董事會會議通告 老恒和釀造有限公司（「本公司」）董事會（「董事會」）謹此宣佈，本公司將於二零二 五年八月二十八日舉行董事會會議，藉以考慮及批准（ 其中包括 ）本公司及其附屬 公司截至二零二五年六月三十日止六個月的中期業績、其發佈、宣派及派付中期 股息（ 如有 ）以及處理任何其他事宜。 承董事會命 老恒和釀造有限公司 Honworld Group Limited 老 恒 和 釀 造 有 限 公 司* （於開曼群島註冊成立的有限公司） （股份代號：2226） 香 港 交 易 及 結 算 所 有 限 公 司 及 香 港 聯 合 交 易 所 有 限 公 司 對 本 公 佈 的 內 容 概 不 負 責，對其準確性或完整性亦不發表任何聲明，並明確表示概不就因本公佈全部或 任何部分內容而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 * 僅供識別 主席 黃大春 於本公佈日期，本公司執行董事為黃大春及朱冰；本公司非執行董事為王艷萍； 以及本公司獨立非執行董事為沈振昌、吳榮輝及孫熲。 香港，二零二五年八月十八日 ...

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年7月31日 狀態: 新提交 致：香港交易及結算所有限公司 公司名稱: 老恒和釀造有限公司 呈交日期: 2025年8月1日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | 於香港聯交所上市 (註1) | | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 02226 | 說明 | | | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | | 法定/註冊股本 | | | 上月底結存 | | | 1,000,000,000 | USD | | 0.0005 | USD | | 500,000 | | 增加 / 減少 (-) | | | 0 | | | | USD | | | | 本月底結存 | | | 1,000,000,000 | USD | | 0.0005 | USD | | 500,000 | 本月底法定/註冊股本總 ...

Company Overview - Lao Heng He Brewing Co., Ltd. has a history dating back to the establishment of Lao Yuan Da Sauce Garden in Huzhou, which has evolved over three dynasties and is known for its traditional brewing techniques [4][5] - The company specializes in producing various alcoholic beverages, including liquor, yellow wine, soy sauce, rose rice vinegar, fermented bean curd, sauces, and marinated products [4] Financial Performance - As of December 31, 2024, Lao Heng He Brewing reported total revenue of 275 million yuan, representing a year-on-year growth of 6.3% [2] - The company recorded a net profit attributable to shareholders of -517 million yuan, with a year-on-year increase of 1.48% [2] - The gross profit margin stood at 26.56%, while the asset-liability ratio was 371.48% [2] Market Position - Over the past month, Lao Heng He Brewing has experienced a cumulative decline of 6.25%, with no overall growth year-to-date, underperforming the Hang Seng Index, which has risen by 20.55% [2] - The company's price-to-earnings (P/E) ratio is -0.62, ranking it 85th in the food and beverage industry, where the average P/E ratio is 23.69 [3] Industry Context - The food and beverage industry has an average P/E ratio of 23.69, with a median of 8.11 [3] - Comparatively, other companies in the industry have P/E ratios ranging from 4.03 to 5.54, indicating that Lao Heng He Brewing is significantly undervalued relative to its peers [3]

Financial Performance - Revenue for the year ended December 31, 2024, amounted to RMB 275.1 million, representing an increase of 6.3% from RMB 258.8 million recorded in 2023[6] - Gross profit for the year ended December 31, 2024, amounted to RMB 73.1 million, representing a decrease of 1.4% from RMB 74.1 million recorded in 2023[6] - Loss attributable to ordinary equity holders for the year ended December 31, 2024, amounted to RMB 516.6 million, a decrease of 1.5% from RMB 524.3 million recorded in 2023[6] - The gross profit margin decreased from approximately 28.6% in 2023 to approximately 26.6% in 2024 due to adjustments in product structure[26] - Loss before income tax decreased by 1.5% from RMB 524.3 million in 2023 to RMB 516.6 million in 2024[97] - Loss per share attributable to ordinary equity holders decreased from RMB0.91 in 2023 to RMB0.89 in 2024[105] - Loss before interest, taxes, depreciation, and amortization (LBITDA) decreased by 5.0% from RMB301.4 million in 2023 to RMB286.4 million in 2024[77] Assets and Liabilities - The total assets as of December 31, 2024, were RMB 1,050.4 million, a decrease from RMB 1,113.2 million in 2023[11] - Total liabilities as of December 31, 2024, were RMB 3,901.9 million, an increase from RMB 3,446.7 million in 2023[11] - The gearing ratio increased from 328.1% in 2023 to 393.5% in 2024, indicating a rise in financial leverage[79] - Total borrowings increased from RMB2,808.5 million as of December 31, 2023, to RMB3,311.3 million as of December 31, 2024[124] - Cash and cash equivalents decreased from RMB10.1 million as of December 31, 2023, to RMB6.3 million as of December 31, 2024[130] Revenue Breakdown - Cooking wine products generated sales revenue of approximately RMB187.0 million, accounting for approximately 68.0% of total revenue[26] - Soy sauce products generated sales revenue of approximately RMB30.3 million, accounting for approximately 11.0% of total revenue[26] - Online sales revenue reached approximately RMB23.0 million in 2024, an increase of approximately 83.0% from approximately RMB12.6 million in the corresponding period in 2023[20] - Revenue from cooking wine products rose by 8.9% from RMB171.7 million in 2023 to RMB187.0 million in 2024, due to product development and enhanced market penetration[82] - Revenue from soy sauce products increased by 15.2% from RMB26.3 million in 2023 to RMB30.3 million in 2024, focusing on zero-additive and cost-effective products[83] - Revenue from rice vinegar and other products decreased by 4.9% from RMB60.8 million in 2023 to RMB57.8 million in 2024, as underperforming products were phased out[84] Marketing and Brand Strategy - The market share of "Lao Heng He Cooking Wine" in offline sales was 19.1% in 2024, ranking first in the industry for the eighth consecutive year[14] - The company engaged a professional marketing team to enhance brand strategy and product development across multiple channels[17] - The Group's marketing strategy includes optimizing product structure and enhancing promotional efforts to improve market competitiveness[19] - The Group participated in major expos, enhancing brand awareness and reaching more global consumers[20] - The company is committed to enhancing brand exposure through digital marketing methods, including social media and content marketing[163] - The company aims to increase the market share of the "Lao Heng He" brand in China through collaboration with strong online platforms and offline distributors[163] Product Development and Innovation - The company plans to maintain a diversified product structure strategy, focusing on innovation in areas such as bacterial strain research and smart brewing to enhance product quality and consumer trust[155] - The company plans to develop distinctive new condiments, including low-sodium, low-fat, low-sugar, and organic products, to align with the healthy eating trend[163] - The Group plans to further develop the