神威药业(02877) - 2025 - 中期业绩

Company Overview and Financial Summary Financial Highlights In the first half of 2025, the Group faced industry challenges with declining turnover and gross profit margin, yet net profit only slightly decreased due to stringent cost control and increased investment income, maintaining stable operating cash flow H1 2025 Financial Highlights | Metric | H1 2025 (RMB thousands) | Y-o-Y Change | | :--- | :--- | :--- | | Turnover | 1,652,698 | -20.8% | | Gross Profit Margin | 72.2% | -3.1 percentage points | | Profit for the Period | 614,663 | -1.9% | | Earnings Per Share | 81 cents | -2.4% | | Net Cash from Operating Activities | 566,319 | +0.4% | | Second Interim Dividend | 11 cents per share | - | Performance Overview and Market Environment In H1 2025, the Group experienced negative operational growth with sales down 20.8% year-on-year and gross margin falling from 75.3% to 72.2%, primarily due to shrinking TCM demand, consumption downgrade, centralized procurement price cuts, rising production costs, and medical insurance cost controls; however, net profit only slightly decreased by 1.9% through cost efficiency and increased investment income - Overall sales decreased by 20.8% to RMB 1,652,698,000, primarily due to macro factors such as shrinking demand in the Traditional Chinese Medicine (TCM) industry, consumption downgrade, centralized procurement price reductions, rising production costs, and medical insurance cost controls[4] - Gross profit margin decreased from 75.3% in the same period last year to 72.2%, mainly due to increased raw material procurement costs and the impact of centralized procurement on drug prices[4] - Through cost control and efficiency improvements, sales and distribution costs decreased by 20.7%, administrative expenses by 12.9%, and coupled with increased investment income, net profit only slightly decreased by 1.9%, with net profit margin improving from 30.0% to 37.2%[5] - Net cash from operating activities was RMB 566,319,000, a slight increase of 0.4% year-on-year, generating approximately RMB 465,705,000 in free cash flow during the first half[5] Dividend Declaration The Board declared a second interim dividend of RMB 11 cents per share for 2025, bringing the total dividends paid to shareholders for 2025 to RMB 47 cents per share, including the first interim dividend - Declared a second interim dividend of RMB 11 cents per share for 2025[6] - Together with the first interim dividend of RMB 36 cents per share for 2025, total dividends paid to shareholders for 2025 amounted to RMB 47 cents per share[6] Operating Performance Analysis Sales by Dosage Form In H1 2025, the Group experienced a general decline in sales across all dosage forms, with total sales decreasing by 20.8% year-on-year, while oral products remained a key development strategy, accounting for 65.8% of total sales H1 2025 Sales by Dosage Form | Dosage Form | H1 2025 Sales (RMB thousands) | Y-o-Y Change | 2025 Sales Share | | :--- | :--- | :--- | :--- | | Injections | 565,628 | -27.4% | 34.2% | | Soft Capsules | 217,383 | -24.7% | 13.2% | | Granules | 272,695 | -21.0% | 16.5% | | TCM Formula Granules | 487,717 | -12.1% | 29.5% | | Others | 109,275 | -8.1% | 6.6% | | Total Oral Products | 1,087,070 | -16.9% | 65.8% | | Total Sales | 1,652,698 | -20.8% | 100.0% | - Oral products accounted for 65.8% of total sales, while injection products accounted for 34.2%, with the Group continuing to prioritize the expansion of oral preparations as a key development strategy[7] Injections Total sales of injection products decreased by 27.4% year-on-year, primarily due to significant reductions in sales of Qingkailing Injection and Shenmai Injection - Total sales of injection products decreased by 27.4%, with Qingkailing Injection and Shenmai Injection sales decreasing by 50.1% and 21.0% respectively[8] Soft Capsules Total sales of soft capsule products decreased by 24.7% year-on-year, mainly due to reduced sales of Wufu Xinnaoqing Soft Capsules, Huoxiang Zhengqi Soft Capsules, and Qingkailing Soft Capsules, though exclusive products Jiangzhi Tongluo Soft Capsules and Dandeng Tongnao Soft Capsules achieved growth - Total sales of soft capsule products decreased by 24.7%, with Wufu Xinnaoqing Soft Capsules, Huoxiang Zhengqi Soft Capsules, and Qingkailing Soft Capsules sales decreasing by 67.4%, 16.0%, and 24.6% respectively[9] - Exclusive products Jiangzhi Tongluo Soft Capsules and Dandeng Tongnao Soft Capsules recorded sales growth of 16.5% and 15.2% respectively[9] Granules Total sales of granule products decreased by 21.0% year-on-year, primarily due to significant reductions in sales of respiratory medications Phenamin Caffeine Granules and Xiao'er Qingfei Huatan Granules, though the exclusive product Shujin Tongluo Granules achieved growth - Total sales of granule products decreased by 21.0%, with Phenamin Caffeine Granules and Xiao'er Qingfei