Financial Performance - Revenue for the six months ended June 30, 2022, was RMB 5,814,428, an increase of 2.01% from RMB 5,699,494 in 2021[4] - Gross profit for the same period was RMB 725,479, representing a significant increase of 84.67% compared to RMB 393,215 in 2021[4] - Operating profit reached RMB 445,206, up 99.00% from RMB 223,651 in the previous year[4] - Profit before income tax was RMB 452,654, an increase of 106.67% from RMB 219,715 in 2021[4] - Profit and total comprehensive income for the period was RMB 364,695, compared to RMB 174,707 in 2021, marking a growth of 108.67%[4] - Earnings per share attributable to owners of the Company increased to RMB 0.0438 from RMB 0.0249, reflecting a growth of 75.50%[4] Assets and Equity - Total assets as of June 30, 2022, amounted to RMB 5,157,297, an increase from RMB 4,719,159 at the end of 2021[6] - Current assets increased to RMB 2,654,513 from RMB 2,197,648, showing a growth of 20.73%[6] - Total equity attributable to owners of the Company was RMB 3,505,411, up from RMB 3,277,963 at the end of 2021[8] - Non-controlling interests increased to RMB 228,660 from RMB 214,059, indicating a growth of 6.25%[8] - As of June 30, 2022, total equity increased to RMB 3,734,071,000, up from RMB 3,492,022,000 at the beginning of the year, reflecting a growth of approximately 6.9%[10] Cash Flow and Financing - The net cash outflow from operating activities for the six months ended June 30, 2022, was RMB 139,002,000, an improvement compared to RMB 207,355,000 in the same period of 2021[12] - Cash and cash equivalents decreased to RMB 792,185,000 as of June 30, 2022, from RMB 1,000,977,000 at the beginning of the year, indicating a reduction of approximately 21%[12] - The net cash outflow from investing activities was RMB 62,666,000, significantly lower than RMB 229,600,000 in the previous year, showing a reduction of about 72.7%[12] - Proceeds from borrowings amounted to RMB 180,831,000, while repayments totaled RMB 100,000,000, resulting in a net inflow from financing activities of RMB 7,124,000[12] - The Group's total liabilities decreased from RMB 416,302,000 as of December 31, 2021, to RMB 350,647,000 as of June 30, 2022[72] Research and Development - Research expenses significantly increased to RMB 151,496 in the first half of 2022, compared to RMB 22,607 in the same period of 2021, indicating a focus on innovation and development[23][24] - The Group's commitment to research and development is expected to enhance its competitive position in the cornstarch and corn-refinery industry[96] - The business performance of new biobased materials was stable, with plans to allocate more resources to R&D for better production experience[103] Market Performance - Total sales to external customers for the six months ended June 30, 2022, amounted to RMB 5,814,428, a decrease of 6.5% compared to RMB 5,699,494 for the same period in 2021[17] - The domestic market showed strong demand for lysine products, supported by a reduction in global supply and robust animal feed market demand[98] - The Group faced challenges in the starch-based sweetener segment due to excessive production capacity in the PRC, but efforts were made to expand market share[98] - Modified starch sales volume significantly decreased due to city sewage reduction measures impacting production[98] Expenses and Cost Management - Unallocated expenses for the first half of 2022 were RMB 64,840, compared to RMB 182,161 in the same period of 2021, showing improved cost management[17] - Distribution expenses decreased to RMB 85,501,000 from RMB 91,532,000 due to the use of bulk cargo delivery and more customers picking up goods[125] - Administrative expenses increased to RMB 104,325,000 from RMB 97,934,000, primarily due to higher staff costs and government levies[130] - Staff costs for the six months ended June 30, 2022, were approximately RMB 125,578,000, up from RMB 109,981,000 in 2021, reflecting an increase in workforce[146] Taxation - Current income tax for the six months ended June 30, 2022 was RMB 104,378,000, significantly higher than RMB 32,079,000 in 2021, reflecting a substantial increase in tax expenses[27] - The Group's effective tax rate for PRC subsidiaries was 25%, with one subsidiary benefiting from a preferential rate of 15%[27] Dividends - The final dividend for 2022 was recorded at RMB 34,882,000, compared to RMB 44,941,000 for 2021, indicating a decrease of approximately 22.3%[10] - The Board did not recommend the payment of an interim dividend for the six months ended 30 June 2022, while a final dividend of HK0.69 cents per share was declared for 2021[46] Governance and Compliance - The Company complied with the Corporate Governance Code during the six months ended 30 June 2022, except for the absence of Mr. Tian Qixiang at the annual general meeting[164] - The Audit Committee has reviewed the unaudited condensed consolidated interim financial statements for the six months ended 30 June 2022[168] - The interim financial statements reflect the Company's commitment to maintaining high standards of governance and transparency[168]

