东瑞制药(02348) - 2025 - 中期财报

Corporate Information This section provides essential details about the company's governance, operational structure, and shareholder-related matters Board of Directors and Governance Structure This section lists the company's board members (including executive, non-executive, and independent non-executive directors), CEO, and members of the audit, remuneration, and nomination committees - Chairperson of the Board is Ms. Li Qiling, CEO is Ms. Yu Liwei[3][4] - Mr. Hu Shuo was appointed as a non-executive director on August 1, 2025[3] - Mr. Lao Tongsheng chairs the Audit Committee, Mr. EDE, Ronald Hao Xi chairs the Remuneration Committee, and Ms. Li Qiling chairs the Nomination Committee[3][4] Company Basic Information This section provides basic company information such as auditor, principal bankers, head office and principal place of business, registered office, and share registrar - The company's auditor is Ernst & Young[5] - Principal bankers include Bank of China (Hong Kong) and The Hongkong and Shanghai Banking Corporation[6][8] - The company's registered office is in the Cayman Islands, and its head office and principal place of business are in Wan Chai, Hong Kong[6][8] Shareholder Information This section outlines the shareholder timetable, including book closure dates, record date, and payment date and amount for the interim dividend - The book closure dates for the interim dividend are from September 18 to September 19, 2025[7][8] - The record date for determining shareholders' entitlement to the interim dividend is September 19, 2025[7][8] - The interim dividend is HKD 0.015 per share, expected to be paid around October 3, 2025[7][8] Group Structure Chart This section visually represents the equity structure of the Group and its major wholly-owned subsidiaries Group Structure Overview This section visually presents the equity structure of ER-BAO Pharmaceutical (Holdings) Limited and its major wholly-owned subsidiaries, including Suzhou ER-BAO Pharmaceutical, Lanzhou ER-BAO Pharmaceutical, and Fujian ER-BAO Pharmaceutical - ER-BAO Pharmaceutical (Holdings) Limited (HKEX: 2348) is the Group's parent company[11] - Major wholly-owned subsidiaries include Suzhou ER-BAO Pharmaceutical Co., Ltd., Lanzhou ER-BAO Pharmaceutical Co., Ltd., and Fujian ER-BAO Pharmaceutical Co., Ltd[11] Financial Highlights This section summarizes the Group's key financial performance for the reporting period Key Financial Performance For the six months ended June 30, 2025, the Group's revenue increased by 9.2% year-on-year, but profit for the period significantly decreased by 79.3% due to non-recurring gains in the prior year (gain on disposal of an associate and government grants); excluding these non-recurring items, operating profit decreased by 17.1% Financial Summary for the Six Months Ended June 30, 2025 | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 630,424 | 577,447 | 9.2% | | Gross profit | 313,978 | 337,912 | –7.1% | | Gross profit margin | 49.8% | 58.5% | –8.7 percentage points | | Gain on disposal of an associate | 0 | 286,670 | Not applicable | | Profit before tax | 130,317 | 556,752 | –76.6% | | Profit for the period | 101,708 | 491,583 | –79.3% | | Net profit margin | 16.1% | 85.1% | –69.0 percentage points | | Profit for the period attributable to owners of the parent (excluding 2024 non-recurring profit) | 104,572 | 126,127 | –17.1% | | Earnings per share – basic (RMB) | 0.06961 | 0.3286 | –78.8% | | Interim dividend per share (HKD) | 0.015 | 0.015 | – | | Net asset value per share (RMB) | 2.199 | 2.180 | 0.9% | - The decrease in profit for the period was primarily due to Suzhou ER-BAO Shanfeng Road plant and Lanzhou ER-BAO not achieving commercial production at scale, price reductions for centralized procurement products, and increased R&D expenses[16][19] Management Discussion and Analysis This section provides an in-depth review of the Group's performance, industry environment, business operations, and future outlook Results The Group's revenue for the six months ended June 30, 2025, increased by 9.2% to RMB 630,424,000; however, profit attributable to owners of the parent significantly decreased by 78.8% year-on-year due to non-recurring gains in the prior year from disposal of an associate's equity and government grants, with operating profit (excluding non-recurring gains) decreasing by 17.1% Revenue and Profit for H1 2025 | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 630,424 | 577,447 | 9.2% | | Profit attributable to owners of the parent | 104,572 | 493,046 | –78.8% | | Change in operating profit (excluding non-recurring profit) | –21,555 | – | –17.1% | - The main reasons for the profit decline include Suzhou ER-BAO Shanfeng Road plant and Lanzhou ER-BAO not achieving commercial production at scale, price reductions for "An" series products due to national centralized procurement policies, and increased R&D expenses[16][19] Industry Environment In H1 2025, the pharmaceutical industry showed diversified development amidst policy changes, market competition, and quality improvements, with optimized centralized procurement policies, rising demand for generic drugs due to an aging population, and the profound impact of AI technology - The National Healthcare Security Administration optimized drug centralized procurement policies, strengthening quality assessment and supervision, with the 10th batch of centralized procurement canceling the rule of being pre-selected if the price reduction exceeds 50%, and the 11th batch drawing significant attention[18][20] - Global aging and increased competition have led to a continuous rise in the incidence of chronic diseases, tumors, and mental illnesses, creating broad market space for generic drugs[21][24] - The application of AI technology has a significant and profound impact on all aspects of the pharmaceutical industry, including R&D, production, and marketing, driving pharmaceutical enterprises towards transformation, innovation, and industrial collaboration[22][24] Business Review Overall sales increased by 9.2% during the period, with "An" series products declining due to centralized procurement, while antiviral drug entecavir dispersible tablets, Fujian ER-BAO's hyperlipidemia treatment series, and cefazolin powder injections all saw increased sales volume and value, and intermediate and API sales significantly grew by 142.7% due to commercial production at Suzhou ER-BAO Shanfeng Road plant and Lanzhou ER-BAO Major Product Sales Performance (H1 2025 vs H1 2024) | Product Category | Sales Volume Change | Sales Value Change | Primary Reason | | :--- | :--- | :--- | :--- | | Overall sales | - | +9.2% | - | | "An" series products | –5.7% | –22.1% | Impacted by national centralized procurement policy, price reductions in some regions | | Entecavir dispersible