阜丰集团(00546) - 2025 - 中期财报

Financial Highlights Financial Highlights The company's first-half 2025 financial performance is summarized, highlighting key revenue and profit figures and product category contributions Key Financial Data for 1H 2025 | Metric | 1H 2025 (RMB million) | | :--------------- | :------------------------ | | Profit attributable to equity holders | 1,281 | | Revenue | 13,960 | Revenue Analysis by Product Category (1H 2025) | Product Category | 1H 2025 Share (%) | 1H 2024 Share (%) | | :--------------- | :--------------- | :--------------- | | MSG | 39.4 | 34.6 | | Corn refined products | 15.1 | 17.0 | | Threonine | 8.6 | 11.4 | | Lysine | 7.7 | 10.3 | | Xanthan gum | 6.5 | 4.6 | | Starch sweeteners | 10.1 | 9.1 | | High-end amino acid products | 8.0 | 7.6 | | Fertilizers | 2.0 | 2.5 | | Glutamic acid | 1.9 | 2.4 | | Others | 0.7 | 0.5 | Management Review Management Review The management review covers market conditions, business and financial performance, future outlook, and other corporate information for the period Market Overview Global economic uncertainties persisted in 1H 2025, yet China's GDP grew by 5.3%, while key raw material prices remained low and major product prices experienced declines - China's GDP grew by 5.3% year-on-year in 1H 2025[12][16] Key Raw Material Price Changes (1H 2025 vs 1H 2024) | Raw Material | 1H 2025 Average Price (RMB/tonne) | Y-o-Y Change | | :----- | :-------------------------- | :------- | | Corn | 2,192 | -5.4% | | Coal | Stable supply, production increased by 5.4% | +5.4% | Key Product Price Changes (1H 2025 vs 1H 2024) | Product | 1H 2025 Average Price (RMB/tonne) | Y-o-Y Change | | :--- | :-------------------------- | :------- | | MSG | 7,180 | -9.1% | | Xanthan gum | 21,990 | -13.7% | | Threonine/Lysine | Reverted to 1H 2024 levels | N/A | Business and Financial Review The Group's 1H 2025 revenue increased by 4.4% to RMB 13.96 billion, with profit attributable to equity holders surging by 72.1% to RMB 1.792 billion, driven by animal nutrition growth, improved margins, and compensation receipts Overall Performance The Group's 1H 2025 revenue increased by 4.4% to approximately RMB 13.96 billion, with profit attributable to equity holders surging by 72.1% to approximately RMB 1.792 billion, driven by animal nutrition growth, improved margins, and compensation receipts - Group revenue increased by 4.4% year-on-year to approximately RMB 13,959.5 million[27] - Profit attributable to equity holders increased by 72.1% year-on-year to approximately RMB 1,791.7 million[27] - Overall gross profit increased by 37.9% year-on-year to approximately RMB 3,168.6 million[28] - Growth was primarily due to increased sales volume of products (including MSG, Threonine, and Lysine), lower costs of key raw materials (including corn and coal), and RMB 233 million compensation received from Meihua Holdings Group Co Ltd and Xinjiang Meihua Amino Acid Co Ltd[32] Analysis of Five Product Segments The Group's products are categorized into five segments: food additives, animal nutrition, high-end amino acids, colloids, and others, with animal nutrition showing strong growth and food additives improving gross margin in 1H 2025 Group Product Segments and Key Products | Segment | Key Products | | :----------- | :------------------------------------- | | Food Additives | MSG | | Animal Nutrition | Threonine, Lysine, Corn refined products | | High-end Amino Acids | Tryptophan, Valine, Leucine, Isoleucine, Glutamine, Hyaluronic acid | | Colloids | Xanthan gum | | Others | Fertilizers | 1H 2025 Financial Performance by Segment | Segment | Revenue (RMB'000) | Gross Profit (RMB'000) | Gross Profit Margin (%) | | :----------- | :------------- | :------------- | :--------- | | Food Additives | 6,474,309 | 1,020,174 | 15.8 | | Animal Nutrition | 5,406,470 | 1,522,624 | 28.2 | | High-end Amino Acids | 1,054,412 | 429,392 | 40.7 | | Colloids | 661,691 | 238,358 | 36.0 | | Others | 362,651 | (41,992) | (11.6) | Segment Performance Changes (1H 2025 vs 1H 2024) | Segment | Revenue Change | Gross Profit Change | Gross Profit Margin Change | | :----------- | :------- | :------- | :--------- | | Food Additives | -6.4% | +34.4% | +4.8pp | | Animal Nutrition | +28.9% | +78.4% | +7.8pp | | High-end Amino Acids | -1.9% | +8.5% | +3.9pp | | Colloids | -26.4% | -32.3% | -3.2pp | | Others | +28.4% | Recorded gross loss | N/A | - MSG revenue decreased by 8.1% to RMB 4.836 billion, with average selling price down 12.3% and sales volume up 4.8%; 400,000 tonnes of new capacity are fully operational[41][45] - Threonine revenue increased by 39.0% to RMB 1.597 billion, with average selling price up 0.6% and sales volume up 38.1%; 20,000 tonnes of new capacity have been absorbed by the market[43][47] - Lysine revenue increased by 39.6% to RMB 1.441 billion, with sales volume up 30.8%; 100,000 tonnes of new capacity have been absorbed by the market[44][47] Analysis of Key Production Costs In 1H 2025, corn kernels accounted for 54.9% of total production costs, with average prices decreasing by 14.3% year-on-year, while coal accounted for 16.0% with average unit costs decreasing by 10.3% - Corn kernels accounted for 54.9% of total production costs (1H 2024: 58.2%), with an average price of approximately RMB 1,780/tonne, a year-on-year decrease of 14.3%; total cost decreased by 1.7% year-on-year[57][58][59] - Coal accounted for 16.0% of total production costs (1H 2024: 16.6%), with an average unit cost of approximately RMB 349/tonne, a