Revenue and Business Segments - The Group's revenue is derived from two business segments: upstream products and fermented and downstream products, with production activities conducted in the People's Republic of China (PRC) [8]. - The Group's principal activities include investment holding and the manufacture and sale of cornstarch, lysine, starch-based sweeteners, modified starch, and ancillary corn-based products [7]. - The Group's subsidiaries are primarily engaged in the manufacture and sale of various corn-based products, contributing to its overall revenue [7]. - The Group achieved a turnover of more than RMB 11 billion for the first time in 2021 [46]. - The Group recorded total revenue of approximately RMB11,639,315,000, a significant increase from RMB8,892,261,000 in 2020, representing a growth of 30.9% [56]. - Revenue from upstream products increased by 27.3% to RMB8,576,482,000, with a gross profit margin of 5.8%, down from 6.2% in 2020 [58]. - Revenue from lysine products increased from RMB1,442,844,000 to RMB2,224,230,000, with a sales volume increase of 16.2% to about 320,638 tonnes [61]. - Revenue from fermented and downstream products rose substantially to RMB3,062,833,000, compared to RMB2,153,751,000 in 2020 [60]. - Revenue of starch-based sweetener increased to approximately RMB519,544,000, up from RMB357,781,000 in 2020, with an average selling price of RMB2,650 per tonne and sales volume of 196,049 tonnes [64]. - Revenue of modified starch decreased to RMB267,463,000 from RMB312,025,000, primarily due to reduced production from sewage disposal control [64]. - Revenue of other fermented products rose by 25.5% to approximately RMB51,596,000, compared to RMB41,101,000 in 2020 [64]. Financial Performance - Gross profit increased by 70.1% to approximately RMB952,211,000, up from RMB559,775,000 in 2020 [56]. - Profit after taxation rose significantly to RMB402,830,000, compared to RMB207,039,000 in 2020 [56]. - Basic earnings per share increased to RMB0.0577 based on a weighted average of 5,994,132,000 ordinary shares, up from RMB0.0317 based on 5,995,591,000 shares in 2020 [56]. - Distribution expenses decreased significantly to RMB164,934,000 from RMB184,229,000, due to increased use of bulk cargo delivery [66]. - Administrative expenses rose to RMB192,013,000 from RMB166,018,000, mainly due to higher staff costs and depreciation [68]. - Research expenses surged to RMB199,648,000 from RMB28,899,000, focusing on production technology innovation and corn-derivative products [69]. - Other net income increased to RMB114,923,000 from RMB80,871,000, with significant contributions from government grants and gains on sales of scrap materials [72]. - The Group's current ratio improved to 2.5 in 2021 from 1.9 in 2020, while the quick ratio increased to 1.8 from 1.2 [78]. - The gearing ratio decreased to 2.4% in 2021 from 2.8% in 2020, indicating a reduction in leverage [78]. - Total shareholder return rose significantly to 41.7% in 2021, compared to 13.3% in 2020 [78]. Dividends and Shareholder Information - The proposed final dividend is HK0.69 cents per share for the year ended 31 December 2021, subject to approval at the upcoming annual general meeting [12]. - As of December 31, 2021, Mr. Tian Qixiang holds 3,705,385,194 ordinary shares of the Company, representing 61.81% of the total shareholding [15]. - The total number of shares in issue of the Company as at December 31, 2021, is 5,994,132,043 [25]. - The Company has maintained appropriate directors and officers liability insurance for indemnifying against losses from relevant legal actions [23]. - The indemnity provision for Directors and officers was in force during the year and remains effective as of the date of the annual report [23]. - The interests of Directors are recorded in accordance with the Securities and Futures Ordinance [15]. - The Board intends to maintain a balance between dividend distribution and adequate