Summary of the Conference Call for Wugu Mofang Company Overview - **Company**: Wugu Mofang - **Event**: Mid-Year Investment Strategy Meeting - **Date**: June 25, 2024 - **Speaker**: Jin Na, Investor Relations General Manager Key Points Industry and Company Developments 1. **Brand Development**: Wugu Mofang is celebrating its 18th anniversary and has undergone a brand upgrade in collaboration with professional branding agencies like Huayu and Hua. The company is repositioning itself as a "functional food" brand focused on health and wellness [3][4] 2. **Product Focus**: The company emphasizes the health benefits of its products, supported by scientific experiments, including studies on hypertension and hair growth [5][6] 3. **Product Launch**: A new product, "Sanxiang Powder," aimed at middle-aged consumers for lowering blood pressure, has shown promising results in scientific tests [6] Sales Channels Performance 1. **Sales Channels**: The company operates three main sales channels: specialty stores, new distribution channels, and e-commerce [8] 2. **Specialty Stores**: Revenue from specialty stores has shown a single-digit growth, despite a reduction in the number of physical locations [9][10] 3. **New Distribution Channels**: This segment has experienced a revenue growth of 30% to 40% year-over-year [11] 4. **E-commerce Growth**: E-commerce sales are expected to grow by 10% to 15% in the first half of the year, with significant growth during the 618 shopping festival, particularly on Tmall, which saw over 30% growth [12][29] Product Strategy 1. **Core Products**: The flagship product, "Walnut Black Bean Sesame Powder," continues to perform well, contributing significantly to overall sales [20] 2. **Gift Products**: The company is focusing on gift packaging products, which saw sales exceed 100 million during the Spring Festival, indicating strong market potential [21][22] 3. **Seasonal Products**: A new product, "Wet No Trace," has gained popularity, particularly during the summer season, with sales exceeding 10 million during the 618 period [24][25] Market Trends and Consumer Behavior 1. **Consumer Trends**: The company acknowledges a trend of consumer downgrade, where consumers seek better value for money. However, Wugu Mofang aims to maintain its focus on functional foods rather than competing on price [38][41] 2. **Promotional Strategy**: The company is strict about its promotional activities, limiting discounts to major sales events like 618 and Double Eleven, to maintain brand value [42][43] Financial Performance 1. **Gross Margin**: The gross margin has seen slight improvements, attributed to changes in channel structure, with specialty stores contributing around 40% of sales and e-commerce also at 40% [64][65] 2. **Channel Profitability**: Specialty stores have a gross margin of approximately 78%, while e-commerce margins are between 65% and 70%, and new channels are around 33% [65][66] Strategic Adjustments 1. **Channel Strategy**: The company is adjusting its channel strategy to focus on high-end membership supermarkets and smaller local stores, which are experiencing growth [46][47] 2. **Distribution Expansion**: Wugu Mofang is expanding its reach through various distribution methods, including direct sales and partnerships with local distributors [48][49] Conclusion - Wugu Mofang is strategically positioning itself in the health food market with a focus on brand value, product functionality, and selective channel growth. The company is navigating market challenges while aiming to enhance consumer engagement and maintain profitability through disciplined pricing and promotional strategies.

Summary of the Conference Call Company and Industry Involved - The conference call is related to Anxin International and its investment strategy for 2024, focusing on the company's development and future plans [1] Core Points and Arguments - Anxin International is hosting a mid-year investment strategy meeting for 2024, featuring a special session with Gina, the company's representative, to discuss the company's development status and future plans [1] Other Important but Possibly Overlooked Content - The call is structured as an interactive session aimed at engaging investors and providing insights into the company's strategic direction [1]

Financial Performance and Cash Flow - Net cash flow from operating activities in 2023 was RMB 185.9 million, compared to RMB 168.5 million in 2022[22] - Net cash used in investing activities in 2023 was RMB 121.1 million, compared to RMB 18.6 million in 2022[22] - Net cash used in financing activities in 2023 was RMB 7.1 million, compared to RMB 25.1 million in 2022[22] - Net current assets as of December 31, 2023, were RMB 1,033.5 million, up from RMB 839.2 million in 2022[22] - Profit before tax increased from RMB 137.3 million in 2022 to RMB 185.9 million in 2023[111] - Net profit grew by 30.8% from RMB 116.5 million in 2022 to RMB 152.4 million in 2023[113] - Income tax expenses increased from RMB 20.8 million in 2022 to RMB 33.6 million in 2023, reflecting higher profitability[112] Revenue and Sales Channels - Offline channel sales revenue increased to RMB 1,000,172 thousand, accounting for 54.2% of total revenue, up from 53.6% in 