常茂生物(00954) - 2025 - 中期业绩

Financial Highlights Summary of Key Financial Data During the reporting period, the company's revenue decreased by 13% year-on-year, loss attributable to equity holders expanded by 37%, and the board did not recommend an interim dividend - The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2025[3] Key Financial Data for the Six Months Ended June 30 (RMB thousands) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | 272,278 | 313,802 | | Loss for the period attributable to equity holders of the Company | (25,790) | (18,786) | Condensed Consolidated Financial Statements Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2025, the company's revenue was RMB 272,278 thousand, a 13.23% year-on-year decrease, with loss attributable to equity holders of RMB (25,790) thousand, expanding by 37.28%, and basic and diluted loss per share of RMB (0.049) Summary of Condensed Consolidated Statement of Comprehensive Income (RMB thousands) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | 272,278 | 313,802 | | Cost of sales | (259,127) | (297,815) | | Gross profit | 13,151 | 15,987 | | Other income | 3,282 | 5,507 | | Other gains, net | 496 | 1,844 | | Selling expenses | (4,396) | (4,194) | | Administrative expenses | (32,018) | (33,716) | | Operating loss | (19,485) | (14,572) | | Finance costs, net | (5,754) | (2,870) | | Loss before income tax | (25,239) | (17,442) | | Income tax expense | (748) | (1,134) | | Loss and total comprehensive loss for the period | (25,987) | (18,576) | | Loss attributable to equity holders of the Company | (25,790) | (18,786) | | Loss per share (RMB) | (0.049) | (0.035) | Condensed Consolidated Statement of Financial Position As of June 30, 2025, the company's total assets were RMB 1,229,695 thousand, total liabilities RMB 672,343 thousand, and total equity RMB 557,352 thousand, with slight decreases in non-current assets, current assets, and current liabilities, but an increase in non-current liabilities Summary of Condensed Consolidated Statement of Financial Position (RMB thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Total non-current assets | 938,140 | 950,965 | | Total current assets | 291,555 | 298,793 | | Total assets | 1,229,695 | 1,249,758 | | Equity | | | | Equity attributable to equity holders of the Company | 557,656 | 583,446 | | Non-controlling interests | (304) | (107) | | Total equity | 557,352 | 583,339 | | Liabilities | | | | Total non-current liabilities | 87,866 | 61,868 | | Total current liabilities | 584,477 | 604,551 | | Total liabilities | 672,343 | 666,419 | | Total equity and liabilities | 1,229,695 | 1,249,758 | Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2025, equity attributable to equity holders decreased from RMB 583,446 thousand at the beginning of the year to RMB 557,656 thousand, primarily due to a loss of RMB 25,790 thousand during the period Summary of Condensed Consolidated Statement of Changes in Equity (RMB thousands) | Item | Balance at January 1, 2025 | Loss for the period | Other | Balance at June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | Attributable to equity holders of the Company | 583,446 | (25,790) | – | 557,656 | | Non-controlling interests | (107) | (197) | – | (304) | | Total equity | 583,339 | (25,987) | – | 557,352 | Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2025, net cash generated from operating activities was RMB 15,363 thousand, a significant improvement from a net outflow in the prior year, with net cash used in investing activities of RMB (1,130) thousand and financing activities of RMB (13,816) thousand, resulting in a net increase in cash and cash equivalents of RMB 417 thousand Summary of Condensed Consolidated Statement of Cash Flows (RMB thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Net cash generated from/(used in) operating activities | 15,363 | (26,585) | | Net cash used in investing activities | (1,130) | (42,820) | | Net cash (used in)/generated from financing activities | (13,816) | 40,892 | | Net increase/(decrease) in cash and cash equivalents | 417 | (28,513) | | Cash and cash equivalents at June 30 | 58,581 | 62,029 | Notes to the Condensed Consolidated Financial Statements 1 General Information Changmao Biochemical Engineering Company Limited primarily engages in the production and sale of organic acid products, with its H shares listed on the Main Board of the HKEX on June 28, 2013, and its registered office in Changzhou, Jiangsu Province, China - The company's principal activities are the production and sale of organic acid products[10] - H shares were transferred to the Main Board of the HKEX on June 28, 2013[10] 2 Basis of Preparation and