Huatan Granules sales decreasing by 40.1% and 57.8% respectively[9] - Exclusive product Shujin Tongluo Granules recorded sales growth of 43.8%[9] TCM Formula Granules Sales of TCM formula granules decreased by 12.1% year-on-year, primarily due to increased overdue accounts receivable leading to delayed shipments, and intensified market competition - Sales of TCM formula granules decreased by 12.1%, mainly due to increased overdue accounts receivable and the Group's temporary suspension of shipments to institutions not meeting risk management requirements[9] Other Dosage Forms Sales of other dosage forms, including pills and tablets, decreased by 8.1% year-on-year - Sales of other dosage forms decreased by 8.1% year-on-year[7] Sales by Drug Category The Group experienced significant declines in sales of essential medicines and prescription drugs, with an even larger drop in OTC drugs, reflecting weak market demand and policy impacts Essential Medicines Overall sales of the Group's regularly produced drugs listed in the National Essential Medicines Catalogue decreased by 30.7% to RMB 582,080,000, accounting for 35.2% of total sales, mainly due to reduced sales of related varieties; national policies promoting widespread use of essential medicines are expected to drive future growth - Eighteen of the Group's regularly produced drugs are listed in the National Essential Medicines Catalogue, but overall sales decreased by 30.7% to RMB 582,080,000, accounting for 35.2% of the Group's total sales[10] - The National Health Commission emphasized improving the national drug system, implementing grassroots drug linkage services, and consolidating the essential medicines system, which is expected to drive sustained growth in essential medicines[11] Prescription and Over-the-Counter Drugs Prescription drug sales decreased by 20.4% year-on-year, accounting for 89.3% of total sales; OTC drug sales decreased by 24.0%, accounting for 10.7% H1 2025 Sales by Drug Category and Efficacy | Drug Category | H1 2025 Sales (RMB thousands) | Sales Share | Sales Change | | :--- | :--- | :--- | :--- | | TCM Formula Granules | 487,717 | 29.5% | -12.1% | | Respiratory Prescription Drugs | 264,410 | 16.0% | -47.6% | | Cardiovascular and Cerebrovascular Injection Prescription Drugs | 294,462 | 17.8% | -14.9% | | Exclusive Oral Prescription Drugs | 266,627 | 16.1% | 3.6% | | Other Prescription Drugs | 162,726 | 9.9% | -15.2% | | Total Prescription Drugs | 1,475,942 | 89.3% | -20.4% | | OTC Drugs | 176,756 | 10.7% | -24.0% | | Total Sales | 1,652,698 | 100% | -20.8% | Key Product Line Details The Group's key product lines face diverse challenges, with declining sales in TCM formula granules and respiratory drugs, cardiovascular and cerebrovascular injections affected by centralized procurement, but exclusive oral prescription drugs maintaining growth, while OTC drugs decreased due to high base and consumer confidence TCM Formula Granules Business Sales of TCM formula granules decreased by 12.1% to RMB 487,717,000, accounting for 29.5% of total sales, primarily due to increased overdue accounts receivable leading to delayed shipments and price wars from new suppliers; the Group is reorganizing its team, increasing national market personnel, and prioritizing hospital market development in 10 other provinces - Sales of TCM formula granules decreased by 12.1% to RMB 487,717,000, accounting for 29.5% of total sales, ranking among the top five listed companies for TCM formula granules nationwide[13] - The sales decline was mainly due to increased overdue accounts receivable leading to temporary suspension of shipments to some hospitals and primary healthcare institutions, as well as price wars from new suppliers[13] - The Group is reorganizing its formula granule business unit team, increasing national market personnel, and prioritizing the development of hospital markets in 10 provinces outside Hebei and Yunnan[14] Respiratory Prescription Drugs Sales of respiratory prescription drugs significantly decreased by 47.6% to RMB 264,410,000, accounting for 16.0% of total sales, primarily due to a high base of social inventory post-pandemic, slowing macroeconomy, and inventory adjustments in terminal channels; the self-developed 'JC Capsule' has completed Phase III clinical trials and is expected to obtain a production license in the second half of the year - Sales of respiratory prescription drugs significantly decreased by 47.6% to RMB 264,410,000, with Qingkailing Injection and Phenamin Caffeine Granules sales decreasing by 50.1% and 40.1% respectively[15] - The sales decline was mainly due to a high base post-pandemic, weak market demand caused by a slowing macroeconomy, and inventory adjustments by medical institutions and retail pharmacies[16] - The self-developed 'JC Capsule' for upper respiratory tract infections has completed Phase III clinical trials and is expected to obtain a production