绿新生物科技(01084) - 2025 - 中期业绩

Company Overview and Performance Summary This section provides an overview of the company's business and a summary of its financial performance for the period Interim Results Announcement Green Fresh Biotechnology Company Limited (formerly Green Future Food Hydrocolloid Marine Science Company Limited) announced an unaudited condensed consolidated interim net loss of RMB 12.3 million for the six months ended June 30, 2025, compared to a net profit of RMB 22.6 million in the prior year, primarily due to decreased revenue and narrower gross margin - The Board does not recommend the payment of an interim dividend for the first half of 2025[2] Key Financial Indicators Comparison for H1 2025 | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | Change (percentage points) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 410.0 | 459.0 | -10.7% | - | | Gross profit | 60.1 | 98.8 | -39.2% | - | | Gross margin | 14.7% | 21.5% | - | -6.8 | | Net loss/profit | (12.3) | 22.6 | Turned to loss | - | | Net loss/profit margin | -3.0% | 4.9% | - | -7.9 | Condensed Consolidated Financial Statements This section presents the condensed consolidated financial statements, including the income statement, comprehensive income statement, balance sheet, statement of changes in equity, and cash flow statement Condensed Consolidated Statement of Profit or Loss for the Interim Period For the six months ended June 30, 2025, the company's revenue decreased by 10.7% year-on-year to RMB 409,977 thousand, and gross profit significantly decreased by 39.2% to RMB 60,053 thousand, resulting in a net loss of RMB 12,301 thousand compared to a net profit of RMB 22,624 thousand in the prior year Key Data from Condensed Consolidated Statement of Profit or Loss | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 409,977 | 459,015 | -10.7% | | Cost of sales | (349,924) | (360,168) | -2.8% | | Gross profit | 60,053 | 98,847 | -39.2% | | Operating (loss)/profit | (3,611) | 46,397 | Turned to loss | | (Loss)/Profit for the period | (12,301) | 22,624 | Turned to loss | | Basic (loss)/earnings per share (RMB) | (0.014) | 0.028 | Turned to loss | Condensed Consolidated Statement of Comprehensive Income for the Interim Period The total comprehensive loss for the period was RMB 11,331 thousand, compared to a total comprehensive income of RMB 20,534 thousand in the prior year, mainly due to the combined effect of loss for the period and currency translation differences Key Data from Condensed Consolidated Statement of Comprehensive Income | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | (Loss)/Profit for the period | (12,301) | 22,624 | | Currency translation differences (may be reclassified to profit or loss) | 3,661 | (2,090) | | Currency translation differences (will not be reclassified to profit or loss) | (2,691) | — | | Total comprehensive (loss)/income for the period | (11,331) | 20,534 | Condensed Consolidated Statement of Financial Position for the Interim Period As of June 30, 2025, total assets were RMB 1,555,511 thousand, a slight decrease from December 31, 2024; total current assets were RMB 1,025,742 thousand, with an increase in inventories and a decrease in cash and bank balances; total equity and total liabilities both decreased Key Data from Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total assets | 1,555,511 | 1,572,268 | -1.07% | | Total non-current assets | 529,769 | 533,583 | -0.71% | | Total current assets | 1,025,742 | 1,038,685 | -1.25% | | Inventories | 773,188 | 747,713 | +3.41% | | Cash and bank balances | 81,315 | 120,734 | -32.65% | | Total equity | 829,977 | 850,142 | -2.37% | | Total liabilities | 725,534 | 722,126 | +0.47% | | Total non-current liabilities | 134,317 | 126,366 | +6.30% | | Total current liabilities | 591,217 | 595,760 | -0.76% | Condensed Consolidated Statement of Changes in Equity for the Interim Period As of June 30, 2025, total equity attributable to owners of the Company was RMB 820,145 thousand, a decrease from the beginning of the period, mainly due to a loss of RMB 12,068 thousand for the period and dividends paid of RMB 9,020 thousand Key Data from Condensed Consolidated Statement of Changes in Equity | Indicator | Balance at January 1, 2025 (RMB thousand) | Balance at June 30, 2025 (RMB thousand) | | :--- | :--- | :--- | | Total equity attributable to owners of the Company | 839,870 | 820,145 | | Loss for the period | (12,068) | - | | Final dividend paid for 2025 | (9,020) | - | Condensed Consolidated Statement of Cash Flows for the Interim Period For the six months ended June 30, 2025, net cash inflow from operating activities was RMB 14,649 thousand, a significant decrease from the prior year; net cash used in investing activities was RMB 18,495 thousand, and net cash used in financing activities was RMB 35,706 thousand, resulting in a decrease in cash and cash equivalents at the end of the