cash flow to meet working capital requirements [100]. Corporate Governance and Compliance - The Company has complied with the Corporate Governance Code during the year under review, except for the absence of the chairman at the 2021 AGM due to other business engagements [197]. - The Company has adopted a Securities Dealing Code that applies to all Directors and employees, ensuring compliance throughout the year [199]. - The Board is committed to maintaining high corporate governance standards, which are crucial for future success [195]. - The effectiveness of the Group's internal control and risk management systems has been evaluated by the Board [189]. - The Company has ensured compliance with legal and regulatory requirements throughout the year [189]. Environmental and Sustainability Practices - The Group is committed to complying with all environmental policies and relevant laws, and has an internal laboratory to ensure product quality meets national standards, including food safety standards [10]. - The company recognizes its corporate social responsibility and aims to create value for stakeholders beyond monetary terms, incorporating ESG principles into business operations [108]. - The company is focused on enhancing its research and development capabilities to support sustainable growth [110]. - The company is committed to using water responsibly and has its own reclaimed water treatment facilities to minimize environmental impact [148]. - The Group has implemented a perpetual monitoring system for sewage disposal, reported to local environmental protection bureau [146]. - The Group did not produce any hazardous waste in its production plants during the year [147]. - The Group is committed to using water responsibly and has its own reclaimed water treatment facilities to minimize environmental impact [148]. - The company encourages the use of reusable packaging materials to align with sustainability practices [152]. - The company has not set any specific targets for reducing emissions or waste, primarily due to the variability in product mix and production methods [150]. Employee and Stakeholder Relations - The Group maintains key relationships with major stakeholders, including employees, customers, and suppliers, as outlined in the Environmental and Sustainability Report [9]. - As of December 31, 2021, the Group had approximately 2,326 full-time staff, with total staff costs of approximately RMB229,470,000, an increase from RMB190,457,000 in 2020 [74]. - The male to female employee ratio is 1,932 males to 391 females, indicating a gender distribution of approximately 83% male and 17% female [126]. - The employee turnover rate for males was 6.7% in 2021, an increase from 5.2% in 2020 [126]. - The Group's whistleblowing policy provides a secure reporting channel for suspected misconduct, enhancing accountability [124]. - The company has established trust with suppliers, primarily consisting of farmers, cooperatives, agents, and traders in the PRC [133]. Risk Management - The Risk Review Report provides a comprehensive review of principal risks and uncertainties facing the Group [9]. - The management uses a risk scorecard to rank and compare identified risks, presenting them to the Board for annual review [169]. - The executive management team is responsible for managing risks and ensuring appropriate control procedures are in place [170]. - The Group invested in high-efficiency equipment to effectively reduce energy consumption as part of its commitment to carbon footprint neutralization [174]. - The company is monitoring commodity price movements closely due to the volatility in cornstarch and corn kernel prices, which may lead to significant losses if costs cannot be passed to customers [182]. Research and Development - The management team expects to start trial production of lactic acid and polylactic acid in the second and fourth quarters of 2022 respectively [48]. - The company plans to adjust production plans and product mix in response to market conditions to maintain profitability [57]. - The Group invests significantly in research and development for new products and production methods, aiming to improve production efficiency and control costs [157]. - The Group plans to register its research and development results with the National Intellectual Property Administration in China to protect its innovations [157]. - The company is conducting market research and feasibility studies for potential new product projects to promote innovation [182].