license in the second half of 2025[16] Cardiovascular and Cerebrovascular Injection Prescription Drugs Sales of cardiovascular and cerebrovascular injection prescription drugs recorded a negative growth of 14.9% to RMB 294,462,000, accounting for 17.8% of total sales, primarily due to the national centralized procurement's 'dual control' policy, leading to a significant decline in hospital procurement demand - Sales of cardiovascular and cerebrovascular injection prescription drugs recorded a negative growth of 14.9% to RMB 294,462,000[17] - The primary sales channel is hospitals, and sales significantly declined due to the implementation of 'dual control' policies on drug prices and procurement volumes across various regions following national centralized procurement[17] Exclusive Oral Prescription Drugs Sales of exclusive oral prescription drugs grew by 3.6% year-on-year, accounting for 16.1% of total sales, with Jiangzhi Tongluo Soft Capsules, Dandeng Tongnao Soft Capsules, and Shujin Tongluo Granules all achieving significant growth; Qihuang Tongmi Soft Capsules and Dandeng Tongnao Soft Capsules received recommendations in expert consensus and medication guidelines, enhancing clinical recognition; the Group will continue to increase evidence-based medicine research and academic promotion - Sales of exclusive oral prescription drugs increased by 3.6%, accounting for 16.1% of total sales[18][19] - Jiangzhi Tongluo Soft Capsules, Dandeng Tongnao Soft Capsules, and Shujin Tongluo Granules grew by 16.5%, 15.2%, and 43.8% respectively[18] - Qihuang Tongmi Soft Capsules were recommended in the 'Expert Consensus on Integrated Traditional Chinese and Western Medicine Diagnosis and Treatment of Functional Constipation (2025)', and Dandeng Tongnao Soft Capsules were included in the 'Guidelines for Rational Drug Use in Cerebrovascular Diseases', enhancing their clinical standing[19][20] Over-the-Counter Drugs Overall OTC drug sales decreased by 24.0% year-on-year, with Huoxiang Zhengqi Soft Capsules, Qingkailing Soft Capsules, and Xiao'er Qingfei Huatan Granules all experiencing sales declines, primarily due to high base reserves by the public and pharmacies post-pandemic, and slowing economic growth affecting consumer confidence - Overall OTC drug sales decreased by 24.0% year-on-year, with Huoxiang Zhengqi Soft Capsules and Qingkailing Soft Capsules declining by 16.0% and 24.6% respectively[22] - Xiao'er Qingfei Huatan Granules sales decreased by 57.8%[22] - The sales reduction was mainly due to high base reserves post-pandemic and slowing economic growth affecting consumer confidence[22] Research and Development & Innovation New Drug Clinical Trial Progress The Group continues to increase R&D investment, focusing on modern TCM new drug development for chronic diseases; the exclusive innovative drug 'Q-B-Q-F Concentrated Pills' is still in Phase III clinical trials, while 'Sailuotong Capsules' and 'JC Capsules' have completed Phase III clinical trials, with the goal of completing production license applications by year-end - The exclusive innovative drug 'Q-B-Q-F Concentrated Pills' is still in Phase III clinical trials[23] - 'Sailuotong Capsules' and 'JC Capsules' have completed Phase III clinical trials, with the goal of completing the submission of production license applications by the end of 2025[23] - R&D expenses accounted for 3.0% of total sales revenue during the period, and the Group will continue to develop innovative TCM drugs focusing on advantageous areas such as cardiovascular and cerebrovascular diseases, pediatric diseases, orthopedic diseases, gynecological diseases, and geriatric diseases[24] Technological Innovation and Awards The Group's 'Research and Application Project of Hawthorn Leaves and Formula Granules, Hebei Characteristic Traditional Chinese Medicine' won the Third Prize of Hebei Provincial Science and Technology Progress Award; this project achieved significant results in hawthorn leaf quality evaluation, material basis research for formula granules, and quality standard formulation, promoting the standardized development of the TCM industry - The 'Research and Application Project of Hawthorn Leaves and Formula Granules, Hebei Characteristic Traditional Chinese Medicine' won the Third Prize of Hebei Provincial Science and Technology Progress Award[25] - The project achieved significant results in constructing a quality evaluation system for hawthorn leaves, researching the material basis of formula granules, formulating quality standards, and industrial upgrading, filling a gap in this field[25] - A total of 49 papers were published, 1 provincial standard and 1 local standard were formulated, and 2 authorized utility model patents were obtained[25] Development of Ancient Classic Prescriptions The Group actively promotes the inheritance and innovation of Traditional Chinese Medicine, having developed and researched over 100 