维达国际(03331) - 2023 - 中期业绩

Summary The Group achieved 10.1% organic revenue growth to HKD 10,070 million, driven by price increases, higher sales volume, and an optimized product mix - Group revenue achieved 10.1% organic growth to HKD 10,070 million, primarily driven by price and sales volume increases, and an optimized product mix[2] - E-commerce channels recorded 23.6% organic growth, accounting for 46% of total Group revenue[2] - Gross profit decreased by 18.5% to HKD 2,527 million due to cost inflation pressure, while net profit declined by 81.1% to HKD 121 million[2] Financial Performance Summary | Metric | H1 2023 (HKD) | H1 2022 (HKD) | Y-o-Y Change (%) | | :--- | :-------------------- | :-------------------- | :----------- | | Revenue | 10,070 million | 9,680 million | 4.0% (10.1% organic growth) | | Gross Profit | 2,527 million | 3,100 million | -18.5% | | Net Profit | 121 million | 638 million | -81.1% | | Basic EPS | 0.10 HKD | 0.53 HKD | -81.1% | | Interim Dividend | 0.10 HKD | 0.10 HKD | 0.0% | Management Discussion and Analysis The Group achieved strong organic sales growth despite post-pandemic uncertainties, mitigating cost inflation through pricing and product mix optimization, while continuing strategic investments for sustainable profitability Overview Despite post-pandemic uncertainties, the Group achieved strong organic sales growth in H1 2023, mitigating raw material cost increases through pricing and product mix upgrades, maintaining market leadership in tissue and growing personal care, while investing in innovation for future sustainable profitability - The Group achieved strong organic sales growth in H1 2023, mitigating raw material price increases through price adjustments and product mix upgrades, especially in premium categories like Tempo brand[4] - Tissue business maintained market leadership in Mainland China and Hong Kong, with continuous market share growth in personal care business[4] - Gross profit and net profit remained negatively impacted by inflation, with high-cost raw material inventory digestion pressuring margins despite falling raw material prices[4] - The Group will continue to invest in innovation, brand building, and operational capabilities to drive future sustainable profitable growth[4] Financial Highlights In H1 2023, the Group's total revenue reached HKD 10,070 million with 10.1% organic growth, but gross profit and net profit significantly declined due to cost inflation, leading to reduced margins and increased net gearing Key Financial Performance | Metric | H1 2023 (million HKD) | H1 2022 (million HKD) | Y-o-Y Change (%) | | :--- | :-------------------- | :-------------------- | :----------- | | Total Revenue | 10,070 | 9,680 | 4.0% (10.1% organic growth) | | Gross Profit | 2,527 | 3,100 | -18.5% | | EBITDA | 818 | 1,418 | -42.3% | | Operating Profit | 137 | 757 | -81.8% | | Net Profit | 121 | 638 | -81.1% | | Basic EPS (HK cents) | 10.0 | 53.0 | -81.1% | Profitability Ratios | Metric | H1 2023 | H1 2022 | Change (percentage points) | | :--- | :----------- | :----------- | :------------ | | Gross Margin | 25.1% | 32.0% | -6.9 | | EBITDA Margin | 8.1% | 14.6% | -6.5 | | Operating Margin | 1.4% | 7.8% | -6.4 | | Net Profit Margin | 1.2% | 6.6% | -5.4 | Revenue Contribution by Business Segment | Business Segment | Share of Total Revenue (H1 2023) | | :------- | :-------------------------- | | Tissue Segment | 83% | | Personal Care Segment | 17% | Revenue Contribution by Sales Channel | Sales Channel | Share of Total Revenue (H1 2023) | Organic Growth Rate | | :------- | :-------------------------- | :--------- | | E-commerce Channels | 46% | 23.6% | | Traditional Distributors | 24% | N/A | | Modern Channels (Supermarkets/Hypermarkets) | 21% | N/A | | Commercial | 9% | N/A | - Borrowing interest expenses increased by 119.9% to HKD 78 million, primarily due to rising interest rates and increased term loans[6] - Net gearing ratio increased to 43.1% from 28.6% at the end of 2022[6][52] Business Review The Group's business review highlights strong performance in tissue and personal care segments, driven by premiumization strategies, e-commerce growth, and market leadership in key regions Tissue Business In H1 2023, tissue business revenue reached HKD 8,361 million, growing 5.0% (or 11.5% at fixed exchange rates), maintaining market leadership in Mainland China and Hong Kong through premiumization and strong sales of high-end products, despite a 7.8 percentage point decline in gross margin due to high-cost pulp inventory and promotions Tissue Business Revenue Performance | Metric | H1 2023 (million HKD) | H1 2022 (million HKD) | Y-o-Y Growth (%) | Fixed Exchange Rate Growth (%) | Share of Total Group Revenue | | :--- | :-------------------- | :-------------------- | :----------- | :--------------- | :--------------- | | Tissue Business Revenue | 8,361 | 7,963 | 5.0% | 11.5% | 83% | - Tissue business maintained market leadership in Mainland China and Hong Kong, with continuous development in Southeast Asia[7] - Premiumization strategy drove double-digit sales growth for high-end tissue product portfolios in Mainland China, with Vinda Deluxe Cotton Soft and Tempo series products receiving strong acclaim[7] - Wet wipes business (wet toilet paper, kitchen wet wipes, bathroom