Financial Compliance and Reporting - The condensed consolidated financial statements were reviewed and found to be in compliance with HKAS 34, with no significant issues identified[9]. - The financial statements include the condensed consolidated statement of financial position as of June 30, 2021, and the related profit or loss and other comprehensive income for the six-month period[5]. - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, focusing on inquiries and analytical procedures[5]. - The company is responsible for the preparation and presentation of the financial statements, ensuring they meet the relevant provisions of the listing rules[5]. - The report covers the interim financial information for the six-month period ending June 30, 2021, as required by the Hong Kong Stock Exchange[5]. - The review scope was less extensive than a full audit, which limits the assurance obtained[5]. - The financial position and performance metrics for the interim period are detailed in the financial statements, which are included in the report[5]. - The report is intended solely for the board of directors and does not assume responsibility to any other parties[9]. - The company’s financial reporting adheres to the standards set by the Hong Kong Institute of Certified Public Accountants[5]. - The review was completed by SHINEWING (HK) CPA Limited, with the conclusion that the financial statements are materially accurate[9]. Financial Performance - Revenue for the six months ended June 30, 2021, was RMB 5,699,494, an increase of 48.0% compared to RMB 3,850,007 in 2020[11]. - Gross profit for the same period was RMB 393,215, representing a 37.9% increase from RMB 285,199 in 2020[11]. - Operating profit rose to RMB 223,651, up 66.4% from RMB 134,371 in the previous year[11]. - Profit attributable to owners of the company was RMB 149,223, an increase of 45.0% compared to RMB 102,728 in 2020[11]. - Basic and diluted earnings per share for the period were RMB 0.0249, compared to RMB 0.0171 in 2020, reflecting a 45.0% increase[11]. - Profit before income tax for the six months ended June 30, 2021, was RMB 219,715,000, up from RMB 138,928,000 in 2020, reflecting a growth of approximately 58.0%[24][25]. - Profit after taxation rose by 55.5% to approximately RMB 174,707,000[83]. Assets and Liabilities - Total assets as of June 30, 2021, amounted to RMB 4,891,337, a rise from RMB 4,567,492 at the end of 2020[13]. - Current assets increased to RMB 2,400,750, compared to RMB 2,063,831 at the end of 2020, reflecting a growth of 16.3%[13]. - Non-current liabilities totaled RMB 358,698, slightly decreased from RMB 361,851 at the end of 2020[15]. - As of June 30, 2021, total equity amounted to RMB 3,263,899,000, an increase from RMB 3,134,133,000 as of January 1, 2021[17]. - Total trade receivables as of June 30, 2021, were RMB 200,232,000, up from RMB 196,187,000 as of December 31, 2020, showing a growth of about 2%[54]. - The Group's total borrowings as of June 30, 2021, were RMB 398,758,000, a significant increase from RMB 126,849,000 as of December 31, 2020[72]. Cash Flow and Investments - The net cash from operating activities for the six months ended June 30, 2021, was a negative RMB 207,355,000, compared to a positive RMB 141,204,000 in the same period of 2020[19]. - Net cash used in investing activities was RMB 229,600,000 for the six months ended June 30, 2021, up from RMB 126,040,000 in 2020[19]. - Payments for property, plant, and equipment amounted to RMB 221,988,000 for the six months ended June 30, 2021, compared to RMB 170,281,000 in 2020[19]. - The company received government grants totaling RMB 19,900,000 during the six months ended June 30, 2021, compared to RMB 800,000 in 2020[19]. Market and Operational Insights - The company adjusted selling prices to reflect the increase in corn kernel costs due to reduced supply and strong market demand from the pig-farming industry[79]. - Strong demand for lysine products from the pig-farming industry positively impacted the performance of fermented and downstream products[81]. - The business performance of modified starch was stable, and the performance of biobased materials was satisfactory during the review period[82]. - The construction of new lactic acid and polylactic acid production facilities is on track, with trial runs expected in the fourth quarter of this year[77]. - The management team maintains a cautiously optimistic outlook for the second half of 2021, despite facing excessive supply and keen competition in the industry[77]. Corporate Governance and Compliance - The company complied with the Corporate Governance Code, except for the absence of Mr. Tian Qixiang at the 2021 annual general meeting due to other business engagements[137]. - All directors confirmed compliance with the Securities Dealing Code throughout the review period[141]. - The company has adopted a Securities Dealing Code that is no less exacting than the Model Code[141]. - The company is audited by SHINEWING (HK) CPA Limited[144].