ancient classic prescriptions for new drug transformation; the self-developed 'Shaoyao Gancao Tang Granules' received NMPA approval for market launch, becoming the first approved classic prescription in 2025; Phase II clinical trials for 'Yigong San Granules', a Class 1.1 new TCM drug for chronic anemia, are progressing smoothly - Over 100 ancient classic prescriptions have been developed and researched for new drug transformation, and the registration applications for multiple Class 1.1 and Class 3.1 new TCM drugs are being accelerated[26] - The self-developed 'Shaoyao Gancao Tang Granules' received approval from the National Medical Products Administration (NMPA) for market launch, becoming the first approved classic prescription in 2025 and the Group's second approved classic prescription[26] - Preparations for Phase II clinical trials of 'Yigong San Granules', a Class 1.1 new TCM drug for chronic anemia, are progressing smoothly, with its clinical value particularly prominent for those unresponsive to EPO treatment[26] Industry Policies and Market Dynamics National Support Policies for TCM In H1 2025, the state continued to introduce multiple policies supporting the high-quality development of the TCM industry, including deepening the '14th Five-Year Plan' for TCM development, promoting standard system construction, enhancing TCM quality and technological innovation, incorporating innovative drugs and high-value TCM drugs into medical insurance, and promoting TCM services to grassroots levels, providing opportunities for TCM enterprises to expand their markets - The National Conference of Directors of Traditional Chinese Medicine Bureaus outlined key tasks for 2025, including deepening the '14th Five-Year Plan' for TCM development, promoting standard system construction, and enhancing TCM quality and technological innovation[28] - The National Healthcare Security Administration announced the inclusion of innovative drugs and high-value TCM drugs in medical insurance policy adjustments and management, supporting TCM innovation[29] - The National Health Commission promoted the optimization of community and grassroots TCM service systems, enhancing basic public health service capabilities in TCM, thereby driving TCM enterprises to expand their markets at the grassroots level[29] National Centralized Procurement Bidding for Proprietary Chinese Medicines Eight of the Group's key products, including Qingkailing Injection and Shuxuening Injection, successfully won bids in the national centralized procurement for proprietary Chinese medicines; this successful bid aligns with DRGs/DIP payment requirements, enhancing the Group's product demand, market coverage, and sales potential in the terminal market - Eight of the Group's key products, including Qingkailing Injection, Shuxuening Injection, Shenmai Injection, Shuanghuanglian Injection, Dengzhanhuasu Injection, Yinzhihuang Injection, Qingkailing Soft Capsules, and Xuesaitong Dripping Pills, successfully won bids in the national centralized procurement for proprietary Chinese medicines[30] - The winning products cover therapeutic areas such as cardiovascular and cerebrovascular diseases, respiratory diseases, and digestive system diseases, all of which are commonly used medical insurance and essential drug varieties in clinical practice[30] - This centralized procurement bid win aligns with DRGs/DIP payment requirements, which will further enhance the Group's product demand, market coverage, and greater market sales potential in the terminal market[31] Financial Analysis Turnover In H1 2025, the Group's turnover decreased by 20.8% year-on-year to RMB 1,652,698,000, with major dosage forms such as injections, soft capsules, granules, and TCM formula granules all experiencing declining turnover H1 2025 Turnover by Dosage Form | Dosage Form | H1 2025 Turnover (RMB thousands) | Y-o-Y Change | Share of Total Turnover | | :--- | :--- | :--- | :--- | | Injections | 565,628 | -27.4% | 34.2% | | Soft Capsules | 217,383 | -24.7% | 13.2% | | Granules | 272,695 | -21.0% | 16.5% | | TCM Formula Granules | 487,717 | -12.1% | 29.5% | | Other Dosage Forms | 109,275 | -8.1% | 6.6% | | Total Turnover | 1,652,698 | -20.8% | 100.0% | - Turnover from prescription drugs and OTC drugs was RMB 1,475,942,000 and RMB 176,756,000 respectively, accounting for 89.3% and 10.7% of total turnover[32] Cost of Sales In H1 2025, the cost of sales was RMB 459,092,000, representing 27.8% of turnover, with direct materials accounting for 66.8% of total production costs - Cost of sales was RMB 459,092,000, accounting for 27.8% of turnover[33] - Direct materials, direct labor, and other production costs accounted for 66.8%, 14.3%, and 18.9% of total production costs respectively[33] Operating Gross Profit Margin In H1 2025, the overall gross profit margin was 72.2%, a decrease from 75.3% in the same period last year, with average gross profit