Accounting Policies Interim financial information is prepared in accordance with HKAS 34, with accounting policies consistent with the 2024 annual financial statements, despite significant going concern uncertainties due to net loss, net current liabilities, and a subsidiary's non-compliance with bank loan covenants, for which management has developed mitigation plans Going Concern Basis For the six months ended June 30, 2025, the Group reported a net loss of RMB 25,987 thousand and net current liabilities of RMB 292,922 thousand, with a subsidiary's non-compliance with loan covenants leading to RMB 168,860 thousand of non-current loans being reclassified as current liabilities, creating significant going concern uncertainty, which management addresses through bank negotiations, unused financing, cost reduction, and capital expenditure control - The Group recorded a net loss of RMB 25,987 thousand and net current liabilities of RMB 292,922 thousand[14] - A subsidiary's failure to meet asset-liability ratio covenants for project loans resulted in RMB 168,860 thousand of non-current loans being reclassified as current liabilities[14] - Management has developed plans including negotiating with banks, utilizing RMB 112,362 thousand in unutilized bank facilities, consolidating production lines, reducing costs, and controlling capital expenditures to mitigate liquidity pressure and support going concern[15][16] 2.1 New and Revised Standards New Hong Kong Financial Reporting Standards effective from July 1, 2025, have no significant impact on the Group's accounting policies - New Hong Kong Financial Reporting Standards have no significant impact on the Group's interim financial statements[18] 3 Estimates Preparation of interim financial information involves management's judgments, estimates, and assumptions regarding accounting policies and reported amounts, with key uncertainties consistent with the 2024 annual financial statements, primarily concerning bank covenant compliance, financing, cost control, and profitability enhancement plans - Key estimation uncertainties include banks' discretionary assessment of financial covenants, successful acquisition of new financing, implementation of cost reduction plans, and control over administrative and capital expenditures[19][20] 4 Financial Risk Management The Group faces foreign exchange, credit, liquidity, and cash flow and fair value interest rate risks, with no significant changes in risk management policies since year-end - The Group faces foreign exchange, credit, liquidity, and interest rate risks, with no significant changes in risk management policies[21][22] 5 Revenue and Segment Information The Group primarily engages in the production and sale of organic acid products, with management identifying only one operating segment; for the six months ended June 30, 2025, Mainland China remained the main revenue source, but revenue decreased across all regions - The Group presents only one operating segment, primarily engaged in the production and sale of organic acid products[23] Sales Revenue by Geographical Region (RMB thousands) | Region | 2025 | 2024 | | :--- | :--- | :--- | | Mainland China | 196,143 | 222,042 | | Asia Pacific | 34,287 | 41,472 | | Europe | 30,713 | 34,902 | | Americas | 7,173 | 9,650 | | Other regions | 3,962 | 5,736 | | Total | 272,278 | 313,802 | - All non-current assets, excluding deferred tax assets, are located in Mainland China[25] 6 Other Income For the six months ended June 30, 2025, total other income decreased to RMB 3,282 thousand from RMB 5,507 thousand in the prior period, primarily due to a significant reduction in income from sales of scrap materials Other Income (RMB thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Sales of scrap materials | 4 | 1,704 | | Government grants | 2,472 | 2,965 | | Others | 806 | 838 | | Total | 3,282 | 5,507 | 7 Other Gains, Net For the six months ended June 30, 2025, net other gains significantly decreased to RMB 496 thousand from RMB 1,844 thousand in the prior period, primarily due to lower net exchange gains Other Gains, Net (RMB thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Fair value gains on financial assets | 10 | 32 | | Net exchange gains | 575 | 1,812 | | Others | (89) | – | | Total | 496 | 1,844 | 8 Finance Costs, Net For the six months ended June 30, 2025, net finance costs significantly increased to RMB 5,754 thousand from RMB 2,870 thousand in the prior period, primarily due to reduced capitalization of interest on qualifying assets, leading to higher bank loan interest expenses Finance Costs, Net (RMB thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Interest on bank