Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 6,980.8 million, representing a 17.2% increase from RMB 5,955.4 million in the same period of 2022[8]. - Gross profit for the same period was RMB 4,262.4 million, up 15.5% from RMB 3,691.5 million year-on-year[8]. - Adjusted comparable EBITDA for the six months ended June 30, 2023, was RMB 1,309.5 million, a 24.0% increase from RMB 1,056.1 million in the prior year[8]. - Net profit for the six months ended June 30, 2023, was RMB 608.0 million, reflecting a 28.0% increase compared to RMB 475.1 million in the same period of 2022[8]. - The company reported a significant increase in EBITDA of 29.5% to RMB 1,397.9 million compared to RMB 1,079.4 million in the prior year[8]. - The adjusted comparable net profit margin for the six months ended June 30, 2023, was 7.4%, down from 8.1% in the previous year[8]. Revenue Breakdown - The revenue breakdown by product segment shows nutritional supplements at 60.1%, infant formula at 31.7%, and others at 8.2% for the six months ended June 30, 2023[9]. - The infant nutrition and care segment saw a revenue contribution of 44.6% for the six months ended June 30, 2023[10]. - The revenue from high-margin and fast-growing nutritional supplements accounted for 60.1% of total revenue in the first half of 2023[15]. - The adult nutrition and care products segment generated RMB 2,938.2 million, reflecting a 43.6% increase compared to the previous year[29]. - The infant nutrition and care segment faced challenges, with revenue declining by 10.1% to RMB 2,213.7 million, representing 31.7% of total revenue[29]. - The pet nutrition and care segment grew by 27.8% to RMB 926.7 million, contributing 13.3% to total revenue[29]. Market Presence and Expansion - The company plans to continue expanding its market presence and invest in new product development to drive future growth[6]. - H&H International Holdings achieved a strong financial performance with a double-digit revenue growth across its three strategic business pillars: adult nutrition and care products, infant nutrition and care products, and pet nutrition and care products, contributing to a positive EBITDA margin[15]. - The company is focusing on market expansion in high-profit regions such as Hong Kong and Singapore, with robust double-digit growth contributions from these markets[20]. - The company plans to expand its market share in the cross-border e-commerce sector in mainland China, targeting double-digit growth in the normal trade market[25]. - The company is focusing on expanding its presence in new markets, including mainland China, Canada, the UK, and Singapore for its Zesty Paws brand[25]. Geographical Revenue Distribution - The geographical revenue distribution indicates that mainland China accounted for 72.7%, Australia and New Zealand 11.9%, and North America 10.6% for the same period[11]. - Revenue from mainland China for the six months ended June 30, 2023, was RMB 5,076.1 million, an increase of 15.4% year-on-year, accounting for 72.7% of the group's total revenue[31]. - Revenue from the Australia and New Zealand market increased by 19.4% to AUD 177.4 million, representing 11.9% of the group's total revenue[33]. - North America revenue grew by 20.9%, accounting for 10.6% of total revenue, with Zesty Paws achieving a 30.1% increase in revenue[34]. Cost and Expenses - Sales and distribution costs, excluding depreciation and amortization, increased by 8.8% to RMB 2,538.7 million for the six months ended June 30, 2023, with the percentage of these costs to total revenue decreasing from 39.2% to 36.4%[37]. - Administrative expenses rose by 31.0% to RMB 412.4 million for the six months ended June 30, 2023, with the percentage of these expenses to total revenue slightly increasing from 5.3% to 5.9%[40]. - Research and development expenses increased by 23.9% to RMB 84.9 million, maintaining a stable percentage of 1.2% of total revenue[40]. - Financing costs increased by 41.9% to RMB 358.0 million for the six months ended June 30, 2023, primarily due to a 65.7% rise in interest on bank loans and preferred notes compared to the previous year[45]. Shareholder and Governance - The company has complied with all corporate governance codes as per the Hong Kong Stock Exchange regulations during the six months ending June 30, 2023[50]. - The Audit Committee, consisting of three non-executive directors, is responsible for overseeing the external auditor's appointment and reviewing the group's financial reporting[52]. - The Remuneration Committee is tasked with recommending remuneration policies for all directors and senior management, ensuring transparency and alignment with company performance[54]. - The Nomination Committee evaluates the board's composition and recommends candidates for directorship, considering diversity and qualifications[55]. - The company established an Environmental, Social, and Governance (ESG) Committee to enhance the management of sustainability issues and improve disclosure quality[56]. Cash Flow and Liquidity - Cash generated from operating activities was RMB 22.1 million for the six months ended June 30, 2023, after tax payments of RMB 337.6 million[47]. - Cash and cash equivalents amounted to RMB 2,137.7 million as of June 30, 2023, providing a strong liquidity position[47]. - The company's net leverage ratio decreased from 3.58 times at the end of 2022 to 3.40 times as of June 30, 2023, reflecting effective management of balance sheet risks[17]. - The company has established several liquidity measures to further manage debt costs following the hedging agreements signed in July 2023[45]. Environmental Initiatives - The company has initiated a greenhouse gas reduction plan and launched a recycling program for Swisse plastic bottles in China[26]. Financial Instruments and Hedging - The company’s hedging strategy has been assessed as highly effective, aligning with expected interest and principal payments[157]. - The fair value of cross-currency swaps is reported at RMB 50,487,000, highlighting the company's exposure to currency risk[196]. - The company’s financial instruments are subject to market fluctuations, with the fair value of derivatives being sensitive to changes in discount rates[194]. Employee Compensation and Share Options - The total remuneration paid to key management personnel for the six months ended June 30, 2023, was RMB 66,306,000, significantly higher than RMB 31,935,000 for the same period in 2022[187]. - The company has adopted three stock option plans, with two currently active as of June 30, 2023[64]. - The company aims to retain and motivate employees through the share award plan, contributing to its ongoing operations and development[76].
H&H国际控股(01112) - 2023 - 中期财报