神冠控股(00829) - 2025 - 中期业绩

Financial and Operational Summary Financial Summary for the Six Months Ended June 30 Revenue decreased by 1.9% to RMB 443.9 million, resulting in a loss attributable to owners of the parent of RMB 40.6 million, with basic loss per share at RMB 1.26 cents and operating cash outflow increasing by 25.9% Financial Summary for the Six Months Ended June 30 (RMB millions): | Indicator | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | 443.9 | 452.4 | -1.9% | | Loss / (Profit) attributable to owners of the parent | (40.6) | 8.2 | N/A | | Basic Loss / (Earnings) per share (RMB cents) | (1.26) | 0.25 | N/A | | Interim dividend per share (HK cents) | – | – | N/A | | Net cash flow (used in) / from operating activities | (188.3) | (149.5) | +25.9% | - The company shifted from a profit of RMB 8.2 million in the prior period to a loss of RMB 40.6 million in the current period[2] Operational Summary for the Six Months Ended June 30 Total assets slightly increased, but inventory and accounts receivable turnover days rose, indicating potential operational efficiency decline, while accounts payable turnover days decreased Operational Summary for the Six Months Ended June 30 (RMB millions/days): | Indicator | H1 2025 | FY 2024 | H1 2024 | | :--- | :--- | :--- | :--- | | Total assets | 2,843.6 | 2,829.2 | 2,996.1 | | Inventory turnover days – Raw materials | 79.3 | 61.1 | 60.6 | | Inventory turnover days – Finished goods and work-in-progress | 322.4 | 223.4 | 232.9 | | Accounts receivable turnover days | 63.2 | 61.3 | 66.4 | | Accounts payable turnover days | 62.4 | 67.0 | 62.3 | - Inventory turnover days (raw materials and finished goods) and accounts receivable turnover days both increased, indicating a potential decline in operational efficiency[2] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Revenue declined by 1.9% and gross profit by 34.5%, shifting the company from profit to a RMB 40.586 million loss attributable to owners of the parent, exacerbated by increased income tax expense Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30, RMB thousands): | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | 443,914 | 452,357 | | Cost of sales | (392,193) | (373,334) | | Gross profit | 51,721 | 79,023 | | Other income and gains, net | 14,525 | 31,862 | | Selling and distribution expenses | (14,961) | (18,579) | | Administrative expenses | (65,862) | (59,640) | | Finance costs | (2,548) | (3,713) | | Profit / (Loss) before tax | (21,074) | 18,703 | | Income tax expense | (18,012) | (9,724) | | Profit / (Loss) for the period | (39,086) | 8,979 | | Profit / (Loss) attributable to owners of the parent | (40,586) | 8,231 | | Profit / (Loss) attributable to non-controlling interests | 1,500 | 748 | | Basic Earnings / (Loss) per share (RMB cents) | (1.26) | 0.25 | - Profit for the period shifted from RMB 8,979 thousand in the prior period to a loss of RMB 39,086 thousand in 2025, primarily due to a significant decrease in gross profit and increased income tax expense[4] Condensed Consolidated Statement of Financial Position Total assets slightly decreased, driven by reduced fixed deposits and increased interest-bearing bank borrowings and dividends payable, resulting in lower net current assets and net assets Condensed Consolidated Statement of Financial Position (As at June 30, 2025, RMB thousands): | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-current assets | | | | Property, plant and equipment | 906,204 | 977,416 | | Investment properties | 78,322 | 30,828 | | Fixed deposits | 10,000 | 114,000 | | Total non-current assets | 1,162,005 | 1,289,642 | | Current assets | | | | Inventories | 912,803 | 813,976 | | Accounts receivable and bills receivable | 148,544 | 158,838 | | Cash and cash equivalents | 558,602 | 503,804 | | Total current assets | 1,681,619 | 1,539,538 | | Current liabilities | | | | Accounts payable and bills payable | 51,270 | 111,160 | | Interest-bearing bank borrowings | 410,295 | 240,285 | | Dividends payable | 117,842 | – | | Total current liabilities | 672,050 | 508,356 | | Net current assets | 1,009,569 | 1,031,182 | | Net assets | 2,133,017 | 2,292,691 | - Fixed deposits within non-current assets significantly decreased from RMB 114,000 thousand at the end of 2024 to RMB 10,000 thousand as of June 30, 2025[6] - Interest-bearing bank