2022[70] - Online channel sales revenue increased to RMB 845,103 thousand, accounting for 45.8% of total revenue, down from 46.4% in 2022[70] - New channel business revenue grew to RMB 265,874 thousand, up from RMB 179,488 thousand in 2022[70] - E-commerce business grew by 6.1% year-on-year, contributing 45.8% of the company's total revenue (2022: 46.4%)[85] - New channel business surged by 48.1% year-on-year, accounting for 14.4% of total revenue (2022: 10.4%)[88] - The company's offline counter business declined by 1.1% year-on-year, but the rate of decline narrowed, showing a stable development trend[90] Costs and Expenses - Sales cost increased by 6.9% to RMB 663.8 million, mainly due to higher raw material, labor, and production costs[94] - Sales and distribution expenses increased from RMB 891.0 million in 2022 to RMB 897.1 million in 2023, primarily due to increased promotional expenses and travel costs related to business expansion[106] - Administrative expenses rose from RMB 79.0 million in 2022 to RMB 100.4 million in 2023, driven by increased depreciation and amortization of factory assets and higher property and value-added taxes[106] - Financial asset impairment increased from RMB 6.0 million in 2022 to RMB 16.2 million in 2023, mainly due to higher overdue trade receivables and extended aging[108] Assets and Liabilities - Trade payables increased due to higher purchases of raw materials and packaging materials for production, with the trade payables turnover days remaining stable at around 50 days as of December 31, 2023[1] - The company's cash and bank deposits increased by 20.7% to RMB 942.0 million as of December 31, 2023, compared to RMB 781.3 million as of December 31, 2022[3] - Inventory value as of December 31, 2023, was RMB 93.5 million, up from RMB 81.9 million in 2022, mainly due to sales growth[39] - The company had no interest-bearing borrowings as of December 31, 2023[40] - The company had no contingent liabilities or asset pledges as of December 31, 2023[26][27] - Trade receivables and bills increased to RMB 217.8 million, with trade receivables turnover days remaining stable at around 40 days[99][100] Corporate Governance and Board Structure - The Board of Directors consists of seven members, including two executive directors, two non-executive directors, and three independent non-executive directors[117] - The Audit Committee is composed of three independent non-executive directors, with Mr. Zhang Senquan serving as the chairman[131] - The company has implemented a Board Diversity Policy and reviews its effectiveness annually[127] - The company held 7 board meetings in 2023, including 1 written resolution, discussing and approving overall strategies, annual reports, and quarterly operating results[141] - The board is scheduled to meet 4 times annually, with at least 14 days' notice for regular meetings and reasonable notice for other meetings[143] - The company has 3 independent non-executive directors, meeting the requirement of at least one-third of the board and having appropriate professional qualifications[137] - The chairman held 1 meeting with independent non-executive directors without other directors present in 2023, as required by corporate governance code[138] - The company has 2 female directors, with plans to maintain gender diversity in board appointments and employee recruitment[144] - The roles of chairman and CEO are separated, with clear written definitions of their respective responsibilities[146] - The audit committee oversees financial reporting, risk management, and internal control systems, and reviews external auditor appointments[147][150][151] - Directors participated in professional development courses and seminars to stay updated on listing rules and corporate governance practices[139][141] Directors and Key Personnel - Xie Chang'an, a non-executive director since September 30, 2019, serves as the CEO of PepsiCo Greater China and has extensive experience in strategy and e-commerce roles within PepsiCo and other companies[6] - Wang Duo, a non-executive director since September 30, 2019, is the founding partner of Fengyuan Capital, focusing on investments in cloud computing, big data, and fintech[8] - Zhang Senquan, an independent non-executive director since November 19, 2018, has over a decade of experience in accounting and auditing, holding roles at major firms like EY and KPMG[9][11] - Hu Peng, an independent non-executive director since November 19, 2018, has extensive experience in capital markets and investment banking, including roles at UBS and Citigroup[14] - Ouyang Liangyi, an independent non-executive director since November 19, 2018, is an associate professor of finance at Peking University HSBC Business School, specializing in private equity and derivatives[15] - Xiong Xinsheng, the group's financial manager since August 2015, oversees financial planning, accounting, auditing, and internal controls, with prior experience in tax administration[16] Product and Brand Development - The company successfully promoted brands such as "Hei Zhi Yang" and "Xiao Tian Cai," contributing to online sales growth[71] - The company topped Tmall's Double 11 sales ranking in the beverage/supplement powder category[63] - The company focuses