Financial Performance - The Group recorded total revenue of approximately RMB8,892 million for the year, a 31.7% increase from RMB6,750 million in 2019 [76]. - Gross profit increased significantly by 58.6% to approximately RMB560 million, up from RMB353 million in 2019 [76]. - Profit after taxation rose to RMB207 million, compared to RMB98 million in 2019 [76]. - Basic earnings per share increased to RMB0.0317 based on a weighted average of 5,995,591,000 ordinary shares [76]. - Revenue of upstream products increased significantly by 26.7% to RMB6,739 million (2019: RMB5,317 million) with a gross profit margin of 6.2% [78]. - Revenue of lysine products surged by 92.8% to approximately RMB1,443 million (2019: RMB749 million), with sales volume increasing by 115.2% in overseas markets and 74.9% in domestic markets [87]. - Revenue of starch-based sweetener was approximately RMB358 million (2019: RMB340 million) [87]. - Revenue of modified starch was RMB312 million (2019: RMB305 million) [87]. - The percentage of corn kernel cost to total cost of sales increased to about 87.3% (2019: 83.9%) due to significant market price increases [87]. - Distribution expenses increased to RMB160,786,000 in 2020 from RMB134,098,000 in 2019, representing a growth of approximately 19.9% [89]. - Administrative staff costs rose to RMB93,835,000 in 2020, up from RMB73,729,000 in 2019, an increase of about 27.3% [89]. - The Group's total staff costs, including Directors' emoluments, were approximately RMB190,000,000 in 2020, down from RMB208,000,000 in 2019, a decrease of about 8.7% [99]. - The gearing ratio improved to 2.8% in 2020 from 3.4% in 2019, indicating a stronger capital structure [103]. - The total shareholder return was 13.3% in 2020, a significant recovery from -8.3% in 2019 [103]. Dividends and Shareholding - The Board recommended a final dividend of HK0.90 cents per share for the year ended 31 December 2020, pending approval at the upcoming annual general meeting [12]. - As of December 31, 2020, Mr. Tian Qixiang holds 3,705,385,194 ordinary shares of the Company, representing 61.81% of the total shareholding [19]. - Merry Boom Group Limited holds 3,705,385,194 shares, representing 61.81% of the issued share capital [40]. - The total number of shares issued by the Company as of December 31, 2020, is 5,994,132,043 [19]. - The Company has adopted a Share Option Scheme to incentivize and retain key employees and management [27]. - The maximum number of shares that may be issued upon the exercise of all outstanding options under the Share Option Scheme must not exceed 30% of the number of issued Shares [33]. - The total number of Shares that may be allotted and issued upon the exercise of all options under the Share Option Scheme must not exceed 10% of the issued Shares as at the date of approval of the Share Option Scheme [33]. - The total number of Shares issued to each grantee in any 12-month period shall not exceed 1% of the issued Shares [33]. - Any grant of options to a substantial shareholder or an independent non-executive director in excess of 0.1% of the issued Shares or with an aggregate value exceeding HK$5 million requires shareholders' approval [33]. - As of December 31, 2020, no share options had been granted under the Share Option Scheme [37]. Environmental and Sustainability Practices - The Group is committed to complying with all environmental policies and relevant laws, and has established an internal laboratory to ensure product quality meets national standards, including food safety standards [10]. - The Group's environmental and sustainability report reviews compliance with laws and regulations that significantly impact the Group and its relationships with major stakeholders [9]. - The company maintains a commitment to meet all environmental standards set by the PRC government, with no material incidents of noncompliance reported during the year [145]. - The company utilizes methane generated from sewage treatment to produce steam for internal use, contributing to cost reduction and environmental protection [145]. - The Group's fresh water consumption increased to 2,095,597 m³ in 2020, up from 1,194,022 m³ in 2019, with an intensity index of 156 compared to 106 in 2019 [167]. - Total GHG emissions for 2020 were 1,238,861 tonnes of CO2e, an increase from 813,454 tonnes in 2019, with a GHG emission intensity index of 100 [167]. - The Group produced no hazardous waste in its production plants during the year under review [160]. - Non-hazardous waste produced increased to 70,717 tonnes in 