loans | 9,903 | 10,678 | | Interest on lease liabilities | 22 | 46 | | Less: Capitalized for qualifying assets | (3,882) | (7,319) | | Interest income from bank deposits | (289) | (535) | | Net finance costs | 5,754 | 2,870 | 9 Loss Before Income Tax For the six months ended June 30, 2025, loss before income tax expanded to RMB 25,239 thousand from RMB 17,442 thousand in the prior period, with depreciation expenses increasing from RMB 20,508 thousand to RMB 23,153 thousand Components of Loss Before Income Tax (RMB thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Amortisation of patent rights | 66 | 66 | | Amortisation of right-of-use assets | 1,526 | 1,526 | | Depreciation | 23,153 | 20,508 | 10 Income Tax Expense For the six months ended June 30, 2025, income tax expense decreased to RMB 748 thousand from RMB 1,134 thousand in the prior period, with the company benefiting from a 15% preferential income tax rate as a high-tech enterprise, while other subsidiaries are subject to 25%, and the R&D super deduction policy remains applicable - The company enjoys a 15% preferential income tax rate as a high-tech enterprise, while other subsidiaries are subject to 25%[28] Income Tax Expense (RMB thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Current income tax | 640 | 632 | | Deferred income tax | 108 | 502 | | Total | 748 | 1,134 | - The 200% R&D super deduction policy continues to provide tax benefits to the company[30] 11 Loss Per Share For the six months ended June 30, 2025, basic and diluted loss per share expanded to RMB (0.049) from RMB (0.035) in the prior period, primarily due to an increase in loss attributable to equity holders Loss Per Share (RMB) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Loss attributable to equity holders of the Company | (25,790,000) | (18,786,000) | | Weighted average number of ordinary shares in issue | 529,700,000 | 529,700,000 | | Loss per share | (0.049) | (0.035) | - There were no dilutive shares during the period[32] 12 Dividends The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025, consistent with the prior period - The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2025[33] 13 Patent Rights As of June 30, 2025, the net book value of patent rights decreased to RMB 440 thousand from RMB 506 thousand at the beginning of the year, primarily due to amortization of RMB 66 thousand Net Book Value of Patent Rights (RMB thousands) | Item | Amount | | :--- | :--- | | Net book value at January 1, 2025 | 506 | | Amortisation | (66) | | Net book value at June 30, 2025 | 440 | 14 Capital Expenditure As of June 30, 2025, the net book value of property, plant, and equipment was RMB 580,197 thousand, and construction in progress was RMB 241,614 thousand, with Dalian land use rights pledged as collateral for bank financing Net Book Value of Capital Expenditure (RMB thousands) | Item | June 30, 2025 | | :--- | :--- | | Property, plant and equipment | 580,197 | | Construction in progress | 241,614 | | Right-of-use assets | 88,833 | | Investment properties | 3,245 | - The land use rights of Changmao Dalian were pledged as collateral for bank financing for the Dalian factory[36] 15 Trade and Bills Receivables As of June 30, 2025, total trade and bills receivables increased to RMB 68,600 thousand from RMB 63,001 thousand as of December 31, 2024, with trade receivables having credit terms ranging from 30 to 210 days Trade and Bills Receivables (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade receivables | 47,898 | 43,010 | | Bills receivables | 20,702 | 19,991 | | Total | 68,600 | 63,001 | - Trade receivables have credit terms ranging from 30 to 210 days, and bills receivables generally mature within six months[37] 16 Pledged Bank Balances and Cash and Bank Balances As of June 30, 2025, total cash and bank balances were RMB 62,405 thousand, with RMB 55,230 thousand denominated in RMB, and pledged bank balances increased to RMB 3,824 thousand; the remittance of RMB funds is subject to China's foreign exchange controls Cash and Bank Balances (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | 58,581 | 57,963 | | Pledged bank balances | 3,824 | 1,108 | | Total | 62,405 | 59,071 | - Balances denominated in RMB are subject to China's government foreign exchange controls for conversion into foreign currencies and remittance[38] 17 Share Capital As of June 30, 2025, the company's total issued share capital was 529,700,000 shares, comprising domestic shares, promoter foreign shares, and H shares, with a total book value of RMB 52,970 thousand; H shares enjoy equal rights with domestic and promoter foreign shares, but dividends are paid in HKD Issued Share Capital (RMB