borrowings in current liabilities increased from RMB 240,285 thousand at the end of 2024 to RMB 410,295 thousand as of June 30, 2025, and dividends payable increased from zero to RMB 117,842 thousand[6] Notes to the Condensed Interim Financial Information 1. Company Information The company, registered in the Cayman Islands, primarily manufactures and sells edible collagen casings, collagen food, skincare, and medical biomaterials - The company's main business encompasses the manufacturing and sale of edible collagen casings, collagen food, skincare products, and high-molecular collagen medical biomaterials[8] 2.1 Basis of Preparation and Accounting Policies Interim financial information is prepared under HKAS 34 'Interim Financial Reporting' and should be read with the 2024 annual consolidated financial statements - Interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'[9] 2.2 Changes in Accounting Policies The company adopted HKAS 21 (Revised) 'Lack of Exchangeability', which had no impact on interim financial information due to currency convertibility - The company first adopted HKAS 21 (Revised) 'Lack of Exchangeability', but it had no impact on the financial information[10] 3. Operating Segment Information Edible collagen casings generate over 90% of revenue, primarily from mainland China, where most non-current assets are located, and a new major customer emerged - Edible collagen casing products contributed over 90% of the Group's revenue[11] Revenue from External Customers (For the six months ended June 30, RMB thousands): | Region | 2025 | 2024 | | :--- | :--- | :--- | | Mainland China | 387,600 | 380,261 | | Asia (excluding Mainland China) | 36,246 | 48,162 | | Other countries / regions | 20,068 | 23,934 | | Total | 443,914 | 452,357 | - As of June 30, 2025, a major customer accounted for over 10% of the Group's revenue, contributing RMB 49,431 thousand[14] 4. Revenue Total revenue decreased by 1.9% to RMB 443.914 million, with 99.99% derived from goods transferred at a point in time Revenue Breakdown (For the six months ended June 30, RMB thousands): | Revenue Source | 2025 | 2024 | | :--- | :--- | :--- | | Goods transferred at a point in time | 443,885 | 452,323 | | Services transferred over time | 29 | 34 | | Total | 443,914 | 452,357 | 5. Other Income and Gains, Net Other income and gains, net, significantly decreased by 54.4% to RMB 14.525 million, mainly due to reduced bank interest, government grants, and auxiliary material sales Analysis of Other Income and Gains, Net (For the six months ended June 30, RMB thousands): | Item | 2025 | 2024 | | :--- | :--- | :--- | | Bank interest income | 7,602 | 17,156 | | Government grants | 1,826 | 4,887 | | Sales of auxiliary materials | 1,930 | 3,596 | | Total | 14,525 | 31,862 | - Other income and gains, net, decreased by 54.4% year-on-year, primarily due to reduced bank interest income and government grants[16] 6. Finance Costs Finance costs decreased by 31.4% to RMB 2.548 million, primarily driven by lower bank loan interest Finance Costs (For the six months ended June 30, RMB thousands): | Item | 2025 | 2024 | | :--- | :--- | :--- | | Interest on bank loans | 2,387 | 3,627 | | Interest on lease liabilities | 161 | 86 | | Total | 2,548 | 3,713 | 7. Profit / (Loss) Before Tax The company shifted from pre-tax profit to a RMB 21.074 million loss, impacted by lower gross profit, increased inventory provisions, and fair value losses Profit / (Loss) Before Tax after deducting / (crediting) items (For the six months ended June 30, RMB thousands): | Item | 2025 | 2024 | | :--- | :--- | :--- | | Cost of inventories sold | 335,472 | 334,283 | | Depreciation of property, plant and equipment | 37,842 | 35,150 | | Provision for obsolete and slow-moving inventories | 22,622 | 2,775 | | Impairment of accounts receivable and bills receivable | 3,027 | 6,395 | | Fair value loss / (gain) on investment properties, net | 258 | (574) | - Profit before tax shifted from RMB 18,703 thousand in the prior period to a loss of RMB 21,074 thousand in 2025[4] - Provision for obsolete and slow-moving inventories significantly increased from RMB 2,775 thousand in 2024 to RMB 22,622 thousand in 2025[18] 8. Income Tax Expense Income tax expense significantly increased by 85.2% to RMB 18.012 million, mainly due to financial planning adjustments between China