tablets | +14.0% | +8.7% | - | | Fujian ER-BAO product series (for hyperlipidemia) | +19.5% | +16.6% | - | | Cefazolin powder injections | +47.9% | +55.7% | - | | Intermediates and APIs | +244.8% | +142.7% | Commercial production at Suzhou ER-BAO Shanfeng Road plant and Lanzhou ER-BAO | Product Research and Development The Group, leveraging Suzhou ER-BAO Advanced Technology Research Institute, coordinates R&D teams across subsidiaries, focusing on generic drug APIs and formulations, optimizing existing product lines, and has divested Nanjing Fumeiruixin Technology Co., Ltd. to integrate R&D resources without significant impact on ongoing projects - Suzhou ER-BAO Advanced Technology Research Institute serves as the R&D platform, responsible for generic drug API and formulation R&D, and optimizing existing product lines[26][30] - To integrate R&D resources, the Group disposed of its entire 65% equity interest in Nanjing Fumeiruixin Technology Co., Ltd. on June 9, 2025, which had negative net assets on its books[27][30] - The Group will continue to invest more resources in technological improvements and product R&D innovation, and seek external cooperation opportunities to enrich its product pipeline and accelerate R&D progress[26][30] New Products and Patent Licensing During the period, the Group received approval for two drug specifications from the National Medical Products Administration's Center for Drug Evaluation, with six more under review, and obtained two national patent certificates, including one utility model patent and one invention patent - Rivaroxaban Tablets (10mg) and Rivaroxaban Tablets (15mg) have been approved by the National Medical Products Administration's Center for Drug Evaluation[28][31] - Six other specifications (three APIs, three formulations) have been submitted for registration to the Center for Drug Evaluation and are currently under review[28][31] - Two patent certificates were obtained: a tablet counting machine vibration device (utility model patent) and a tedizolid phosphate for injection powder and its preparation method (invention patent)[29][32] Other Matters The Group consistently adheres to a quality-first management policy, steadily improving product quality, and systematically advancing corporate governance and social responsibility initiatives, achieving significant progress in organizational structure optimization, employee training, performance appraisal reform, digitalization, and risk control - The Group adheres to a quality-first management policy, with product quality steadily improving[33][35] - Corporate governance and social responsibility work are progressing in an orderly manner, with continuous improvements in safety and environmental protection[33][35] - Significant progress has been made in employee training, performance appraisal reform, digitalization, and risk control[33][35] Honors Awarded to the Group In H1 2025, several of the Group's subsidiaries received multiple honors, including economic contribution awards, outstanding employer titles, and product recognition as "New Excellent Medical Devices and Classic Traditional Chinese Medicine Products" - Fujian ER-BAO Pharmaceutical Co., Ltd. was awarded the "2024 Annual Special Award for Outstanding Economic Contribution Enterprise" by the Licheng District People's Government and the "2024 Annual Outstanding Economic Contribution Award (Tax Payment RMB 50 million-100 million)" by the Putian Municipal People's Government[37] - Suzhou ER-BAO Pharmaceutical Co., Ltd. was awarded the "2025 Outstanding Employer" honor by 51job[37] - Fujian ER-BAO Pharmaceutical Co., Ltd.'s "Atorvastatin Calcium Tablets" and "Loxoprofen Sodium Tablets" were recognized as "Fujian Province New Excellent Medical Devices and Classic Traditional Chinese Medicine Products"[37] - Lanzhou ER-BAO Pharmaceutical Co., Ltd. was recognized as a "Specialized, Refined, Unique, and New" SME by the Gansu Provincial Department of Industry and Information Technology[37] Outlook Facing intense competition and deepening policies in the generic drug industry, the Group will continue to increase R&D investment, leverage its advanced technology research institute platform for both generic and innovative drug development, strengthen collaborations with universities and research institutions, actively explore the big health sector and non-medical insurance consumer healthcare products to create a second growth curve, uphold quality-first principles, optimize production processes, reduce costs, expand market share through centralized procurement participation, sales channel expansion, and international certifications, and advance the application of information and intelligent technologies while continuously improving talent development and team building - The Group will continue to increase R&D investment, leverage its advanced technology research institute platform, focus on core areas, combine generic and innovative drug development, and strengthen cooperation with universities and research institutions[39][41] - Actively explore the big health sector and non-medical insurance consumer healthcare products, seek external partners, expand new businesses, and create a second growth curve[39][41] - In terms of market expansion, the Group will actively participate in domestic drug centralized procurement, strengthen cooperation with medical institutions, pharmaceutical commercial companies, and online e-commerce platforms, and systematically carry out international certification work[42][46] - Formulate a five-year plan to promote the application of information and intelligent technologies, from business online-ization to AI-driven innovation, to build ER-BAO's digital technology platform[43][46] - Continuously improve talent recruitment plans, implement three major human resource systems, build a scientific and reasonable talent development and career progression system, and enhance organizational capabilities[44][47] Financial Review This section provides a detailed analysis of the Group's financial performance, including sales, gross profit, expenses, segment profit, and asset profitability Sales and Gross Profit During the period, the Group's turnover increased by 9.2% year-on-year to RMB 630,424,000, primarily driven by successful centralized procurement bids and significant growth in intermediate and API sales; however, gross profit decreased by 7.1% year-on-year, and gross profit margin declined by 8.7 percentage points to 49.8%, mainly due to high costs from underutilized API and intermediate production capacity and a decrease in gross profit from "An" series products Turnover Analysis by Product Category (Six Months Ended June 30, 2025) | Product | 2025 Turnover (RMB thousands) | 2024 Turnover (RMB thousands) | Change (RMB thousands) | 2025 Sales Ratio (%) | 2024 Sales