thousands) | Number of shares | Book value | | :--- | :--- | | 529,700,000 | 52,970 | - The company's share capital comprises 2,500,000 domestic shares, 343,500,000 promoter foreign shares, and 183,700,000 H shares[39] 18 Reserves As of June 30, 2025, the company's total reserves decreased to RMB 504,686 thousand from RMB 530,476 thousand at the beginning of the year, primarily due to a loss of RMB 25,790 thousand during the period Movement in Reserves (RMB thousands) | Item | January 1, 2025 | Loss for the period | Other | June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | Share premium | 102,559 | – | – | 102,559 | | Statutory surplus reserve | 87,233 | – | – | 87,233 | | Capital reserve | 461 | – | – | 461 | | Translation reserve | 7 | – | – | 7 | | Special reserve | 1,164 | – | 1,360 | 2,524 | | Retained profits | 339,052 | (25,790) | (1,360) | 311,902 | | Total | 530,476 | (25,790) | – | 504,686 | 19 Bank Loans As of June 30, 2025, the Group's total outstanding bank loans were RMB 524,361 thousand, with RMB 487,961 thousand classified as current bank loans; a subsidiary, Changmao Dalian, failed to meet its asset-liability ratio covenant, leading to RMB 168,860 thousand of non-current secured bank loans being reclassified as current liabilities, though management believes banks have discretion not to deem this a non-compliance Total Bank Loans (RMB thousands) | Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Secured bank loans | 245,020 | 282,634 | | Unsecured bank loans | 279,341 | 241,906 | | Total | 524,361 | 524,540 | - Subsidiary Changmao Dalian's failure to meet its asset-liability ratio covenant resulted in RMB 168,860 thousand of non-current secured bank loans being reclassified as current liabilities[43] - Management believes banks have discretion in calculating the asset-liability ratio and may not deem Changmao Dalian non-compliant, and internal loans can be converted to capital if necessary to meet requirements[43] - The effective interest rate for secured bank loans is 4.4%, and for unsecured bank loans is 3.1%[44] 20 Trade and Bills Payables As of June 30, 2025, total trade and bills payables significantly increased to RMB 49,724 thousand from RMB 28,700 thousand as of December 31, 2024, with trade payables primarily aged between zero and six months Trade and Bills Payables (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade payables | 30,604 | 23,158 | | Bills payables | 19,120 | 5,542 | | Total | 49,724 | 28,700 | - Trade payables are primarily aged between zero and six months, and bills payables generally mature within six months[48] 21 Contingent Liabilities As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities - The Group has no significant contingent liabilities[46] 22 Commitments As of June 30, 2025, the Group's capital commitments for property, plant, and equipment increased to RMB 47,133 thousand from RMB 34,719 thousand as of December 31, 2024 Capital Commitments (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contracted but not provided for | 47,133 | 34,719 | Business Review and Outlook Interim Results For the six months ended June 30, 2025, the Group's sales revenue decreased by 13% year-on-year to RMB 272,278 thousand, and net loss attributable to equity holders expanded by 37% to RMB 25,790 thousand, primarily due to geopolitical conflicts, tariff policy uncertainties, weaker-than-expected maleic anhydride downstream demand, and increased interest expenses - Sales revenue decreased by 13% year-on-year to RMB 272,278 thousand[49] - Net loss attributable to equity holders expanded by 37% to RMB 25,790 thousand[49] - Performance decline was primarily impacted by geopolitical conflicts, tariff policy uncertainties, weaker-than-expected maleic anhydride downstream demand, and increased interest expenses[49] Business Review In the first half, the Group maintained balanced production and sales, with Changzhou factory's production and sales increasing but gross margin declining, while Dalian factory's performance lagged; some Lianyungang production lines have relocated to Dalian and commenced operation, and the Group focuses on product quality, industrial upgrading, system development (smart factory certification), factory management, safety, environmental protection, and energy saving - Changzhou factory's production and sales increased but gross margin declined, while Dalian factory's production and sales lagged behind the prior period[50] - Some Lianyungang production lines have been relocated to Dalian and commenced operation, positively impacting operations[50] - The Group obtained Jiangsu Province Advanced Smart Factory certification and 'Jiangsu Quality