on traditional Chinese "food as medicine" concepts combined with modern nutrition to create healthy food products[59] - The company's flagship product "Walnut Black Sesame Powder" maintained its position as the top-selling natural powder product on Tmall for seven consecutive years[101] - The company collaborated with the Chinese Academy of Agricultural Sciences to develop a new high-sesamin sesame variety "Heizhiyang No. 1"[82] - The company partnered with celebrity influencers and KOLs to enhance brand image and attract a broader consumer base[83] - The company's "Black Sesame Ball" series won awards, including the iSEE Innovation Brand Top 100 and the Superior Taste Award from the International Taste Institute[91] Sustainability and Corporate Responsibility - The company collaborates with environmental organizations to protect the Yangtze River source and promote sustainability[61] Financial Reporting and Accounting Policies - The company evaluates potential impairment losses at each reporting period end and may reverse them if conditions improve[155] - New accounting standards on supplier financing arrangements require additional disclosures but are not expected to significantly impact financial statements[153] - Depreciation is calculated using the straight-line method over the estimated useful lives of property, plant, and equipment, with major annual rates specified[157] - Intangible assets acquired through business combinations are measured at fair value at the acquisition date, with finite useful lives amortized over their economic lives[159] - Deferred development costs are amortized on a straight-line basis over a commercial period of 5 to 7 years from the date of commercial production[161] - The group applies the short-term lease recognition exemption for leases with a term of 12 months or less and low-value asset leases[165] - Financial assets are classified and measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss[166] - Financial assets are considered in default when contract payments are overdue by 90 days, and are written off when there is no reasonable expectation of recovering contractual cash flows[170] - The group's financial liabilities include trade payables, amounts due to directors and related parties, dividends payable, convertible and redeemable preferred shares, and interest-bearing borrowings[200] - Contract assets are recognized when the group transfers goods or services to customers before being entitled to unconditional consideration, and are reclassified as trade receivables when the right to consideration becomes unconditional[185] - The group's reserves changes during the reporting period are detailed in the financial statements note 29[184] - The group's financial liabilities are derecognized when the obligation is discharged, canceled, or expired[195] Employee and Workforce Management - Employee costs in 2023 totaled RMB 140.2 million, a decrease of approximately 8% from RMB 156.3 million in 2022[29] - The company's total number of employees decreased from 697 in 2022 to 682 in 2023, with a stable gender ratio of approximately 1:2 (male to female)[128] Capital and Investments - Capital commitments as of December 31, 2023, were RMB 5.0 million, primarily for property, plant, and equipment for a new production facility in Guangzhou Nansha[23] - The interest-bearing debt ratio as of December 31, 2023, was 0.3%, down from 0.7% in 2022[28] Other Income and Gains - Other income and gains increased by RMB 3 million to RMB 19.5 million, mainly due to higher bank interest income[73]

Financial Performance - The company's revenue for 2023 was RMB 1,845,275 thousand, representing a 7% increase from RMB 1,719,074 thousand in 2022[10] - Gross profit for 2023 reached RMB 1,181,484 thousand, an 8% increase compared to RMB 1,098,384 thousand in 2022[10] - Profit before tax increased by 35% to RMB 185,934 thousand from RMB 137,253 thousand in the previous year[10] - Net profit attributable to the owners of the company was RMB 152,375 thousand, up 31% from RMB 116,462 thousand in 2022[10] - Basic earnings per share for 2023 was RMB 0.071, compared to RMB 0.054 in 2022[10] - Diluted earnings per share for 2023 was RMB 0.070, an increase from RMB 0.053 in 2022[10] - Total comprehensive income for the year was RMB 153,843 thousand, compared to RMB 127,028 thousand in 2022[12] Dividends - The company proposed a final dividend of RMB 0.0323 per share for the year ended December 31, 2023, compared to no dividend in 2022[36] - The board proposed a final dividend of RMB 0.0323 per ordinary share, totaling approximately RMB 70 million, which represents about 45.70% of the group's net profit for the year ended December 31, 2023[188] Assets and Liabilities - Total non-current assets as of December 31, 2023, were RMB 375,506 thousand, down from RMB 413,539 thousand in 2022[39] - Current assets increased to RMB 1,305,850 thousand in 2023 from RMB 1,105,315 thousand in 2022, representing a growth of 18.1%[39] - Total liabilities for 2023 were RMB 272,370 thousand, slightly up from RMB 266,091 thousand in 2022[39] - The company's total equity as of December 31, 2023, was RMB 1,395,767 thousand, an increase from RMB 1,238,055 thousand in 2022[40] - The group's net