condiment industry chain, aiming to become a diversified condiment manufacturer with cooking wine as the leading product[27] - The company is focusing on the development of a diversified seasoning product structure, aiming to establish itself as a leading manufacturer of cooking wine and other seasoning products[29] Corporate Governance - The Company has complied with the Governance Code provisions, except for a deviation noted in the "D. Chairman and Chief Executive" section[180] - The Board is committed to maintaining high standards of corporate governance to enhance accountability and transparency[181] - The Board has established clear rules and policies for delegating powers to facilitate efficient operations, supported by three committees: Audit, Remuneration, and Nomination[189] - The Board is responsible for overall management, including strategic development, business plans, and financial objectives[187] Employee and Operational Insights - The total remuneration paid to employees for the year ended December 31, 2024, amounted to approximately RMB 49.5 million, an increase from RMB 45.3 million in 2023[169] - The employee benefit plan contribution for 2024 was RMB 7.3 million, up from RMB 5.6 million in 2023[169] - As of December 31, 2024, the company employed approximately 509 full-time employees, a decrease from 528 in 2023[169] Future Outlook - Looking ahead to 2025, the Chinese government aims to boost consumption and expand domestic demand, with a focus on increasing the income of middle- and low-income groups[149] - The condiment industry is expected to face challenges such as weak consumer demand and intensified competition, but will also encounter new opportunities for market differentiation[149] - The company aims to achieve a market growth target of approximately 5% by 2025, focusing on enhancing consumer confidence and tapping into the domestic market[161] - The group aims to achieve business goals by stabilizing customers, expanding channels, increasing revenue, and reducing costs, while focusing on innovation[158]

Financial Performance - For the fiscal year ending December 31, 2024, revenue was RMB 275.1 million, an increase of 6.3% compared to RMB 258.8 million in 2023[2] - Gross profit for the same period was RMB 73.1 million, a decrease of 1.4% from RMB 74.1 million in 2023[2] - The loss attributable to ordinary equity holders was RMB 516.6 million, a reduction of 1.5% from RMB 524.3 million in 2023[2] - Total comprehensive expenses for the year amounted to RMB 525.4 million, compared to RMB 518.0 million in the previous year[4] - The basic and diluted loss per share was RMB 0.89, compared to RMB 0.91 in the previous year[4] - The company reported a net loss of 2,851,544 thousand RMB in 2024, compared to a net loss of 2,333,542 thousand RMB in 2023, representing an increase in losses of approximately 22.2%[6] - The company reported a loss before tax of RMB 516,564,000 for the year ending December 31, 2024, compared to a loss of RMB 524,316,000 for the previous year, representing a slight improvement[35] - The effective tax rate for the year was 15.4% for 2024, compared to 25.0% for 2023, indicating a reduction in tax burden[35] Cash Flow and Liquidity - Cash and cash equivalents decreased from 10,124 thousand RMB in 2023 to 6,346 thousand RMB in 2024, a decrease of about 37.5%[5] - The group reported a net cash amount of approximately RMB 836,000 as of December 31, 2024, compared to RMB 102,215,000 in 2023, indicating a significant decrease[13] - The group has implemented measures to ensure sufficient cash resources to meet its financial obligations over the next twelve months[16] - The group is negotiating with financial institutions for the renewal of short-term loans totaling approximately RMB 2,315,145,000 and has received commitments for new financing of RMB 450,000,000[18] Assets and Liabilities - Total assets decreased from 803,342 thousand RMB in 2023 to 752,212 thousand RMB in 2024, a decline of approximately 6.4%[5] - Current liabilities increased from 432,455 thousand RMB in 2023 to 452,136 thousand RMB in 2024, an increase of about 4.0%[5] - The company's total liabilities increased from 3,438,026 thousand RMB in 2023 to 3,894,099 thousand RMB in 2024, an increase of approximately 13.3%[5] - The company's long-term debt increased from 2,806,293 thousand RMB in 2023 to 3,309,947 thousand RMB in 2024, an increase of about 17.9%[5] - The accumulated losses of the group reached approximately RMB 3,718,420,000 as of December 31, 2024, compared to RMB 3,201,856,000 in 2023, indicating a rise of about 16.1%[13] Revenue and Sales - Revenue from the sale of seasoning products for the year 2024 is RMB 275,077,000, an increase from RMB 258,784,000 in 2023, representing a growth of approximately 6.3%[26] - Revenue from liquor products rose by 8.9% from RMB 171.7 million in 2023 to RMB 187.0 million in 2024, driven by product optimization and improved market penetration[75] - Revenue from soy sauce products increased by 15.2% from RMB 26.3 million in 2023 to RMB 30.3 million in 2024, driven by the development of zero-additive and high-value products[76] - Online sales revenue reached approximately RMB 23.0 million in 2024, up approximately 83.0% from RMB 12.6 million in the same period of 2023[67] Operational Efficiency - The company experienced a foreign exchange loss of RMB 1.4 million, compared to a loss of RMB 1.1 million in the previous year[4] - The company reported a decrease in selling and distribution expenses to RMB 95.2 million from RMB 86.9 million[4] - Administrative expenses increased to RMB 47.1 million from RMB 41.0 million[4] - The company has implemented cost management measures to enhance production efficiency and improve management effectiveness[69] Inventory and Receivables - Inventory decreased from 645,899 thousand RMB in 2023 to 586,086 thousand RMB in 2024, a decline of approximately 9.2%[5] - The company recognized an additional provision of RMB 358,000 for inventory obsolescence in 2024, compared to a reversal of RMB 3,038,000 in 2023, highlighting challenges in inventory valuation[41] - Trade receivables totaled RMB 27,893,000 in 2024, up from RMB 23,229,000 in 2023, indicating an increase in sales on credit[42] - The net value of trade receivables after impairment was RMB 25,220,000 for 2024, compared to RMB 20,775,000 in 2023, showing improved