period Key Data from Condensed Consolidated Statement of Cash Flows | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Net cash inflow from operating activities | 14,649 | 45,391 | -67.7% | | Net cash used in investing activities | (18,495) | (20,590) | -10.2% | | Net cash used in financing activities | (35,706) | (33,129) | +7.78% | | Net decrease in cash and cash equivalents | (39,552) | (8,328) | +375% | | Cash and cash equivalents at end of period | 81,315 | 64,556 | +26.0% | Notes to the Condensed Consolidated Financial Information This section provides detailed notes to the condensed consolidated financial information, explaining the basis of preparation, significant accounting policies, and other relevant financial details 1 General Information of the Group Green Fresh Biotechnology Company Limited (formerly Green Future Food Hydrocolloid Marine Science Company Limited), incorporated in the Cayman Islands, primarily manufactures and sells food hydrocolloid products, including carrageenan, agar, compound, and konjac products, in China and overseas, with shares listed on the Hong Kong Stock Exchange since October 17, 2019 - The company's English name has been changed from "Green Future Food Hydrocolloid Marine Science Company Limited" to "Green Fresh Biotechnology Company Limited", and its Chinese name from "綠新親水膠體海洋科技有限公司" to "綠新生物科技有限公司", effective from July 17, 2025[11] - The Group is principally engaged in the manufacture and sale of food hydrocolloid products, including carrageenan products, agar products, compound products, and konjac products, in China and overseas[12] 2 Basis of Preparation The condensed consolidated interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2024 - Income tax for the interim period is accrued using the tax rate that would be applicable to the expected total annual earnings[18] 3 Significant Accounting Policies The principal accounting policies adopted in preparing this condensed consolidated interim financial information are consistent with those used in the annual consolidated financial statements for the year ended December 31, 2024, except for the adoption of certain new and revised standards which did not have a significant impact on the Group's interim results and financial position - The new and revised standards adopted by the Group, such as HKAS 21 (Amendment) – Lack of Exchangeability, did not have a significant impact on the Group's interim results and financial position[18][20] - New and revised standards not yet effective include HKFRS 9 and 7 (Amendments) – Amendments to Classification and Measurement of Financial Instruments, Annual Improvements to HKFRS Standards – Volume 11 (effective January 1, 2026), and HKFRS 18 and 19 (Amendments) (effective January 1, 2027)[21] 4 Critical Accounting Estimates and Judgements The significant judgments made by management and key sources of estimation uncertainty in preparing the interim condensed consolidated financial information are the same as those applied in the annual consolidated financial statements for the year ended December 31, 2024 5 Financial Risk Management The Group is exposed to market risks (foreign exchange, interest rates), credit risk, and liquidity risk, with risk management policies remaining unchanged since the end of last year; liquidity risk analysis shows total contractual undiscounted cash flows of RMB 703,723 thousand as of June 30, 2025 - The carrying amounts of the Group's liquid financial assets and liabilities approximate their fair values at the reporting date due to their short maturities[29] Financial Liabilities Liquidity Risk Analysis (June 30, 2025) | Term | Less than 1 year (RMB thousand) | 1 to 2 years (RMB thousand) | 2 to 5 years (RMB thousand) | Over 5 years (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Bank borrowings | 436,481 | 44,950 | 66,029 | 250 | 547,710 | | Interest payable on borrowings | 12,489 | 3,479 | 4,965 | 4 | 20,937 | | Lease liabilities | 1,415 | 1,415 | 196 | — | 3,026 | | Trade and other payables | 132,050 | — | — | — | 132,050 | | Total | 582,435 | 49,844 | 71,190 | 254 | 703,723 | 6 Revenue and Segment Information The Group's chief operating decision maker reviews performance from a product perspective, identifying five operating segments: agar, carrageenan, konjac products, compound products, and others; for the six months ended June 30, 2025, total revenue was RMB 409,977 thousand, with carrageenan sales being the largest contributor, but overall revenue and segment results decreased year-on-year - The Group's five operating segments are: agar manufacturing and sales, carrageenan manufacturing and sales, konjac product manufacturing and sales, compound product manufacturing and sales, and others (such as seaweed powder manufacturing and sales)[30][31] Segment Revenue and Results (H1 2025) | Segment | Revenue (RMB thousand) | Cost of Sales (RMB thousand) | Segment Results (RMB