and Hong Kong entities, resulting in dividend withholding tax Income Tax Expense (For the six months ended June 30, RMB thousands): | Item | 2025 | 2024 | | :--- | :--- | :--- | | Current – China | 10,712 | 12,865 | | Current – Hong Kong | 647 | 406 | | Deferred tax | 6,653 | (3,547) | | Total tax expense for the period | 18,012 | 9,724 | - Income tax expense increased from RMB 9,724 thousand in the prior period to RMB 18,012 thousand in 2025, an increase of 85.2%[21] - The increase in income tax expense is primarily due to overall financial planning adjustments between the Group's companies in China and Hong Kong, resulting in dividend withholding tax expenses and provisions[48] 9. Dividends The company declared and paid RMB 118.328 million in 2024 final and special dividends, but the Board does not recommend an interim dividend for this period Dividends Declared and Paid (For the six months ended June 30, RMB thousands): | Item | 2025 | 2024 | | :--- | :--- | :--- | | Final dividend declared and paid for 2024 | 59,164 | 58,725 | | Special dividend declared and paid for 2024 | 59,164 | 58,725 | | Total | 118,328 | 117,450 | - The Board does not recommend paying any interim dividend for this reporting period[22] 10. Earnings / (Loss) Per Share Attributable to Owners of the Parent Basic loss per share attributable to owners of the parent was RMB 1.26 cents, a shift from RMB 0.25 cents profit in the prior period, with no dilutive shares Earnings / (Loss) Per Share Attributable to Owners of the Parent (For the six months ended June 30, RMB cents per share): | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Basic and diluted | (1.26) | 0.25 | - Basic earnings per share shifted from a profit of RMB 0.25 cents in the prior period to a loss of RMB 1.26 cents in the current period[23] 11. Accounts Receivable and Bills Receivable Total accounts receivable and bills receivable slightly decreased to RMB 148.544 million, with the majority aged within three months Aging Analysis of Accounts Receivable and Bills Receivable (As at June 30, RMB thousands): | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 1 month | 48,496 | 72,326 | | 1 to 3 months | 47,038 | 43,777 | | 3 to 6 months | 44,576 | 33,653 | | 6 months to 1 year | 4,807 | 3,618 | | Over 1 year | 3,627 | 5,464 | | Total | 148,544 | 158,838 | 12. Accounts Payable and Bills Payable Total accounts payable and bills payable significantly decreased by 53.9% to RMB 51.270 million, with the largest portion due within one month Aging Analysis of Accounts Payable and Bills Payable (As at June 30, RMB thousands): | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 1 month | 35,594 | 38,257 | | 1 to 2 months | 499 | 12,168 | | 2 to 3 months | 1,162 | 9,753 | | 3 to 6 months | 6,002 | 41,396 | | Over 6 months | 8,013 | 9,586 | | Total | 51,270 | 111,160 | - Total accounts payable and bills payable significantly decreased by 53.9% from RMB 111,160 thousand at the end of 2024 to RMB 51,270 thousand as of June 30, 2025[25] 13. Share Capital Authorized share capital remained at HKD 200,000 thousand, with issued and fully paid share capital at HKD 32,305 thousand (equivalent to RMB 27,807 thousand), consistent with 2024 year-end Share Capital (As at June 30, RMB thousands): | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Authorized share capital (20,000,000,000 ordinary shares of HKD 0.01 each) | 200,000 (HKD) | 200,000 (HKD) | | Issued and fully paid share capital (3,230,480,000 ordinary shares of HKD 0.01 each) | 32,305 (HKD) | 32,305 (HKD) | | Equivalent (RMB thousands) | 27,807 | 27,807 | Management Discussion and Analysis Market Review China's GDP grew by 5.3% in H1 2025, with future policies expected to boost domestic consumption and drive collagen casing market growth - China's GDP grew by 5.3% year-on-year in the first half of 2025, with the national economy maintaining overall resilience[27] - Future policies are expected to further unleash domestic consumption potential, driving sustained growth in China's collagen casing market demand[27] Business Review The Group focused on quality and high-end products, expanding into food, skincare, and medical biomaterials, with the latter showing exceptional performance in R&D and approvals - The Group's core guiding principle is "strengthening standard management and solidifying new product