margins for all major product dosage forms declining to varying degrees H1 2025 Average Gross Profit Margin by Dosage Form | Dosage Form | H1 2025 Gross Profit Margin | H1 2024 Gross Profit Margin | | :--- | :--- | :--- | | Injections | 71.6% | 76.0% | | Soft Capsules | 76.0% | 77.8% | | Granules | 77.5% | 78.6% | | TCM Formula Granules | 69.7% | 72.9% | | Overall Gross Profit Margin | 72.2% | 75.3% | Other Income Other income primarily included enterprise development funds of RMB 156,300,000, a slight decrease from the same period last year - Other income primarily consisted of enterprise development funds of RMB 156,300,000 (H1 2024: RMB 162,297,000)[35] Investment Income Investment income significantly increased, primarily from interest income on bank deposits and structured deposits, and income from financial product investments - Investment income primarily included interest income from bank deposits and structured deposits of RMB 119,821,000 (H1 2024: RMB 116,556,000) and income from financial product investments of RMB 98,469,000 (H1 2024: RMB 4,617,000)[36] Other Gains and Losses The Group recorded a net exchange gain of RMB 32,843,000, primarily due to changes in the exchange rates of AUD and HKD against RMB - Recorded a net exchange gain of RMB 32,843,000 (H1 2024: RMB 19,118,000), primarily due to changes in the exchange rates of AUD and HKD against RMB[37] Impairment of Financial Assets The Group made an impairment reversal of RMB 2,706,000 for trade receivables and recognized an impairment of RMB 871,000 for trade receivables secured by bank notes - Made an impairment reversal of RMB 2,706,000 for trade receivables (H1 2024: impairment of RMB 4,788,000)[38] - Recognized an impairment of RMB 871,000 for trade receivables secured by bank notes (H1 2024: impairment reversal of RMB 502,000)[38] Selling and Distribution Costs Selling and distribution costs decreased by 20.7% year-on-year, accounting for 39.2% of turnover, primarily due to the Group's enhanced cost control, reducing market development, marketing management, and promotional expenses, as well as sales personnel numbers and salaries - Selling and distribution costs decreased by 20.7% year-on-year, accounting for 39.2% of turnover[39] - Mainly due to enhanced cost control, reducing market development expenses, marketing management expenses, market promotion expenses, and the number and salaries of sales personnel[39] Administrative Expenses Administrative expenses decreased by approximately 12.9% year-on-year, accounting for about 7.7% of turnover - Administrative expenses decreased by approximately 12.9% year-on-year, accounting for about 7.7% of turnover (H1 2024: 7.0%)[40] Research and Development Costs Research and development costs accounted for approximately 3.0% of turnover, an increase from 2.1% in the same period last year - Research and development costs accounted for approximately 3.0% of turnover (H1 2024: 2.1%)[41] Taxation Total taxation for the period was RMB 160,015,000, with the effective tax rate decreasing from 27.3% in the same period last year to 20.7%, primarily due to reduced withholding tax on dividends distributed by domestic subsidiaries - Total taxation for the period was RMB 160,015,000, with the effective tax rate decreasing from 27.3% in the same period last year to 20.7%[42] - Mainly due to a decrease in withholding tax on dividends distributed by domestic subsidiaries during the period compared to the same period last year[42] Profit for the Period Net profit for H1 2025 was RMB 614,663,000, a 1.9% decrease from the same period last year, primarily due to increased raw material procurement costs and the impact of centralized procurement on drug prices, leading to reduced turnover and gross profit - Net profit was RMB 614,663,000, a decrease of 1.9% compared to the same period last year[43] - The decrease in profit was mainly due to increased raw material procurement costs and the impact of centralized procurement on drug prices, leading to reduced turnover and gross profit[43] Liquidity and Financial Resources As of June 30, 2025, the Group's bank balances and cash amounted to RMB 6,860,819,000, indicating a robust financial position with sufficient resources for future development - As of June 30, 2025, bank balances and cash amounted to RMB 6,860,819,000 (December 31, 2024: RMB 6,140,153,000)[44] - The fair value of financial assets at fair value through profit or loss was RMB 100,419,000[44] - The Directors believe the Group's financial position is robust, with sufficient financial resources to meet future development needs[44] Capital Expenditure and Property, Plant and Equipment In H1 2025, the Group's capital expenditure included additions to construction in progress of approximately RMB 59,126,000 and acquisition of other property, plant and equipment of approximately RMB 19,063,000; depreciation of property, plant and equipment was RMB 69,511,000 - Additions to construction in progress of RMB 59,126,000 and acquisition of other property, plant and equipment of RMB 19,063,000 in H1 2025[45] - Depreciation of property, plant and equipment was RMB 69,511,000 (H1 2024: RMB 75,634,000)[45] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the Group's unaudited consolidated profit or loss and other comprehensive income for the six months ended June 30, 2025, showing key financial indicators such as turnover, gross profit, profit for the period, and earnings per share, along with comparisons to the prior year Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 1,652,698 | 2,086,695 | | Cost of Sales | (459,092) | (514,511) | | Gross Profit | 1,193,606 | 1,572,184 | | Other Income | 162,059 | 168,985 | | Investment Income | 218,290 | 121,173 | | Other Gains and Losses | 29,418 | 14,206 | | Reversal (Provision) for Impairment Loss on Financial Assets, Net | 1,835 | (4,286) | | Selling and Distribution Costs | (647,836) | (817,369) | | Administrative Expenses | (126,452) | (145,212) | | Research and Development Costs | (50,378) | (44,746) | | Finance Costs | (5,864) | (2,852) | | Profit Before Tax | 774,678 | 862,083 | | Taxation | (160,015) | (235,604) | | Profit and Total Comprehensive Income for the Period | 614,663 | 626,479 | | Basic Earnings Per Share | RMB 81 cents | RMB 83 cents | Condensed Consolidated Statement of Financial Position This statement presents the Group's unaudited consolidated financial position as of June 30, 2025, including key components such as non-current assets, current assets, current liabilities, non-current liabilities, and shareholders' equity Summary of Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Non-current Assets | 1,434,737 | 1,443,007 | | Property, Plant and Equipment | 1,225,148 | 1,219,402 | | Current Assets | 8,952,919 | 8,598,523 | | Inventories | 722,369 | 813,190 | | Trade Receivables | 915,803 | 908,115 | | Bank Balances and Cash | 6,860,819 | 6,140,153 | | Current Liabilities | 2,428,081 | 2,449,996 | | Trade Payables | 373,676 | 367,046 | | Net Current Assets | 6,524,838 | 6,148,527 | | Non-current Liabilities | 149,952 | 124,630 | | Net Assets | 7,809,623 | 7,466,904 | | Total Equity | 7,809,623 | 7,466,904 | Notes to the Condensed Consolidated Financial Statements This section provides detailed notes to the condensed consolidated financial statements, explaining the basis of preparation, significant accounting policies, composition and reasons for changes in financial data, and important information such as related party transactions and capital commitments General Information and Significant Accounting Policies The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, presented in RMB, and adopt the same accounting policies and methods of computation as the annual consolidated financial statements for 2024 - The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[51] - Presented in the Company's functional currency, RMB, and adopt the same accounting policies and methods of computation as the annual consolidated financial statements for 2024[52][53] - The application of amendments to International Financial Reporting Standards had no significant impact on the financial position and performance for the current and prior periods[54] Turnover and Segment Information The Group operates a single segment business of research, development, manufacturing, and trading of Traditional Chinese Medicine products, primarily selling to external customers in China (including Hong Kong); the notes provide an analysis of turnover by major products - The Group operates a single segment business of research, development, manufacturing, and trading of Traditional Chinese Medicine products[55] Analysis of Turnover from Major Products | Product | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Injections | 565,628 | 779,238 | | Soft Capsules | 217,383 | 288,759 | | Granules | 272,695 | 345,074 | | TCM Formula Granules | 487,717 | 554,726 | | Others | 109,275 | 118,898 | | Total | 1,652,698 | 2,086,695 | Taxation Taxation includes PRC corporate income tax, under-provision for prior years, withholding tax on distributed profits of PRC subsidiaries, and deferred tax; certain subsidiaries enjoy a 15% preferential tax rate or tax exemption; a 5% withholding tax rate applies to dividends distributed by PRC subsidiaries to overseas investors Composition of Taxation | Tax Category | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | PRC Corporate Income Tax | 97,329 | 144,053 | | Under-provision in Prior Years | 5,763 | 7,979 | | Withholding Tax on Distributed Profits of PRC Subsidiaries | 70,287 | 81,752 | | Deferred Tax | (13,364) | 1,820 | | Total Taxation | 160,015 | 235,604 | - Certain subsidiaries operating in Western China and recognized as high-tech enterprises enjoy a 15% preferential PRC corporate income tax rate, while a subsidiary engaged in agricultural