current assets as of December 31, 2023, were RMB 1,033.5 million, compared to RMB 839.2 million as of December 31, 2022[180] Taxation - The group's taxable profit in mainland China is subject to a corporate income tax rate of 25% for the years ending December 31, 2022, and 2023[57] - The actual tax expense for 2023 is RMB 33,559, which is 18.0% of the pre-tax profit, compared to RMB 20,791 or 15.2% in 2022[59] - The group reported a total tax expense of RMB 33,559 thousand in 2023, up from RMB 20,791 thousand in 2022, indicating a significant increase of 61.4%[88] Revenue Sources - Revenue from customer contracts for 2023 reached RMB 1,845,275 thousand, an increase of 7.35% from RMB 1,719,074 thousand in 2022[33] - E-commerce business grew by 6.1% year-on-year, contributing 45.8% to the group's overall revenue in the current fiscal year[72] - New channel business grew by 48.1% year-on-year, contributing 14.4% to total revenue in 2023, compared to 10.4% in 2022[132] - Offline channel sales accounted for 54.2% of total revenue in 2023, up from 53.6% in 2022, while online channel sales decreased to 45.8% from 46.4%[111] Expenses - Cost of goods sold increased to RMB 663,791 thousand in 2023 from RMB 620,690 thousand in 2022, representing an increase of 6.2%[83] - Research and development expenses rose to RMB 11,918 thousand in 2023, up from RMB 11,456 thousand in 2022, marking a growth of 4.0%[83] - The group's sales and distribution expenses increased from approximately RMB 891.0 million for the year ended December 31, 2022, to approximately RMB 897.1 million for the year ended December 31, 2023, primarily due to increased promotional expenses corresponding to sales growth and increased travel expenses related to business expansion[144] - Administrative expenses rose from approximately RMB 79.0 million for the year ended December 31, 2022, to approximately RMB 100.4 million for the year ended December 31, 2023, attributed to increased depreciation and additional taxes related to property and value-added tax[144] Employee and Operational Metrics - Employee costs (excluding directors' remuneration) totaled RMB 140.2 million for the year ended December 31, 2023, a decrease of about 8% from RMB 156.3 million in 2022[185] - Trade receivables turnover days remained stable at approximately 40 days for the year ended December 31, 2023[177] - Trade payables turnover days increased to approximately 50 days for the year ended December 31, 2023, compared to 43 days for the previous year[176] Product Development and Marketing - The group has established a modern dietary research center in collaboration with the Chinese Nutrition Society to enhance product formulation accuracy and nutritional value[69] - The group has partnered with various celebrities and KOLs to enhance brand visibility and attract a broader consumer base[70] - The company successfully launched the "Walnut Black Bean Sesame Powder," which has been recognized as the top-selling natural powder product on Tmall for six consecutive years[106] - The company has expanded its product offerings with health gift boxes for festive occasions, catering to the growing consumer demand for health products[107] - The company aims to establish a strong brand presence in the health food sector, leveraging distribution channel changes and consumer awareness to drive future growth[108] Financial Health - The group's interest-bearing debt ratio was approximately 0.3% as of December 31, 2023, down from 0.7% as of December 31, 2022[185] - The group's cash and bank deposits increased by approximately 20.7% to RMB 942.0 million in 2023 from RMB 781.3 million in 2022[124] - Operating cash flow net amount for 2023 was RMB 185.9 million, compared to RMB 168.5 million in 2022[125] Inventory and Trade Receivables - Trade receivables increased to RMB 215,877 thousand in 2023 from RMB 195,685 thousand in 2022, an increase of 10.3%[95] - Trade receivables within one month increased to RMB 215,651 in 2023 from RMB 185,901 in 2022, reflecting a growth of 16.0%[65] - Inventory increased to RMB 93.5 million as of December 31, 2023, from RMB 81.9 million as of December 31, 2022[176]

Economic Environment - In the first half of 2023, China's GDP grew by 5.5% year-on-year, and retail sales increased by 8.2% year-on-year, indicating a recovering macroeconomic environment[6] Product Development and Innovation - The company launched a new product, "Shangpin Bazhen," which combines traditional Chinese dietary formulas with modern nutritional science, enhancing brand vitality while maintaining classic offerings[8] - The company established the "Modern Dietary Research and Development Center" in collaboration with the Chinese Nutrition Society to enhance product scientific accuracy and precision[9] - The establishment of the "Dietary Black Sesame Research Center" aims to innovate and improve the nutritional value of black sesame products[11] - The company emphasizes the importance of a flexible supply chain and professional R&D to continuously innovate and meet diverse health needs[12] Market Performance - The "Xiaotianzai" product contributed 11.4% of e-commerce channel revenue for the six months ending June 30, 2023, showcasing strong growth potential[12] - E-commerce revenue