thousand) | | :--- | :--- | :--- | :--- | | Agar sales | 124,418 | (92,147) | 32,271 | | Carrageenan sales | 186,443 | (182,228) | 4,215 | | Konjac product sales | 35,865 | (29,711) | 6,154 | | Compound product sales | 55,250 | (40,882) | 14,368 | | Others | 8,001 | (4,956) | 3,045 | | Total | 409,977 | (349,924) | 60,053 | Revenue from External Customers by Country/Region | Country/Region | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | China | 189,308 | 245,862 | -23.0% | | Europe | 124,373 | 111,562 | +11.5% | | Asia (excluding China) | 61,766 | 76,934 | -19.7% | | South America | 19,916 | 16,203 | +22.9% | | North America | 11,796 | 7,644 | +54.3% | | Africa | 2,700 | 682 | +296% | | Oceania | 118 | 128 | -7.8% | | Total | 409,977 | 459,015 | -10.7% | 7 Profit Before Income Tax For the six months ended June 30, 2025, loss before income tax was RMB 16,359 thousand, compared to a profit of RMB 29,991 thousand in the prior year, mainly impacted by increased employee benefit expenses, utilities expenses, and net impairment losses on financial assets Composition of (Loss)/Profit Before Income Tax | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Government grants | 2,583 | 5,097 | | Employee benefit expenses | 61,026 | 56,056 | | Depreciation of property, plant and equipment | 21,634 | 23,225 | | Utilities expenses | 14,831 | 13,178 | | Interest and finance costs on bank borrowings | 13,118 | 16,039 | | Net impairment losses on financial assets | 1,233 | — | 8 Income Tax Expense The Group recorded an income tax credit of RMB 4,058 thousand in H1 2025, compared to an income tax expense of RMB 7,367 thousand in the prior year, primarily due to deferred income tax credits; Chinese subsidiaries enjoy preferential tax rates, such as 15% for Luqi (Fujian) and 12.5% for Donghaiwan Composition of Income Tax Expense | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Current income tax | 654 | 3,432 | | Deferred income tax | (4,712) | 3,935 | | Income tax credit/(expense) | (4,058) | 7,367 | - Chinese subsidiaries Fujian Luqi Food Hydrocolloid Co., Ltd. (Luqi (Fujian)) enjoys a preferential income tax rate of 15%, and Longhai Donghaiwan Seaweed Aquaculture Comprehensive Development Co., Ltd. (Donghaiwan) enjoys a preferential income tax rate of 12.5%[39] - The holding company of the Group's Chinese subsidiaries, incorporated in Hong Kong, is subject to a 5% withholding tax[39] 9 Earnings Per Share For the six months ended June 30, 2025, basic and diluted loss per share attributable to ordinary equity holders of the Company was RMB 0.014, compared to earnings per share of RMB 0.028 in the prior year, reflecting a turn from profit to loss in the current period Basic and Diluted (Loss)/Earnings Per Share | Indicator | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Basic (loss)/earnings per share | (0.014) | 0.028 | | Diluted (loss)/earnings per share | (0.014) | 0.028 | Reconciliation of (Loss)/Profit for Calculating (Loss)/Earnings Per Share | Indicator | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | (Loss)/Profit attributable to ordinary equity holders of the Company | (12,068) | 23,086 | 10 Dividends The Board of Directors did not propose an interim dividend for the first half of 2025, consistent with the situation in 2024 - The Board did not propose an interim dividend for the first half of 2025[42] 11 Property, Plant and Equipment, Intangible Assets and Land Use Rights As of June 30, 2025, the carrying value of property, plant and equipment was RMB 363,789 thousand, land use rights were RMB 51,772 thousand, and intangible assets were RMB 65,329 thousand, with additions, depreciation, and amortization recorded during the period Changes in Property, Plant and Equipment, Intangible Assets and Land Use Rights | Item | January 1, 2025 (RMB thousand) | Additions (RMB thousand) | Depreciation/Amortization (RMB thousand) | June 30, 2025 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Property, plant and equipment | 372,947 | 13,100 | (21,634) | 363,789 | | Land use rights | 52,593 | — | (599) | 51,772 | | Intangible assets (goodwill and others) | 67,143 | 17 | (1,290) | 65,329 | - The land use rights and buildings pledged for bank borrowings by the Group as of June 30, 2025, are detailed in Note 17(a)[44] 12 Cash and Bank Balances As of June 30, 2025, total cash and bank balances were RMB 106,435 thousand, a decrease from RMB 141,436 thousand as of December 31, 2024, with restricted cash held as collateral Cash and Bank Balances | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Cash on hand and at bank | 81,315 | 120,734 | | Restricted cash – bank cash | 25,120 | 20,702 | | Total cash and bank balances | 106,435 | 141,436 | - Restricted cash represents deposits held at banks as collateral for the Group's bills payable and letters of credit[45] 13 Trade and Other Receivables As of June 30, 2025, total trade and other receivables were