collection efficiency[42] Corporate Governance and Management - The board of directors did not recommend the payment of a final dividend for the fiscal year ending December 31, 2024[2] - The company is actively seeking a new Chief Executive Officer to fill the vacancy left by the resignation of the previous CEO in November 2024[121] - The company emphasizes the importance of good corporate governance to enhance management and protect shareholder interests[120] Future Outlook and Strategy - The company aims to achieve an economic growth target of around 5% by 2025, focusing on domestic demand and consumer confidence recovery[109] - The company plans to enhance its market position by diversifying its product structure and expanding product lines to respond to market demands[107] - The company is focusing on developing a diverse range of seasoning products to better meet the personalized and diversified needs of existing customers[71] - The company plans to strengthen its marketing and brand promotion through digital marketing strategies, including social media and content marketing, to increase online visibility and interaction[112]

Awards and Recognition - In the first half of 2024, the company achieved a significant recognition with its matsutake cooking wine winning the 2024 Cereal-based Brew Cooking Wine Flavour Award at the 20th China International Alcoholic Drinks Expo[9]. - The subsidiary, Huzhou Lao Heng He Brewery Co., Ltd., was named one of the "Top Ten Leading Agricultural Enterprises" in Wuxing District for 2023 by the local Communist Party committee[10]. - The product "king of Huadiao cooking wine" was recognized as a "2023 Zhejiang Province Famous, Special and Excellent Food" by the Zhejiang Industry Organisation[11]. Financial Performance - In the first half of 2024, the Group achieved sales revenue of approximately RMB 144.3 million, representing an increase of approximately 12.9% compared to RMB 127.8 million for the same period in 2023[25][26]. - The company reported a loss attributable to ordinary equity holders of approximately RMB 247.6 million, an increase of approximately 1.1% compared to RMB 244.9 million in the corresponding period of 2023[30]. - The gross profit margin decreased from approximately 34.6% in the first half of 2023 to approximately 32.7% in the corresponding period of 2024 due to an increase in the sales of mid-range products with lower gross margins[27][28]. Marketing and Brand Strategy - The company reported a 33% increase in search volume for the "Lao Heng He" brand during its elevator advertising campaign compared to the previous period, and a 300% increase compared to the same period last year[15]. - The company engaged a professional marketing team to enhance brand planning and design, focusing on high-end product packaging and promotional events[14]. - The company participated in the "Hainan Expo 2024," aiming to attract younger consumers and enhance brand confidence[15]. Product Development and Innovation - The Group successfully developed and launched over ten new products while improving the technology of new production lines for soy sauce and soybean paste[19][20]. - The Group is committed to innovation in product development, focusing on natural, healthy, and nutritious products, while adhering to food safety regulations[88]. - The Group plans to maintain a diversified product structure strategy to meet market demand for green, healthy, and palatable condiments[92]. Operational Efficiency and Cost Management - The company is committed to reducing costs and enhancing operational efficiency to improve market competitiveness amid fierce competition[13]. - The company is focusing on establishing long-term cooperative relationships with suppliers and optimizing procurement processes to reduce costs[35]. - The Group is implementing measures to improve liquidity, including monitoring production activities and tightening cost controls[151]. Market Expansion and Sales Channels - The company is focusing on optimizing product structure and expanding sales channels to drive growth in product sales[13]. - The Group is actively expanding its market presence in fourth- and fifth-tier cities across 30 provinces in China and developing overseas markets[27][28]. - The company anticipates growth in sales of products such as cooking wine, soy sauce, rice vinegar, and fermented bean curd due to increasing customer demand and further development of sales channels[32]. Financial Challenges and Risks - The company faces potential risks, including significant increases in production costs and challenges in consumer education regarding cooking wine products[32]. - Significant uncertainties exist regarding the management's ability to achieve its plans and measures, impacting the Group's going concern status[152]. - The total deficit as of June 30, 2024, was RMB (2,584,201,000), an increase from RMB (2,333,542,000) at the beginning of the year, highlighting ongoing financial challenges[124]. Governance and Compliance - The Company has complied with the Corporate Governance Code for the six months ended June 30, 2024, and will continue to monitor its governance practices[108]. - The remuneration committee and nomination committee have been established to ensure compliance with corporate governance codes[118]. - The Board has resolved not to declare any interim dividend for the six months ended June 30, 2024[101]. Shareholding and Ownership - As of June 30, 2024, Wuxing City Investment HK holds 313,044,100 shares, representing approximately 54.09% of the issued share capital of the Company[112]. - The Company has a significant concentration of ownership, with major shareholders holding over 5% of the issued share capital[112]. - The interests of substantial shareholders are primarily categorized as beneficial ownership or interests of controlled corporations[113]. Cash Flow and Liquidity - The Group's cash and cash equivalents were approximately RMB 9,873,000 as of June 30, 2024, a slight decrease from RMB 10,124,000 as of 31 December 2023[141]. - The Group has received a commitment from its immediate holding company, Wuxing HK, to provide continuing financial support for twelve months from 30 March 2024[143]. - The directors believe that the Group will have sufficient cash resources to meet its working capital and financial obligations for the next twelve months[151].