reached RMB 359.3 million, a year-on-year increase of 10.0%, with social media platforms like Douyin and Kuaishou contributing approximately 43.0% of this revenue[14] - New channel business revenue increased by 34.9% to RMB 110.8 million, with a 65.0% growth in the number of sales outlets[15] - Total revenue for the six months ended June 30, 2023, was RMB 873.9 million, up from RMB 840.4 million in the same period of 2022, reflecting a growth of approximately 4.2%[19] - Offline channel sales accounted for approximately 58.9% of total revenue, down from 61.1% in the previous year, while online channel sales increased to about 41.1% from 38.9%[19] Financial Performance - Gross profit rose from approximately RMB 542.8 million to RMB 558.5 million, but the gross margin decreased from about 64.6% to 63.9% due to a higher percentage of revenue from online channels[22] - The group's pre-tax profit for the period was approximately RMB 101.0 million, an increase from RMB 68.0 million for the six months ended June 30, 2022, representing a growth of about 48.5%[33] - The net profit for the period was approximately RMB 83.2 million, compared to RMB 52.4 million for the six months ended June 30, 2022, indicating a rise of approximately 58.7%[35] - The company's cash and cash equivalents increased to RMB 880.4 million as of June 30, 2023, up approximately 12.7% from RMB 781.3 million as of December 31, 2022[42] - The net current assets of the group were RMB 950.3 million as of June 30, 2023, compared to RMB 839.2 million as of December 31, 2022, reflecting an increase of approximately 13.2%[42] Shareholder Information - As of June 30, 2023, the company’s major shareholders include 恒泰信託（香港）有限公司, holding 930,000,000 shares, representing 42.49% of the total shares[55] - PepsiCo, Inc. is a significant shareholder with 566,506,000 shares, accounting for 25.88% of the total shares[55] - The total number of shares held by the major shareholders indicates a concentrated ownership structure, with the top two shareholders holding over 68% of the total shares[55] Corporate Governance - The board of directors confirmed compliance with the corporate governance code throughout the six months ending June 30, 2023[61] - The company has implemented a share option scheme approved by shareholders on November 19, 2018, to incentivize eligible participants[65] - The company’s directors have adhered to the standard code of conduct for securities trading during the reporting period[62] Stock Options and Incentive Plans - The total number of shares available for issuance under the stock option plan is capped at 222,100,000 shares, representing 10% of the total shares issued at the time of listing[68] - The stock option plan allows for the issuance of options without a minimum holding period prior to exercise, unless otherwise specified by the board[73] - The stock incentive plan was adopted by the board on March 28, 2022, to reward and retain employees[83] - The maximum number of reward shares under the stock incentive plan cannot exceed 10% of the company's issued share capital[86] Cash Flow and Investments - The company made investments in financial assets amounting to RMB 423,000 thousand during the six months ended June 30, 2023, compared to RMB 309,200 thousand in the same period of 2022[122] - The company recorded a net cash inflow from investing activities of RMB 428,635 thousand for the six months ended June 30, 2023, compared to RMB 312,405 thousand in the same period of 2022[122] Other Financial Metrics - The average revenue per store in the specialty store segment increased by 6.3%, despite a 6.5% decline in total revenue from this segment due to a reduction in the number of stores[15] - The company reported a decrease in inventory to RMB 64,448,000 from RMB 81,865,000 as of December 31, 2022, representing a reduction of about 21.4%[153] - The company reported no impairment losses recognized for the six months ended June 30, 2023, consistent with the previous year[152]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責， 對其準確性或完整性亦不發表聲明，並明確表示概不就因本公告全部或任何部分內 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。 Natural Food International Holding Limited 五谷磨房食品國際控股有限公司 （以存續方式於開曼群島註冊的有限公司） 1837 （股份代號： ） 2023 6 30 截至 年 月 日止六個月 中期業績 五谷磨房食品國際控股有限公司（「本公司」，連同其附屬公司統稱「本集團」）董事 2023 6 30 （「董事」）會（「董事會」）欣然公佈本集團截至 年 月 日止六個月（「本期間」）的 2022 綜合業績連同 年同期的比較數字如下。 財務摘要 6 30 截至 月 日止六個月 2023 2022 年 年 按期變動 人民幣千元 人民幣千元 增加 873,853 840,411 4.0% 收入 ...

Financial Performance - Total revenue for the year ended December 31, 2022, was approximately RMB 1,719.1 million, an increase from RMB 1,610.3 million in 2021[26]. - The group recorded a profit of approximately RMB 116.5 million for the year ended December 31, 2022, compared to RMB 86.5 million in 2021, representing a year-on-year increase of 34.7%[34]. - The company's gross profit decreased to approximately RMB 1,098.4 million in 2022, with a gross margin of 63.9%, down from RMB 1,138.4 million and 70.7% in 2021[51]. - The company recorded a pre-tax profit of approximately RMB 137.3 million for the year ended December 31, 2022, compared to RMB 113.7 million in 2021[56]. - Financial asset impairment for the year ended December 31, 2022, was approximately RMB 6.0 million, compared