year-on-year decrease of 10.3%[62][64] - The Group's main production bases have their own power plants, procuring low-cost coal directly from local mines through long-term contracts[63][64] Production The Group sets production volumes based on market demand, achieving full capacity utilization for MSG, Threonine, Lysine, and Xanthan gum in 1H 2025, with MSG's annual design capacity increasing by 4.8% to 1.73 million tonnes Annual Design Capacity of Key Products (as at 30 June 2025) | Product | Annual Capacity (tonnes) | Change from 31 Dec 2024 (%) | | :----------- | :---------- | :----------------------- | | MSG | 1,730,000 | +4.8 | | Starch sweeteners | 720,000 | – | | Threonine | 263,000 | – | | Lysine | 380,000 | – | | Xanthan gum | 80,000 | – | - Capacity utilization rates for MSG, Threonine, Lysine, and Xanthan gum all reached full capacity[68][69] Other Financial Information In 1H 2025, other income totaled RMB 146 million, mainly from scrap sales, deferred income amortization, and government grants, while selling and administrative expenses increased, and finance income and costs saw mixed changes - Other income was approximately RMB 145.6 million, primarily comprising income from sales of scrap products and raw materials, amortization of deferred income, and government grants[71][79] - Net foreign exchange gain from operating activities was approximately RMB 73.2 million (1H 2024: RMB 47.6 million)[72][80] - Selling and distribution expenses increased by 11.9% (approximately RMB 112.0 million), mainly due to higher transportation costs[73][81] - Administrative expenses increased by 3.7% (approximately RMB 17.4 million), primarily due to higher staff welfare expenses[74][82] - Interest income from bank deposits was approximately RMB 241.1 million, an increase of 11.9%, mainly due to higher USD bank balances[75][83] - Finance costs increased by 34.3% (approximately RMB 35.0 million), primarily due to interest expenses[76][84] - Depreciation expenses were approximately RMB 648.0 million, a year-on-year increase of 10.9% (an increase of RMB 63.8 million)[77][85] Dividend The Board proposed a basic interim dividend, a special interim dividend, and a special dividend from Meihua compensation after tax for 1H 2025, totaling 36.5 HK cents (approximately 33.3 RMB cents) per share, a significant increase from the prior year 1H 2025 Dividend Proposal | Dividend Type | Per Share (HK cents) | Per Share (RMB cents) | Amount (HKD thousand) | Amount (RMB thousand) | | :------------------- | :---------- | :-------------- | :-------------- | :---------------- | | Basic interim dividend (35%) | 24.4 | 22.3 | 611,767 | 558,219 | | Special interim dividend (5%) | 3.5 | 3.2 | 87,753 | 80,072 | | Special dividend from Meihua compensation | 8.6 | 7.8 | 215,623 | 196,749 | | Total | 36.5 | 33.3 | 915,143 | 835,040 | - Total dividend for 1H 2024 was 18.0 HK cents per share (approximately 16.4 RMB cents), amounting to HKD 453,690 thousand (approximately RMB 415,235 thousand)[88] - Dividends will be paid on or before 30 September 2025 to shareholders whose names appear on the register of members on 15 September 2025[89] Capital structure, liquidity and financial resources As of 30 June 2025, the Group maintained robust liquidity with total cash and bank balances of approximately RMB 16.617 billion and total bank borrowings of approximately RMB 13.493 billion, resulting in a current ratio of 1.44 times and a gearing ratio of 34.7% - As at 30 June 2025, total cash and bank balances were approximately RMB 16,617.4 million (31 December 2024: RMB 13,657.1 million), primarily denominated in RMB and USD[91][96] - As at 30 June 2025, total bank borrowings were approximately RMB 13,492.5 million (31 December 2024: RMB 11,364.5 million), comprising approximately RMB 12,995.5 million in short-term borrowings and approximately RMB 497.0 million in long-term borrowings[92][96] - Net cash inflow from operating activities for 1H 2025 was approximately RMB 1,622.8 million (1H 2024: RMB 2,964.8 million)[94][98] - As at 30 June 2025, net current assets were approximately RMB 7,699.6 million (31 December 2024: RMB 6,291.6 million), with a current ratio of 1.44 times (31 December 2024: 1.39 times)[95][98] - As at 30 June 2025, the gearing ratio was approximately 34.7% (31 December 2024: 31.5%)[99][100] - Net foreign exchange gain for 1H 2025 was approximately RMB 73.8 million (1H 2024: RMB 47.8 million), primarily from operating activities[103][104] - As at 30 June 2025, restricted bank balances of RMB 4,799.7 million were pledged for bank borrowings, and RMB 300 million for bills payable[107][113] Outlook and Future Plan The Group anticipates continued market volatility in 2H 2025 due to geopolitical and trade policies, potentially impacting product prices, but plans to mitigate this through price increases and full capacity utilization, while exploring new overseas production bases - Continued global economic instability in 2H 2025 may affect product selling prices, but the Group will strive to increase prices and fully utilize capacity to offset potential low prices[110][111][116][117] - Domestic corn supply is expected to remain ample in 2H 2025, with prices potentially slightly lower than 1H 2025; coal prices are expected to remain low[118][119][122] - The Group is exploring establishing its next overseas production base in Latin America[120][123] - Construction of the first overseas production base in Kazakhstan commenced during the period, with an