wet wipes) developed well, helping the Group increase its market share in wet wipes[7] Tissue Segment Gross Margin | Metric | H1 2023 | H1 2022 | Change (percentage points) | | :--- | :----------- | :----------- | :------------ | | Tissue Segment Gross Margin | 23.8% | 31.6% | -7.8 | Personal Care Business In H1 2023, personal care business revenue was HKD 1,708 million, a 0.5% decrease (or 3.7% growth at fixed exchange rates), with a gross margin of 31.2%, driven by strong performance in feminine and adult incontinence care through marketing and new product launches Personal Care Business Revenue Performance | Metric | H1 2023 (million HKD) | H1 2022 (million HKD) | Y-o-Y Change (%) | Fixed Exchange Rate Growth (%) | Share of Total Group Revenue | | :--- | :-------------------- | :-------------------- | :----------- | :--------------- | :--------------- | | Personal Care Business Revenue | 1,708 | 1,717 | -0.5% | 3.7% | 17% | Personal Care Segment Revenue and Gross Margin by Category | Category | H1 2023 Revenue (million HKD) | H1 2023 Gross Margin | | :--- | :-------------------------- | :----------------- | | Baby Care | 556 | 24.0% | | Feminine Care | 400 | 46.7% | | Adult Care | 752 | 28.2% | | Personal Care Segment Total | 1,708 | 31.2% | - Libresse brand deepened its pioneering feminine care brand image through "No Hidden Period" 4.0 campaign and Douyin Super Brand Day, driving continuous product sales growth[8] - TENA and Dr. P brands launched new premium products in incontinence care, enhancing market penetration and professional image through consumer salons, hospital stores, and Vinda Health TENA Experience Centers (363 cumulative)[8] Baby Care Business The baby care business, led by Drypers in Malaysia, demonstrated strong performance in Southeast Asia through innovative marketing campaigns, enhancing brand awareness and sales, and solidifying its market leadership - Drypers, a leading baby diaper brand in Malaysia, performed outstandingly in Southeast Asia[9] - Innovative marketing, including a themed brand film, CoComelon limited edition packaging, and offline parent-child activities, effectively boosted product sales and brand awareness, solidifying market leadership[9] Production Capacity As of June 30, 2023, the Group's papermaking equipment had a designed annual production capacity of 1,390,000 tonnes, with the Southeast Asia regional headquarters in Malaysia operational since December 2022, featuring its first overseas innovation and R&D center Papermaking Equipment Designed Annual Production Capacity | Metric | As of June 30, 2023 | | :--- | :--------------- | | Designed Annual Production Capacity of Papermaking Equipment | 1,390,000 tonnes | - The Southeast Asia regional headquarters in Malaysia became operational in December 2022, housing the first overseas innovation and R&D center[10] - Aimed at precisely meeting Southeast Asian consumer demand, strengthening supply chain coverage, and enhancing production and sales efficiency[10] Human Resources Management and Internal Control Vinda views employees as the cornerstone of sustainable development, providing equal employment opportunities, fair compensation, and continuous professional development training, while upholding high corporate governance standards and regularly reviewing internal control policies Human Resources Metrics | Metric | H1 2023 | | :--- | :----------- | | Total Training Hours | 95,417.18 hours | | Number of Trainees | 11,066 persons | | Total Employees (as of June 30, 2023) | 11,887 employees | - The Group is committed to providing equal employment opportunities, fair compensation management, and continuous professional development training[11] - 100% of employees have received Code of Conduct training, with the internal audit department responsible for identifying, addressing, and reporting significant risks and internal control deficiencies[11] Sustainable Procurement The Group prioritizes environmentally certified raw materials and adheres to low-carbon and green supply chain standards, with all top 20 non-pulp suppliers ISO 14001 certified in 2022, and aims for all wood pulp to be forest management certified while increasing biodegradable packaging - Prioritizes environmentally certified raw materials and adheres to low-carbon and green supply chain standards[12] - In 2022, all top 20 raw and auxiliary material suppliers (excluding wood pulp) obtained ISO 14001 environmental management certification[12] - Vinda product packaging uses renewable or recyclable materials, aiming for all wood pulp to be forest management certified and increasing the proportion of biodegradable materials[12] Outlook Despite economic uncertainties, the Group is confident in its growth potential, anticipating easing inflation, and will strategically invest in premium and high-margin categories, personal care, e-commerce, and new channels to drive differentiated, sustainable, and profitable growth - The Group is confident in the growth potential of its operating categories and anticipates easing inflationary pressures[13] - Will continue to invest in premium and high-margin categories, personal care business in key markets, e-commerce, and new channels[13] - Will continue to invest in brand building and innovation to achieve differentiation