to a reversal of impairment losses of RMB 3.5 million in 2021, primarily due to an increase in overdue trade receivables[31]. - The financing cost decreased from approximately RMB 0.8 million in 2021 to RMB 0.6 million in 2022, attributed to reduced interest expenses on lease liabilities[32]. Sales Channels - Offline channel sales revenue as a percentage of total revenue decreased from 63.5% in 2021 to 57.8% in 2022, while online channel sales revenue increased from 36.5% to 42.2%[27]. - Online channel sales increased to RMB 725.6 million, representing 42.2% of total sales, up from RMB 587.4 million or 36.5% in 2021[50]. - New channel business revenue surged to RMB 179.5 million, accounting for 10.4% of total sales, compared to RMB 24.9 million or 1.5% in 2021[50]. - The group believes that offline retail channels will continue to play a significant role in connecting with consumers despite the challenges posed by the COVID-19 pandemic[20]. Brand and Market Strategy - The brand "五谷磨房" contributed a GMV of approximately RMB 670.0 million in 2022, representing a year-on-year growth of 63.4%[42]. - The group aims to focus on health grain foods and adopt a multi-brand and omnichannel strategy to capture diverse consumer demands and retail opportunities[38]. - The group plans to enhance brand communication targeting new generation consumers through social media platforms like Douyin and Xiaohongshu, promoting product attributes of health, convenience, and fashion[18]. Operational Efficiency - Operating expenses for sales and distribution decreased to approximately RMB 891.0 million in 2022 from RMB 954.4 million in 2021[53]. - Trade payables turnover days remained stable at approximately 43 days as of December 31, 2022[36]. - The company maintained a stable trade receivables turnover period of approximately 39 days as of December 31, 2022[59]. - As of December 31, 2022, the company's inventory remained stable at approximately RMB 819 million, with a decrease in inventory turnover days due to strict inventory control measures[83]. Human Resources - Employee costs (excluding director remuneration) totaled RMB 1,563 million for the year ended December 31, 2022, an increase of approximately 0.3% compared to RMB 1,558 million in 2021[87]. - As of December 31, 2022, the company employed 697 staff, a decrease from 713 staff as of December 31, 2021[87]. - The total number of employees in the group was 697, with a gender ratio of approximately 1:2 (227 male and 470 female employees)[116]. - The company has maintained a stable employee gender ratio over the past five years, which is deemed appropriate for its business in natural health food manufacturing and sales[116]. Corporate Governance - The board is responsible for overseeing the management of the company's business affairs and overall performance[79]. - The company is committed to fulfilling its responsibilities to shareholders and enhancing shareholder value through good corporate governance[101]. - The board of directors will continue to review and monitor the company's corporate governance in accordance with the corporate governance code[102]. - The board consists of 7 members, including 2 executive directors, 2 non-executive directors, and 3 independent non-executive directors[106]. - The company has adopted a share option plan to provide incentives to directors, eligible employees, and third-party service providers[88]. - The board has established three committees: the audit committee, remuneration committee, and nomination committee, each with defined terms of reference[161]. Risk Management - The company has implemented strict internal control and risk management measures to ensure operational and financial performance[79]. - The board is responsible for assessing the nature and extent of risks acceptable to the company while ensuring effective risk management and internal control systems are in place[156]. - The group’s risk management and internal control systems include annual plans based on significant potential risks related to financial reporting, operations, and compliance[192]. - The audit committee is responsible for monitoring the integrity of the company's financial statements and reviewing significant judgments made in financial reporting[163]. Shareholder Engagement - The company has established procedures for shareholders to propose matters at general meetings, ensuring transparency and shareholder engagement[177]. - Shareholders can request the board to convene a special general meeting if they hold at least 10% of the paid-up capital with voting rights[196]. - The company encourages feedback from shareholders and the public, welcoming inquiries and suggestions through designated communication channels[183].

34 香港，2023年3月28日 於本公告日期，執行董事為桂常青女士及張澤軍先生；非執行董事為謝長安女士及 王鐸先生；以及獨立非執行董事為張森泉先生、胡芃先生及歐陽良宜先生。 其他全面收入： 換算海外業務的匯兌差額 (45,044) 13,790 其後期間不會重新分類至損益的 其他全面收入： 功能貨幣換算為呈列貨幣 55,610 (19,141) 年內全面收入總額 127,028 81,180 下列人士應佔： 母公司擁有人 127,028 81,180 非控股權益 – – 127,028 81,180 每股盈利（以人民幣列示） 8 基本 0.054 0.039 攤薄 0.053 0.039 3 綜合財務狀況表 2022年12月31日 | --- | --- | --- | --- | |----------------------------------|-------|--------------------------------|--------------------------------| | | | | | | | 附註 | 2022 年 12 月 31 日 人民幣千元 | 2021 年 12 ...