initial investment target of approximately USD 350 million, focusing on manufacturing and selling animal nutrition and high-end amino acid products[125] - New capacities of 400,000 tonnes for MSG, 20,000 tonnes for Threonine, and 100,000 tonnes for Lysine are fully operational and will ensure full utilization[125] - Internal resources are sufficient to cover international capital expenditures, but external financing will continue to be considered to rationalize the capital structure[121][124] Other Information In 1H 2025, the Group had no significant acquisitions or disposals of subsidiaries, employed approximately 16,600 staff, increased executive director's remuneration, complied with corporate governance, and disclosed share interests - No significant acquisitions or disposals of subsidiaries or associates occurred during the period[127][130] - As at 30 June 2025, the Group employed approximately 16,600 staff[128][131] - Executive Director Mr. Li Xuechun's annual remuneration increased by RMB 1.12 million, effective from 1 April 2025[129][132][133] - The Company complied with the Corporate Governance Code, and the Audit Committee reviewed the interim financial statements[135][139][140] - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any listed securities during the period[137][142] - As at 30 June 2025, the number of share options available for grant under the share option scheme was 251,573,403 shares, representing approximately 10.0% of the issued shares; 1,554,000 share options remained unexercised during the period[144][145][146] Directors' and Chief Executive's Interests in Shares (as at 30 June 2025) | Director Name | Capacity | Number and Class of Securities | Approximate Percentage of Total Issued Share Capital | | :--------- | :----------- | :------------------- | :-------------------------------- | | Mr. Li Xuechun | Interest of controlled corporation | 1,000,217,461 shares | 39.90% | | Mr. Li Deheng | Interest of controlled corporation | 35,320,160 shares | 1.41% | Interests of Persons Holding 5% or More of the Share Capital (as at 30 June 2025) | Name | Capacity | Number and Class of Securities | Approximate Percentage of Total Issued Share Capital | | :------------------------- | :----------- | :------------------- | :-------------------------------- | | Motivator Enterprises Limited | Beneficial interest | 1,000,217,461 shares | 39.90% | | Ms. Shi Guiling | Spouse's interest | 1,000,217,461 shares | 39.90% | | Stichting Administratiekantoor Hermes Hercule | Depositary | 251,155,403 shares | 10.02% | | Christiane Louise M. Waucquez | Beneficiary of a trust | 333,153,785 shares | 13.29% | | Jacques Marie J. Berghmans | Founder of a discretionary trust | 333,153,785 shares | 13.29% | Financials Financials This section presents the interim condensed consolidated financial statements, including the income statement, comprehensive income, balance sheet, equity changes, and cash flows, along with detailed notes Interim Condensed Consolidated Financial Statements This section contains the Group's 1H 2025 income statement, statement of comprehensive income, balance sheet, statement of changes in equity, and cash flow statement, reflecting financial performance, position, and cash flows for the period Interim Condensed Consolidated Income Statement In 1H 2025, revenue increased by 4.4% to RMB 13.96 billion, gross profit surged by 37.9% to RMB 3.169 billion, operating profit grew by 84.8% to RMB 2.054 billion, and profit attributable to equity holders rose by 72.1% to RMB 1.792 billion Income Statement Key Data (1H 2025 vs 1H 2024) | Metric | 1H 2025 (RMB'000) | 1H 2024 (RMB'000) | Y-o-Y Change | | :------------------- | :------------------- | :------------------- | :------- | | Revenue | 13,959,533 | 13,368,021 | +4.4% | | Cost of sales | (10,790,977) | (11,069,960) | -2.5% | | Gross profit | 3,168,556 | 2,298,061 | +37.9% | | Selling and distribution expenses | (1,051,148) | (939,152) | +11.9% | | Administrative expenses | (490,184) | (472,762) | +3.7% | | Other gains – net | 326,932 | 111,145 | +194.1% | | Operating profit | 2,053,844 | 1,111,403 | +84.8% | | Finance income – net | 107,102 | 116,488 | -8.1% | | Profit before income tax | 2,160,946 | 1,227,891 | +76.0% | | Income tax expense | (369,205) | (186,632) | +97.8% | | Half-year profit attributable to equity holders | 1,791,741 | 1,041,259 | +72.1% | | Basic earnings per share (RMB cents) | 71.48 | 41.31 | +73.0% | | Diluted earnings per share (RMB cents) | 71.46 | 41.30 | +73.0% | Interim Condensed Consolidated Statement of Comprehensive Income In 1H 2025, the Group's half-year profit was RMB 1.792 billion, with other comprehensive loss primarily from exchange differences on translating overseas operations, resulting in a total comprehensive income attributable to equity holders of RMB 1.786 billion Comprehensive Income Key Data (1H 2025 vs 1H 2024) | Metric | 1H 2025 (RMB'000) | 1H 2024 (RMB'000) | | :------------------- | :------------------- | :------------------- | | Half-year profit | 1,791,741 | 1,041,259 | | Exchange differences on translating overseas operations | (5,414) | (1,379) | | Total comprehensive income attributable to equity holders for the half-year | 1,786,327 | 1,039,880 | Interim Condensed Consolidated Balance Sheet As at 30 June 2025, the Group's total assets reached RMB 38.927 billion, an increase of 7.86% from year-end 2024, driven by a 12.3% rise in total current assets and a 16.3% increase in cash and cash equivalents Balance