Ratio (%) | Change (percentage points) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Finished drugs | 590,208 | 560,878 | 29,330 | 93.6 | 97.1 | –3.5 | | Intermediates and APIs | 40,216 | 16,569 | 23,647 | 6.4 | 2.9 | 3.5 | | Total | 630,424 | 577,447 | 52,977 | 100.0 | 100.0 | 0.0 | - Export sales amounted to approximately RMB 10,651,000, accounting for 1.7% of total turnover, a year-on-year increase of 229.0%, primarily to Pakistan, Vietnam, and other countries[51][54] - Gross profit margin decreased by 8.7 percentage points from 58.5% in the prior year to 49.8%, mainly due to high production costs for APIs and intermediates and a decrease in gross profit from "An" series products[52][54] Expenses Total expenses for the period were approximately RMB 214,522,000, accounting for 34.0% of turnover, a 0.5 percentage point decrease from the prior year; selling expenses decreased due to a higher proportion of centralized procurement products, administrative expenses increased due to reclassification of surtaxes and intangible asset amortization, R&D expenses increased by 29.5% year-on-year, and other expenses primarily included inventory write-downs, idle capacity losses, and intangible asset impairment losses Major Expense Changes (H1 2025 vs H1 2024) | Expense Category | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (RMB thousands) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Total expenses | 214,522 | 199,100 | +15,422 | +7.7% | | Selling and distribution expenses | 56,830 | 68,911 | –12,081 | –17.5% | | Administrative expenses | 67,491 | 54,148 | +13,343 | +24.6% | | Research and development costs | 56,816 | 43,883 | +12,933 | +29.5% | | Other expenses | 33,071 | 29,498 | +3,573 | +12.1% | - The decrease in selling expenses was mainly due to the increased proportion of centralized procurement products[57][58] - The increase in administrative expenses was primarily due to the reclassification of surtaxes and intangible asset amortization expenses[57][58] - The increase in other expenses was mainly due to inventory write-downs and idle capacity losses resulting from high unit costs of Suzhou ER-BAO and Lanzhou ER-BAO products, as well as intangible asset impairment losses from Nanjing Fumeiruixin[57][58] Segment Profit For the six months ended June 30, 2025, the finished drug segment profit was approximately RMB 250,864,000, a year-on-year decrease of approximately RMB 13,598,000, mainly due to reduced gross profit from "An" series products affected by centralized procurement; the intermediate and API segment recorded a loss of approximately RMB 25,216,000, similar to the prior year, primarily due to increased costs from underutilized production capacity at Suzhou ER-BAO Shanfeng Road plant and Lanzhou ER-BAO Segment Profit (H1 2025 vs H1 2024) | Segment | 2025 Segment Profit/Loss (RMB thousands) | 2024 Segment Profit/Loss (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Finished drug segment | 250,864 | 264,462 | –13,598 | | Intermediate and API segment | –25,216 | –25,858 | +642 | - The decrease in finished drug segment profit was mainly due to a decline in gross profit from "An" series products affected by centralized procurement[59][61] - The loss in the intermediate and API segment was primarily due to increased costs from underutilized production capacity at Suzhou ER-BAO Shanfeng Road plant and Lanzhou ER-BAO[59][61] Profit Attributable to Owners of the Parent For the six months ended June 30, 2025, profit attributable to owners of the parent was approximately RMB 104,572,000, a significant year-on-year decrease of 78.8%; excluding two non-recurring gains in 2024 (net gain from disposal of 35% equity in Kangrong Dongfang and net gain from government grants for equipment validation at Suzhou ER-BAO Tianling Road plant), profit for the period decreased by 17.1% year-on-year Profit Attributable to Owners of the Parent (H1 2025 vs H1 2024) | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (RMB thousands) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Profit attributable to owners of the parent | 104,572 | 493,046 | –388,474 | –78.8% | | Profit attributable to owners of the parent (excluding non-recurring profit) | 104,572 | 126,127 | –21,555 | –17.1% | - 2024 non-recurring gains included a net gain of approximately RMB 277,627,000 from the disposal of 35% equity in Kangrong Dongfang and a net gain of approximately RMB 89,292,000 from government grants for equipment validation at Suzhou ER-BAO Tianling Road plant[60][62] Analysis on the Return on Assets As of June 30, 2025, net assets attributable to owners of the parent were approximately RMB 3,302,996,000, with a return on net assets of 3.2%, a significant decrease from 15.1% in 2024; current ratio and quick ratio were 4.78 and 4.21, respectively, while accounts receivable turnover period decreased by 22 days to 74 days and inventory turnover period decreased by 8 days to 160 days, primarily due to strengthened accounts receivable management and lean production activities Key Asset Profitability Indicators (As of June 30, 2025) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net assets attributable to owners of the parent | Approximately RMB 3,302,996,000 | - | | Return on net assets | 3.2% | 15.1% | | Current ratio | 4.78 | - | | Quick ratio | 4.21 | - | | Accounts receivable turnover period (including trade and notes receivables) | Approximately 74 days | Decreased by 22 days | | Inventory turnover period | Approximately 160 days | Decreased by 8 days | - The decrease in accounts receivable turnover days was mainly due to strengthened management of accounts receivable[63][64] - The decrease in inventory turnover days was mainly due to Suzhou ER-BAO's lean production activities reducing inventory[63][64] Financial Assets at Fair Value Through Profit or Loss As of June 30, 2025, the Group held financial assets at fair value through profit or loss totaling approximately RMB 261,353,000, accounting for 6.7% of total assets, comprising Hong Kong listed equity investments and principal-protected floating-rate structured deposits; during the period, the Group recorded a net gain of approximately RMB 4,474,000 from financial assets Financial Assets at Fair Value Through Profit or Loss (As of June 30, 2025) | Investment Category | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Hong Kong publicly listed equities | 15,356 | 10,795 | | Structured deposits | 245,200 | 195,500 | | Total | 261,353 | 207,135 | | Percentage of total assets | 6.7% | 5.2% | | Net gain for the period | 4,474 | 4,093 | - The Group purchased RMB 245,200,000 in principal-protected floating-rate structured deposits from seven reputable Chinese banks, with annual interest rates ranging from 0.84% to 3.1591%[65][69] - The Group also holds a 1.48% equity interest in Sino-American Huashitong