830,011,000, up 61.5% from RMB 317,388,000 in 2019[156]. - Cash and cash equivalents increased to RMB 1,846.3 million as of June 30, 2020, from RMB 1,674.5 million at the end of 2019[94]. - The group’s total assets reached RMB 8,880.1 million as of June 30, 2020, compared to RMB 8,343.2 million at the end of 2019[94]. - The group’s total liabilities stood at RMB 4,042,542,000, compared to RMB 3,279,286,000 in the previous year, representing an increase of approximately 23.2%[148]. Customer Engagement and Marketing - The company has increased its marketing efforts, achieving significant brand exposure through popular TV dramas and online platforms, enhancing brand recognition among target audiences[42]. - The company has focused on enhancing consumer interaction through online and offline activities, including live streaming and community events, to drive sales and customer engagement[44]. Inventory and Supply Chain Management - The company has increased the procurement of goat milk to ensure stable supply for the production of Jiabei Aite, resulting in increased output of related by-products[71]. - The group has increased its safety stock levels for key materials and finished products to ensure stable supply of formula milk products during the COVID-19 pandemic[89].