Financial Performance - For the six months ended June 30, 2024, the revenue was approximately RMB 144.3 million, an increase of 12.9% compared to RMB 127.8 million for the same period in 2023[1]. - The gross profit for the same period was approximately RMB 47.1 million, reflecting a 6.6% increase from RMB 44.2 million in the prior year[1]. - The net loss attributable to ordinary equity holders was approximately RMB 247.6 million, up 1.1% from RMB 244.9 million in the same period last year[1]. - Total comprehensive loss for the period was RMB 250.7 million, compared to RMB 246.4 million in the previous year[3]. - The company reported a total capital deficit of RMB 2,584,201,000 as of June 30, 2024, compared to RMB 2,333,542,000 at the end of 2023, reflecting a deterioration of approximately 10.7%[5]. - The company reported a pre-tax loss of RMB 14,794,000 for the six months ended June 30, 2024, compared to RMB 14,243,000 for the same period in 2023, showing an increase in losses of 3.9%[19]. - Basic loss per share attributable to ordinary equity holders for the six months ended June 30, 2024, was RMB (0.43), compared to RMB (0.42) for the same period in 2023[24]. - The company reported a loss attributable to ordinary equity holders of approximately RMB 247.6 million, a slight increase of about 1.1% from RMB 244.9 million in the same period of 2023[46]. Cash Flow and Liquidity - As of June 30, 2024, total assets amounted to RMB 783.9 million, a decrease from RMB 803.3 million as of December 31, 2023[4]. - The company's cash and cash equivalents were RMB 9.9 million, slightly down from RMB 10.1 million at the end of the previous year[4]. - The total liabilities were RMB 3.66 billion, an increase from RMB 3.44 billion at the end of 2023[4]. - The company experienced a net loss of RMB 247,604,000 for the six months ending June 30, 2024, compared to a net loss of RMB 244,926,000 for the same period in 2023, indicating a slight increase in losses[8]. - Cash and cash equivalents were approximately RMB 9,873,000 as of June 30, 2024, a decrease from RMB 10,124,000 at the end of 2023, showing a decline of about 2.5%[8]. - The group anticipates sufficient cash resources to meet operational funding and financial obligations for the next twelve months[10]. Inventory and Receivables - Inventory as of June 30, 2024, was RMB 610.8 million, down from RMB 645.9 million at the end of the previous year[4]. - Raw materials inventory decreased from RMB 11,040,000 to RMB 10,307,000, a decline of approximately 6.6%[27]. - Work-in-progress inventory decreased from RMB 616,847,000 to RMB 583,937,000, a decline of approximately 5.3%[27]. - Finished goods inventory decreased from RMB 18,012,000 to RMB 16,526,000, a decline of approximately 8.2%[27]. - Net trade receivables decreased from RMB 20,775,000 to RMB 18,459,000, a decline of approximately 11.1%[28]. - Trade receivables turnover days improved from 33 days to 25 days due to adjustments in distribution channels and collaboration with higher-quality distributors[65]. Borrowings and Liabilities - The total borrowings of the company as of June 30, 2024, were approximately RMB 3,127,759,000, an increase from RMB 2,808,480,000 at the end of 2023, marking a rise of about 11.4%[8]. - The group reported overdue other borrowings principal of approximately RMB 209,250,000 as of June 30, 2024, which includes machinery and equipment under sale and leaseback arrangements[37]. - The group recognized overdue interest expenses of approximately RMB 114,367,000 related to other borrowings as of June 30, 2024, compared to RMB 108,518,000 as of June 30, 2023[36]. - The group has capital commitments of approximately RMB 14.3 million as of June 30, 2024, down from RMB 19.7 million as of December 31, 2023, primarily due to payments for equipment and construction costs[71]. Operational Developments - The company has not disclosed any new product developments or market expansion strategies in the current report[6]. - The company is enhancing market competitiveness through cost reduction, production efficiency improvements, and product structure optimization[42]. - The company is collaborating with universities for brewing theory research to standardize product craftsmanship[43]. - The company is actively expanding its online sales channels through various platforms, including community e-commerce and group buying[50]. - The company is committed to becoming the preferred brand for consumers in the market[50]. Employee and Management - The company employed 510 full-time employees as of June 30, 2024, down from 528 employees as of December 31, 2023[79]. - Employee benefits expenses (excluding directors' remuneration) for the six months ended June 30, 2024, were RMB 22,867,000, up from RMB 21,323,000 in 2023, indicating a rise of 7.3%[19]. - The company plans to strengthen management and invest in employee training to improve operational efficiency[49]. Market Strategy and Product Development - The company is actively developing a diversified flavor product structure to enhance future business growth, focusing on liquor, soy sauce, rice vinegar, and fermented tofu[46]. - The company plans to enhance its market strategy by expanding distribution channels in lower-tier cities and increasing investment in foreign markets[46]. - The market strategy for the second half of 2024 emphasizes consumer-centered development and the introduction of affordable products to meet diverse consumer needs[48]. - The company aims to enhance its market position in the seasoning industry by expanding diverse sales channels and product offerings[49]. - The company is facing potential risks including rising production costs and changes in consumer behavior towards liquor products[47]. Corporate Governance - The company has adopted corporate governance rules to enhance management structure and internal control systems, ensuring shareholder interests are protected[82]. - The audit committee has reviewed the financial statements and internal controls, ensuring compliance with accounting standards[84].