2020, compared to 40,778 tonnes in 2019 [167]. - The Group's packaging material usage was 7,893 tonnes in 2020, with 20% of total packaging materials being reused, down from 23% in 2019 [167]. Corporate Governance - The Directors confirmed their independence in accordance with the Listing Rules, ensuring governance standards are upheld [12]. - The Group has established a corporate governance framework that complies with the applicable code provisions, ensuring accountability and integrity to stakeholders [197]. - The Board is composed of four executive Directors and three independent non-executive Directors, ensuring accountability to Shareholders [199]. - The Board formulated long-term and short-term strategic and business plans during the year [200]. - Corporate governance policies and practices were reviewed and monitored by the Board to ensure compliance with the CG Code [200]. - The effectiveness of the Group's internal control and risk management systems was evaluated by the Board [200]. - Integrity of financial information was ensured by the Board, highlighting a commitment to transparency [200]. Risk Management - The executive management team is responsible for managing risks and ensuring appropriate control procedures are in place [184]. - The Board reviews identified risks and mitigation tools annually, ensuring effective risk management [184]. - Monthly management reports on operations, market, and safety issues are circulated to keep management alert to potential risks [184]. - The company faces a lack of growth dynamics in the PRC, with challenges of oversupply and weak demand for cornstarch and related products intensifying over the year [189]. - The company has observed significant price volatility in cornstarch and corn kernel, which may lead to substantial losses if increased costs cannot be passed to customers promptly [191]. - The company is required to maintain a strong balance sheet and sufficient banking facilities to mitigate risks associated with external financing and economic conditions [191]. - The company emphasizes strict quality control and product testing to ensure compliance with customer and national standards, minimizing the risk of negative impacts on brand reputation [191]. Employee Relations and Training - The Group recognizes the health and safety of its employees as a core aspect of long-term success, implementing appropriate controls and training to minimize occupational injuries [116]. - The number of employees increased to 2,313 in 2020 from 2,300 in 2019, with a turnover ratio of 5.2% for males and 0.7% for females [131]. - The average training hours per employee increased to 14.8 hours per month in 2020 from 11.9 hours in 2019 [131]. - On-the-job training is provided to enhance employees' skills and capabilities, ensuring compliance with health and safety regulations [116]. - Training events and drills are mandatory, with results included in staff appraisal records, covering topics such as fire prevention, hazardous chemical handling, and occupational disease prevention [124]. - The Group encourages communication at all levels to achieve positive workplace relations, which are deemed mutually beneficial for both the Group and its employees [116]. Strategic Initiatives - The Group aims to improve production efficiency to maintain minimal production costs and increase profitability despite industry competition [70]. - The Group plans to deploy more resources in the development of different biobased materials in the long run [76]. - The Group aims to become a market leader in the corn refinery industry in China, focusing on cost control and strengthening the balance sheet [113]. - The Group is committed to enhancing its research and development capabilities to support sustainable growth [111]. - The Group's marketing force and market coverage are being enhanced to capture increasing market share [111]. - The company plans to conduct market research and feasibility studies for potential new product projects to enhance its product offerings [193].

China Starch Holdings Limited 中國澱粉控股有限公司 (incorporated in the Cayman Islands with limited liability 於関曼群島註冊成立之有限公司) Stock Code 股份代號 : 3838 INTERIM REPO Contents 目錄 | --- | --- | |------------------------------------------------------------------|------------------------------| | | | | Report on Review of Interim Financial Information | 中期財務資料之審閱報告 | | Condensed Consolidated Statement of Profit or Loss and | 簡明合併損益及其他綜合收益表 | | Other Comprehensive Income | | | Condensed Consolidated Statement of Financial Pos ...