quality," with a focus on increasing the proportion of high-end casing products, accounting for approximately 40% of first-half sales volume[28] - The Group is intensifying market development efforts in new business areas such as collagen food, skincare products, and high-molecular collagen medical biomaterials[28] Collagen Casings New collagen casing products gained significant market acceptance, production efficiency improved through innovation, and raw material sourcing and cost management were enhanced - Market acceptance for the six new series of collagen casing products significantly improved after market promotion[29] - Production processes were optimized through technological innovation, equipment upgrades, and resource investment, enhancing production efficiency[29] - Raw material import channels were expanded, and domestic acquisition points increased to ensure stable supply, while standardized management of equipment and spare parts was implemented to reduce costs[29] High-Molecular Collagen Medical Biomaterials, Collagen Food and Skincare Products Non-casing business sales grew by 93%, led by high-molecular collagen medical biomaterials with strong performance and progress in medical device approvals, exceeding FDA standards - Sales of business segments other than collagen casings increased by approximately 93% year-on-year, with high-molecular collagen medical biomaterials performing exceptionally well[30] - The endotoxin content of medical collagen raw materials is only 0.01EU/ml, superior to the US FDA standard of 0.5EU/ml[30] - Documentation for the "Collagen Bone Graft Material (Artificial Bone)" Class III medical device product license approval is being finalized, and clinical trials for "Dental Medical Collagen Sponge" have been completed, with plans to enter the application process in the second half of the year[30] Group Accolades The 'Shenguan' brand was recognized among China's Top 500 Most Valuable Brands, maintaining its research center status, holding 116 patents, and collaborating on research with universities - The "Shenguan" brand was evaluated by the World Brand Lab as one of China's Top 500 Most Valuable Brands in 2025[31] Group Patent Status (As at June 30, 2025): | Patent Authority | Total Granted | In Force | Pending | | :--- | :--- | :--- | :--- | | China National Intellectual Property Administration | 108 | 71 | 22 | | Taiwan Intellectual Property Office, Ministry of Economic Affairs | 2 | 2 | – | | United States Patent and Trademark Office | 1 | 1 | – | | Intellectual Property Office of Singapore | 2 | 2 | – | | Intellectual Property Department, Ministry of Commerce, Cambodia | 1 | 1 | – | | Directorate General of Intellectual Property, Indonesia | 1 | 1 | – | | Intellectual Property Corporation of Malaysia | 1 | 1 | – | | Total | 116 | 79 | 22 | - The Group collaborates closely with Huazhong University of Science and Technology, publishing research articles in Advanced Science and BioDesign Research journals, with six co-developed patents authorized or pending[32][33] Quality Control Strict quality control, multiple ISO and FDA certifications enable global exports, while a subsidiary's extensive testing capabilities support high-end collagen raw material development - Collagen casing production is certified with multiple management systems including ISO9001, ISO22000, ISO10012, ISO45001, and ISO14001, and has obtained US FDA registration, allowing products to be exported to Southeast Asia, Europe, and the United States[34] - Subsidiary Wuzhou Zhongguan Testing Technology Service Co., Ltd. possesses over 800 physicochemical indicator testing capabilities and provides third-party impartial testing services, which helps the Group develop a high-end collagen raw material base[35] Customer Relationships The Group maintains strong, long-term relationships with domestic and international partners, ensuring a stable customer base and continuous new client acquisition - The Group maintains close relationships with leading meat product processing and sausage manufacturers in China and various overseas markets including Southeast Asia, South America, and the United States[36] - The Group continuously attracts new customers while maintaining its existing customer base, achieving good results[36] Raw Material Supply Bovine inner hide supply has been stable