Financial Performance - The company achieved sales revenue of approximately RMB 258.8 million in 2023, a decrease of RMB 12.8 million (4.7%) compared to 2022, primarily due to rising raw material costs, market competition, and reduced consumer purchasing power[1] - Revenue decreased by 4.7% from RMB 271.6 million in 2022 to RMB 258.8 million in 2023, primarily due to weak consumer demand, rising raw material costs, and adjustments in the distribution network[20] - Gross profit decreased by 0.9% from RMB 74.8 million in 2022 to RMB 74.1 million in 2023, while gross profit margin increased from 27.5% to 28.6% due to effective cost control and lower raw material prices[23] - Loss attributable to owners of the company increased by 7.8% from RMB 486.3 million in 2022 to RMB 524.3 million in 2023[18] - Revenue for 2023 decreased by 4.7% to RMB258.8 million compared to RMB271.6 million in 2022[89] - Gross profit for 2023 decreased by 0.9% to RMB74.1 million compared to RMB74.8 million in 2022[89] - Loss attributable to ordinary equity holders increased by 7.8% to RMB524.3 million in 2023 from RMB486.3 million in 2022[89] - Revenue decreased by 4.7% from RMB271.6 million in 2022 to RMB258.8 million in 2023, primarily due to industry challenges, consumer uncertainty, and distribution network adjustments[143] - Gross profit decreased by 0.9% from RMB74.8 million in 2022 to RMB74.1 million in 2023, while gross profit margin increased from 27.5% to 28.6% due to cost control and lower raw material prices[157] - Loss attributable to ordinary equity holders increased by 7.8% from RMB486.3 million in 2022 to RMB524.3 million in 2023, reflecting higher net loss[160] - Net loss margin increased by 13.1% from 179.1% in 2022 to 202.6% in 2023, driven by the combined effect of revenue decline and increased expenses[161] - Pre-tax loss increased by 7.8% from RMB 486.3 million in 2022 to RMB 524.3 million in 2023[162] - Income tax expenses for both 2022 and 2023 were zero due to business losses[163] Product Revenue Breakdown - Revenue from soy sauce products increased by 9.5% from RMB 23.8 million in 2022 to RMB 26.3 million in 2023, driven by the "one heart with two wings" product strategy and new product development[28] - Revenue from cooking wine products decreased by 2.5% from RMB 176.2 million in 2022 to RMB 171.8 million in 2023, mainly due to adjustments in the distribution network and equipment upgrades[20] - Revenue from rice vinegar products decreased by 16.3% from RMB 17.8 million in 2022 to RMB 14.9 million in 2023, reflecting weak consumer demand and reduced purchasing power[30] - Revenue from other products decreased by 14.9% from RMB 53.8 million in 2022 to RMB 45.8 million in 2023, as the company focused on high-performing products and phased out underperforming ones[30] - Revenue from rice vinegar products decreased by 16.3% from RMB17.8 million in 2022 to RMB14.9 million in 2023, driven by declining sales of high-end products[144] - Revenue from cooking wine products decreased by 2.5% from RMB176.2 million in 2022 to RMB171.8 million in 2023, influenced by distribution network adjustments and equipment upgrades[155] - Revenue from other products decreased by 14.9% from RMB53.8 million in 2022 to RMB45.8 million in 2023, due to downsizing underperforming products[156] - Cooking wine products accounted for approximately 66.4% of the company's total revenue in 2023[128] - Soy sauce products generated approximately RMB26.3 million in sales revenue, representing 10.2% of total revenue in 2023[128] Cost and Expense Management - Cost of sales decreased by 6.1% from RMB 196.8 million in 2022 to RMB 184.7 million in 2023, primarily due to lower revenue and reduced prices of some raw materials[29] - Selling and distribution expenses increased from RMB74.7 million in 2022 to RMB95.2 million in 2023, with the percentage of revenue rising from 27.5% to 36.8%[31] - Administrative expenses increased by 6.1% from RMB44.4 million in 2022 to RMB47.1 million in 2023, driven by higher management salaries and R&D costs[145][159] - Sales and distribution expenses increased from RMB74.7 million in 2022 to RMB95.2 million in 2023, with the expense-to-revenue ratio rising from 27.5% to 36.8% due to higher marketing costs[146] - The company implemented quality improvement and cost control measures to expand economies of scale and reduce product costs[128] Strategic Initiatives and Product Development - The company plans to expand its condiment product portfolio, focusing on cooking wine, soy sauce, rice vinegar, and fermented bean curd, to meet growing customer demand and develop sales channels[2] - The company aims to further develop the horizontal and vertical condiment industry chain, positioning itself as a diversified condiment manufacturer with cooking wine as the leading product[2] - The company is upgrading and innovating production processes, standardizing systems, and optimizing workflows to enhance production efficiency and reduce costs[1] - The company has invested in new production line equipment to improve labor efficiency and strengthen its core competitiveness in the market[1] - The company established a R&D team with external technical professionals and collaborated with universities to enhance product quality and innovate brewing technology[86] - The company successfully developed and launched several new products, improving the technology of soy sauce and soybean paste production lines[86] - The company reconstructed and upgraded production equipment, optimized processes, and purchased new production line equipment to enhance efficiency and reduce costs[95] - The company aims to develop a diversified condiment product structure, focusing on expanding its horizontal and vertical condiment industry chain[97] - The company expanded and developed new products such as hot pot base and oyster sauce under its "grand brand, big single product, national product, and wide-ranged product" strategy[85] - The company remains committed to natural, healthy, and nutritious products, adhering to food safety regulations and integrating food technology with production practices[76][83] - The company focused on developing high-end cooking wine products with good value for money to compensate for other product categories[128] Financial Position and Liabilities - Gearing ratio increased from 273.8% in 2022 to 328.1% in 2023, reflecting higher net debt relative to total equity[18][19] - Total borrowings increased from RMB2,211.6 million in 2022 to RMB2,808.5 million in 2023[61] - Cash and cash equivalents increased to RMB10.1 million as of 31 December 2023, up from RMB9.8 million in 2022[63][67] - Interest-bearing bank and other borrowings totaled RMB2,808.5 million as of 31 December 2023, compared to RMB2,211.6 million in 2022[63][67] - The gearing ratio of the