product business enjoys tax exemption[58] - Direct holding companies of PRC subsidiaries enjoy a 5% withholding tax rate[58] Profit for the Period Profit for the period is stated after deducting amortization of intangible assets, depreciation of property, plant and equipment, and including enterprise development funds, net exchange gains, and gains from disposal of property, plant and equipment Items Deducted (Included) in Profit for the Period | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Amortization of Intangible Assets | 4,424 | 5,044 | | Depreciation of Property, Plant and Equipment | 69,511 | 75,634 | | Enterprise Development Funds (included in other income) | (156,300) | (162,297) | | Net Exchange Gains (included in other gains and losses) | (32,843) | (19,118) | | Gain (Loss) on Disposal of Property, Plant and Equipment | (7,619) | 255 | Dividends The Company's Directors have declared a second interim dividend of RMB 11 cents per share for 2025, totaling RMB 83,094,000, to be paid on September 26, 2025 - The Directors have declared a second interim dividend of RMB 11 cents per share for 2025, totaling RMB 83,094,000[61] - The dividend will be paid on September 26, 2025, to shareholders whose names appear on the Company's register of members on September 12, 2025[61] Earnings Per Share Basic and diluted earnings per share attributable to owners of the Company are calculated based on profit for the period and the weighted average number of ordinary shares outstanding Earnings Per Share Calculation Data | Metric | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit attributable to owners of the Company | 614,663 | 626,479 | | Weighted average number of ordinary shares outstanding | 755,400,000 | 755,400,000 | | Basic and diluted earnings per share | RMB 81 cents | RMB 83 cents | Property, Plant and Equipment In H1 2025, the Group added RMB 59,126,000 in construction in progress and acquired other property, plant and equipment totaling RMB 19,063,000; a gain of RMB 7,619,000 was recognized from the disposal of certain property, plant and equipment - Additions to construction in progress of RMB 59,126,000 (H1 2024: RMB 40,518,000)[65] - Acquisition of other property, plant and equipment of RMB 19,063,000 (H1 2024: RMB 22,088,000)[65] - Gain on disposal of property, plant and equipment of RMB 7,619,000 (H1 2024: loss of RMB 255,000)[65] Trade Receivables / Trade Receivables Secured by Bank Notes As of June 30, 2025, net trade receivables amounted to RMB 915,803,000, and net trade receivables secured by bank notes amounted to RMB 276,312,000; the Group generally grants credit terms ranging from six months to one year Trade Receivables and Trade Receivables Secured by Bank Notes | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade Receivables | 950,242 | 945,260 | | Less: Provision for Expected Credit Losses | (34,439) | (37,145) | | Net Trade Receivables | 915,803 | 908,115 | | Trade Receivables Secured by Bank Notes | 278,883 | 295,462 | | Less: Provision for Expected Credit Losses | (2,571) | (1,700) | | Net Trade Receivables Secured by Bank Notes | 276,312 | 293,762 | | Total | 1,192,115 | 1,201,877 | - The Group generally grants credit terms ranging from six months to one year to its trade customers[67] Reversal (Provision) for Impairment Loss on Financial Assets under Expected Credit Loss Model, Net In H1 2025, an impairment loss reversal of RMB 2,706,000 was recognized for trade receivables, and an impairment loss of RMB 871,000 was recognized for trade receivables secured by bank notes, resulting in a net reversal of RMB 1,835,000 Reversal (Provision) for Impairment Loss on Financial Assets, Net | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Impairment loss recognized (reversed) on trade receivables | (2,706) | 4,788 | | Impairment loss recognized (reversed) on trade receivables secured by bank notes | 871 | (502) | | Total | (1,835) | 4,286 | Trade Payables / Trade Payables Secured by Bank Notes As of June 30, 2025, total trade payables amounted to RMB 377,676,000, of which RMB 4,000,000 were trade payables secured by bank notes; the average credit period ranged from two to six months Trade Payables and Trade Payables Secured by Bank Notes | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade Payables | 373,676 | 367,046 | | Trade Payables Secured by Bank Notes | 4,000 | 35,918 | | Total | 377,676 | 402,964 | - The average credit period obtained for trade purchases ranged from two to six months[70] Share-based Payment Transactions The Company's share option scheme expired on May 28, 2025, with no outstanding share options; the share award scheme, adopted in 2018 to incentivize employees, had 71,600,000 shares held by the trustee at the end of the reporting period, with no shares granted or traded during the period - The Company's share option scheme expired on May 28, 2025, with no outstanding share options[71] - The