Biomedical Technology (Wuhan) Co., Ltd., with an investment of RMB 20,000,000, showing no signs of impairment[66][69] Liquidity and Financial Resources As of June 30, 2025, the Group held cash and bank balances of approximately RMB 1,139,131,000; net cash inflow from operating activities was approximately RMB 201,983,000, net cash outflow from investing activities was approximately RMB 439,071,000, and net cash outflow from financing activities was approximately RMB 127,398,000, resulting in a net decrease in cash and cash equivalents of approximately RMB 364,486,000; the Group's total bank credit facilities amounted to RMB 1,713,000,000, with a gearing ratio of 0.2% Liquidity and Cash Flows (As of June 30, 2025) | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Cash and bank balances | 1,139,131 | 1,158,261 | | Net cash inflow from operating activities | 201,983 | 171,454 | | Net cash outflow from investing activities | 439,071 | –29,185 (inflow) | | Net cash outflow from financing activities | 127,398 | 31,428 | | Net change in cash and cash equivalents | –364,486 (decrease) | +169,211 (increase) | | Total bank credit facilities | 1,713,000 | 1,613,000 | | Interest-bearing bank and other borrowings | 8,995 | 29,864 | | Gearing ratio | 0.2% | 0.7% | | Inventory balance | 254,100 | 308,241 | - The significant increase in net cash outflow from investing activities, compared to an inflow in the prior year, may be primarily related to the acquisition of property, plant and equipment, acquisition of intangible assets, and an increase in time deposits[68][70][152] Significant Investments and Asset Changes Lanzhou ER-BAO Pharmaceutical Co., Ltd., as the Group's API and intermediate production base, has completed its first phase and plans to invest RMB 29,000,000 in its second phase; the Suzhou ER-BAO Tianling Road plant relocation project is complete, with ongoing environmental building and Minfeng Road plant workshop renovation projects at Shanfeng Road, totaling approximately RMB 27,000,000; to integrate R&D resources, the Group transferred its entire equity interest in Nanjing Fumeiruixin Technology Co., Ltd. for RMB 100,000; as of June 30, 2025, the Group had contracted but unprovided capital expenditure commitments for plant and machinery of approximately RMB 41,513,000 - Lanzhou ER-BAO Pharmaceutical Co., Ltd.'s Phase I project has been completed and put into production, with Phase II planned to invest RMB 29,000,000 for new product equipment additions and process improvements[74][77] - The Suzhou ER-BAO Tianling Road plant relocation project has been completed, and the Shanfeng Road environmental building and Minfeng Road plant workshop renovation projects are underway, with a total investment of approximately RMB 27,000,000[75][77] - To integrate R&D resources, the Group on June 9, 2025, transferred its entire equity interest in Nanjing Fumeiruixin Technology Co., Ltd. to an independent third party for RMB 100,000[78][84] - As of June 30, 2025, the Group had contracted but unprovided capital expenditure commitments for plant and machinery of approximately RMB 41,513,000[80][84] Foreign Currency and Treasury Policies For the period ended June 30, 2025, the Group recorded a net exchange gain of approximately RMB 1,103,000 due to RMB exchange rate fluctuations (compared to a loss of approximately RMB 2,689,000 in 2024); foreign exchange risk is not significant as most business is settled in RMB, but there is HKD-related foreign exchange risk when paying HKD dividends; the Group will continue to monitor foreign exchange and interest rate markets and hedge when necessary Exchange Gain/Loss (Six Months Ended June 30, 2025) | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Net exchange gain | 1,103 | –2,689 (loss) | - Most of the Group's business transactions, assets, and liabilities are primarily settled in RMB, so foreign exchange risk is not significant[82][85] - As the Group pays dividends in HKD, foreign exchange risk is mainly related to HKD[82][85] - The Group will continue to monitor foreign exchange and interest rate markets and, when necessary, use forward foreign exchange contracts to hedge foreign exchange risk and interest rate swap contracts to hedge interest rate risk[83][85] Other Information This section covers various additional disclosures, including employee and remuneration policies, asset charges, contingent liabilities, future investments, and corporate governance matters Staff and Remuneration Policy As of June 30, 2025, the Group employed 1,116 staff, with total staff costs for the period approximately RMB 108,715,000, mainly due to annual salary adjustments; the Group values human resources as its most precious asset, with remuneration policies referencing market benchmarks and individual qualifications, and providing retirement plans, share option schemes, and medical benefits Employee and Remuneration Information (As of June 30, 2025) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Number of employees | 1,116 | - | | Total staff costs (RMB thousands) | 108,715 | 106,147 | | Reason for change | Annual salary adjustment increase | - | - The Group provides employees with defined contribution retirement plans, share option schemes, and medical benefits, and offers dormitory accommodation for certain employees in China[86][91] Charges on Assets As of June 30, 2025, the Group had no assets pledged to banks to secure credit facilities granted to its subsidiaries - As of June 30, 2025, the Group had not pledged any assets to secure bank credit facilities[87][92] 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[88][93] Plans for Significant Investments and Expected Source of Funding Apart from disclosed capital expenditure commitments, increases in subsidiary registered capital, and capital investments for relocation projects, the Group has no other significant future investment plans or plans to acquire capital assets; the Group possesses sufficient financial and internal resources but may still use bank loans or internal resources to fund these capital expenditures - Except for disclosed capital expenditure commitments, increases in subsidiary registered capital, and capital investments for relocation projects, the Group has no other significant investment plans[89][94] - The Group will fund these capital expenditure commitments through bank loans or internal resources[81][84] Segment Information This section indicates that the Group's segment information analysis for the six months ended June 30, 2025, is presented in Note 2 to the interim financial information - Details of the Group's segment information analysis can be found in Note 2 to the interim financial information[90][95] Directors' and Chief Executive Officer's Interests and Short Positions in Shares and Underlying Shares As of June 30, 2025, the