since H2 2024, significantly improving from prior years, with the main supplier holding a food production license - The supply of bovine inner hide, the main raw material for collagen casings, has remained stable since the second half of 2024, showing significant improvement compared to the previous two years[37] - The main supplier, Guangxi Zhiguan Industrial Development Co., Ltd., has obtained a food production license valid until October 2027[38] Financial Analysis Revenue decreased by 1.9% and gross profit by 34.5%, leading to a RMB 40.6 million loss attributable to owners of the parent, impacted by weak consumer confidence, inventory write-downs, and increased tax expense - Revenue decreased by 1.9% to RMB 443.9 million, primarily due to weakened demand in the meat market caused by insufficient consumer confidence[39] - Gross profit decreased by 34.5% to RMB 51.7 million, with the gross profit margin falling from 17.5% to 11.7%, mainly due to inventory write-downs and preferential sales policies for old process products[41] - Loss attributable to owners of the parent was approximately RMB 40.6 million, a reversal from a profit of approximately RMB 8.2 million in the prior period[50] Revenue Revenue decreased by 1.9% to RMB 443.9 million, primarily due to weakened market demand for meat products amid insufficient consumer confidence Revenue (RMB millions): | Period | Amount | | :--- | :--- | | Current period | 443.9 | | Prior period | 452.4 | | Change | -1.9% | Cost of Sales Cost of sales increased by 5.1% to RMB 392.2 million, driven by a 312.5% surge in inventory write-downs and provisions, despite slight reductions in raw material and energy costs Cost of Sales Composition (RMB millions): | Item | Current Period | Prior Period | Change | | :--- | :--- | :--- | :--- | | Total cost of sales | 392.2 | 373.3 | +5.1% | | Inventory write-downs and provisions | 23.1 | 5.6 | +312.5% | | Raw material costs | 163.1 | 164.7 | -1.0% | | Energy expenses | 76.2 | 76.4 | -0.2% | | Direct labor costs | 78.7 | 75.5 | +4.2% | - Inventory write-downs and provisions significantly increased from RMB 5.6 million in the prior period to RMB 23.1 million in the current period, which is the main reason for the increase in cost of sales[40] Gross Profit Gross profit decreased by 34.5% to RMB 51.7 million, with gross profit margin falling from 17.5% to 11.7%, primarily due to inventory write-downs and promotional sales Gross Profit and Gross Profit Margin (RMB millions): | Indicator | Current Period | Prior Period | Change | | :--- | :--- | :--- | :--- | | Gross profit | 51.7 | 79.0 | -34.5% | | Gross profit margin | 11.7% | 17.5% | -5.8 percentage points | | Gross profit margin after deducting inventory write-downs and provisions | 16.8% | 18.7% | -1.9 percentage points | - The decrease in gross profit margin is primarily due to increased inventory write-downs and provisions, as well as preferential policies implemented to accelerate sales of old process products[41] Other Income and Gains Other income and gains decreased by 54.4% to RMB 14.5 million Other Income and Gains (RMB millions): | Period | Amount | | :--- | :--- | | Current period | 14.5 | | Prior period | 31.9 | | Change | -54.4% | Selling and Distribution Expenses Selling and distribution expenses decreased by 19.5% to RMB 15.0 million, with its revenue ratio falling from 4.1% to 3.4% Selling and Distribution Expenses (RMB millions): | Period | Amount | | :--- | :--- | | Current period | 15.0 | | Prior period | 18.6 | | Change | -19.5% | Administrative Expenses Administrative expenses increased by 10.4% to RMB 65.9 million, primarily due to higher staff costs and a RMB 2.9 million revaluation loss on investment properties Administrative Expenses (RMB millions): | Period | Amount | | :--- | :--- | | Current period | 65.9 | | Prior period | 59.6 | | Change | +10.4% | - The increase in administrative expenses is mainly due to higher employee remuneration and benefits expenses, and a revaluation loss of approximately RMB 2.9 million on investment properties[44] Finance Costs Finance costs decreased by 31.4% to RMB 2.5 million Finance Costs (RMB millions): | Period | Amount | | :--- | :--- | | Current period | 2.5 | | Prior period | 3.7 | | Change | -31.4% | Share of Loss of an Associate The Group no longer shared losses from an associate in the current