and maintain premium pricing advantages, laying the foundation for long-term sustainable profitable growth[13] Condensed Consolidated Interim Financial Information This section presents the Group's unaudited condensed consolidated interim financial statements, including comprehensive income, financial position, changes in equity, and cash flows for the period Condensed Consolidated Interim Statement of Comprehensive Income For the six months ended June 30, 2023, Group revenue increased by 4.0% to HKD 10,069.6 million, but gross profit, operating profit, and profit attributable to equity holders significantly declined due to a 14.6% increase in cost of sales Condensed Consolidated Interim Statement of Comprehensive Income | Metric | H1 2023 (HKD) | H1 2022 (HKD) | Y-o-Y Change (%) | | :--- | :-------------------- | :-------------------- | :----------- | | Revenue | 10,069,610,810 | 9,680,375,460 | 4.0% | | Cost of sales | (7,543,054,231) | (6,580,323,074) | 14.6% | | Gross profit | 2,526,556,579 | 3,100,052,386 | -18.5% | | Selling and distribution expenses | (1,940,747,502) | (1,895,316,830) | 2.4% | | Administrative expenses | (477,518,937) | (478,370,521) | -0.2% | | Operating profit | 137,383,940 | 756,918,414 | -81.8% | | Net finance costs | (67,807,683) | (25,204,168) | 169.8% | | Profit before income tax | 69,574,744 | 731,684,124 | -90.5% | | Income tax credit / (expense) | 51,071,608 | (93,968,894) | N/A | | Profit attributable to equity holders of the Company | 120,646,352 | 637,715,230 | -81.1% | | Basic earnings per share (HKD) | 0.100 | 0.530 | -81.1% | | Diluted earnings per share (HKD) | 0.100 | 0.530 | -81.1% | Condensed Consolidated Interim Statement of Financial Position As of June 30, 2023, total assets decreased by 6.1% to HKD 22,805.5 million, primarily due to a 24.1% reduction in inventories, while total equity and liabilities also decreased, despite an increase in borrowings Consolidated Financial Position Summary | Metric | As of June 30, 2023 (HKD) | As of Dec 31, 2022 (HKD) | Change (%) | | :--- | :-------------------- | :-------------------- | :------- | | Total Assets | 22,805,462,022 | 24,288,643,860 | -6.1% | | Total Non-current Assets | 14,187,490,652 | 14,703,634,063 | -3.5% | | Total Current Assets | 8,617,971,370 | 9,585,009,797 | -10.1% | | Total Equity | 11,320,918,777 | 12,000,285,443 | -5.7% | | Total Liabilities | 11,484,543,245 | 12,288,358,417 | -6.5% | Current Assets Breakdown | Current Asset Item | As of June 30, 2023 (HKD) | As of Dec 31, 2022 (HKD) | Change (%) | | :--- | :-------------------- | :-------------------- | :------- | | Inventories | 4,561,238,574 | 6,014,823,036 | -24.1% | | Trade and bills receivables | 2,503,218,417 | 2,339,665,339 | 7.0% | | Cash and cash equivalents | 838,118,380 | 606,947,407 | 38.1% | Current and Non-current Liabilities Breakdown | Liability Item | As of June 30, 2023 (HKD) | As of Dec 31, 2022 (HKD) | Change (%) | | :--- | :-------------------- | :-------------------- | :------- | | Trade and other payables and accruals | 4,989,683,277 | 7,548,972,120 | -33.9% | | Borrowings (current) | 1,198,680,882 | 299,246,812 | 300.6% | | Borrowings (non-current) | 3,968,774,941 | 2,800,715,036 | 41.7% | Condensed Consolidated Interim Statement of Changes in Equity As of June 30, 2023, total equity attributable to equity holders decreased from HKD 12,000.3 million to HKD 11,320.9 million, primarily due to a HKD 318.5 million comprehensive loss and HKD 361.0 million in dividend payments Changes in Total Equity | Metric | Balance as of Jan 1, 2023 (HKD) | Balance as of June 30, 2023 (HKD) | Change (HKD) | | :--- | :-------------------- | :-------------------- | :---------- | | Total Equity | 12,000,285,443 | 11,320,918,777 | (679,366,666) | - Total comprehensive loss for the period was HKD 318.5 million, including a HKD 439.1 million loss from currency translation differences[19] - Dividend payments related to transactions with owners amounted to HKD 361.0 million[19] Condensed Consolidated Interim Statement of Cash Flows In H1 2023, net cash flow from operating activities turned into an outflow of HKD 696.7 million, while financing activities generated a net inflow of HKD 1,430.2 million due to new borrowings, resulting in a HKD 261.3 million increase in cash and cash equivalents Condensed Consolidated Interim Statement of Cash Flows | Cash Flow Activity | H1 2023 (HKD) | H1 2022 (HKD) | Change (HKD) | | :--- | :-------------------- | :-------------------- | :---------- | | Net cash flow (used in) / generated from operating activities | (696,745,207) | 1,959,993,971 | (2,656,739,178) | | Net cash flow used in investing activities | (472,201,825) | (562,092,534) | 89,890,709 | | Net cash flow generated from / (used in) financing activities | 1,430,202,650 | (1,357,733,467) | 2,787,936,117 | | Net increase in cash and cash equivalents | 261,255,618 | 40,167,970 | 221,087,648 | | Cash and cash equivalents at end of period | 838,118,380 | 1,009,290,494 | (171,172,114) | - Operating cash flow shifted from a net inflow to a net outflow, reflecting challenges in operations or working capital management[20] - Financing cash flow shifted from a net outflow to a net inflow, primarily driven by new borrowings[20] Notes to the Condensed Consolidated Interim Financial