company's directors and chief executive officer held long positions in the company's ordinary shares and underlying shares of associated corporations, with Ms. Li Qiling and Mr. Xiong Rongli holding substantial shares through controlled companies, and Ms. Yu Liwei holding share options Directors' and Chief Executive Officer's Long Positions in the Company's Ordinary Shares (As of June 30, 2025) | Name | Number of Shares Beneficially Owned Directly | Number of Shares Held Through Controlled Corporations | Total | Approximate Percentage of the Company's Issued Share Capital (%) | | :--- | :--- | :--- | :--- | :--- | | Ms. Li Qiling | 107,708,000 | 601,844,000 | 709,552,000 | 47.21 | | Mr. Xiong Rongli | 1,880,000 | 601,844,000 | 603,724,000 | 40.17 | | Mr. Liang Kangmin | – | 112,284,000 | 112,284,000 | 7.47 | | Ms. Yu Liwei (CEO) | 8,624,000 | – | 8,624,000 | 0.57 | - Ms. Li Qiling and Mr. Xiong Rongli each beneficially own 50% equity interest in Fortune United Group Limited, which holds 601,844,000 shares in the Company[104] - Ms. Yu Liwei's interest in 8,624,000 underlying shares represents share options granted under the Company's share option scheme[104] Directors' Rights to Acquire Shares or Debentures Apart from the disclosed interests of directors and the chief executive officer in shares and underlying shares, no director, their spouse, or children under 18 years of age were granted or exercised any rights to acquire interests in the company's shares or debentures during the period - During the period, except for the disclosed share options, no director or their family members were granted or exercised rights to purchase company shares or debentures[105][108] Share Option Scheme This section indicates that details regarding the company's share option scheme are provided in Note 17 to the interim financial information - Detailed disclosure of the Company's share option scheme can be found in Note 17 to the interim financial information[106][109] Substantial Shareholders' and Other Persons' Interests in Shares and Underlying Shares As of June 30, 2025, in addition to directors and the chief executive officer, several substantial shareholders and other persons held long positions in the company's shares, including Fortune United Group Limited and its associated companies, Ms. Yao Bin, Mr. Li Dongming and his associated companies, East Sea International Investment Limited and its related parties, and FMR LLC Substantial Shareholders' and Other Persons' Long Positions in the Company's Shares (As of June 30, 2025) | Name | Nature of Interest | Number of Shares Held | Approximate Percentage of the Company's Issued Share Capital (%) | | :--- | :--- | :--- | :--- | | Fortune United Group Limited | Direct beneficial ownership | 601,844,000 | 40.04 | | Keysmart Enterprises Limited | Held through controlled corporations | 601,844,000 | 40.04 | | Hunwick International Limited | Held through controlled corporations | 601,844,000 | 40.04 | | Ms. Yao Bin | Family interest | 603,724,000 | 40.17 | | Mr. Li Dongming | Direct beneficial ownership | 224,000 | 0.02 | | Time Lead Investments Limited | Direct beneficial ownership | 80,000,000 | 5.32 | | East Sea International Investment Limited | Direct beneficial ownership | 112,284,000 | 7.47 | | Ms. Luo Meixi | Family interest | 112,284,000 | 7.47 | | Mr. Liang Yaocheng | Held through controlled corporations | 112,284,000 | 7.47 | | Ms. Zhu Xuefang | Family interest | 112,284,000 | 7.47 | | FMR LLC | Held through controlled corporations | 119,751,156 | 7.98 | - The issued share capital of Fortune United Group Limited is equally beneficially owned by companies wholly owned by Ms. Li Qiling and Mr. Xiong Rongli[118] - Ms. Yao Bin is the spouse of Mr. Xiong Rongli, Ms. Luo Meixi is the spouse of Mr. Liang Kangmin, and Ms. Zhu Xuefang is the spouse of Mr. Liang Yaocheng, all of whom are deemed to have family interests[118] Purchase, Redemption or Sale of Listed Securities of the Company For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities - During the period, neither the company nor its subsidiaries engaged in any purchase, redemption, or sale of listed securities[115][117] Compliance with Corporate Governance Code For the six months ended June 30, 2025, the company complied with the provisions of the Corporate Governance Code, with one exception: non-executive director Mr. Liang Kangmin was unable to attend the annual general meeting due to other business arrangements - The company complied with the Corporate Governance Code, except that non-executive director Mr. Liang Kangmin was unable to attend the annual general meeting due to other business arrangements[119][123] Model Code for Securities Transactions The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and based on specific inquiries to all directors, the directors have complied with the standards set out in the Model Code for the six months ended June 30, 2025 - Directors have complied with the Model Code for Securities Transactions by Directors of Listed Issuers during the reporting period[120][124] Audit Committee The company has established an Audit Committee in compliance with the Listing Rules, responsible for overseeing the Group's financial reporting system, risk management, and internal control systems; the Audit Committee has reviewed the unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025 - The Audit Committee is chaired by Mr. Lao Tongsheng, with members including Mr. EDE, Ronald Hao Xi and Ms. Lin Mingyi, all of whom are independent non-executive directors[121][125] - The Audit Committee has reviewed the unaudited condensed consolidated interim financial statements for the period[122][125] Interim Dividend The Board resolved to declare an interim dividend of HKD 0.015 per share for the year ending December 31, 2025, totaling approximately HKD 22,546,000 (approximately RMB 20,710,000) Interim Dividend Declaration | Metric | Amount | | :--- | :--- | | Interim dividend per share | HKD 0.015 | | Total amount | Approximately HKD 22,546,000 (approximately RMB 20,710,000) | Closure of Register of Members To determine eligibility for the interim dividend, the company will suspend share transfer registration from Thursday, September 18, 2025, to Friday, September 19, 2025; the record date is September 19, 2025, and dividend warrants are expected to be dispatched around October 3, 2025 - The register of members will be closed from September 18 to September 19, 2025[128][132] - The record date for determining shareholders' entitlement to the interim dividend is September 19, 2025[129][132] - Dividend warrants will be dispatched to shareholders around October 3, 2025[129][132] Appreciation Ms. Li Qiling, Chairperson of the Board, expressed sincere gratitude to the company's shareholders, directors, business partners, management, and