Sheet Key Data (as at 30 June 2025 vs 31 Dec 2024) | Metric | 30 June 2025 (RMB'000) | 31 Dec 2024 (RMB'000) | Change (%) | | :------------------- | :---------------------- | :----------------------- | :----- | | Assets | | | | | Total non-current assets | 13,623,333 | 13,557,759 | +0.48% | | Total current assets | 25,303,880 | 22,532,137 | +12.30% | | Total Assets | 38,927,213 | 36,089,896 | +7.86% | | Liabilities | | | | | Total non-current liabilities | 1,701,022 | 1,506,345 | +12.92% | | Total current liabilities | 17,604,279 | 16,240,497 | +8.40% | | Total Liabilities | 19,305,301 | 17,746,842 | +8.78% | | Equity | | | | | Total Equity | 19,621,912 | 18,343,054 | +7.08% | | Total Equity and Liabilities | 38,927,213 | 36,089,896 | +7.86% | - Cash and cash equivalents as at 30 June 2025 were RMB 11,517,766 thousand, an increase of 16.3% from 31 December 2024[173] - Restricted bank balances as at 30 June 2025 were RMB 5,099,676 thousand, an increase of 69.5% from 31 December 2024[173] Interim Condensed Consolidated Statement of Changes in Equity In 1H 2025, profit attributable to equity holders was RMB 1.792 billion, but due to other comprehensive losses and dividend payments, total equity increased to RMB 19.622 billion by period-end Equity Changes (1H 2025) | Metric | Amount (RMB'000) | | :------------------- | :------------- | | Balance at 1 January 2025 | 18,343,054 | | Half-year profit | 1,791,741 | | Other comprehensive loss | (5,414) | | Transactions related to employee share option scheme | 1,461 | | Net provision for safety production expenses | 5,810 | | Dividends | (508,970) | | Balance at 30 June 2025 | 19,621,912 | Interim Condensed Consolidated Statement of Cash Flows In 1H 2025, net cash inflow from operating activities was RMB 1.623 billion, net cash inflow from investing activities was RMB 589 million, and net cash outflow from financing activities was RMB 571 million, leading to period-end cash and cash equivalents of RMB 11.518 billion Cash Flow Key Data (1H 2025 vs 1H 2024) | Metric | 1H 2025 (RMB'000) | 1H 2024 (RMB'000) | | :------------------- | :------------------- | :------------------- | | Net cash inflow from operating activities | 1,622,806 | 2,964,812 | | Net cash inflow/(outflow) from investing activities | 588,598 | (650,275) | | Net cash (outflow)/inflow from financing activities | (571,362) | 631,844 | | Net increase in cash and cash equivalents | 1,640,042 | 2,946,381 | | Cash and cash equivalents at end of period | 11,517,766 | 9,837,999 | Notes to the Interim Condensed Consolidated Financial Statements This section details the basis of preparation, accounting policy changes, significant estimates, financial risk management, segment information, other income, operating profit, finance income and costs, income tax, earnings per share, property, plant and equipment, intangible assets, leases, equity-accounted investments, receivables, cash and cash equivalents, share capital, borrowings, payables, dividends, contingent liabilities, related party transactions, and post-balance sheet events 1. GENERAL INFORMATION Fufeng Group Limited and its subsidiaries primarily engage in manufacturing and selling fermented food additives, biochemical products, and starch products from production bases in China, serving mainly Chinese customers, with the company registered in the Cayman Islands and listed on the Stock Exchange - Principal activities include manufacturing and selling fermented food additives, biochemical products, and starch products[185] - Production plants are located in Shaanxi Province, Heilongjiang Province, Inner Mongolia Autonomous Region, and Xinjiang Uygur Autonomous Region in China, primarily selling to Chinese customers[185] - The Company was incorporated in the Cayman Islands, and its shares are listed on the Stock Exchange[186][187][189][190] 2. BASIS OF PREPARATION AND CHANGES IN ACCOUNTING POLICIES The interim condensed consolidated financial statements are prepared in accordance with HKAS 34, with accounting policies consistent with the 2024 annual financial statements, except for the initial adoption of HKAS 21 amendments which had no retrospective impact, while new standards like HKFRS 18 are expected to primarily affect the presentation of the statement of comprehensive income - The interim condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[188][192] - Accounting policies are consistent with those applied in the annual financial statements for the year ended 31 December 2024, except for the initial adoption of "Lack of Exchangeability – Amendments to HKAS 21"[193][194][196] - Hong Kong Financial Reporting Standard 18 "Presentation and Disclosure in Financial Statements" may primarily affect the presentation of the consolidated statement of comprehensive income, with the Group still assessing the impact[195][196] 3. ESTIMATES The preparation of interim financial statements requires management to make judgments, estimates, and assumptions, which are consistent with the significant judgments and sources of estimation uncertainty applied in the 2024 annual consolidated financial statements - In preparing the interim financial statements, management is required to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses[199][201] - The key sources of significant judgments and estimation uncertainty are the same as those applied in the consolidated financial statements for the year ended 31 December 2024[200][201] 4. FINANCIAL RISK MANAGEMENT The Group faces market risks (foreign exchange, interest rate), credit risk, and liquidity risk, managing credit risk through reputable institutions and customer assessments, and liquidity risk by maintaining sufficient cash and credit lines, with fair value estimates using a three-level hierarchy 4.1 Financial risk factors The Group's operations are exposed to market risk (including foreign exchange risk, cash flow interest rate risk, and fair value interest rate risk), credit risk, and liquidity risk, with no significant changes in risk management departments or policies since year-end 2024 - The Group's operations are exposed to market risk (including foreign exchange risk, cash flow interest rate risk, and fair value interest rate risk), credit risk, and liquidity risk[203][208] - There have been no significant changes in the risk management department or any risk management policies since the end of 2024[204][208] 4.2 Credit risk The Group manages credit risk by depositing bank balances with reputable institutions, granting credit terms to long-term customers with continuous credit assessments, and applying HKFRS 9's simplified approach for expected credit loss provisions on trade receivables, totaling RMB 26.70 million as of 30 June 2025 - Credit risk management measures include depositing bank balances with reputable financial institutions and granting credit terms (typically not exceeding 90 days) to customers with long-term relationships and good credit records, along with continuous credit assessments[206][207][210] - Trade receivables are measured at expected credit losses using the simplified approach under Hong Kong Financial Reporting Standard 9, which recognizes lifetime expected loss provisions for all trade receivables[213][217] Loss Allowance for Trade Receivables (RMB'000) | Date | Within 3 months | 3 to 12 months | Over 12 months | Total | | :--------------- | :------ | :-------- | :--------- | :----- | | 30 June 2025 | 15,047 | 5,895 | 5,754 | 26,696 | | 31 December 2024 | 15,539 | 4,381 | 7,448 | 27,368 | - Trade receivables are written off when there is no reasonable expectation of recovery, and impairment losses are presented within operating profit[225][226][227] Reversal of Impairment Loss on Financial Assets (RMB'000) | Metric | 1H 2025 | 1H 2024 | | :--------------- | :--------- | :--------- | | Reversal of impairment loss | 672 | 4,866 | 4.3 Liquidity risk The Group manages liquidity risk by maintaining sufficient cash and available credit facilities to meet obligations as they arise and by regularly monitoring funding needs, with most borrowings and trade payables maturing within one year - Prudent liquidity risk management involves maintaining sufficient cash and available credit facilities to meet obligations as they arise, and monitoring the Group's funding needs and available credit facilities[235][237] Contractual Maturities of Financial Liabilities (as at 30 June 2025, RMB'000) | Liability Type | Less than 1 year | 1 to 2 years | 2 to 5 years | Total Contractual Cash Flows | | :--------------- | :----------- | :------- | :------- | :--------------- | | Borrowings | 12,995,484 | 497,000 | – | 13,492,484 | | Interest payments on borrowings | 97,008 | 8,351 | – | 105,359 | | Lease liabilities | 1,140 | 862 | 50 | 2,052 | | Trade and other payables | 3,006,722 | – | – | 3,006,722 | | Total non-derivative instruments | 16,100,354 | 506,213 | 50 | 16,606,617 | 4.4 Fair value estimation The Group estimates the fair value of its financial instruments using a three-level hierarchy, with unlisted equity securities, notes receivable, and derivative financial instruments classified as Level 3, and their fair values determined using valuation techniques such as discounted cash flow analysis - The Group classifies financial instruments into three levels to indicate the reliability of input data used to determine fair value[244][245] Level 3 Financial Assets (as at 30 June 2025, RMB'000) | Type | Amount | | :--------------- | :------ | | Equity investments | 4,078 | | Notes receivable measured at FVOCI | 789,643 | | Total | 793,721 | Level 3 Financial Liabilities (as at 30 June 2025, RMB'000) | Type | Amount | | :--------------- | :--- | | Derivative financial instruments | 226 | - Valuation techniques include: cross currency and interest rate swaps using present value of future cash flows based on observable yield curves; forward foreign exchange contracts using present value of future cash flows based on forward exchange rates; foreign exchange options using option pricing models; and other financial instruments using discounted cash flow analysis[259][260] 5. SEGMENT INFORMATION The Group reports performance across five product segments: food additives, animal nutrition, high-end amino acids, colloids, and others, with executive directors assessing segment performance based on gross profit, and approximately 68% of 1H 2025 revenue derived from Chinese customers - The Group's products are categorized into five product segments: food additives, animal nutrition, high-end amino acids, colloids, and others[261][266] - Executive Directors assess business segment performance based on the gross profit of the five product segments mentioned above[264] - Approximately 68% of revenue was derived from sales of goods to customers in China (1H 2024: 70%)[262][265] - No single customer contributed 10% or more of the revenue in 1H 2025[262][265] 1H 2025 Revenue by Product Segment (RMB'000) | Product Segment | Revenue | | :----------- | :---------- | | Food