RMB 146,119 thousand, a slight decrease from December 31, 2024, with the largest portion of trade receivables aged within 30 days Trade and Other Receivables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables (net of loss allowance) | 113,359 | 112,753 | | Prepayments for raw material purchases | 8,096 | 12,095 | | Export tax rebates and deductible VAT receivable | 12,842 | 10,568 | | Other receivables | 11,822 | 14,120 | | Total trade and other receivables | 146,119 | 149,536 | Ageing Analysis of Trade Receivables (June 30, 2025) | Ageing | Amount (RMB thousand) | | :--- | :--- | | Up to 30 days | 62,269 | | 31 to 90 days | 32,028 | | 91 to 180 days | 2,056 | | 181 to 365 days | 8,774 | | Over one year | 11,349 | | Total | 116,476 | 14 Share Capital As of June 30, 2025, the Company's share capital was RMB 7,892 thousand, with 874,120,000 shares outstanding, remaining unchanged from the beginning of the period, while new shares were issued in the prior year due to the exercise of share options Changes in Share Capital | Item | June 30, 2025 (Shares) | June 30, 2025 (RMB thousand) | June 30, 2024 (Shares) | June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | At January 1 | 874,120,000 | 7,892 | 829,688,000 | 7,485 | | Shares issued upon exercise of share options | — | — | 4,432,000 | 40 | | At June 30 | 874,120,000 | 7,892 | 834,120,000 | 7,525 | 15 Share-based Payment For the period ended June 30, 2025, total share-based payment expenses were RMB 1,227 thousand, primarily from share award schemes; the share option scheme was fully exercised by June 30, 2025, with no outstanding share options Share-based Payment Expenses | Scheme | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Share option scheme | — | 341 | | Share award scheme (b) | 837 | 1,502 | | Share award scheme (c) | 390 | 191 | | Total | 1,227 | 2,034 | - As of June 30, 2025, the share option scheme has been fully exercised, with no outstanding share options[50] - Share award scheme (b) granted to three employees had 1,720,000 outstanding award shares as of June 30, 2025, with a remaining unamortized fair value of approximately RMB 1,763,000[53][54] - Share award scheme (c) granted to five employees had 2,280,000 outstanding award shares as of June 30, 2025, with a remaining unamortized fair value of approximately RMB 1,032,000[57][58] 16 Trade and Other Payables As of June 30, 2025, total trade and other payables were RMB 151,337 thousand, an increase from December 31, 2024, with trade payables primarily due within 90 days Trade and Other Payables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade payables | 116,322 | 93,302 | | Payables for property, plant and equipment | 1,950 | 3,873 | | Contract liabilities – customer advances | 7,597 | 7,500 | | Employee benefits payable | 8,372 | 8,094 | | Other taxes payable | 3,318 | 3,660 | | Others | 13,778 | 12,813 | | Total | 151,337 | 129,242 | Ageing Analysis of Trade Payables (June 30, 2025) | Ageing | Amount (RMB thousand) | | :--- | :--- | | 0 to 90 days | 96,020 | | 91 to 180 days | 10,018 | | 181 to 365 days | 10,284 | | Total | 116,322 | 17 Bank Borrowings and Lease Liabilities As of June 30, 2025, the Group's total borrowings were RMB 547,710 thousand, predominantly bank borrowings, with secured bank borrowings collateralized by land use rights and buildings; the weighted average effective interest rate for bank borrowings was 3.93%, a decrease from the prior year Total Bank Borrowings and Lease Liabilities | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total bank borrowings | 530,710 | 544,592 | | Loans from third parties | 17,000 | 17,000 | | Lease liabilities | 2,843 | 3,534 | | Total borrowings | 550,553 | 565,126 | Pledged Assets | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Land use rights | 28,484 | 28,895 | | Buildings | 55,812 | 58,307 | | Total assets pledged as collateral | 84,296 | 87,202 | - For the six months ended June 30, 2025, the weighted average effective interest rate for bank borrowings was 3.93% (H1 2024: 5.34%)[63] - The Group's unsecured bank borrowings are supported by personal guarantees from Mr. Chen Jincang and Mr. Guo Dongxu, with guarantee amounts of RMB 73,791,000 and RMB 10,000,000 respectively[63] - A long-term loan of RMB 17,000,000 from a third party (Zhangzhou Longhai District Xinwan Industrial Investment Co., Ltd.) for Xiamen Blue Seaweed Film Biotechnology Co., Ltd.'s biodegradable biopolysaccharide film cultivation program has a fixed return rate of 8.0% per annum[64] 17 Bank Borrowings and Lease Liabilities (c) Lease Liabilities As of June 30, 2025, total lease liabilities were RMB 2,843 thousand, primarily related to the Group's buildings, with RMB 1,270 thousand due within one year Lease Liabilities | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total minimum lease payments | 3,026 | 3,769 | | Future finance charges | (183) | (235) | | Total lease