share award scheme was adopted in 2018 to recognize employee contributions and attract talent[72] - As of the end of the reporting period, 71,600,000 shares were held by the trustee, and no shares were sold or purchased by the trustee during the period[72] Related Party Disclosures The Group has transactions with related parties, including Shenwei Pharmaceutical Technology Co Ltd, Shenwei (Sanhe) Real Estate Development Co Ltd, and Shijiazhuang Luancheng Shenwei Training School, involving interest expenses on lease liabilities and service fees Summary of Related Party Transactions and Balances | Related Party Name | Nature of Transaction | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | :--- | | Shenwei Pharmaceutical Technology Co Ltd | Interest expense on lease liabilities | 287 | 412 | | Shenwei Pharmaceutical Technology Co Ltd | Service fees | 5,916 | 5,916 | | Shenwei (Sanhe) Real Estate Development Co Ltd | Interest expense on lease liabilities | 47 | 68 | | Shenwei (Sanhe) Real Estate Development Co Ltd | Service fees | 1,353 | 1,353 | | Shijiazhuang Luancheng Shenwei Training School | Service fees | 621 | 360 | | Related Party Name | Nature of Balance | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | :--- | | Shenwei Pharmaceutical Technology Co Ltd | Lease liabilities | 10,517 | 13,871 | | Shenwei (Sanhe) Real Estate Development Co Ltd | Lease liabilities | 1,733 | 2,285 | - Shenwei Pharmaceutical Technology, Shenwei Sanhe, and Shenwei Training School are all ultimately controlled by the Company's controlling shareholder[73] Capital Commitments As of June 30, 2025, the Group's contracted capital expenditure for the acquisition of property, plant and equipment, but not yet provided for in the condensed consolidated financial statements, amounted to RMB 225,175,000 - As of June 30, 2025, contracted capital expenditure for the acquisition of property, plant and equipment, but not yet provided for in the condensed consolidated financial statements, amounted to RMB 225,175,000 (December 31, 2024: RMB 217,818,000)[74] Corporate Governance and Other Information Closure of Register of Members The Company will suspend registration of members from September 11 to September 12, 2025, to determine eligibility for the second interim dividend for 2025 - The Company will suspend registration of members from September 11, 2025, to September 12, 2025 (both dates inclusive)[75] - All transfer documents must be lodged with the Company's Hong Kong Share Registrar by 4:30 p.m. on September 10, 2025, to be eligible for the second interim dividend for 2025[75] Purchase, Sale or Redemption of Securities Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's securities during the six months ended June 30, 2025 - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's securities during the six months ended June 30, 2025[76] Compliance with Corporate Governance Code The Company complied with the Corporate Governance Code in Appendix C1 of the Listing Rules during the reporting period, except for the deviation where the Chairman and CEO roles are held by the same person; the Board believes this arrangement facilitates business strategy execution and maximizes operational efficiency, subject to periodic review, and all Directors confirmed compliance with the Model Code - The Company complied with the Corporate Governance Code in Appendix C1 of the Listing Rules during the reporting period, except for the deviation from Code Provision C.2.1 regarding the separation of roles for Chairman and Chief Executive Officer[77] - Mr Li Zhenjiang holds both the Chairman and Chief Executive Officer positions, and the Board believes this arrangement facilitates the execution of the Group's business strategies and maximizes operational efficiency[77] - All Directors of the Company confirmed their compliance with the Model Code for Securities Transactions by Directors during the six months ended June 30, 2025[78] Audit Committee The Company's Audit Committee, together with management and external auditors, reviewed the accounting principles and policies adopted by the Group and the unaudited consolidated results for the six months ended June 30, 2025 - The Company's Audit Committee reviewed the accounting principles and policies adopted by the Group and the unaudited consolidated results for the six months ended June 30, 2025[79] Board of Directors This announcement is issued by Mr Li Zhenjiang, Chairman, on behalf of the Board; as of the announcement date, the Board members include executive directors, non-executive directors, and independent non-executive directors - Chairman Mr Li Zhenjiang issued this announcement on behalf of the Board[81] - The Board members include Executive Directors Mr Li Zhenjiang, Ms Xin Yunxia, and Mr Li Huimin; Non-executive Director Mr Zhou Wencheng; and Independent Non-executive Directors Mr Liao Shunhui, Mr Yao Yian, and Ms Wang Guihua[81]