Additives | 6,474,309 | | Animal Nutrition | 5,406,470 | | High-end Amino Acids | 1,054,412 | | Colloids | 661,691 | | Others | 362,651 | | Total | 13,959,533 | 6. OTHER INCOME In 1H 2025, other income totaled RMB 146 million, primarily comprising amortization of deferred income, government grants related to expenses, and income from sales of scrap products and raw materials Other Income Components (1H 2025 vs 1H 2024, RMB'000) | Item | 1H 2025 | 1H 2024 | | :--------------- | :--------- | :--------- | | Amortization of deferred income | 43,287 | 40,236 | | Government grants | 39,490 | 35,367 | | Sales of scrap products and raw materials | 39,071 | 47,802 | | Others | 23,741 | 16,879 | | Total | 145,589 | 140,284 | 7. OPERATING PROFIT Operating profit for 1H 2025 was RMB 2.054 billion, influenced by factors such as depreciation, amortization, reversal of impairment loss on financial assets, net foreign exchange gains, and litigation compensation Analysis of Operating Items (1H 2025 vs 1H 2024, RMB'000) | Item | 1H 2025 | 1H 2024 | | :------------------- | :--------- | :--------- | | Amortization of intangible assets | 6,442 | 4,209 | | Depreciation of property, plant and equipment | 635,313 | 571,474 | | Depreciation of right-of-use assets | 12,675 | 12,708 | | Reversal of impairment loss on financial assets | (672) | (4,866) | | Value of employee services under share option scheme | (548) | 481 | | Write-down of inventories – net | (2,106) | 31,915 | | Net foreign exchange gain | (73,230) | (47,614) | | Gain on sales of carbon emission allowances | (896) | (29,157) | | Litigation compensation | (233,000) | (15,000) | | Gain on cross currency swaps and foreign exchange investments | (13,973) | – | | Fair value loss on financial assets measured at FVPL | 1,154 | – | 8. FINANCE INCOME AND COSTS Net finance income for 1H 2025 was RMB 107 million, with finance income primarily from bank deposit interest and finance costs mainly from bank borrowing interest Finance Income (1H 2025 vs 1H 2024, RMB'000) | Item | 1H 2025 | 1H 2024 | | :--------------- | :--------- | :--------- | | Interest on bank deposits and balances | 241,093 | 215,365 | | Interest on other receivables | 2,520 | 3,004 | | Net foreign exchange gain from financing activities | 618 | 211 | | Total Finance Income | 244,231 | 218,580 | Finance Costs (1H 2025 vs 1H 2024, RMB'000) | Item | 1H 2025 | 1H 2024 | | :--------------- | :--------- | :--------- | | Interest on bank borrowings | (137,080) | (102,082) | | Interest on lease liabilities | (49) | (7) | | Interest on other payables | – | (3) | | Total Finance Costs | (137,129) | (102,092) | - Net finance income for 1H 2025 was RMB 107,102 thousand (1H 2024: RMB 116,488 thousand)[278] 9. INCOME TAX EXPENSE Income tax expense for 1H 2025 was RMB 369 million, primarily comprising PRC corporate income tax, withholding tax, and US corporate income tax, with a RMB 50 million withholding tax provision made for future distribution of retained earnings by PRC subsidiaries Income Tax Expense (1H 2025 vs 1H 2024, RMB'000) | Item | 1H 2025 | 1H 2024 | | :--------------- | :--------- | :--------- | | PRC corporate income tax | 318,379 | 196,000 | | Withholding tax | 11,042 | 24,230 | | US corporate income tax | 7,095 | 12,142 | | Hong Kong profits tax | 1,596 | 449 | | Total Current Income Tax | 338,112 | 232,821 | | Deferred income tax | 31,093 | (46,189) | | Total Income Tax Expense | 369,205 | 186,632 | - A withholding tax provision of RMB 50,000 thousand was made in 1H 2025 for the expected distribution of RMB 1,000,000 thousand in retained earnings by PRC subsidiaries[286][288] 10. EARNINGS PER SHARE Basic earnings per share for 1H 2025 was RMB 71.48 cents, and diluted earnings per share was RMB 71.46 cents, both showing significant growth compared to the prior period Earnings Per Share (1H 2025 vs 1H 2024, RMB cents) | Type | 1H 2025 | 1H 2024 | | :----------- | :--------- | :--------- | | Basic earnings per share | 71.48 | 41.31 | | Diluted earnings per share | 71.46 | 41.30 | - Basic earnings per share is calculated by dividing profit attributable to equity holders by the weighted average number of ordinary shares outstanding during the period; diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding, assuming the conversion of all dilutive potential ordinary shares[290][291][293] 11. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS As at 30 June 2025, the net book value of property, plant and equipment was approximately RMB 12.366 billion, and intangible assets were approximately RMB 71.004 million, with new additions totaling approximately RMB 677 million during the period Net Book Value (as at 30 June 2025, RMB'000) | Asset Type | Amount | | :--------------- | :---------- | | Property, plant and equipment | 12,366,424 | | Intangible assets | 71,004 | | Total | 12,437,428 | - Total additions to property, plant and equipment and intangible assets for 1H 2025 were approximately RMB 677,030 thousand[295] - Total depreciation and amortization for 1H 2025 was approximately RMB 641,755 thousand[295] 12. LEASES As a lessee, the Group leases offices, warehouses, and equipment, typically for 1 to 5 years, with total right-of-use assets amounting to RMB 996 million and total lease liabilities of RMB 2.082 million as at 30 June 2025, and total cash outflow for leases of RMB 16.387 million during the period Right-of-Use Assets (as at 30 June 2025, RMB'000) | Asset Type | Amount | | :--------------- | :------ | | Leased land use rights | 993,752 | | Buildings | 1,925 | | Equipment | 36 | | Total | 995,713 | Lease Liabilities (as at 30 June 2025, RMB'000) | Type | Amount | | :--------------- | :--- | | Current | 1,220 | | Non-current | 862 | | Total | 2,082 | - Total cash outflow for leases during the period was approximately RMB 16,387 thousand (1H 2024: RMB 7,091 thousand)[306] - The Group leases various offices, warehouses, and equipment, with lease contracts typically having fixed terms of 1 to 5 years[307][309] 13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD As at 30 June 2025, the carrying amount of investments accounted for using the equity method was RMB 5.886 million, with new investments of RMB 5.8 million added during the period Carrying Amount of Equity-Accounted Investments (RMB'000) | Date | Amount | | :--------------- | :--- | | Balance at 1 January 2025 | 86 | | Additions during the period | 5,800 | | Balance at 30 June 2025 | 5,886 | 14. TRADE AND OTHER RECEIVABLES, NOTES RECEIVABLE AND PREPAYMENTS As at 30 June 2025, net trade receivables amounted to RMB 1.059 billion, notes receivable to RMB 790 million, and prepayments to suppliers to RMB 591 million, with some notes receivable endorsed to suppliers or pledged for bank borrowings Receivables and Prepayments (as at 30 June 2025 vs 31 Dec 2024, RMB'000) | Item | 30 June 2025 | 31 Dec 2024 | | :------------------- | :------------ | :------------- | | Trade receivables – net | 1,058,708 | 1,087,233 | | Notes receivable | 789,643 | 915,336 | | Prepayments to suppliers | 590,735 | 412,531 | | Prepayments for non-current assets | 121,968 | 78,329 | Ageing of Trade Receivables (as at 30 June 2025, RMB'000) | Ageing | Amount | | :----------- | :---------- | | Within 3 months | 1,036,976 | | 3 to 12 months | 42,437 | | Over 12 months | 5,991 | | Total | 1,085,404 | - Notes receivable are all bank acceptance bills with an ageing of less than one year, of which RMB 601,752 thousand have been endorsed to suppliers[320][321] - As at 30 June 2025, RMB 143,314 thousand of notes receivable were pledged as collateral for the Group's bank borrowings[323][324] 15. CASH AND CASH EQUIVALENTS, RESTRICTED BANK BALANCES AND TIME DEPOSITS As at 30 June 2025, cash and cash equivalents totaled RMB 11.518 billion, and restricted bank balances amounted to RMB 5.100 billion, primarily pledged as collateral for bank borrowings and bills payable Cash and Bank Balances (as at 30 June 2025 vs 31 Dec 2024, RMB'000) | Item | 30 June 2025 | 31 Dec 2024 | | :------------------- | :------------ | :------------- | | Cash and cash equivalents | 11,517,766 | 9,902,194 | | Restricted bank balances | 5,099,676 | 3,009,115 | | Time deposits | – | 745,840 | | Total | 16,617,442 | 13,657,149 | - As at 30 June 2025, restricted bank balances included: RMB 4,799,676 thousand pledged as collateral for bank borrowings; and RMB 300,000 thousand pledged as collateral for the issuance of bills payable[326] - The weighted average effective annual interest rate for cash and cash equivalents, restricted bank balances, and time deposits as at 30 June 2025 was 2.50% (31 December 2024: 2.95%)[329][330] 16. SHARE CAPITAL AND SHARE PREMIUM As at 30 June 2025, the company had 2,507,096 thousand issued shares, with share capital of RMB 241 million and share premium of RMB 155 million, both slightly increasing due to the exercise of share options during the period Share Capital and Share Premium (as at 30 June 2025, RMB'000) | Item | Share Capital | Share Premium | Total | | :----------- | :------ | :------- | :------ | | Balance at 1 January 2025 | 240,786 | 152,710 | 393,496 | | Exercise of share options | 41 | 2,008 | 2,049 | | Balance at 30 June 2025 | 240,827 | 154,718 | 395,545 | - As at 30 June 2025, the number of issued and fully paid shares was 2,507,096 thousand[333] 17. BORROWINGS As at 30 June 2025, the Group's total borrowings amounted to RMB 13.492 billion, predominantly short-term bank borrowings, with secured bank borrowings collateralized by restricted bank balances and notes receivable, and interest expenses on borrowings totaling RMB 137 million during the period Total Borrowings (as at 30 June 2025 vs 31 Dec 2024, RMB'000) | Type | 30 June 2025 | 31 Dec 2024 | | :----------- | :------------ | :------------- | | Non-current bank borrowings | 497,000 | 348,000 | | Current bank borrowings | 12,995,484 | 11,016,468 | | Total Borrowings | 13,492,484 | 11,364,468 | - Secured current bank borrowings are collateralized by restricted bank balances of RMB 4,799,676 thousand and notes receivable of RMB 143,314 thousand[334][335] - Interest expense on borrowings for the period was RMB 137,080 thousand (1H 2024: RMB 102,082 thousand)[338][340] - As at 30 June 2025 and 31 December 2024, the Group had not breached any loan covenants[339][341] 18. TRADE, OTHER PAYABLES AND ACCRUALS As at 30 June 2025, total trade payables amounted to RMB 1.078 billion, payables for property, plant and equipment were RMB 952 million, and bills payable were RMB 315 million Payables and Accruals (as at 30 June 2025 vs 31 Dec 2024, RMB'000) | Item | 30 June 2025 | 31 Dec 2024 | | :------------------- | :------------ | :------------- | | Trade payables | 1,077,819 | 1,409,871 | | Payables for property, plant and equipment | 952,046 | 1,155,624 | | Payables for salaries, wages and staff welfare | 513,208 | 513,034 | | Bills payable | 314,649 | 563,465 | | Interest payables | 11,051 | 16,946 | | Other payables and accruals | 655,600 | 522,937 | | Total | 3,524,373 | 4,181,877 | Ageing of Trade Payables (as at 30 June 2025, RMB'000) | Ageing | Amount | | :----------- | :---------- | | Within 3 months | 998,938 | | 3 to 6 months | 33,239 | | 6 to 12 months | 22,236 | | 1 to 2 years | 11,103 | | Over 2 years | 12,303 | | Total | 1,077,819 | 19. DIVIDENDS The Board proposed a basic interim dividend, a special interim dividend, and a special dividend from Meihua compensation after tax for 1H 2025, totaling 36.5 HK cents per share, which have not yet been recognized as payable in the financial statements 1H 2025 Dividend Proposal | Dividend Type | Per Share (HK cents) | Per Share (RMB cents) | Amount (HKD thousand) | Amount (RMB thousand) | | :------------------- | :---------- | :-------------- | :-------------- | :---------------- | | Basic interim dividend (35%) | 24.4 | 22.3 | 611,767 | 558,219 | | Special interim dividend (5%) | 3.5 | 3.2 | 87,753 | 80,072 | | Special dividend from Meihua compensation | 8.6 | 7.8 | 215,623 | 196,749 | | Total | 36.5 | 33.3 | 915,143 | 835,040 | - The basic interim dividend, special interim dividend, and special dividend from Meihua compensation after tax have not been recognized as dividends payable in these interim financial statements[347][350] 20. CONTINGENT LIABILITIES As at 30 June 2025 and 31 December 2024, the Group had no significant contingent liabilities - As at 30 June 2025 and 31 December 2024, the Group had no significant contingent liabilities[348][350] 21. RELATED PARTY TRANSACTIONS AND BALANCES The Group engaged in transactions with related parties, including granting and repaying loans and collecting interest, with a balance of RMB 33.694 million in loans receivable from a related party as at 30 June 2025, which are unsecured, floating-rate loans Related Party Transactions (1H 2025 vs 1H 2024, RMB'000) | Transaction Type | 1H 2025 | 1H 2024 | | :--------------- | :--------- | :--------- | | Loans granted to associates | 2,672 | 69,000 | | Repayment of loans by associates | 20,450 | 10,877 | | Interest received from associates | 809 | 926 | Key Management Personnel Remuneration (1H 2025 vs 1H 2024, RMB'000) | Item | 1H 2025 | 1H 2024 | | :--------------- | :--------- | :--------- | | Salaries and allowances | 9,152 | 10,732 | | Pension costs | 438 | 490 | | Share options granted | 202 | 481 | | Total | 9,792 | 11,703 | - As at 30 June 2025, the balance of loans receivable from a related party was RMB 33,694 thousand (31 December 2024: RMB 50,614 thousand)[360] - Balances with related parties are unsecured, bear interest at a floating rate linked to the one-year Loan Prime Rate (LPR) (3.0% as at 30 June 2025), and are repayable within one year[361] 22. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE Subsequent to the balance sheet date, the Board proposed basic, special, and Meihua compensation special interim dividends, and the Group entered into an agreement to acquire equity in Qingdao Yijing Real Estate Co Ltd for approximately RMB 355 million to construct a new headquarters, dormitories, and supporting buildings - The Board proposed the payment of a basic interim dividend, a special interim dividend, and a special dividend from Meihua compensation after tax (details in Note 19)[369] - Subsequent to 30 June 2025, the Group entered into a sale and purchase agreement with certain related parties on 21 July 2025 to acquire equity interests in Qingdao Yijing Real Estate Co Ltd in three installments[369] - The acquisition of Qingdao Yijing aims to develop its land in Qingdao for the construction of a new headquarters, dormitories, and other supporting buildings (in shell and core condition), with an expected acquisition consideration of RMB 355,000 thousand[363][367] - Save as disclosed above, no other significant events occurred after the balance sheet date for the Group[365][368] Corporate Information Corporate Information This section provides essential corporate details including board members, registered offices, committees, banking relationships, and auditor information - Executive Directors include Mr. Li Xuechun (Chairman), Mr. Li Deheng, and Mr. Li Guangyu; Independent Non-executive Directors include Mr. Liu Zhongwei, Mr. Zhang Youming, and Ms. Li Ming[370] - The Company's registered office is in the Cayman Islands, its principal place of business in China is in Chengyang District, Qingdao City, and its principal place of business in Hong Kong is in Tsim Sha Tsui, Kowloon[370][371] - The Company has an Audit Committee, a Remuneration Committee, and a Nomination Committee[372][373] - Principal bankers in China include China Construction Bank, Bank of China, Agricultural Bank of China, etc.; principal bankers in Hong Kong include Bank of China (Hong Kong), Deutsche Bank AG Hong Kong Branch, Hang Seng Bank Limited, etc.[373] - The independent auditor is PricewaterhouseCoopers, and the stock code for The Stock Exchange of Hong Kong Limited is 00546[374] Glossary Glossary This section defines key terms and abbreviations used throughout the interim report, covering financial metrics, company entities, accounting standards, and geographical references - This section provides key terms and their definitions used in this interim report, including financial metrics (e.g., ASP, FVOCI, FVPL), company entities (e.g., Board, Company, Group), accounting standards (e.g., HKAS, HKFRS), geographical areas (e.g., BVI, Hong Kong, PRC/China, U.S.), and currency units (e.g., HKD, RMB, USD)[375][376][377][378][379]