liabilities | 2,843 | 3,534 | | Amounts payable: within one year | 1,270 | 1,338 | | Amounts payable: after one year | 1,573 | 2,196 | 18 Commitments As of June 30, 2025, the Group's significant capital expenditures contracted but not recognized as liabilities amounted to RMB 7,754 thousand, primarily for property, plant and equipment Capital Commitments | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Property, plant and equipment | 7,754 | 9,476 | 19 Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities - The Group had no significant contingent liabilities as of June 30, 2025[68] 20 Related Party Transactions The Group's related party transactions primarily include personal guarantees provided by two directors for bank borrowings and key management personnel compensation, which slightly increased year-on-year - Two directors provided personal guarantees for the Group's bank borrowings, details of which are set out in Note 17[70] Key Management Personnel Compensation | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Key management personnel compensation | 4,584 | 4,520 | Management Discussion and Analysis This section provides management's perspective on the Group's operational and financial performance, strategic direction, and future outlook Change of Company Name The Company has changed its English name to "Green Fresh Biotechnology Company Limited" and its Chinese name to "綠新生物科技有限公司" to better reflect its business focus on researching, developing, producing, and selling seaweed products using advanced biotechnology - The change of company name aims to effectively communicate the Company's focus on leveraging advanced biotechnology for the research, development, production, and sale of seaweed products[72] - Seaweed is increasingly recognized as an environmentally friendly resource due to its carbon-negative footprint and diverse applications as a fossil fuel alternative[72] Long-term Business Strategy The Group is a global leading R&D manufacturer of all-natural functional materials, specializing in agar, carrageenan, konjac gum, and compound products for food, cosmetics, home, and laboratory media, ranking first in China and globally as the largest producer of agar and refined/semi-refined carrageenan products - The Group's main products include agar and carrageenan products made from naturally cultivated seaweed; konjac gum products made from naturally grown konjac; and compound products and related professional solutions that combine different hydrocolloids to provide extended functions[73] - Products are widely used in processed meats, confectionery, dairy products, sauces, baked goods, pet food, flavored tea beverages, 100% biodegradable facial masks, air fresheners, plastic substitute packaging and mulching films, as well as laboratory culture media and gel electrophoresis media for gene sequencing[73][74] - The Group ranks first among Chinese producers of agar products and refined and semi-refined carrageenan products, and is recognized as the world's largest producer of these products[74] Business Review In H1 2025, the Group faced weak economic conditions in its main markets (China and Europe), with China experiencing sluggish growth and intense price competition due to "involution" and tariff wars, leading to a 10.7% year-on-year decrease in total revenue from reduced sales volume and average selling prices of carrageenan and agar, though partially offset by lower seaweed material procurement prices and reduced loan interest rates - Weak economic conditions in China and Europe, coupled with sluggish growth and 'involution' in the Chinese market, led to intense price competition, further exacerbated by tariff wars[75][77] - In H1 2025, sales volume and average selling price of refined carrageenan decreased by approximately 4.2% and 5.5% respectively compared to H1 2024; agar sales volume and average selling price decreased by approximately 12.8% and 1.8% respectively[75] H1 2025 Revenue and Market Performance | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Total revenue | 410.0 | 459.0 | -10.7% | | Total revenue contribution from carrageenan and agar products | 75.8% | 78.8% | -3.0 percentage points | | China market revenue | 189.3 | 245.8 | -23.0% | | Overseas market revenue | 220.7 | 228.3 | -3.3% | | Europe market sales | 124.4 | 111.6 | +11.5% | | Asia market sales | 61.8 | 76.9 | -19.7% | - Decreased procurement prices for seaweed materials and lower interest rates on RMB, USD, and HKD-denominated loans led to reduced finance costs in H1 2025[75] Continuous Investment in Product Technology The Group continuously invests in product R&D to optimize its product portfolio and enhance profitability, focusing on high-margin compound products, instant agar, deep-processed carrageenan, konjac health foods, and new applications like gel air fresheners, cosmetic facial masks, and 100% biodegradable plastic substitutes - The Group optimizes its product portfolio through continuous investment in product R&D to enhance profitability[80] - Key development areas include: high-margin compound products, instant agar for dairy products, deep-processed carrageenan for baked goods, konjac health foods, gel air fresheners, cosmetic facial masks, and 100% biodegradable plastic substitute envelope window films, packaging films, and mulching films[80] Business Outlook Despite a sluggish economic environment in the first half, global demand for hydrocolloid products is expected to rebound with the anticipated end of the European conflict; China's sales performance is projected to remain stable, with an upward trend in compound products; the Group will leverage its industry-leading advantages and plans to invest in capacity expansion for its Indonesian subsidiary, Hongxin, to enhance cost competitiveness - Global demand for hydrocolloid products is expected to rebound with the anticipated end of the European conflict[81] - Directors anticipate China's sales performance to remain stable, with the upward trend in compound products continuing[81][82] - The Group plans to invest in capacity expansion for its Indonesian subsidiary, PT Hongxin Algae International (Hongxin), to leverage its lower operating costs and proximity to seaweed resources, thereby improving product quality and cost competitiveness[82] Interim Dividend The Board does not recommend the payment of an interim dividend for the first half of 2025 - The Board does not recommend the payment of an interim dividend for the first half of 2025[83] Financial Review This section provides a detailed review of the H1 2025 financial performance, covering revenue, cost of sales, gross profit, various expenses, net finance costs, and income tax expense, ultimately leading to the loss attributable to owners of the Company Revenue H1 2025 revenue was RMB 410.0 million, a 10.7% year-on-year decrease, mainly due to reduced sales volume and prices of carrageenan and agar, as well as the impact of "involution" and tariff wars in the Chinese market; revenue from konjac and other products increased Product Revenue Changes | Product | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Carrageenan | - | - | -30.0 | -13.9% | | Agar | - | - | -20.8 | -14.3% | | Compound products | - | - | -5.7 | -9.3% | | Konjac products | - | - | +4.2 | +13.2% | | Other products | - | - | +3.2 | +67.2% | - Total sales revenue from carrageenan and agar products accounted for 75.8% of the Group's revenue, a decrease of 3.0 percentage points compared to H1 2024[85] Cost of Sales H1 2025 cost of sales was RMB 349.9 million, a slight year-on-year decrease of 2.9%, primarily due to the combined effect of reduced carrageenan and agar sales volume and lower seaweed material procurement costs, partially offset by the base effect of inventory provision reversals in the prior year Cost of Sales Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cost of sales | 349.9 | 360.2 | -10.3 | -2.9% | - The decrease in cost of sales was primarily due to the combined effect of a total decrease of approximately 9.0% in carrageenan and agar sales volume and a continuous decline in seaweed material procurement costs, leading to lower average inventory costs[86] Gross Profit and Gross Margin H1 2025 gross profit was RMB 60.1 million, a significant year-on-year decrease of 39.2%; the overall gross margin was 14.7%, down 6.8 percentage points, mainly due to reduced carrageenan and agar selling prices, impacted by weak economic conditions and intensified "involution" competition Gross Profit and Gross Margin Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Gross profit | 60.1 | 98.8 | -38.7 | -39.2% | | Gross margin | 14.7% | 21.5% | - | -6.8 percentage points | - Gross margins for carrageenan and agar products decreased by 14.7 percentage points and 1.6 percentage points respectively, while gross margins for konjac and compound products increased by 1.8 percentage points and 0.5 percentage points respectively[87][88] Selling and Distribution Expenses H1 2025 selling and distribution expenses were RMB 12.1 million, a 28.7% year-on-year increase, mainly due to an increased number of overseas sales representatives, more trade fair participations, and corresponding increases in travel and accommodation expenses Selling and Distribution Expenses Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Selling and distribution expenses | 12.1 | 9.4 | +2.7 | +28.7% | Administrative Expenses H1 2025 administrative expenses were RMB 52.9 million, a 7.7% year-on-year increase, mainly due to higher staff wages and social security contributions, and increased R&D expenses related to mainstream and new product production Administrative Expenses Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Administrative expenses | 52.9 | 49.1 | +3.8 | +7.7% | Net Finance Costs H1 2025 finance costs decreased