Product' certification, and continuously enhances safety and environmental protection standards[50] Research and Development In the first half, the Group steadily advanced multiple R&D projects, covering new product development and existing product process improvements; the Pharmaceutical Division has laid out 12 API and pharmaceutical excipient varieties, with 7 already in A-status for direct supply to pharmaceutical companies, and one new pharmaceutical excipient undergoing quality stability assessment, expected to be submitted for approval within the year - R&D projects steadily advanced in the first half, covering new product development and existing product process improvements[51] - The Pharmaceutical Division has laid out 12 API and pharmaceutical excipient varieties, with 7 already in A-status, and one new pharmaceutical excipient is expected to be submitted for approval within the year[51] Prospects and Outlook The Group will continue to prioritize technological innovation and economic efficiency, focusing on customer needs to maintain industry leadership through transformation, technological innovation, enhanced safety and environmental standards, and market expansion, extending its product chain into high-value-added areas such as new materials and APIs 1. Continue Transformation and Upgrading, Promote New Base Business Development The Group will fully support the development of the Dalian factory, which has commenced production for Phase II and relocated Lianyungang products, serving as the primary chemical product manufacturing base to extend the product chain into new materials, APIs, and novel feed additives, creating new economic benefits - The Dalian factory will serve as the Group's main chemical product manufacturing base, with Phase II and relocated Lianyungang products already in production[52] - Future plans include extending the product chain into new materials, APIs, and novel feed additives[52] 2. Accelerate Technological Innovation, Promote Product Upgrading The Group will continuously increase R&D investment, integrate resources, attract talent, and focus on key breakthroughs to enhance existing product competitiveness and accelerate the development of safe, environmentally friendly, and market-competitive new products, seeking new sources of profit - Continuously increase R&D investment, integrate resources, attract talent, and focus on key breakthroughs to enhance existing product competitiveness[53] - Accelerate the development of safe, environmentally friendly, and market-competitive new products, promoting product chain renewal and upgrading[53] 3. Enhance Safety and Environmental Protection, Strengthen Risk Control The Group will continue to strengthen safety risk control, improve the safe production environment, promote cleaner production, implement pollution prevention, and strive to enhance performance in energy and resource consumption, carbon neutrality, and pollutant emissions, building a resource-saving and environmentally friendly enterprise - Strengthen safety risk control, improve the safe production environment, promote cleaner production, and implement pollution prevention[54] - Committed to improving performance in energy and resource consumption, carbon neutrality, and pollutant emissions, building a resource-saving and environmentally friendly enterprise[54] 4. Focus on Market Expansion, Develop High-End Customers The sales team will focus on developing key accounts and end-users, enhancing Changmao's brand recognition and added value through improved product quality and service to avoid low-price competition, while also expanding international markets and collaborating with major international clients on new products and technologies to boost global influence - The sales team will develop key accounts and end-users, enhancing brand recognition and added value through improved product quality and service[55] - Expand international markets and collaborate with major international clients on new products and technologies to enhance global influence[55] Outlook Summary The Group will continue to focus on food additives, enhance existing product competitiveness, accelerate new product launches, actively explore new markets and application areas, leverage R&D and manufacturing advantages, extend the product chain, and grow stronger - Continue to focus on food additives, enhance existing product competitiveness, and accelerate new product launches[56] - Develop new functional food additives, new materials, APIs, and other products to extend the product chain[56] Review of Financial Statements The Audit Committee, together with the Directors, has reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025 - The Audit Committee has reviewed the Group's unaudited condensed consolidated interim financial statements[57] Dividends The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Directors do not recommend the payment of an interim dividend[58] Segment Information For the six months ended June 30, 2025, export sales accounted for approximately 28% of the Group's revenue (29% in the prior period), while domestic sales accounted for approximately 72% (71% in the prior period) - Export sales accounted for approximately 28% of revenue (a 1% year-on-year decrease), while domestic sales accounted for approximately 72% (a 1% year-on-year increase)[59] Exchange Rate Fluctuation Risk and Related Hedging Operating primarily in China, the Group faces foreign currency risk mainly denominated in USD; management regularly monitors and considers hedging significant foreign currency exposures, utilizing forward foreign exchange agreements to hedge some USD risk during the period - The Group primarily faces USD foreign currency risk, which management regularly monitors and partially hedges using forward foreign exchange agreements[60] Liquidity and Financial Resources As of June 30, 2025, the Group's total outstanding bank loans were RMB 524,361 thousand, with capital commitments of RMB 47,133 thousand primarily for the new Dalian factory and production line upgrades, and a debt-to-asset ratio of 54.7% - Total outstanding bank loans amounted to RMB 524,361 thousand[61] - Capital commitments were RMB 47,133 thousand, primarily for the new Dalian factory and production line upgrades[61] - The debt-to-asset ratio was 54.7% (53.3% as of December 31, 2024)[62] - Cash and cash equivalents at bank totaled approximately RMB 58,581 thousand[62] Employees As of June 30, 2025, the Group had 533 employees, with total staff costs of RMB 40,605 thousand, a year-on-year decrease primarily due to reduced headcount and structural changes; the company's employee incentive plan had a target profit of RMB 40,000 thousand, which was not met this period - Total employees numbered 533 (a decrease of 114 year-on-year), with total staff costs of RMB 40,605 thousand (a 4.2% year-on-year decrease)[63] - The decrease in staff costs was primarily due to a reduction in headcount and structural changes[63] - The company has an employee incentive plan with a target profit of RMB 40,000 thousand, which was not achieved this period, resulting in no profit-based incentive bonuses[63][64] Significant Investments The Group had no significant investments during the reporting period, with capital commitments primarily allocated to capital expenditures for the Dalian factory - The Group has no significant investments or capital asset plans, with capital commitments primarily for capital expenditures at the Dalian factory[65] Changes in the Group's Structure During the Period For the six months ended June 30, 2025, the Group did not acquire or dispose of any significant subsidiaries or associated companies - There were no significant acquisitions or disposals of subsidiaries or associated companies during the period[66] Contingent Liabilities As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities - The Group has no significant contingent liabilities[67] Going Concern The Group faces significant going concern uncertainties due to net loss, net current liabilities, and a subsidiary's non-compliance with bank loan covenants, leading to reclassification of some non-current loans as current liabilities; the Board has reviewed management's cash flow forecasts and mitigation plans, believing the Group will have sufficient working capital, but the realization of these plans remains subject to significant uncertainties - The Group recorded a net loss of RMB 25,987 thousand, net current liabilities of RMB 292,922 thousand, total bank loans of RMB 524,361 thousand, of which RMB 487,961 thousand were current bank loans[68] - A subsidiary's failure to meet bank loan financial covenants resulted in RMB 168,860 thousand of non-current loans being reclassified as current liabilities, constituting a significant going concern uncertainty[68] - The Board has reviewed management's cash flow forecasts and mitigation plans, believing the Group will have sufficient working capital, but the realization of these plans remains subject to significant uncertainties[69] Corporate Governance and Shareholder Information Directors', Supervisors' or Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or its Specified Corporations or Any Other Associated Corporations As of June 30, 2025, Director Mr. Rui Xinsheng and his spouse Ms. Leng Yixin held significant long