Information This section provides detailed notes to the condensed consolidated interim financial information, covering general information, basis of preparation, significant accounting policies, and other financial disclosures General Information Vinda International Holdings Limited, incorporated in the Cayman Islands, primarily manufactures and sells tissue and personal care products, listed on HKEX since July 10, 2007, with Essity Aktiebolag (publ) as its ultimate holding company - Vinda International Holdings Limited's principal activities are the manufacture and sale of tissue paper products and personal care products[21] - The Company's shares have been listed on The Stock Exchange of Hong Kong Limited since July 10, 2007[21] - Essity Aktiebolag (publ) is the ultimate holding company of the Group[21] Basis of Preparation The condensed consolidated interim financial information for the six months ended June 30, 2023, is prepared in accordance with HKAS 34 "Interim Financial Reporting" and should be read in conjunction with the annual financial statements for the year ended December 31, 2022 - The condensed consolidated interim financial information is prepared in accordance with HKAS 34 "Interim Financial Reporting"[22] - Should be read in conjunction with the annual financial statements for the year ended December 31, 2022, considering newly adopted standard amendments[22] Significant Accounting Policies This section details the significant accounting policies, including newly adopted and not yet effective standards and amendments, particularly regarding deferred income tax recognition for transactions generating equal taxable and deductible temporary differences New and Amended Standards Adopted by the Group The Group adopted several standard amendments effective January 1, 2023, including HKAS 12 (Amendments) requiring deferred income tax recognition for transactions generating equal taxable and deductible temporary differences, with no material cumulative impact on opening retained earnings as of December 31, 2022 - Adopted several standard amendments effective January 1, 2023, including HKAS 12 (Amendments) regarding deferred income tax recognition[24] - The amendment requires deferred income tax recognition for transactions generating equal taxable and deductible temporary differences upon initial recognition, such as leases and decommissioning obligations[24] - As of December 31, 2022, the cumulative impact of these adjustments was not material, with no adjustments made to opening retained earnings or other equity components[25] New and Amended Standards Not Yet Effective The Group has not early adopted new and amended standards effective for fiscal years beginning on or after January 1, 2024, including HKAS 1 (Amendments) on liability classification and HKFRS 16 (Amendments) on lease liabilities in sale and leaseback transactions, and is currently assessing their full impact - Has not early adopted several new and amended standards effective for fiscal years beginning on or after January 1, 2024, including HKAS 1 (Amendments) and HKFRS 16 (Amendments)[26][27] - The Group is currently assessing the full impact of these new standards, interpretations, and amendments to standards and interpretations[27] Segment Revenue The Group's Executive Committee reviews business performance primarily by business type (tissue and personal care products) rather than geographical distribution, with inter-segment sales conducted on fair terms and Mainland China contributing the largest share of external customer revenue - The Executive Committee reviews business performance primarily by business type (tissue paper products and personal care products), rather than geographical distribution[28] Revenue from External Customers by Geographical Segment | Geographical Segment | H1 2023 Revenue (HKD) | H1 2022 Revenue (HKD) | | :--- | :-------------------- | :-------------------- | | Mainland China | 7,911,383,829 | 7,526,820,217 | | Hong Kong | 612,881,559 | 583,343,849 | | Overseas | 1,545,345,422 | 1,570,211,394 | | Total Revenue | 10,069,610,810 | 9,680,375,460 | Revenue from External Customers by Business Segment | Business Segment | H1 2023 Revenue (HKD) | H1 2022 Revenue (HKD) | | :--- | :-------------------- | :-------------------- | | Tissue paper products | 8,361,343,453 | 7,963,350,222 | | Personal care products | 1,708,267,357 | 1,717,025,238 | | Total | 10,069,610,810 | 9,680,375,460 | Net Finance Income and Costs In H1 2023, net finance costs significantly increased by 169.8% to HKD 67.8 million, primarily due to a 119.9% surge in borrowing interest expenses to HKD 77.5 million, partially offset by foreign exchange gains and bank interest income Net Finance Income and Costs Breakdown | Metric | H1 2023 (HKD) | H1 2022 (HKD) | Y-o-Y Change (%) | | :--- | :-------------------- | :-------------------- | :----------- | | Interest expense - borrowings | (77,543,057) | (35,260,544) | 119.9% | | Interest expense - lease liabilities | (3,282,031) | (3,763,701) | -12.8% | | Foreign exchange gains - net | 5,129,928 | 3,794,574 | 35.2% | | Interest income - bank deposits | 7,887,477 | 10,025,503 | -21.3% | | Net finance costs | (67,807,683) | (25,204,168) | 169.8% | Income Tax (Credit) / Expense In H1 2023, the Group recorded