Group was 328.1% as of 31 December 2023, representing a 19.8% increase over 2022[70][80] - Capital commitment as of 31 December 2023 amounted to RMB19.7 million, up from RMB14.8 million in 2022[71] - Inventories with a carrying amount of RMB487.3 million, property, plant and equipment with a carrying amount of RMB189.3 million, and leasehold land with a carrying amount of RMB47.0 million were pledged to secure general banking facilities[73] - Total assets decreased to RMB 1,113,188 thousand in 2023 from RMB 1,123,077 thousand in 2022, a decrease of approximately 0.9%[102] - Total liabilities increased to RMB 3,446,730 thousand in 2023 from RMB 2,931,240 thousand in 2022, an increase of approximately 17.6%[102] - Total deficit increased to RMB 2,333,542 thousand in 2023 from RMB 1,808,163 thousand in 2022, an increase of approximately 29.1%[102] Market Strategy and Distribution - The company expanded its distribution network to fourth and fifth-tier cities across 30 provinces, autonomous regions, and municipalities[128] - The company classified distributors into core and non-core categories in 2023, focusing resources on terminal construction and market development to cultivate all distributors into core distributors[164][165] - The company launched a 2.5L Lao Heng He Huadiao Wine promotion in collaboration with East Buy Holding Limited and multiple influencers to build presence on the Douyin platform[107] - The Group's market strategy in 2023 included a full-scale upgrade of brand and product positioning, logo image, marketing slogans, and product packaging[85] Risk Management and Internal Controls - The company faces risks from significant increases in production costs, including agricultural and sideline product prices, packaging costs, and labor costs[130] - The company faces risks from changes in consumer education, awareness, and habits in the consumption of cooking wine products[130] - The company faces risks from increased market expansion costs and sales expenses compared to expectations[130] - The company faces risks from new products potentially not being recognized by the market in the short term[130] - The company's risk management and internal control systems aim to manage, rather than eliminate, risks of not achieving business objectives, providing reasonable but not absolute assurance[186] - The Board is responsible for maintaining an effective risk management and internal control system, with clear responsibilities, procedures, and high transparency[197] - The Company has established a policy for handling inside information to ensure timely public disclosure and confidentiality before full disclosure[197] Corporate Governance and Committees - The Audit Committee held four meetings in 2023, with all members attending either in person or via teleconference[176] - The Nomination Committee, established in 2013, consists of three members and is responsible for reviewing the Board's structure and composition annually[178][179] - The Audit Committee recommended the re-appointment of Grant Thornton as the external auditor for the financial year ending December 31, 2024, subject to shareholder approval[182] - The Nomination Committee held one meeting in 2023 to review and consider the diversity, structure, size, and composition of the Board, as well as the independence of independent non-executive Directors, and made relevant recommendations to the Board[191] - The remuneration paid or payable to the Company's external auditors, Grant Thornton Hong Kong Limited, for audit services in 2023 was RMB 2,040,000[194] - Shareholders have the right to attend and vote at general meetings, and all resolutions will be voted on, with results published on the Company's and Stock Exchange's websites[199] Food Safety and Quality Control - The company strengthened its food safety control system, implemented a digital traceability system, and established emergency response plans for food safety incidents[93] - The company strengthened its food safety technology protection capability by deepening integration and collaboration between industry, academia, and research facilities[111] - The company upgraded its experimental equipment and made sustained technological breakthroughs to enhance technical support[111] - The company built a whole-process digital food safety traceability system to implement code control of each product[111] - The company formulated emergency plans and disposal plans for food safety accidents to improve and enhance the quality system[111] Investor Relations and Shareholder Communication - The company actively implemented investor relations measures in 2023 and will continue to ensure effective shareholder communication and transparency[167] - The Board is responsible for presenting a balanced and clear assessment of the Group's performance and prospects, with management providing all relevant information to the Board[187] Other Financial Metrics - Other income and gains decreased by 85.5% from RMB 20.7 million in 2022 to RMB 3.0 million in 2023, mainly due to the absence of compensation income and reduced government subsidies[22] - Financing costs decreased by 4.4% from RMB203.9 million in 2022 to RMB194.9 million in 2023 due to the full amortization of finance lease interest expenses[32] - Loss before income tax increased by 7.8% from RMB486.3 million in 2022 to RMB524.3 million in 2023[34] - Net loss attributable to ordinary equity holders increased by 7.8% from RMB486.3 million in 2022 to RMB524.3 million in 2023[35] - Loss per share increased from RMB0.84 in 2022 to RMB0.91 in 2023[36] - Net loss ratio increased from 179.1% in 2022 to 202.6% in 2023, a rise of 13.1%[37] - Other income and gains decreased by 85.5% from RMB20.7 million in 2022 to RMB3.0 million in 2023[40] - Trade receivables increased slightly from RMB20.5 million in 2022 to RMB20.8 million in 2023, with turnover days increasing from 32 to 33 days[49] - Inventories decreased from RMB646.7 million in 2022 to RMB645.9 million in 2023, with base wine inventory decreasing from RMB534.7 million to RMB465.3 million[50][51] - Trade receivables increased from RMB 20.5 million as of December 31, 2022, to RMB 20.8 million as of December 31, 2023, with turnover days increasing from 32 days to 33 days[165]