positions in domestic shares, foreign shares, and H shares; Mr. Yu Xiaoping and his spouse also held interests in foreign shares and H shares, with other directors and supervisors holding partial interests Directors' Long Positions in Shares | Director | Type of interest | Domestic shares (thousand shares) | Foreign shares (thousand shares) | H shares (thousand shares) | | :--- | :--- | :--- | :--- | :--- | | Mr. Rui Xinsheng | Beneficial owner, spouse, controlled corporation | 2,500 | 135,000 | 12,236 | | Ms. Leng Yixin | Beneficial owner, spouse, controlled corporation | 2,500 | 135,000 | 12,236 | | Mr. Yu Xiaoping | Spouse, controlled corporation | – | 66,000 | 3,774 | - Mr. Rui Xinsheng and Ms. Leng Yixin hold significant interests in domestic shares, foreign shares, and H shares through beneficial ownership, spouse's interests, and controlled corporations[72][74] Persons and Substantial Shareholders Required to Disclose Interests or Short Positions Under Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance As of June 30, 2025, Hong Kong Xinsheng Venture Capital Co., Ltd., Hong Kong Biochemical High-Tech Investment Co., Ltd., Zaowu Co., Ltd., Hong Kong Kehai Venture Capital Co., Ltd., and their associated companies were substantial shareholders of the Company, holding significant interests in foreign shares; Ms. Lin Mao (spouse of Mr. Yu Xiaoping) also held interests in H shares Substantial Shareholders' Long Positions in Shares | Shareholder Name | Type of interest | Foreign shares (thousand shares) | H shares (thousand shares) | | :--- | :--- | :--- | :--- | | Hong Kong Xinsheng Venture Capital Co., Ltd. | Beneficial owner | 135,000 | – | | Hong Kong Biochemical High-Tech Investment Co., Ltd. | Beneficial owner | 67,500 | – | | Zaowu Co., Ltd. | Beneficial owner | 66,000 | – | | Ms. Lin Mao | Spouse, controlled corporation, beneficial owner | 66,000 | 3,774 | | Hong Kong Kehai Venture Capital Co., Ltd. | Beneficial owner | 62,500 | – | | Shanghai Science and Technology Venture Capital Co., Ltd. | Controlled corporation | 62,500 | – | - Hong Kong Xinsheng Venture Capital Co., Ltd. is the largest foreign share shareholder, holding 135,000,000 shares, representing 39.30%[75] Interests of Directors, Supervisors and Chief Executive to Subscribe for Shares or Debentures Neither the Company, its subsidiaries, nor any associated corporations entered into any arrangements during the year enabling directors, supervisors, chief executive, or their associates to acquire interests in shares or debentures of the Company or its associated corporations - During the current year, the company had no arrangements enabling directors, supervisors, chief executive, or their associates to hold interests in the company's shares or debentures[78] Purchase, Sale or Redemption of the Company's Listed Securities For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the period, neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities[79] Share Capital Structure As of June 30, 2025, the Company's total issued shares were 529,700,000, comprising H shares, domestic shares, and foreign shares; foreign shareholders enjoy the same rights and obligations as domestic shareholders, including receiving foreign currency dividends, participating in residual asset distribution, and, with approval, converting to overseas listed foreign shares Issued Share Classes and Quantities | Share Class | Number of Shares | | :--- | :--- | | H shares | 183,700,000 | | Domestic shares | 2,500,000 | | Foreign shares | 343,500,000 | | Total | 529,700,000 | - Foreign shareholders enjoy the same rights and obligations as domestic shareholders, including receiving foreign currency dividends, participating in residual asset distribution, and, with approval, converting to overseas listed foreign shares[82][83][88] Compliance with Code Provisions of the Corporate Governance Code For the six months ended June 30, 2025, the Company has consistently complied with the code provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules - The company complies with the Corporate Governance Code in Appendix C1 Part 2 of the Listing Rules[84] Code of Conduct for Directors' Securities Transactions The Company has adopted the Standard Code as its code of conduct for directors' securities transactions and found no instances of non-compliance during the reporting period - The company has adopted the Standard Code as its code of conduct for directors' securities transactions, with no non-compliance found during the reporting period[85] Glossary Glossary This section provides definitions of key terms used in the report to aid reader comprehension of the financial report content