an income tax credit of HKD 51.1 million, a significant shift from the HKD 94.0 million expense in H1 2022, primarily due to a HKD 131.7 million deferred income tax credit, with varying corporate income tax rates across regions and a 15% preferential rate for high-tech enterprises in Mainland China Income Tax (Credit) / Expense Breakdown | Metric | H1 2023 (HKD) | H1 2022 (HKD) | | :--- | :-------------------- | :-------------------- | | Current income tax - Hong Kong and overseas profits tax | 69,821,733 | 46,409,392 | | Current income tax - Mainland China income tax | 10,798,730 | 12,764,499 | | Deferred income tax | (131,692,071) | 34,795,003 | | Total income tax (credit) / expense | (51,071,608) | 93,968,894 | - Applicable corporate income tax rates for subsidiaries in Hong Kong, Malaysia, and Taiwan are 16.5%, 24%, and 20%, respectively; Mainland China subsidiaries apply a 25% rate, with high-tech enterprises enjoying a 15% preferential rate[33] Earnings Per Share This section details the calculation of basic and diluted earnings per share, both significantly decreasing in H1 2023 due to lower profit attributable to equity holders Basic In H1 2023, basic earnings per share significantly decreased to HKD 0.100 from HKD 0.530 in H1 2022, calculated from HKD 120.6 million profit attributable to equity holders and 1,203.3 million weighted average ordinary shares outstanding Basic Earnings Per Share Calculation | Metric | H1 2023 | H1 2022 | | :--- | :----------- | :----------- | | Profit attributable to equity holders of the Company (HKD) | 120,646,352 | 637,715,230 | | Weighted average number of ordinary shares in issue | 1,203,280,898 | 1,202,590,748 | | Basic earnings per share (HKD per share) | 0.100 | 0.530 | Diluted In H1 2023, diluted earnings per share was HKD 0.100, consistent with basic EPS, indicating minimal potential dilutive impact, with only a slight increase in the weighted average number of ordinary shares due to share option adjustments Diluted Earnings Per Share Calculation | Metric | H1 2023 | H1 2022 | | :--- | :----------- | :----------- | | Profit attributable to equity holders of the Company (HKD) | 120,646,352 | 637,715,230 | | Weighted average number of ordinary shares in issue | 1,203,280,898 | 1,202,590,748 | | Adjustment for share options | 2,284 | 202,177 | | Weighted average number of ordinary shares for diluted earnings per share | 1,203,283,182 | 1,202,792,925 | | Diluted earnings per share (HKD per share) | 0.100 | 0.530 | Dividends The Company paid a final dividend of HKD 0.30 per ordinary share for FY2022, totaling HKD 360.99 million, on June 8, 2023, and declared an interim dividend of HKD 0.10 per share for H1 2023, consistent with 2022, totaling HKD 120.33 million Dividend Declarations and Payments | Dividend Type | Amount Per Share (HKD) | Total Amount (HKD) | Payment Date | | :--- | :-------------- | :------------ | :------- | | 2022 Final Dividend | 0.30 | 360,985,612 | June 8, 2023 | | 2023 Interim Dividend | 0.10 | 120,328,537 | Board resolution declared | | 2022 Interim Dividend | 0.10 | 120,327,537 | N/A | Property, Plant and Equipment, Intangible Assets and Investment Properties As of June 30, 2023, the net book value of property, plant and equipment was HKD 9,903.4 million, and intangible assets were HKD 2,362.5 million, both decreasing from January 1, 2023, with HKD 423.4 million in additions to property, plant and equipment and HKD 4.7 million in capitalized borrowing costs Net Book Value of Property, Plant and Equipment, Intangible Assets and Investment Properties | Asset Category | Net Book Value as of Jan 1, 2023 (HKD) | Net Book Value as of June 30, 2023 (HKD) | Change (HKD) | | :--- | :-------------------- | :-------------------- | :---------- | | Property, plant and equipment | 10,353,535,314 | 9,903,369,300 | (450,166,014) | | Intangible assets | 2,456,705,131 | 2,362,480,746 | (94,224,385) | | Investment properties | 40,173,068 | 1,944,607 | (38,228,461) | Movements in Property, Plant and Equipment, Intangible Assets and Investment Properties (H1 2023) | Item (H1 2023) | Property, Plant and Equipment (HKD) | Intangible Assets (HKD) | Investment Properties (HKD) | | :--- | :-------------------- | :---------------- | :-------------- | | Additions | 423,361,914 | 21,069,144 | – | | Depreciation and amortisation | (581,279,157) | (52,182,487) | (1,179,568) | | Exchange differences | (328,937,354) | (63,111,042) | 136,050 | - The Group capitalized HKD 4,657,008 in borrowing costs for qualifying assets during the period[39] Leases As of June 30, 2023, total right-of-use assets amounted to HKD 1,187.5 million, primarily comprising land use rights and buildings, with total lease liabilities of HKD 167.7 million and HKD 46.4 million in depreciation expenses for right-of-use assets in H1 2023 Lease Assets and Liabilities | Lease Item | As of June 30, 2023 (HKD) | As of Dec 31, 2022 (HKD) | | :--- | :-------------------- | :-------------------- | | Total right-of-use assets | 1,187,497,196 | 1,221,438,469 | | Lease liabilities (current) | 56,920,198 | 55,585,120 | | Lease liabilities (non-current) | 110,813,556 | 99,385,024 | | Total lease liabilities | 167,733,754 | 154,970,144 | Depreciation of Right-of-Use Assets | Depreciation of Right-of-Use Assets | H1 2023 (HKD) | H1 2022 (HKD) | | :--- | :-------------------- | :-------------------- | | Land use rights | 13,754,117 | 14,708,869 | | Buildings | 31,004,331 | 37,551,906 | | Equipment and others | 1,659,322 | 1,177,424 | | Total depreciation | 46,417,770 | 53,438,199 | Trade and Bills Receivables, Other Receivables and Prepayments As of June 30, 2023, net trade and bills receivables increased to HKD 2,503.2 million, with most (HKD 2,261.3 million) aged within three months, while other receivables and prepayments also increased, and customers are generally granted 60 to 90 days of credit Trade and Bills Receivables, Other Receivables and Prepayments Summary | Receivable Item | As of June 30, 2023 (HKD) | As of Dec 31, 2022 (HKD) | Change (%) | | :--- | :-------------------- | :-------------------- | :------- | | Trade and bills receivables - net | 2,503,218,417 | 2,339,665,339 | 7.0% | | Other receivables | 569,562,229 | 483,237,455 | 17.9% | | Prepayments | 122,752,314 | 100,093,982 | 22.6% | Ageing of Trade Receivables (by invoice date) | Ageing of Trade Receivables (by invoice date) | As of June 30, 2023 (HKD) | As of Dec 31, 2022 (HKD) | | :--- | :-------------------- | :-------------------- | | Within 3 months | 2,261,252,142 | 2,192,548,789 | | 4 to 6 months | 109,486,333 | 104,836,574 | | 7 to 12 months | 25,251,087 | 25,336,069 | | Over 1 year | 43,969,679 | 45,051,511 | - Customers are generally granted credit terms of 60 to 90 days[43] Trade and Other Payables and Accruals As of June 30, 2023, total trade and other payables and accruals significantly decreased by 33.9% to HKD 4,989.7 million, primarily due to a substantial reduction in trade payables from HKD 4,500.4 million to HKD 2,160.8 million, with most trade payables and bills (HKD 1,717.6 million) aged within three months Trade and Other Payables and Accruals Summary | Payable Item | As of June 30, 2023 (HKD) | As of Dec 31, 2022 (HKD) | Change (%) | | :--- | :-------------------- | :-------------------- | :------- | | Trade payables | 2,160,801,128 | 4,500,445,917 | -52.0% | | Bills payables | 360,476,368 | 321,486,143 | 12.1% | | Other payables | 811,844,152 | 994,537,691 | -18.4% | | Accruals | 1,617,117,540 | 1,686,454,983 | -4.1% | | Total | 4,989,683,277 | 7,548,972,120 | -33.9% | Ageing of Trade and Bills Payables (by invoice date) | Ageing of Trade and Bills Payables (by invoice date) | As of June 30, 2023 (HKD) | As of Dec 31, 2022 (HKD) | | :--- | :-------------------- | :-------------------- | | Within 3 months | 1,717,609,943 | 4,221,075,633 | | 4 to 6 months | 802,901,499 | 588,864,427 | | 7 to 12 months | 679,703 | 10,834,808 | | Over 1 year | 86,351 | 1,157,192 | - Credit terms granted by creditors generally range from 30 to 180 days[44] Borrowings As of June 30, 2023, total Group borrowings significantly increased by 42.8% to HKD 5,551.6 million, driven by substantial increases in both non-current and current bank borrowings, with HKD 3,387.4 million in new borrowings during the period Borrowings Breakdown | Borrowing Type | As of June 30, 2023 (HKD) | As of Dec 31, 2022 (HKD) | Change (%) | | :--- | :-------------------- | :-------------------- | :------- | | Non-current bank borrowings | 3,968,774,941 | 2,800,715,036 | 41.7% | | Non-current related party loans | 84,123,300 | 88,282,378 | -4.7% | | Current bank borrowings | 1,198,680,882 | 299,246,812 | 300.6% | | Current related party loans | 300,000,000 | 700,000,000 | -57.1% | | Total borrowings | 5,551,579,123 | 3,888,244,226 | 42.8% | Borrowings Movement (H1 2023) | Borrowings Movement (H1 2023) | Amount (HKD) | | :--- | :---------- | | Balance as of Jan 1, 2023 | 3,888,244,226 | | New borrowings | 3,387,417,462 | | Repayment of borrowings | (1,160,754,777) | | Repayment of related party loans | (400,000,000) | | Exchange differences | (163,327,788) | | Balance as of June 30, 2023 | 5,551,579,123 | Long-Term Incentive Schemes The Group operates two cash-settled long-term incentive schemes for employees, senior management, and directors, with 12,358,000 and 11,195,000 option equivalent units granted under Scheme One (vesting until October 2023) and Scheme Two (vesting until October 2025) respectively, and a HKD 2 million expense in H1 2023 Long-Term Incentive Schemes Details | Incentive Scheme | Approval Date | Number of Units Granted | Vesting Period | Fair Value as of June 30, 2023 (HKD per unit) | | :--- | :--- | :--- | :--- | :--- | | Scheme One | Sep 17, 2020 | 12,358,000 | Oct 30, 2020 - Oct 30, 2023 | 3.60 (Management), 3.59 (Directors and Senior Management) | | Scheme Two | Jul 20, 2022 | 11,195,000 | Nov 1, 2022 - Oct 31, 2025 | 4.64 (Management, Directors and Senior Management) | Long-Term Incentive Scheme Expense | Metric | H1 2023 (million HKD) | H1 2022 (million HKD) | | :--- | :-------------------- | :-------------------- | | Long-term incentive scheme expense | 2 | 10 | Other Information This section covers additional disclosures including foreign exchange and interest rate risks, liquidity, financial resources, borrowings, corporate governance, and committee structures Foreign Exchange and Fair Value Interest Rate Risk The Group's assets and sales are primarily in Mainland China, Hong Kong, Malaysia, Taiwan, and Korea, with transactions in various currencies, but significant