all employees for their support to the Group during the period - Ms. Li Qiling, Chairperson of the Board, expressed gratitude to all stakeholders for their support to the Group[130][133] Condensed Consolidated Statement of Profit or Loss This section presents the Group's financial performance over a specific period, detailing revenues, expenses, and net profit Profit or Loss Statement This section presents the condensed consolidated statement of profit or loss for the six months ended June 30, 2025, detailing financial data such as revenue, cost of sales, gross profit, other income and gains, various expenses, profit before tax, income tax, and profit for the period Condensed Consolidated Statement of Profit or Loss (Six Months Ended June 30, 2025) | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 630,424 | 577,447 | | Cost of sales | (316,446) | (239,535) | | Gross profit | 313,978 | 337,912 | | Other income and gains | 30,861 | 421,636 | | Selling and distribution expenses | (56,830) | (68,911) | | Administrative expenses | (67,491) | (54,148) | | Research and development costs | (56,816) | (43,883) | | Other expenses | (33,071) | (29,498) | | Finance costs | (314) | (2,660) | | Share of loss of an associate | – | (3,696) | | Profit before tax | 130,317 | 556,752 | | Income tax | (28,609) | (65,169) | | Profit for the period | 101,708 | 491,583 | | Profit attributable to owners of the parent | 104,572 | 493,046 | | Non-controlling interests | (2,864) | (1,463) | | Earnings per share – basic (RMB) | 0.06961 | 0.3286 | | Earnings per share – diluted (RMB) | 0.06958 | 0.3282 | Condensed Consolidated Statement of Comprehensive Income This section presents the Group's total comprehensive income, encompassing profit for the period and other comprehensive income/loss Comprehensive Income Statement This section presents the condensed consolidated statement of comprehensive income for the six months ended June 30, 2025, including profit for the period and other comprehensive income/loss, such as exchange differences arising from the translation of foreign operations and the company's financial statements, ultimately arriving at total comprehensive income for the period after tax Condensed Consolidated Statement of Comprehensive Income (Six Months Ended June 30, 2025) | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit for the period | 101,708 | 491,583 | | Other comprehensive (loss)/income (to be reclassified to profit or loss): | | | | Exchange differences arising from translation of foreign operations | (4,848) | 2,516 | | Other comprehensive (loss)/income (not to be reclassified to profit or loss): | | | | Exchange differences arising from translation of the Company's financial statements | (10,350) | 8,473 | | Total other comprehensive (loss)/income for the period after tax | (15,198) | 10,989 | | Total comprehensive income for the period after tax | 86,510 | 502,572 | | Attributable to owners of the parent | 89,374 | 504,035 | | Non-controlling interests | (2,864) | (1,463) | Condensed Consolidated Statement of Financial Position This section presents the Group's financial position at a specific point in time, detailing assets, liabilities, and equity Financial Position Statement This section provides the condensed consolidated statement of financial position as of June 30, 2025, detailing the composition of non-current assets, current assets, current liabilities, non-current liabilities, and equity Condensed Consolidated Statement of Financial Position (As of June 30, 2025) | Metric | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Non-current assets | | | | Property, plant and equipment | 994,385 | 1,038,195 | | Investment properties | 2,547 | 2,611 | | Right-of-use assets | 97,795 | 104,644 | | Construction in progress | 102,256 | 85,568 | | Goodwill | 241,158 | 241,158 | | Other intangible assets | 277,934 | 300,923 | | Financial assets at fair value through profit or loss | 20,000 | 20,000 | | Long-term prepayments | 7,564 | 8,469 | | Deferred tax assets | 4,462 | 5,467 | | Total non-current assets | 1,748,101 | 1,807,035 | | Current assets | | | | Inventories | 254,100 | 308,241 | | Trade and notes receivables | 247,272 | 267,886 | | Prepayments, other receivables and other assets | 232,725 | 249,715 | | Financial assets at fair value through profit or loss | 261,353 | 207,135 | | Cash and bank balances | 1,139,131 | 1,158,261 | | Total current assets | 2,134,581 | 2,202,241 | | Assets held for sale | – | 11,003 | | Current liabilities | | | | Trade and notes payables | 204,884 | 221,560 | | Other payables and accrued expenses | 228,772 | 299,417 | | Interest-bearing bank and other borrowings | 8,995 | 29,864 | | Lease liabilities | 162 | 1,160 | | Income tax payable | 4,147 | 2,602 | | Total current liabilities | 446,960 | 554,603 | | Net current assets | 1,687,621 | 1,647,638 | | Total assets less current liabilities | 3,435,722 | 3,454,673 | | Non-current liabilities | | | | Government grants | 3,360 | 3,360 | | Deferred tax liabilities | 129,366 | 120,950 | | Lease liabilities | – | 3,695 | | Total non-current liabilities | 132,726 | 128,005 | | Net assets | 3,302,996 | 3,326,668 | | Equity | | | | Equity attributable to owners of the parent | 3,302,996 | 3,324,268 | | Issued capital | 80,584 | 80,530 | | Reserves | 3,222,412 | 3,243,738 | | Non-controlling interests | – | 2,400 | | Total equity | 3,302,996 | 3,326,668 | Condensed Consolidated Statement of Changes in Equity This section presents the changes in the Group's equity over a specific period, detailing movements in various equity components Equity Changes Statement This section presents the condensed consolidated statement of changes in equity for the six months ended June 30, 2025, detailing opening balances, profit for the period, other comprehensive income, exercise of share options, dividend declarations, and other changes for issued capital, share premium, capital redemption reserve, share option reserve, contributed surplus, statutory surplus reserve, exchange fluctuation reserve, other reserves, retained profits, and non-controlling interests Condensed Consolidated Statement of Changes in Equity (Six Months Ended June 30, 2025) | Item | Issued Capital (RMB thousands) | Share Premium (RMB thousands) | Capital Redemption Reserve (RMB thousands) | Share Option Reserve (RMB thousands) | Contributed Surplus (RMB thousands) | Statutory Surplus Reserve (RMB thousands) | Exchange Fluctuation Reserve (RMB thousands) | Other Reserves (RMB thousands) | Retained Profits (RMB thousands) | Total Equity Attributable to Owners of the Parent (RMB thousands) | Non-controlling Interests (RMB thousands) | Total Equity (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | As of January 1, 2025 | 80,530 | 5,777 | 8,106 | 5,949 | 100,175 | 443,952 | 22,556 | (1,114) | 