Financial Performance - For the fiscal year ending December 31, 2023, revenue was RMB 258.8 million, a decrease of 4.7% compared to RMB 271.6 million in 2022[3]. - Gross profit for the same period was RMB 74.1 million, down 0.9% from RMB 74.8 million in 2022[3]. - The net loss attributable to ordinary equity holders was RMB 524.3 million, an increase of 7.8% from RMB 486.3 million in 2022[3]. - Total comprehensive expenses for the year amounted to RMB 525.4 million, compared to RMB 490.3 million in 2022[5]. - The company reported a basic and diluted loss per share of RMB 0.91, compared to RMB 0.84 in the previous year[5]. - Other income and gains decreased significantly from RMB 20.7 million in 2022 to RMB 3.0 million in 2023[5]. - Selling and distribution expenses increased from RMB 74.7 million in 2022 to RMB 95.2 million in 2023[5]. - Administrative expenses rose from RMB 44.4 million in 2022 to RMB 47.1 million in 2023[5]. - The company did not report any income tax expenses for the year[5]. - The group reported a net loss of approximately RMB 524,316,000 for the year, compared to a net loss of RMB 486,339,000 in 2022, reflecting ongoing financial difficulties[16]. - The group reported revenue from customer contracts of RMB 258,784,000 in 2023, a decrease from RMB 271,600,000 in 2022, representing a decline of approximately 4.7%[26]. - The group incurred overdue tax penalties of RMB 37,787,000 in 2023, compared to RMB 56,206,000 in 2022, showing a reduction of about 32.8%[30]. - The group recognized sales revenue of RMB 32,736,000 from contract liabilities at the beginning of the reporting period in 2023, down from RMB 34,955,000 in 2022, a decrease of approximately 6.4%[26]. - The group reported a pre-tax loss of RMB 3,038,000 in 2023, compared to a loss of RMB 2,184,000 in 2022, reflecting ongoing challenges[33]. - The company reported a loss before tax of RMB 524,316,000 for the year 2023, compared to a loss of RMB 486,339,000 in 2022[40]. - The net loss attributable to ordinary shareholders increased by 7.8% from RMB 486.3 million in 2022 to RMB 524.3 million in 2023[100]. Assets and Liabilities - Total assets as of December 31, 2023, amounted to RMB 3,438,026 thousand, compared to RMB 2,872,714 thousand in 2022, reflecting an increase of approximately 19.6%[6]. - Current liabilities increased from RMB 50,020 thousand in 2022 to RMB 57,268 thousand in 2023, representing a growth of about 14.5%[6]. - The company's total liabilities reached RMB 2,333,542 thousand in 2023, up from RMB 1,808,163 thousand in 2022, indicating an increase of approximately 29%[7]. - The company's total non-current assets were RMB 309,846 thousand in 2023, down from RMB 319,175 thousand in 2022, indicating a decrease of about 2.5%[6]. - The company's total equity was negative at RMB (2,335,309) thousand in 2023, compared to RMB (1,809,930) thousand in 2022, indicating a decline in equity position[7]. - The company's inventory decreased slightly from RMB 646,740 thousand in 2022 to RMB 645,899 thousand in 2023, a reduction of approximately 0.2%[6]. - Accounts receivable increased from RMB 20,484 thousand in 2022 to RMB 20,775 thousand in 2023, representing a growth of about 1.4%[6]. - The company's total borrowings reached RMB 2,808,480,000, an increase from RMB 2,211,564,000 in 2022, highlighting rising debt levels[17]. - Approximately RMB 1,863,275,000 of the borrowings were overdue, compared to RMB 1,671,025,000 in 2022, indicating worsening liquidity issues[17]. - The balance of inventories as of December 31, 2023, was RMB 487,255,000, compared to RMB 556,115,000 in 2022, indicating a decline of about 12.4%[61]. - The total amount of other receivables increased to RMB 38,345,000,000 in 2023 from RMB 26,618,000,000 in 2022, marking an increase of approximately 44%[52]. - The expected credit loss provision for other receivables was RMB 3,704,000,000 in 2023, compared to RMB 1,612,000,000 in 2022, indicating a significant increase in provisions[52]. Cash Flow and Financing - Cash and cash equivalents as of December 31, 2023, were RMB 10,124 thousand, compared to RMB 9,806 thousand in 2022, reflecting a slight increase of about 3.2%[6]. - The group's cash net amount was approximately RMB 102,215,000, a decrease from RMB 226,802,000 in 2022, indicating a significant cash flow challenge[16]. - The group has received commitments for new credit facilities of approximately RMB 150,000,000 for the next twelve months, maintaining financial support from major lenders[22]. - The group is actively negotiating the renewal of short-term loans and seeking new financing options to address upcoming financial obligations[22]. - The board believes that the group will have sufficient cash resources to meet its operational and financial obligations for the next twelve months[20]. - The company plans to further diversify its financing channels to improve its capital structure[115]. - The interest expense on overdue borrowings was approximately RMB 226,079,000 as of December 31, 2023, up from RMB 179,357,000 in 2022, representing a rise of approximately 26.0%[62]. Operational Performance - The company achieved a market share of 17.1% in the offline sales market for liquor in 2023, maintaining the top position in the industry for seven consecutive years[72]. - The liquor series products continued to be the main source of revenue, accounting for approximately 66.4% of total revenue in 2023[82]. - The company is focusing on expanding its market presence in lower-tier cities across 30 provinces, autonomous regions, and municipalities[82]. - The company plans to enhance product quality, control costs, and expand scale effects to reduce product costs[82]. - The company is actively monitoring potential risk factors that could impact financial performance, including rising production costs and changes in consumer behavior[84]. - The company aims to develop a diversified flavor product manufacturing chain centered around liquor products[83]. - The company faces risks related to increased market expansion costs, sales expenses, and potential market acceptance of new products[85]. - The group maintains a consumer-centric approach, emphasizing quality and innovation to meet diverse consumer needs for healthy and nutritious products[124]. - The group plans to strengthen the promotion of product quality, unique craftsmanship, and application scenarios to enhance market share in the liquor industry[125]. - The group has demonstrated significant competitive advantages in technology, financial strength, and market influence, positioning the "Lao Heng He" brand for broader development opportunities[126]. Corporate Governance and Future Outlook - The independent auditor's report indicates significant uncertainty regarding the company's ability to continue as a going concern[147]. - The company acknowledges the importance of good corporate governance and has adhered to the corporate governance code as of December 31, 2023[143]. - The outlook for 2024 indicates a recovery in the national economy, but the flavoring industry faces challenges such as weak demand and increased market competition[122]. - The company will suspend shareholder registration procedures from May 23, 2024, to May 28, 2024, for the upcoming annual general meeting[141]. - The annual report for the year 2023 will be sent to shareholders by April 30, 2024, or earlier[150].