Financial Performance - In the first half of 2022, the company's revenue increased by approximately 11.5% to RMB 840.4 million, while net profit rose by about 37.7% to RMB 52.4 million[13]. - Total revenue increased from RMB 753.9 million in the six months ended June 30, 2021, to RMB 840.4 million in the same period of 2022, representing an increase of approximately 11.5%[31]. - The group's pre-tax profit for the period was approximately RMB 68 million, an increase from RMB 48 million for the six months ended June 30, 2021, representing a growth of about 41.67%[42]. - The group's profit for the period was approximately RMB 52.4 million, compared to RMB 38 million for the six months ended June 30, 2021, indicating a growth of approximately 38.42%[44]. - Revenue for the six months ended June 30, 2022, was RMB 840,411,000, an increase of 11.5% compared to RMB 753,899,000 for the same period in 2021[140]. - Gross profit for the same period was RMB 542,809,000, slightly up from RMB 534,881,000, resulting in a gross margin of approximately 64.5%[140]. - Net profit for the six months ended June 30, 2022, was RMB 52,355,000, representing a 37.7% increase from RMB 38,032,000 in the prior year[142]. - Total comprehensive income for the period was RMB 57,653,000, compared to RMB 36,158,000 in the same period last year, reflecting a significant growth[142]. Revenue Sources - E-commerce channels generated revenue of RMB 326.6 million, representing a year-on-year growth of approximately 36.6%[15]. - Offline channel revenue decreased from 68.3% of total revenue in 2021 to 61.1% in 2022, while online channel revenue increased from 31.7% to 38.9%[32]. - The core product "Walnut Sesame Black Bean Powder" recorded a GMV growth of approximately 36% in e-commerce channels, maintaining its position as the top natural powder product[22]. - The company has successfully expanded its social media e-commerce presence, with sales from platforms like Douyin and Kuaishou accounting for about 37% of total e-commerce revenue[15]. Cost and Expenses - Sales cost rose approximately 35.9% from RMB 219 million in 2021 to RMB 297.6 million in 2022, primarily due to increased raw material costs and transportation expenses[33]. - Gross profit increased from approximately RMB 534.9 million in 2021 to RMB 542.8 million in 2022, but gross margin decreased from about 71% to 64.6%[33]. - Selling and distribution expenses decreased from approximately RMB 455.1 million in 2021 to RMB 440.9 million in 2022, influenced by increased advertising costs and reduced transportation expenses[36]. - Administrative expenses increased from approximately RMB 38.4 million in 2021 to RMB 41.2 million in 2022, primarily due to salary increases and new office rental costs[37]. - The company incurred a loss of RMB 7,000,000 from the sale of property, plant, and equipment during the six months ended June 30, 2022, compared to a loss of RMB 3,056,000 in the same period of 2021[170]. Assets and Liabilities - As of June 30, 2022, the group's cash and cash equivalents were RMB 660.9 million, a 2.3% increase from RMB 646 million as of December 31, 2021[51]. - The net current assets of the group as of June 30, 2022, were RMB 778.2 million, up from RMB 709.9 million as of December 31, 2021[51]. - Trade receivables increased to RMB 211.4 million from RMB 176.6 million, attributed to increased revenue[47]. - The inventory turnover days decreased from 67 days to 46 days, reflecting improved inventory control measures[50]. - The capital debt ratio as of June 30, 2022, was approximately 1.0%, down from 1.2% as of December 31, 2021[56]. Shareholder Information - As of June 30, 2022, the major shareholders include 恒泰信託（香港）有限公司 with 930,000,000 shares, representing 42.49% of the issued share capital[74]. - PepsiCo, Inc. holds 566,506,000 shares, accounting for 25.88% of the total shares[74]. - The company purchased a total of 18,126,000 shares at a total cost of approximately HKD 7,975,000 (approximately RMB 6,862,000) under the share incentive plan[80]. Corporate Governance - The company has complied with all provisions of the corporate governance code during the six months ending June 30, 2022[82]. - The board of directors has adopted the standard code for securities transactions since the company's listing on December 12, 2018, and confirmed compliance during the reporting period[83]. - The audit committee consists of independent non-executive directors, ensuring proper governance and oversight[130]. Stock Options and Incentives - The company aims to align the interests of eligible participants with its own through the share option plan, incentivizing contributions to the group[86]. - The company granted 74,018,823 stock options on June 12, 2019, with an exercise price of HKD 1.468 per share, valid until December 11, 2028[99]. - The total number of stock options granted is subject to shareholder approval, but the options already granted do not require such approval[99]. - The company has a structured vesting schedule for stock options, with percentages allocated over specific periods[105]. Taxation and Compliance - The corporate income tax rate for the group's subsidiaries operating in China remains at 25% for both the six months ended June 30, 2022, and 2021[199]. - No income tax was incurred in the British Virgin Islands and the Cayman Islands for the period, consistent with the previous year[199]. Miscellaneous - There were no significant acquisitions, disposals, or investments during the period[58]. - The company has not identified any contingent assets or liabilities arising from business combinations that occurred after January 1, 2022[184]. - The company operates entirely within China, generating 100% of its revenue and holding all non-current assets in the region[188].