2,658,337 | 3,324,268 | 2,400 | 3,326,668 | | Profit for the period | – | – | – | – | – | – | – | – | 104,572 | 104,572 | (2,864) | 101,708 | | Exchange differences | – | – | – | – | – | – | (15,198) | – | – | (15,198) | – | (15,198) | | Total comprehensive income for the period | – | – | – | – | – | – | (15,198) | – | 104,572 | 89,374 | (2,864) | 86,510 | | Exercise of share options | 54 | 1,138 | – | (178) | – | – | – | – | – | 1,014 | – | 1,014 | | Declaration of 2024 final dividend | – | – | – | – | – | – | – | – | (112,229) | (112,229) | – | (112,229) | | Equity-settled share option arrangements | – | – | – | 569 | – | – | – | – | – | 569 | – | 569 | | Lapsed share options | – | – | – | (1,954) | – | – | – | – | 1,954 | – | – | – | | Disposal of a subsidiary | – | – | – | – | – | – | – | – | – | – | 464 | 464 | | As of June 30, 2025 | 80,584 | 6,915 | 8,106 | 4,386 | 100,175 | 443,952 | 7,358 | (1,114) | 2,652,634 | 3,302,996 | – | 3,302,996 | Condensed Consolidated Statement of Cash Flows This section presents the Group's cash inflows and outflows from operating, investing, and financing activities over a specific period Cash Flows Statement This section presents the condensed consolidated statement of cash flows for the six months ended June 30, 2025, detailing net cash flows from operating, investing, and financing activities, as well as the closing balance of cash and cash equivalents Condensed Consolidated Statement of Cash Flows (Six Months Ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Cash flows from operating activities | | | | Profit before tax | 130,317 | 556,752 | | Total adjustments | 189,288 | 349,621 | | Decrease (increase) in inventories | 31,154 | (49,041) | | Decrease in trade and notes receivables | 18,374 | 26,218 | | (Increase)/decrease in prepayments | (4,506) | 4,869 | | Decrease/(increase) in deposits and other receivables | 14,232 | (126,883) | | (Decrease)/increase in trade and notes payables | (16,673) | 27,255 | | (Decrease)/increase in other payables and accrued expenses | (24,150) | 1,254 | | Increase in other liabilities | – | 10,500 | | Income tax paid | (5,736) | (72,339) | | Net cash flows from operating activities | 201,983 | 171,454 | | Cash flows from investing activities | | | | Bank interest received | 25,111 | 29,815 | | Dividend income from financial assets at fair value through profit or loss | 584 | 48 | | Proceeds from disposal of property, plant and equipment | 6,572 | 7,225 | | Proceeds from disposal of financial assets at fair value through profit or loss | 5,281 | 896 | | Acquisition of property, plant and equipment and construction in progress | (58,038) | (129,255) | | Acquisition of intangible assets | (3,752) | (47,755) | | Redemption of wealth management products | 574,772 | 196,480 | | Acquisition of land use rights | (162) | – | | Disposal of a subsidiary (net of cash) | (287) | – | | Increase in time deposits with maturity over three months | (358,920) | (46,000) | | Acquisition of financial assets at fair value through profit or loss | (630,232) | (138,297) | | Net cash flows (used in)/generated from investing activities | (439,071) | 29,185 | | Cash flows from financing activities | | | | Cash paid for repayment of bank loans | (24,864) | (120,060) | | Proceeds from exercise of share options | 1,014 | 143 | | Lease liability payments | (2) | (641) | | New bank loans | 8,995 | 182,552 | | Interest paid | (312) | (2,636) | | Dividends paid | (112,229) | (90,786) | | Net cash flows used in financing activities | (127,398) | (31,428) | | Net (decrease)/increase in cash and cash equivalents | (364,486) | 169,211 | | Cash and cash equivalents at January 1 | 615,675 | 366,826 | | Effect of exchange rate changes, net | (13,564) | 11,285 | | Cash and cash equivalents at June 30 | 237,625 | 547,322 | | Analysis of cash and cash equivalents balance | | | | Cash and bank balances | 212,625 | 547,322 | | Short-term bank deposits | 25,000 | 585,000 | | Total | 237,625 | 1,132,322 | Notes to the Interim Financial Information This section provides detailed explanations and breakdowns of the figures presented in the condensed consolidated interim financial statements Corporate Information, Basis of Preparation and Changes in Accounting Policies This section outlines the company's registration, group reorganization, listing status, principal business activities, and ultimate holding company, while also clarifying the basis of preparation for the interim financial information (IAS 34) and changes in accounting policies, noting that amendments to IAS 21 have no significant impact on the Group's financial information - The Company was incorporated in the Cayman Islands, and its shares were listed on the Main Board of the Stock Exchange on July 11, 2003[157][160] - The Group is principally engaged in the development, manufacture, and sale of off-patent pharmaceutical products, including intermediates, APIs, and finished drugs[158][161] - The interim financial information is prepared in accordance with IAS 34 and presented in RMB[162][163][167] - Amendments to IAS 21 regarding lack of exchangeability have no impact on this condensed consolidated interim financial information[168][171] Segment Information_Note This section details the Group's two reportable segments by product: finished drugs and intermediates & APIs; management assesses segment performance based on adjusted profit before tax and provides an analysis of segment revenue, results, and assets for the six months ended June 30, 2025 - The Group is divided into two reportable segments: finished drugs (including antibiotic and non-antibiotic formulations) and intermediates & APIs[172][173] - Segment performance is assessed based on reportable segment profit (adjusted profit before tax), excluding interest income, non-lease finance costs, government grants, dividend income, fair value gains/losses on financial instruments, share of loss of an associate, and head office expenses[169][172] Segment Revenue and Results (Six Months Ended June 30, 2025) | Segment | External Sales (RMB thousands) | Segment Results (RMB thousands) | | :--- | :--- | :--- | | Finished drugs | 590,208 | 250,864 | | Intermediates and APIs | 40,216 | (25,216) | | Total | 630,424 | 225,648 | Segment Assets (As of June 30, 2025) | Segment | Segment Assets (RMB thousands) | | :--- | :--- | | Finished drugs | 868,821 | | Intermediates and APIs | 774,853 | | Total | 1,643,674 | | Corporate and other unallocated assets | 2,239,008 | | Total assets | 3,882,682 | Revenue, Other Income and Gains_Note This section provides a detailed analysis of the Group's revenue, other income, and gains; for the six months ended June 30, 2025, revenue from contracts with customers was RMB 630,424,000, primarily from pharmaceutical product sales; other income includes bank interest income, government