Market Performance - In the first half of 2023, the market share of the Group's offline sales was 18.6%, maintaining its position as the industry leader for six consecutive years[13]. - The overall consumer market showed positive momentum from January to March 2023, but sales slowed down from April to June 2023, resulting in longer inventory turnover[14]. - The Group faced challenges in the condiment industry due to rising raw material costs, intensified competition, and weak consumption, leading to a pessimistic outlook for the market[14]. Sales and Revenue - In the first half of 2023, the Group achieved sales revenue of approximately RMB 127.8 million, representing a decrease of approximately RMB 10.7 million, or approximately 7.7% compared to the same period in 2022[27]. - Revenue for the six months ended June 30, 2023, was RMB 127,791,000, a decrease of 7.3% compared to RMB 138,455,000 for the same period in 2022[183]. - Revenue from cooking wine products decreased by 9.2% from RMB 89.6 million to RMB 81.4 million due to intensified competition and market saturation[51]. - Revenue from soy sauce products increased by 6.3% from RMB 12.7 million to RMB 13.4 million as a result of increased promotional efforts[52]. - Revenue from rice vinegar and other products decreased by 9.0% from RMB 36.2 million to RMB 32.9 million due to adjustments in the product portfolio[55]. Profitability and Loss - The gross profit margin decreased from approximately 37.3% for the six months ended June 30, 2022, to approximately 34.6% for the six months ended June 30, 2023[28]. - The Group's gross profit decreased by 14.4% from approximately RMB 51.6 million to approximately RMB 44.2 million, with a gross profit margin decline from 37.3% to 34.6%[58]. - The loss attributable to ordinary equity holders for the six months ended June 30, 2023, was approximately RMB 244.9 million, an increase of about 14.2% compared to RMB 214.5 million in the same period of 2022[32]. - Loss before income tax increased by 14.2% from approximately RMB 214.5 million to approximately RMB 244.9 million[68]. - Basic loss per share increased from RMB 0.37 to RMB 0.42, reflecting the increase in net loss[70]. Marketing and Brand Development - The Group launched a promotional campaign called the "Hundred-Day Campaign" to boost sales amid declining purchasing power and slower sales[14]. - The Group engaged a professional marketing team to upgrade its brand and product positioning, enhancing the brand image of "Lao Heng He" among consumers[15]. - In June 2023, the Group became the title sponsor of the "2023 Wu Xing New Youth City Super Music Festival" to enhance brand awareness and attract younger consumers[16]. - The Group organized a new product launch event themed "Centennial Lao Heng He, Taste of Exquisite Chinese Cooking Wine" to boost distributor confidence[16]. Product Development and Innovation - The Group successfully developed and launched six new products in the first half of 2023, while improving the technology of the new production line for soy sauce and soybean paste[21]. - The Group intends to introduce new products and production lines that align with consumer needs in the PRC market[103]. - The Group emphasizes health, safety, and flavor as core elements of innovation in the condiment cooking wine industry[104]. Financial Management - Selling and distribution expenses increased by 33.7% from approximately RMB 34.8 million to approximately RMB 46.5 million, raising the percentage of revenue from 25.1% to 36.4%[60]. - Other income and gains decreased by 53.0% from approximately RMB 2.7 million to approximately RMB 1.3 million, primarily due to reduced interest income and government grants[59]. - The gearing ratio increased from 242.6% to 297.8%, indicating a rise in financial leverage[49]. - Cash and cash equivalents decreased to approximately RMB 2.2 million as of June 30, 2023, down from RMB 9.8 million as of December 31, 2022[92]. Strategic Initiatives - The Group's market strategy focused on expanding its distributor network in fourth- and fifth-tier cities across 30 provinces, autonomous regions, and municipalities in China[28]. - The company plans to further develop its horizontal and vertical condiment industry chain, aiming to become a diversified condiment manufacturer with cooking wine as the leading product[32]. - The company is accelerating the development of new retail sales channels, including online platforms and community e-commerce, to enhance promotional coverage[43]. Human Resources - As of June 30, 2023, the group had a total of 561 full-time employees, an increase from 535 employees as of December 31, 2022[119]. - Employee costs for the six months ended June 30, 2023, were RMB 21.3 million, a slight decrease from RMB 22.1 million for the same period in 2022[119]. Corporate Governance - The company targets to appoint at least one female director by December 31, 2024, to improve gender diversity on the board[117]. - The company has undergone a change in non-executive directors, with Mr. Wu Hongping appointed as a non-executive director effective January 10, 2023[147]. Shareholding Structure - The overall shareholding structure indicates significant control by a few major shareholders, with the largest holding nearly 60% of the issued share capital[158]. - As of June 30, 2023, Chen Weizhong holds a controlled corporation interest of 283,018,750 shares, representing approximately 48.90% of the company's issued share capital[154].