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].
老恒和酿造(02226) - 2024 - 中期财报