by RMB 3.8 million or 22.8%, primarily due to lower market interest rates on RMB, USD, and HKD-denominated loans, while finance income decreased Net Finance Costs Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Finance income | 0.13 | 0.287 | -0.157 | -54.7% | | Finance costs | 12.9 | 16.7 | -3.8 | -22.8% | - The decrease in finance costs was due to lower market interest rates on RMB, USD, and HKD-denominated loans in H1 2025[92] Income Tax Expense In H1 2025, the Group recorded an income tax credit of RMB 4.1 million, a decrease of RMB 11.5 million compared to an expense of RMB 7.4 million in the prior year, mainly due to deferred income tax credits Income Tax Expense Changes | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Current income tax | 654 | 3,432 | -2,778 | | Deferred income tax/(credit) | (4,712) | 3,935 | -8,647 | | Income tax (credit)/expense | (4,058) | 7,367 | -11,425 | Loss/Profit Attributable to Owners of the Company In H1 2025, the loss attributable to owners of the Company was RMB 12.1 million, compared to a profit of RMB 23.1 million in the prior year, a decrease of RMB 35.2 million, primarily due to a reduced net profit margin for the Group (Loss)/Profit Attributable to Owners of the Company | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (RMB million) | | :--- | :--- | :--- | :--- | | (Loss)/Profit attributable to owners of the Company | (12.1) | 23.1 | -35.2 | Liquidity and Financial Ratios As of June 30, 2025, the Group's cash and bank balances were RMB 106.4 million, with a current ratio of 1.73 and a gearing ratio of 36.1%; net current assets decreased by 1.9%, primarily due to increased inventories, decreased cash, and increased trade payables Financial Ratios | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current ratio | 1.73 | 1.74 | | Gearing ratio | 36.1% | 34.3% | Changes in Cash and Net Current Assets | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cash and bank balances | 106.4 | 141.4 | -35.0 | -24.8% | | Net current assets | 434.5 | 442.9 | -8.4 | -1.9% | Borrowings As of June 30, 2025, the Group's total bank borrowings were RMB 530.7 million, with RMB 436.5 million repayable within one year; the weighted average interest rate for bank borrowings was 3.93%, a decrease from 2024 Bank Borrowings | Indicator | June 30, 2025 (RMB million) | | :--- | :--- | | Total bank borrowings | 530.7 | | Repayable within one year | 436.5 | | Repayable after one year | 94.2 | - As of June 30, 2025, the weighted average interest rate (per annum) for bank borrowings was 3.93% (2024: 5.34%)[99] Interest Rate Risk The Group's interest rate risk primarily arises from interest-bearing short-term deposits and bank borrowings, facing cash flow interest rate risk for variable-rate borrowings and fair value interest rate risk for fixed-rate borrowings; directors expect minimal impact from interest rate changes on interest-bearing assets - The Group faces cash flow interest rate risk (variable-rate borrowings) and fair value interest rate risk (fixed-rate borrowings)[100] Pledged Assets As of June 30, 2025, the Group's bank borrowings were secured by land use rights and buildings with a carrying value of RMB 84.3 million, with secured bank borrowings amounting to RMB 148.3 million Pledged Assets and Secured Borrowings | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Carrying value of pledged land use rights and buildings | 84.3 | 87.2 | | Amount of secured bank borrowings | 148.3 | 169.7 | Future Plans for Material Investments or Capital Assets The Group plans to make further investments in the capacity expansion of its Indonesian subsidiary, Hongxin, in the foreseeable future to enhance cost competitiveness, with funding sourced from internal resources - The Group expects to make further investments in the capacity expansion of Hongxin in the foreseeable future, with funding to be sourced from the Group's internal resources[102] Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures In H1 2025, the Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures - In H1 2025, the Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures[104] Treasury Policy and Exposure to Exchange Rate Fluctuations The Group adopts a prudent approach to cash management and fund investment, with revenue and expenditure primarily denominated in RMB and USD, achieving a natural hedge against foreign exchange risk; no hedging activities were undertaken during the period - The Group's revenue and expenditure items are primarily denominated in RMB and USD, largely achieving a natural hedge against foreign exchange risk[105] - In H1 2025, the Group did not use any financial instruments for hedging purposes[105] Employees and Remuneration Policies As of June 30, 2025, the Group had 1,045 full-time employees, with total staff costs of RMB 61.0 million; the company offers competitive remuneration, training, and discretionary bonuses and equity