Financial Performance - The group reported a revenue of HKD 392.9 million for the first half of 2022, compared to HKD 206.5 million in the same period last year, representing an increase of 90%[21]. - The group's revenue for the review period was RMB 392.9 million, an increase of 6.3% compared to RMB 369.5 million in the same period last year[30]. - Revenue for the six months ended June 30, 2022, was RMB 392,903 thousand, an increase of 6.0% compared to RMB 369,461 thousand for the same period in 2021[84]. - The revenue from the food raw materials segment was RMB 206,452,000 for the six months ended June 30, 2022, up from RMB 186,451,000 in the same period of 2021, indicating a growth of about 10.7%[130]. - Profit for the review period decreased by RMB 19.3 million or 44.8% to RMB 23.8 million, compared to RMB 43.1 million in the same period last year[44]. - The company's profit attributable to equity holders for the six months ended June 30, 2022, was 23,780,000 RMB, a decline of 44.5% from 43,077,000 RMB in the same period last year[160]. - Basic and diluted earnings per share for the period were RMB 0.03, down from RMB 0.06 in the previous year[88]. - Total comprehensive income for the period was RMB 26,703 thousand, compared to RMB 42,911 thousand in the same period last year, reflecting a decrease of 37.8%[90]. Cost and Expenses - The cost of sales increased to RMB 320.0 million, up 10.7% from RMB 300.0 million in the previous year, due to higher sales revenue and procurement costs[32]. - Gross profit decreased by RMB 8.6 million to RMB 60.9 million, with a gross margin of 15.5%, down from 18.8% in the previous year[33]. - Selling and distribution expenses decreased by RMB 3.4 million or 20.5% to RMB 13.2 million, attributed to reduced travel expenses due to lockdowns[39]. - Administrative expenses increased by RMB 2.2 million or 12.4% to RMB 20.0 million, mainly due to higher employee salaries and social security adjustments[40]. - The total tax expense for the six months ended June 30, 2022, was RMB 7,501,000, down from RMB 12,687,000 in the same period of 2021, showing a decrease of about 41.3%[152]. Investments and Assets - The group holds 28,125,200 shares of Tianye, representing approximately 10.42% of Tianye's equity, with an investment cost of RMB 78.8 million[70]. - As of June 30, 2022, the group's investment in Tianye amounted to RMB 99.7 million, accounting for 19.2% of the group's total assets[70]. - The group has no foreign currency hedging policy but monitors foreign currency risks and may consider hedging significant risks when necessary[54]. - The total assets as of June 30, 2022, amounted to RMB 518,609 thousand, while total liabilities were RMB 91,240 thousand, resulting in a net asset value of RMB 427,369 thousand[97]. - The group’s total identifiable non-current assets located in mainland China accounted for over 95% of its total non-current assets[120]. Cash Flow and Liquidity - The group's cash and cash equivalents increased to RMB 136.8 million from RMB 134.9 million, reflecting an increase in operating cash flow[52]. - The net cash flow from operating activities for the six months ended June 30, 2022, was RMB 39,574,000, an increase from RMB 31,281,000 in the previous year, indicating a growth of approximately 26.5%[110]. - The cash and cash equivalents at the end of June 30, 2022, were RMB 136,756,000, a decrease from RMB 143,381,000 at the end of June 2021, representing a decline of approximately 4.6%[112]. - The company reported a financing cash outflow of RMB 35,148,000 for the six months ended June 30, 2022, compared to an inflow of RMB 18,122,000 in the same period of the previous year[112]. Strategic Initiatives - The company has established a strong customer base across various provinces in China, serving major clients such as Nestlé, Coca-Cola, and AAK[13]. - In April 2022, the company obtained agency rights for various food ingredient products from Korea's Jeonggwanjang, focusing on the nutrition and health sector[10]. - The company plans to enhance its R&D capabilities by constructing an Asia-Pacific Innovation Center on a land area of approximately 20,936.5 square meters, which will include a food solutions laboratory, manufacturing, logistics, and sales functions[17]. - The company aims to increase product sales through existing and new agency rights, targeting the food service and nutrition sectors[15]. - The group has expanded its distribution coverage significantly by establishing six subsidiaries in cities such as Xiamen, Qingdao, and Wuhan, enhancing market penetration[9]. - The company is actively seeking strategic investment opportunities and aims to acquire quality target businesses and assets to create synergies[18]. Governance and Compliance - The company continues to enhance its corporate governance practices to align with the latest developments and ensure compliance with applicable rules[75]. - The audit committee has reviewed the interim results and confirmed adherence to applicable accounting standards and listing rules[81]. Workforce and Employment - The group employed 175 staff members, with compensation determined based on market terms and individual performance[56]. - The company’s workforce costs, including salaries and wages, amounted to RMB 22,623,000 for the six months ended June 30, 2022, compared to RMB 20,893,000 for the same period in 2021, reflecting an increase of approximately 8.3%[149]. Inventory and Trade Receivables - Trade receivables as of June 30, 2022, amounted to 142,491,000 RMB, down from 157,949,000 RMB at the end of the previous year[178]. - Inventory levels increased significantly, with raw materials at 32,132,000 RMB compared to 14,039,000 RMB in the previous year, indicating a rise of 128%[177]. - The company reported a provision for inventory of 81,253,000 RMB, up from 60,197,000 RMB, reflecting a 35% increase[177]. - The aging analysis of trade receivables showed that 136,239,000 RMB was within three months, down from 149,258,000 RMB in the previous year[182]. - The company has maintained strict control over its trade receivables to minimize credit risk, with no significant credit concentration risk identified[178].
欣融国际(01587) - 2022 - 中期财报