Revenue and Financial Performance - The Group recorded total revenue of approximately RMB 6,750 million in 2019, an increase from RMB 5,073 million in 2018[51]. - Gross profit decreased significantly by 20.3% to approximately RMB 353 million, down from RMB 443 million in 2018[51]. - Profit after taxation decreased significantly to RMB 98 million, compared to RMB 238 million in 2018[52]. - Basic earnings per share was RMB 0.0162, down from RMB 0.0385 per share in 2018[52]. - Revenue from upstream products increased significantly by 49.4% to RMB 5,317 million, with sales volume rising by 39.0%[63][65]. - Revenue from lysine products decreased by 9.5% to approximately RMB 748 million, with an average selling price of RMB 4,953 per tonne[68][69]. - Revenue from starch-based sweeteners was approximately RMB 340 million, with sales volume increasing to 160,868 tonnes[71]. - Revenue from modified starch decreased by 5.6% to RMB 305 million, with export sales accounting for approximately 25.4% of total sales, down from 33.3% in 2018[74]. - Other fermentation and downstream products generated revenue of approximately RMB 39 million, a slight decrease from RMB 41 million in 2018[74]. Dividends and Share Options - The proposed final dividend is HK$0.62 per share for the year ended December 31, 2019, subject to approval at the upcoming AGM[6]. - The Company adopted a Share Option Scheme on May 19, 2017, to incentivize and retain key employees and management[18]. - The maximum number of shares that may be issued upon the exercise of all outstanding options under the Share Option Scheme must not exceed 30% of the number of issued shares[22]. - The total number of shares that may be allotted under the Share Option Scheme must not exceed 10% of the issued shares as of the date of approval[23]. - As of December 31, 2019, no share options had been granted under the Share Option Scheme[33]. Corporate Governance and Compliance - The Directors have confirmed their independence as per the Listing Rules[6]. - The Company has maintained appropriate directors and officers liability insurance for indemnifying losses related to legal actions against its Directors and officers[9]. - The Company has adopted a Securities Dealing Code that applies to all Directors and employees, ensuring compliance with required standards throughout the year[156]. - The Board has overall responsibility for the Group's risk management and internal control systems[134]. - The Company has complied with the Corporate Governance Code during the year under review, except for the absence of the chairman of the Audit Committee at the 2019 AGM[155]. Risk Management - The Risk Review Report provides a comprehensive review of principal risks and uncertainties facing the Group[4]. - Major risks identified include domestic market risk due to oversupply and weak demand for cornstarch, with plans to strengthen credit control and allocate resources for overseas market development[147]. - Financial risks are highlighted, with profit margins being suppressed and the need for bank borrowings to fulfill working capital requirements due to extended recoverable periods for certain customers[149]. - Regulatory risks are increasing as environmental protection-related rules become more stringent, necessitating regular monitoring of changes in laws and regulations[149]. - The management team is responsible for overseeing risk management and ensuring appropriate monitoring procedures are in place[140]. Environmental and Social Responsibility - The Group is committed to complying with all environmental policies and regulations related to its business operations[4]. - The Group emphasizes the importance of employee health and safety as key to long-term success[105]. - The Group prohibits the employment of child and forced labor in all operations[111]. - The Group is committed to using water responsibly and has facilities to minimize reliance on underground water[128]. - The environmental strategy focuses on balancing production costs with greenhouse gas emissions and sewage disposal[126]. Production and Operational Efficiency - The Group's production activities are primarily carried out in the People's Republic of China[4]. - The production capacity of cornstarch is expected to increase to 2,400,000 tonnes and lysine to 300,000 tonnes upon completion of new facilities[45]. - The Group is committed to improving production efficiency through modernized production facilities, with long-term investments expected to yield payback over time[121]. - The Group's research and development efforts are aimed at improving production efficiency and controlling costs effectively[127]. Employee Relations and Development - The Company is committed to attracting and retaining valuable human resources through the Share Option Scheme[18]. - Total staff costs, including Directors' emoluments, were approximately RMB 208 million in 2019, compared to RMB 183 million in 2018, with the workforce increasing to about 2,300 employees[83]. - Continuous professional development is recognized as essential for Directors to stay updated on current trends and issues[176]. - Major training events included fire prevention drills, hazardous chemical leaking drills, and occupational disease prevention training[110].

China Starch Holdings Limited 中國澱粉控股有限公司 (incorporated in the Cayman Islands with limited liability 於開曼群島註冊成立之有限公司) Stock Code 股份代號 : 3838 2019 INTERIM REPORT 中期報告 Contents 目錄 | --- | --- | |------------------------------------------------------------------|------------------------------| | | | | Report on Review of Interim Financial Information | 中期財務資料之審閱報告 | | Condensed Consolidated Statement of Profit or Loss and | 簡明合併損益及其他綜合收益表 | | Other Comprehensive Income | | | Condensed Consolidated Statement of F ...