exposure to foreign exchange and interest rate risks due to US dollar-denominated raw material imports and multi-currency borrowings - Group assets and sales operations are primarily located in Mainland China, Hong Kong, Malaysia, Taiwan, and Korea, with transactions denominated in multiple currencies[51] - Major raw materials are imported and paid in US dollars, and most long-term and short-term borrowings are denominated in RMB, HKD, or US dollars, exposing the Group to foreign exchange and interest rate risks[51] Liquidity, Financial Resources and Borrowings As of June 30, 2023, the Group maintained a sound financial position with HKD 838.1 million in cash and bank balances, but total borrowings increased to HKD 5,551.6 million, leading to a higher net gearing ratio of 43.1%, with approximately HKD 6.95 billion in unused credit facilities Liquidity and Borrowings Summary | Metric | As of June 30, 2023 (HKD) | As of Dec 31, 2022 (HKD) | Change (%) | | :--- | :-------------------- | :-------------------- | :------- | | Bank and cash balances | 838,118,380 | 606,947,407 | 38.1% | | Total short-term and long-term borrowings | 5,551,579,123 | 3,888,244,226 | 42.8% | | Proportion of long-term borrowings | 73.0% | 74.3% | -1.3 percentage points | Net Gearing Ratio | Metric | As of June 30, 2023 | As of Dec 31, 2022 | Change (percentage points) | | :--- | :------------ | :------------- | :------------ | | Net gearing ratio | 43.1% | 28.6% | 14.5 | - As of June 30, 2023, unused credit facilities amounted to approximately HKD 6.95 billion[52] Charge on Group Assets As of June 30, 2023, the Group had no assets pledged - As of June 30, 2023, the Group had no assets pledged[53] Contingent Liabilities As of June 30, 2023, the Group had no significant contingent liabilities - As of June 30, 2023, the Group had no significant contingent liabilities[53] Interim Dividend The Board resolved to declare an interim dividend of HKD 0.10 per share for the period, totaling approximately HKD 120.33 million, payable on or around September 7, 2023, to shareholders registered on August 24, 2023 Interim Dividend Details | Metric | H1 2023 | H1 2022 | | :--- | :----------- | :----------- | | Interim dividend per share (HKD) | 0.10 | 0.10 | | Total interim dividend (HKD) | 120,328,537 | 120,327,537 | | Payment date | On or around Sep 7, 2023 | N/A | | Shareholder registration date | Aug 24, 2023 | N/A | Closure of Register of Members The Company's share transfer registration will be suspended from August 22 to August 24, 2023, inclusive, to determine eligibility for the interim dividend, with all transfer documents to be submitted by 4:30 p.m. on August 21, 2023 - Share transfer registration will be suspended from August 22 to August 24, 2023, inclusive, to determine eligibility for the interim dividend[55] - All transfer documents must be submitted by 4:30 p.m. on August 21, 2023[55] Purchase, Sale or Redemption of Securities Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's shares during the period - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's shares during the period[56] Corporate Governance The Company is committed to maintaining high standards of corporate governance, having adopted the principles of the Corporate Governance Code in Appendix 14 of the HKEX Listing Rules, and has complied with all code provisions during the period - The Company is committed to maintaining high standards of corporate governance practices and has adopted the principles of the Corporate Governance Code in Appendix 14 of the HKEX Listing Rules[56] - The Company has complied with all code provisions of the Corporate Governance Code during the period[56] Directors' Securities Transactions The Company has adopted a code for directors' securities transactions, with terms no less exacting than the Model Code in Appendix 10 of the Listing Rules, and all directors confirmed compliance with the standards during the period - The Company has adopted a code for directors' securities transactions, with terms no less exacting than the Model Code set out in Appendix 10 of the Listing Rules[57] - All directors confirmed compliance with the standards for directors' securities transactions as stipulated in the Model Code and the Code of Conduct during the period[57] Audit Committee The Audit Committee, comprising four members (three independent non-executive directors and one non-executive director) and chaired by Mr. Xu Jinghui, reviews and monitors financial reporting, internal audit, internal controls, and risk assessment, having reviewed the Company's unaudited interim results and report for the period - The Audit Committee comprises four members, including three independent non-executive directors and one non-executive director, chaired by Mr. Xu Jinghui[58] - Its primary responsibilities include reviewing and monitoring financial reporting procedures, and assessing the effectiveness of internal audit, internal controls, and risk assessment[58] - The Company's unaudited interim results and interim report for the period have been reviewed by the Audit Committee[58] Remuneration Committee The Remuneration Committee, consisting of five members (three independent non-executive directors and two non-executive directors) and chaired by Mr. Xu Jinghui, is