period, as its net investment had been reduced to zero by prior losses and impairment Share of Loss of an Associate (RMB thousands): | Period | Amount | | :--- | :--- | | Current period | – | | Prior period | (287) | Impairment of Accounts Receivable and Bills Receivable Impairment of accounts receivable and bills receivable decreased to RMB 3.0 million from RMB 6.4 million in the prior period Impairment of Accounts Receivable and Bills Receivable (RMB millions): | Period | Amount | | :--- | :--- | | Current period | 3.0 | | Prior period | 6.4 | Income Tax Expense Income tax expense significantly increased to RMB 18.0 million from RMB 9.7 million, primarily due to financial planning adjustments between China and Hong Kong entities, leading to dividend withholding tax Income Tax Expense (RMB millions): | Period | Amount | | :--- | :--- | | Current period | 18.0 | | Prior period | 9.7 | - Income tax expense significantly increased, primarily due to overall financial planning adjustments between the Group's companies in China and Hong Kong, resulting in dividend withholding tax expenses and provisions[48] Profit Attributable to Non-Controlling Interests Profit attributable to non-controlling interests increased to RMB 1.5 million, representing the aggregate profit from non-wholly owned subsidiaries Profit Attributable to Non-Controlling Interests (RMB millions): | Period | Amount | | :--- | :--- | | Current period | 1.5 | | Prior period | 0.7 | Loss Attributable to Owners of the Parent The Group reported a loss attributable to owners of the parent of RMB 40.6 million, a reversal from a RMB 8.2 million profit in the prior period Loss Attributable to Owners of the Parent (RMB millions): | Period | Amount | | :--- | :--- | | Current period | (40.6) | | Prior period | 8.2 | Liquidity and Capital Resources Cash and equivalents, net of dividends, decreased to RMB 477.1 million, while bank borrowings rose to RMB 410.3 million, increasing the debt-to-equity ratio to 19.7%; operating cash outflow was RMB 188.3 million, with future capital commitments of RMB 130.2 million - As of June 30, 2025, cash and cash equivalents, together with pledged and fixed deposits, amounted to approximately RMB 595.0 million, or RMB 477.1 million after deducting dividends, a decrease of approximately RMB 169.2 million from the end of 2024[51] - Total bank borrowings increased to approximately RMB 410.3 million, all repayable within one year[52] - The net cash position (after deducting dividends) was RMB 66.8 million, a decrease of approximately RMB 339.2 million from the end of 2024; the debt-to-equity ratio increased to 19.7% (December 31, 2024: 10.8%)[53] Cash and Bank Borrowings Cash and equivalents, net of dividends, decreased to RMB 477.1 million, while bank borrowings rose to RMB 410.3 million, increasing the debt-to-equity ratio to 19.7% Cash and Bank Borrowings Overview (RMB millions): | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents together with pledged and fixed deposits | 595.0 | 646.3 | | Cash and cash equivalents together with pledged and fixed deposits after deducting dividends | 477.1 | – | | Total bank borrowings | 410.3 | 240.3 | | Net cash position (after deducting dividends) | 66.8 | 406.0 | | Debt-to-equity ratio | 19.7% | 10.8% | Cash Flows Net cash outflow from operating activities was RMB 188.3 million, primarily due to increased inventory and reduced accounts payable, offset by inflows from investing and financing activities Cash Flows (For the six months ended June 30, RMB millions): | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash outflow from operating activities | (188.3) | (149.5) | | Net cash inflow from investing activities | 57.6 | – | | Net cash inflow from financing activities | 164.9 | – | - Net cash outflow from operating activities increased by 25.9%, mainly due to increased inventory and decreased accounts payable[54] Exposure to Exchange Rate Risk Operating primarily in China with RMB-denominated transactions, the Group has no formal hedging policy, as the Board anticipates no significant impact from future currency fluctuations - The Group primarily settles transactions in Renminbi and has not adopted a formal hedging policy, as the Board believes future currency fluctuations will not have a significant impact on operations[55] Capital Expenditure Capital