Financial Performance - The Group recorded total revenue of approximately RMB5,073 million, an increase from RMB4,695 million in 2017, representing a growth of 8.1%[58]. - Gross profit decreased significantly by 28.5% to approximately RMB443 million, down from RMB620 million in 2017[58]. - Profit after taxation decreased to RMB238 million, compared to RMB394 million in 2017, reflecting a decline of 39.6%[59]. - Revenue from upstream products increased by 12.0% to RMB3,558.9 million, with a sales volume of cornstarch rising to approximately 1,153,848 tonnes[60][62]. - Revenue from fermented and downstream products slightly decreased to RMB1,514.6 million, down from RMB1,517.2 million in 2017[66]. - Revenue from starch-based sweetener increased by 18.7% to approximately RMB322.7 million, with an average selling price of RMB2,105 per tonne[68][70]. - Revenue from modified starch increased by 17.4% to RMB323.5 million, with export sales percentage rising to about 33.3%[68][71]. Business Operations - The Group's revenue is derived from two business segments: upstream products and fermented and downstream products, with production activities conducted in the People's Republic of China[6]. - The Company’s principal activity is investment holding, with subsidiaries engaged in manufacturing and selling cornstarch, lysine, and starch-based products[8]. - The Group's production activities are primarily located in the PRC, highlighting its operational focus in this region[8]. - The production capacity of cornstarch and lysine is expected to increase to 2,400,000 tonnes and 300,000 tonnes per annum respectively upon the completion of the Golden Corn Biotech production base by the end of 2019[45]. - The construction of the production base for Golden Corn Biotech is slightly behind schedule but is still targeted for operation by the end of 2019[45]. Environmental and Sustainability Practices - The Group is committed to complying with all environmental policies and relevant laws, and has an internal laboratory to ensure product quality meets national standards[6]. - The Group's environmental and sustainability report reviews compliance with laws and regulations impacting the business and relationships with stakeholders[6]. - The environmental and sustainability report complies with the "Environmental, Social and Governance Reporting Guide" of the Hong Kong Stock Exchange[105][114]. - The company has implemented a perpetual monitoring system for sewage disposal, which is reported to local environmental protection authorities[165]. - The company did not produce any hazardous waste in its production plants during the review year, and most non-hazardous waste is sold to third parties[165]. - There were no significant incidents of non-compliance with environmental laws during the review year, reflecting the company's commitment to environmental standards[165]. Corporate Governance and Compliance - The Board recommends a final dividend of HK1.20 cents per share for the year ended 31 December 2018, pending approval at the upcoming annual general meeting[9]. - The related party transactions for the year ended 31 December 2018 did not constitute connected transactions as defined under the Listing Rules[6]. - The company has complied with the Corporate Governance Code during the year under review, except for the absence of the chairman at the annual general meeting[194]. - The company has adopted a Securities Dealing Code that applies to all directors and relevant employees, ensuring compliance throughout the year[195]. - The board considers the internal control system effective and adequate for financial reporting and compliance with listing rules as of December 31, 2018[191]. Risk Management - The Group has implemented a strong balance sheet and sufficient banking facilities to mitigate domestic market risks[186]. - The Group utilizes a risk scorecard to rank and compare identified risks and their impacts, presenting this information to the Board effectively[184]. - The board evaluates the effectiveness of the company's internal control and risk management systems[197]. - The frequency of production output limitations may increase in the future due to regional gas pollutant benchmarks set by local government[186]. Employee and Stakeholder Relations - The Company recognizes the importance of employee health and safety as a priority[116]. - The company provided major training events including fire prevention drills and hazardous chemical leaking drills to enhance employee safety[126]. - The company strictly complies with PRC Labour Law and prohibits child and forced labor, promoting fair treatment in recruitment, compensation, and working conditions[127]. - The Group's sustainability is dependent on relationships with stakeholders, balancing financial performance with social and environmental responsibilities[115][117]. - The company has developed trust with suppliers, utilizing mobile technology for transparent corn kernel pricing and efficient procurement processes[155]. Shareholder Information - As of December 31, 2018, the Company's distributable reserves amounted to approximately RMB 156,291,000, including a share premium of approximately RMB 39,369,000[98][102]. - The Board intends to balance dividend distribution with adequate cash flow and reserves, with no assurance of specific dividend payments in any given period[99][103]. - The Group's public float is maintained at not less than 25% of the total issued shares as required under the Listing Rules[43].