responsible for formulating the Group's remuneration policy, recommending compensation to the Board, and determining specific remuneration packages for senior management based on various factors - The Remuneration Committee comprises five members, including three independent non-executive directors and two non-executive directors, chaired by Mr. Xu Jinghui[59] - Responsible for formulating the Group's remuneration policy, recommending remuneration to the Board, and determining specific remuneration packages for senior management[59] - Factors considered include remuneration in comparable companies, time and responsibility contributed by directors and senior management, employment conditions for other Group positions, and the appropriateness of performance-linked remuneration[59] Nomination Committee The Nomination Committee, composed of five members (three independent non-executive directors, one executive director, and one non-executive director) and chaired by Mr. Li Chao Wang, is responsible for recommending suitable qualified individuals for directorships and regularly reviewing the Board's structure, size, diversity, and composition - The Nomination Committee comprises five members, including three independent non-executive directors, one executive director, and one non-executive director, chaired by Mr. Li Chao Wang[60] - Its primary responsibilities are to recommend suitable qualified individuals for directorships to the Board and to regularly review the Board's structure, size, diversity, and composition[60] Risk Management Committee The Risk Management Committee, consisting of five members (two executive, two non-executive, and one independent non-executive director) and chaired by Mr. Jan Christer JOHANSSON, assists the Board in determining the Group's risk appetite, advises on significant decisions affecting the risk portfolio, and reviews identified key risks and mitigation measures - The Risk Management Committee comprises five members, including two executive directors, two non-executive directors, and one independent non-executive director, chaired by Mr. Jan Christer JOHANSSON[61] - Its primary responsibilities are to assist the Board in determining the Group's risk level and acceptable risk appetite, advise on significant decisions affecting the Group's risk portfolio, and review identified key risks and mitigation measures[61] Executive Committee The Executive Committee, composed of four executive directors and chaired by Mr. Li Chao Wang, is responsible for formulating and recommending the Company's annual budget, capital expenditure budget, and major business plans to the Board, as well as deliberating and approving reorganizations, significant asset disposal plans, and individual annual salary increments for senior officers - The Executive Committee comprises four executive directors, chaired by Mr. Li Chao Wang[62] - Responsibilities include formulating and recommending the annual budget, capital expenditure budget, and major business plans to the Board, as well as deliberating and approving reorganizations, significant asset disposal plans, and annual salary increments for senior officers[62] Strategy Development Committee The Strategy Development Committee, consisting of five members (two executive, two non-executive, and one independent non-executive director) and chaired by Mr. Jan Christer JOHANSSON, advises the Board/Executive Committee on the Group's medium-to-long-term strategic positioning, business plans, brand strategy, investment decisions, and M&A, while overseeing and reviewing strategy implementation - The Strategy Development Committee comprises five members, including two executive directors, two non-executive directors, and one independent non-executive director, chaired by Mr. Jan Christer JOHANSSON[63] - Its primary responsibilities are to advise the Board/Executive Committee on the Group's medium-to-long-term strategic positioning, business plans, brand strategy, investment decisions, and mergers and acquisitions[63] - Oversees and reviews the implementation of strategic plans and provides recommendations[63] Publication of Results Announcement and Interim Report This announcement has been published on the Company's website (www.vinda.com) and the HKEX website (www.hkexnews.hk), with the 2023 Interim Report to be dispatched to shareholders and published on these websites in due course - The results announcement has been published on the Company's website and the HKEX website[64] - The 2023 Interim Report will be dispatched to shareholders and published on the websites in due course[64] Acknowledgement The Board, on behalf of all directors, extends its gratitude to all employees for their hard work and dedication during the period - The Board extends its gratitude to all employees for their hard work and dedication during the period[64] Board of Directors As of the announcement date, the Board comprises four executive, four non-executive, and four independent non-executive directors, along with two alternate directors, with Mr. Li Chao Wang serving as Chairman - The Board comprises four executive directors, four non-executive directors, and four independent non-executive directors, along with two alternate directors[66] - Mr. Li Chao Wang serves as the Chairman of the Board[65][66]