expenditure was RMB 17.3 million, with future commitments of RMB 130.2 million for capacity expansion and equipment upgrades, including RMB 100.0 million estimated for 2025 Capital Expenditure and Commitments (RMB millions): | Item | Amount | | :--- | :--- | | Capital expenditure for the current period | 17.3 | | Capital commitments as of June 30, 2025 | 130.2 | | Estimated capital expenditure for 2025 | 100.0 | - Future capital commitments are primarily related to expanding, improving, and upgrading production equipment, particularly for the renovation of high-quality collagen casing production lines[56] Pledge of Assets Pledged bank deposits totaled RMB 26.4 million as of June 30, 2025 Pledged Bank Deposits (RMB millions): | Date | Amount | | :--- | :--- | | June 30, 2025 | 26.4 | Contingent Liabilities The Group had no significant contingent liabilities as of June 30, 2025 - The Group had no significant contingent liabilities as of the end of the reporting period[58] Material Investments, Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures No significant investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures occurred during the period - No material investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures occurred during the reporting period[59] Events After the Reporting Period No significant post-reporting period events affecting the Group have occurred as of this announcement date - No significant events affecting the Group have occurred subsequent to the reporting period as of the date of this announcement[60] Human Resources The Group had 3,010 employees with RMB 134.7 million in staff costs, focusing on automation to mitigate rising labor expenses Human Resources Overview (RMB millions): | Indicator | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Number of contracted employees | 3,010 | 2,730 | | Total remuneration and employee benefits expenses | 134.7 | 124.0 | - The Group is committed to enhancing automated production to offset continuously rising labor costs[61] Outlook Macroeconomic Outlook China's government will continue implementing policies to stabilize employment, boost consumption, and expand emerging industry investment, aiming to unleash domestic demand potential - The country will continue to promote policies to stabilize employment, boost consumption, and expand investment in emerging industries to unleash domestic demand potential[62] Collagen Casing Business Outlook The Group will focus on standardizing collagen casing production, enhancing new product applicability, improving efficiency, resolving bottlenecks, and strengthening market expansion efforts - Key work for the second half of the year includes strengthening standardized production management and enhancing the applicability of the six new series of products[63] - The Group will advance improvements in the production environment, site environment, and equipment environment to enhance production efficiency and product quality[63] - The Group plans to improve collagen casing production support capabilities, resolve production bottlenecks, and conduct training for market marketing and technical service teams to continuously expand the market[63] High-Molecular Collagen Medical Biomaterials Industry Outlook The Group will boost medical collagen raw material sales, expedite Class III medical device approvals for 'artificial bone' and 'oral collagen sponge,' and advance other biomaterial R&D - The Group will continue to promote the production and sales of medical collagen raw materials to enhance performance[64] - Efforts will be made to accelerate the finalization of supplementary materials required for "artificial bone" approval and to compile post-clinical data for "oral medical collagen sponge" in preparation for application[65][66] - The Group will continue to advance the research and development and preclinical preparation for other high-molecular collagen medical biomaterials[67] Collagen Food Industry Outlook The Group will innovate high-molecular collagen food applications, expand marketing for 'Niu Xiaojin' and 'Boboji,' and adjust strategies via in-store and online channels to boost performance - The Group will expand marketing and promotion for products such as "Niu Xiaojin" and "Boboji"[67] - Marketing strategies will be adjusted, and the marketing team expanded, utilizing