awards based on performance Employees and Remuneration | Indicator | June 30, 2025 | | :--- | :--- | | Number of full-time employees | 1,045 | | Total staff costs (H1 2025) | RMB 61.0 million | - The Group provides competitive remuneration packages aligned with market rates and considers discretionary bonuses and equity awards based on overall Group performance and individual employee performance[106] Share Option Scheme and Share Award Scheme The pre-IPO share option scheme was fully vested and exercised by May 21, 2024, with no outstanding share options in H1 2025; no grants, exercises, lapses, or cancellations occurred under the post-IPO share option scheme during the period; under the share award scheme, the trustee purchased 1,596,000 shares and vested 1,620,000 award shares - All share options under the pre-IPO share option scheme were fully vested and exercised by May 21, 2024, with no outstanding pre-IPO share options as of June 30, 2025[107] - In H1 2025, the trustee of the share award scheme purchased 1,596,000 shares in the market for a total consideration of HKD 1,120,700, and a total of 1,620,000 award shares were vested[108] Capital Expenditure H1 2025 capital expenditure was RMB 18.6 million, primarily for plant, equipment, and land use rights Capital Expenditure | Indicator | H1 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Capital expenditure | 18.6 | 48.0 | Commitments As of June 30, 2025, the Group's contracted capital commitments amounted to RMB 7.8 million Contracted Capital Commitments | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Contracted capital commitments | 7.8 | 9.5 | Lease Liabilities As of June 30, 2025, total lease liabilities were RMB 2,843 thousand, related to the Group's buildings Lease Liabilities | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total lease liabilities | 2,843 | 3,534 | Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[113] Capital Structure There was no change in the Company's capital structure during H1 2025 - There was no change in the Company's capital structure during H1 2025[114] Purchase, Sale or Redemption of the Company's Listed Securities In H1 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - In H1 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[115] Events After Reporting Period After the reporting date, the company name change became effective on July 17, 2025, with relevant announcements published; no other significant events occurred - The company name change became effective on July 17, 2025, and an announcement regarding the adoption of the new English name and dual foreign name, along with the new stock short name for trading on the Stock Exchange, has been published[116] Corporate Governance The Company is committed to maintaining high standards of corporate governance and has complied with the applicable code provisions of the Corporate Governance Code, except for the combined roles of Chairman and Chief Executive Officer (Mr. Chen Jincang), which the Board believes benefits management and is balanced by an experienced executive team and independent non-executive directors - The Company has complied with the applicable code provisions of the Corporate Governance Code, except for the combined roles of Chairman and Chief Executive Officer (Mr. Chen Jincang)[118] - The Board believes that combining the roles of Chairman and Chief Executive Officer benefits the Group's management and that power and authority are balanced by a long-serving, excellent executive team and a Board comprising five executive directors and three independent non-executive directors[118] Compliance with the Model Code for Securities Transactions by Directors The Company has adopted the Model Code set out in Appendix C3 of the Listing Rules and confirms that all directors complied with the code in H1 2025 - The Company confirms that its directors complied with the Model Code set out in Appendix C3 of the Listing Rules in H1 2025[119] Audit Committee and Review of Interim Results The Audit Committee, comprising three independent non-executive directors, is responsible for reviewing financial statements, risk management, and internal controls; the Company's unaudited interim results and condensed consolidated interim financial statements for H1 2025 have been reviewed by the Audit Committee and by PricewaterhouseCoopers - The Audit Committee, comprising three independent non-executive directors with Mr. He Guiqing as Chairman, is primarily responsible for making recommendations on the appointment and dismissal of external auditors, reviewing financial statements, and overseeing risk management and internal control procedures[120] - The Company's unaudited interim results and condensed consolidated interim financial statements for H1 2025 have been reviewed by the Audit Committee and by PricewaterhouseCoopers in accordance with Hong Kong Standard on Review Engagements 2410[120]