Financial Performance - In 2021, the company's revenue increased by 11.9% year-on-year to RMB 1,610.3 million, while net profit turned from a loss of RMB 14.5 million in 2020 to a profit of RMB 86.5 million[35]. - The company achieved a profit before tax of approximately RMB 113.7 million in 2021, a significant turnaround from a loss of RMB 53.1 million in 2020[67]. - The group recorded a profit of approximately RMB 86.5 million for the year ended December 31, 2021, compared to a loss of approximately RMB 14.5 million for the year ended December 31, 2020, indicating a significant turnaround in performance[70]. - Gross profit rose to approximately RMB 1,138.4 million in 2021, up from RMB 1,006.6 million in 2020, with a gross margin improvement from 70% to 70.7%[58]. - The company recorded a net reversal of financial asset impairment of approximately RMB 3.5 million in 2021, compared to a loss of RMB 9.6 million in 2020[64]. - The net cash flow from operating activities for 2021 was RMB 130.8 million, up from RMB 86.9 million in 2020, reflecting improved operational efficiency[79]. - As of December 31, 2021, the group's cash and cash equivalents increased by approximately 14.5% to RMB 646 million from RMB 564.2 million as of December 31, 2020[78]. - The company has established a comprehensive financial accounting system to ensure compliance with various performance measurement indicators[164]. - The company’s financial performance and position as of December 31, 2021, are detailed in the annual report, specifically in the financial statements[189]. Revenue Channels - Online channel revenue accounted for 36.5% of total revenue, an increase of 7.8 percentage points compared to 2020, while offline revenue decreased to 63.5% from 71.3% in the previous year[36]. - The e-commerce channel achieved revenue of RMB 587.4 million in 2021, representing a growth of 42.1% year-on-year[38]. - Sales from social e-commerce channels, including Douyin and Kuaishou, reached approximately RMB 130 million, showcasing the company's successful adaptation to emerging platforms[39]. - Offline channel sales accounted for 63.5% of total revenue in 2021, down from 71.3% in 2020, while online channel sales increased to 36.5% from 28.7%[56]. Strategic Initiatives - The company plans to continue focusing on natural, healthy, and additive-free food products, while expanding e-commerce and diversifying sales channels[31]. - The company aims to deepen its multi-brand strategy to explore potential single products further[31]. - The strategic focus for 2022 includes strengthening core product categories, expanding channels, and exploring new product opportunities[52]. - The company plans to enhance its online presence and capture new customer segments through social e-commerce platforms[56]. - The company is investing heavily in R&D, with a budget increase of 15% aimed at developing healthier snack options and sustainable packaging solutions[92]. - Future outlook includes a projected revenue growth of 10% for 2022, supported by new product launches and market expansion initiatives[92]. Brand Development - The company maintained its position as the top brand in the Tmall natural powder category for several consecutive years, benefiting from strong partnerships with e-commerce platforms[27]. - The brand's awareness and reputation have improved significantly during the year[26]. - The launch of the "Heizhi Yang" brand in the e-commerce channel aims to leverage the popularity of black foods, with products like "Walnut Sesame Black Bean Powder" and "Black Sesame Balls" planned for future expansion[48]. - The company aims to reshape the "Wugu Mofang" brand image, emphasizing "good ingredients, no additives, and professionalism" through diverse content marketing across social and e-commerce platforms[50]. - The brand ambassador, actress Guan Xiaotong, was appointed to enhance the brand's image and appeal to younger consumers[51]. Cost Management - Sales and distribution expenses decreased to approximately RMB 954.4 million in 2021 from RMB 967.2 million in 2020, attributed to reduced personnel costs and promotional activities[60]. - Administrative expenses slightly increased to approximately RMB 81.6 million in 2021 from RMB 81 million in 2020, mainly due to salary adjustments and increased R&D spending[63]. - Employee costs for the year ended December 31, 2021, totaled RMB 155.8 million, a decrease of approximately 7.5% from RMB 168.5 million in 2020, indicating cost management efforts[86]. Corporate Governance - The board of directors consists of seven members, including two executive directors, two non-executive directors, and three independent non-executive directors[112]. - The company has established a high standard of corporate governance, adhering to the applicable provisions of the corporate governance code[107]. - Independent non-executive directors constitute at least one-third of the board, ensuring compliance with listing rules[116]. - The company provided training for directors on their duties and responsibilities, as well as updates on relevant laws and regulations[117]. - The board plans to hold four regular meetings annually, approximately once per quarter, with at least 14 days' notice given[123]. - The company has appropriate insurance arrangements for legal actions against directors[115]. - The board is responsible for overseeing the management of the group's business affairs and overall performance[111]. - The company has established three committees: Audit Committee, Remuneration Committee, and Nomination Committee, each with clearly defined responsibilities[128]. Risk Management - The company emphasizes the importance of internal controls and risk management systems, ensuring management fulfills its responsibilities[131]. - The company has implemented a risk management system to identify, assess, and control operational risks associated with its business growth and expansion[197]. - The internal audit department evaluates the adequacy and effectiveness of the risk management and internal control systems, reporting findings to the board at least annually[163]. - The board believes that the risk management and internal control systems are adequate and effective, with annual reviews planned[165]. Environmental Compliance - The company has a dedicated team for environmental compliance and implements strict waste management procedures at its manufacturing base[195]. - The company aims to reduce its carbon footprint by 30% by 2025, aligning with global sustainability goals[92]. Shareholder Engagement - Shareholders can propose resolutions at general meetings, with voting results published on the company's and stock exchange's websites[170]. - Qualified shareholders can request the board to convene a special general meeting to present proposals[172]. - The company maintains a communication policy to ensure shareholders receive timely information, allowing them to participate actively in company affairs[181].