grants, while gains primarily arose from fair value gains on financial assets and exchange gains Revenue, Other Income and Gains (Six Months Ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | | | | Revenue from contracts with customers | 630,424 | 577,447 | | Other income | | | | Bank interest income | 16,649 | 15,498 | | Government grants | 6,375 | 113,567 | | Gains | | | | Exchange gain, net | 1,103 | – | | Fair value gain on financial assets at fair value through profit or loss, net | 4,474 | 4,093 | | Gain on disposal of an associate | – | 286,670 | | Total other income and gains | 30,861 | 421,636 | Revenue by Geographical Market (Six Months Ended June 30, 2025) | Geographical Market | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Mainland China | 619,773 | 574,210 | | Other countries | 10,651 | 3,237 | | Total | 630,424 | 577,447 | - Other income and gains in 2024 included a gain on disposal of an associate of RMB 286,670,000 and government grants of RMB 113,567,000, which were non-recurring items[186] Finance Costs_Note This section details finance costs for the six months ended June 30, 2025, primarily comprising interest on bank loans, interest on discounted bills receivable, and interest on lease liabilities, totaling RMB 314,000, a significant decrease from the prior year Finance Costs (Six Months Ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest on bank loans | 157 | 2,492 | | Interest on discounted bills receivable | 155 | 144 | | Interest on lease liabilities | 2 | 24 | | Total | 314 | 2,660 | - Total finance costs significantly decreased year-on-year, mainly due to a substantial reduction in bank loan interest[188] Profit Before Tax_Note This section details various expenses and gains affecting the Group's profit before tax, including cost of sales, depreciation, R&D costs, employee benefit expenses, inventory write-downs, intangible asset impairment losses, as well as bank interest income and government grants Expenses/Gains Affecting Profit Before Tax (Six Months Ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Cost of sales | 316,446 | 239,535 | | Depreciation of property, plant and equipment | 37,518 | 33,451 | | Research and development costs | 56,816 | 43,883 | | Total employee benefit expenses | 108,715 | 106,147 | | Write-down of inventories to net realizable value | 21,569 | 24,492 | | Impairment loss on intangible assets | 7,622 | – | | Bank interest income | (16,649) | (15,498) | | Government grants | (6,375) | (113,567) | - Research and development costs increased by 29.5% year-on-year, reaching RMB 56,816,000[190] - An intangible asset impairment loss of RMB 7,622,000 was recognized during the period, with no such item in the prior year[190] - Government grants significantly decreased from RMB 113,567,000 in 2024 to RMB 6,375,000 in 2025[190] Income Tax_Note This section discloses income tax expense for the six months ended June 30, 2025, totaling RMB 28,609,000, comprising current income tax and deferred tax; no provision was made for Hong Kong profits tax as no taxable profit arose in Hong Kong during the period Income Tax Expense (Six Months Ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current income tax expense | 19,527 | 41,256 | | Adjustment in respect of current income tax of prior years | (339) | (140) | | Deferred tax | 9,421 | 24,053 | | Total tax expense for the period | 28,609 | 65,169 | - Total income tax expense for the period decreased compared to the prior year[195] - No provision was made for Hong Kong profits tax as no taxable profit arose in Hong Kong during the period[196] Dividends_Note This section presents the dividends declared for the six months ended June 30, 2025, including final dividends, special dividends, and interim dividends; the Board has declared an interim dividend of HKD 0.015 per share Dividend Declaration (Six Months Ended June 30, 2025) | Dividend Type | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Final dividend (HKD 0.048/0.065 per share) | 67,337 | 90,786 | | Special dividend (HKD 0.032 per share/nil) | 44,892 | – | | Interim dividend (HKD 0.015 per share) | 20,710 | 20,594 | - A special dividend of HKD 0.032 per share was declared in 2025, with no such item in the prior year[199] - On August 22, 2025, the company declared an interim dividend of HKD 0.015 per share for the year ending December 31, 2025, totaling approximately HKD 22,546,000 (approximately RMB 20,710,000)[199][202] Earnings Per Share Attributable to Ordinary Equity Holders of the Parent_Note This section provides the calculation methods and results for basic and diluted earnings per share for the six months ended June 30, 2025; basic earnings per share was RMB 0.06961, and diluted earnings per share was RMB 0.06958, both significantly lower than the prior year Earnings Per Share (Six Months Ended June 30, 2025) | Metric | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Basic earnings per share | 0.06961 | 0.3286 | | Diluted earnings per share | 0.06958 | 0.3282 | - Basic earnings per share is calculated based on profit attributable to ordinary equity holders of the parent and a weighted average of 1,502,199,000 shares[200][206] - Diluted earnings per share considers the dilutive effect of share options, with a weighted average of 1,503,021,000 shares[201][208] Movements in Property, Plant and Equipment_Note During the period, additions to the Group's property, plant and equipment amounted to approximately RMB 1,712,000, disposals had a net book value of approximately RMB 3,798,000, and transfers from construction in progress amounted to approximately RMB 4,887,000 Movements in Property, Plant and Equipment (Six Months Ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Additions | 1,712 | 2,495 | | Net book value of disposals | 3,798 | 709 | | Transfers from construction in progress | 4,887 | 321,275 | - The amount transferred from construction in progress to property, plant and equipment significantly decreased compared to the prior year[209][211] Inventories_Note As of June 30, 2025, the Group's total inventory amounted to RMB 254,100,000, a decrease from December 31, 2024, primarily comprising raw materials, work in progress, and finished goods Inventory Composition (As of June 30, 2025) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Raw materials | 87,275 | 98,128 | | Work in progress | 52,825 | 55,484 | | Finished goods | 114,000 | 154,629 | | Total | 254,100 | 308,241 | - Total inventory decreased by approximately RMB 54,141,000 compared to the end of 2024[213] Trade and Notes Receivables_Note As of June 30, 2025, the Group's net trade and notes receivables amounted to RMB 247,272,000; an aging analysis of trade receivables shows that amounts due within 90 days constitute the largest proportion; the Group primarily transacts with customers on cred