in-store experiences and online live streaming to strive for better performance[67] Collagen Skincare Products Industry Outlook The Group will research high-molecular collagen in skincare, develop new products, expand brands like 'Luxianna,' and enhance advertising and sales planning for dual online and offline sales - The Group will continue to research and develop new daily skincare and washing products, expanding the product chain for brands such as "Luxianna," "Gaojile," "Collagen Family," and "Guangcaidunsheng"[68] - Advertising and sales planning will be strengthened to fully promote both online (e-commerce, WeChat commerce) and offline sales[68] Overall Group Strategy The Group aims to accelerate Shenguan's health industry development, expand collagen technology applications, launch more products, and enhance shareholder returns - The Group's team will continue to strive to accelerate the development of Shenguan's grand health industry and further expand the technological application of collagen[68] - The Group will develop and launch more collagen industry chain products to the market, providing better investment returns for shareholders[68] Other Information Share Option Scheme The employee stock option scheme, adopted in 2020 and revised in 2024, aims to attract and retain talent, with a 10% share cap and approximately 5 years remaining; no options were transacted this period - The share option scheme aims to attract and retain qualified individuals and promote the Group's business development[69] - The scheme has a ten-year validity, with approximately 5 years remaining as of June 30, 2025[69] - Under the scheme, the total number of shares that can be issued is capped at 10% of the issued shares on the adoption date (323,048,000 shares)[72] Payment of Interim Dividend The Board does not recommend an interim dividend for this period, prioritizing future capital expenditures and market expansion needs - The Board does not recommend paying an interim dividend for this reporting period, to support future capital expenditures and market expansion[75] Purchase, Redemption or Sale of the Company's Listed Securities Neither the company nor its subsidiaries purchased, redeemed, or sold any of the company's listed securities during the period - During the reporting period, neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities[76] Corporate Governance Code The company complied with corporate governance codes, except for the combined Chairman and CEO roles, which the Board is reviewing, while the Chairman ensures board effectiveness and shareholder communication - The company did not comply with code provision C.2.1 (separation of Chairman and Chief Executive Officer roles), but the Board believes the current structure fosters strong leadership[77] - The company will continue to consider the feasibility of appointing a separate Chief Executive Officer[78] - The Chairman's responsibilities include ensuring the Board acts in the company's best interests, maintaining effective communication with shareholders, and leading the Board's effective operation[79][81] Model Code for Securities Transactions The company adopted the Listing Rules' Model Code for securities transactions, with all directors confirming compliance and no known breaches by senior management - The company has adopted the Model Code set out in Appendix C3 of the Listing Rules, and all directors confirmed compliance during the reporting period[80] Audit Committee The Audit Committee, comprising three independent non-executive directors with a professionally qualified Chairman, reviewed and approved the interim results, confirming compliance with standards - The Audit Committee comprises three independent non-executive directors, with Mr. Xu Rongguo, the Chairman, possessing professional accounting qualifications[82] - The Committee has reviewed and approved the Group's unaudited condensed consolidated interim results, deeming them compliant with all applicable accounting standards and Listing Rules[82] Board of Directors Board Members The Board comprises four executive directors, one non-executive director, and three independent non-executive directors, including the Chairman - The Board of Directors includes four executive directors, one non-executive director, and three independent non-executive directors[83]