Huabao International : Announcements and Notices - Inside Information - P ...

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HUABAO INTERNATIONAL HOLDINGS LIMITED 華寶國際控股有限公司*

(Incorporated in Bermuda with limited liability)

(Stock Code: 00336)

INSIDE INFORMATION

PRINCIPAL ACCOUNTING DATA AND FINANCIAL INDICATORS

FOR THE HALF YEAR ENDED 30 JUNE 2018

OF HUABAO FLAVOURS & FRAGRANCES CO., LTD.

This announcement is made by Huabao International Holdings Limited (the "Company") pursuant to Rules 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

Reference is made to an announcement published by the Company on 13 July 2018 in respect of the indicative results of Huabao Flavours & Fragrances Co., Ltd. ("Huabao Flavours") for the half year ended 30 June 2018.

Huabao Flavours is a subsidiary of the Company and its shares are listed on the ChiNext of Shenzhen Stock Exchange (Stock Code: 300741). In compliance with the relevant applicable regulations of Shenzhen Stock Exchange, Huabao Flavours published its 2018 Half Yearly Report for the half year ended 30 June 2018 on the information disclosure webpage of Shenzhen Stock Exchange's website athttp://www.szse.cn/disclosure/listed/notice/index.html.

The board of directors of the Company would like to draw the attention of its shareholders and the public investors to the Appendices of this announcement which set out the principal accounting data and financial indicators of Huabao Flavours prepared in accordance with the PRC Accounting Standard for Business Enterprises for the six months ended 30 June 2018.

Please note that the information in the Appendix is an extract of the unaudited financial statements prepared by Huabao Flavours in Chinese language. In case of any inconsistency between the Chinese version and the English version, the Chinese version shall prevail.

By Order of the Board

Huabao International Holdings Limited

POON Chiu Kwok

Executive Director

Hong Kong, 24 August 2018

As at the date of this announcement, the Board comprises five executive directors, namely Ms. CHU Lam Yiu (Chairwoman and CEO), Messrs. XIA Liqun, POON Chiu Kwok, XIONG Qing and LAM Ka Yu and four independent non-executive directors, namely Mr. LEE Luk Shiu, Ms. MA Yun Yan, Dr. DING Ningning and Mr. WU Chi Keung.

* For identification purposes only

APPENDIX I.

PRINCIPAL ACCOUNTING DATA AND FINANCIAL INDICATORS

Unit: RMB (Yuan)

Current reporting period	Same reporting period of last year	Increase / decrease of current reporting period over the same period of last year
Operating revenue	957,824,685	953,651,063	0.44%
Net profit attributable to Huabao Flavours's shareholders	526,291,099	462,302,854	13.84%
Net profit attributable to Huabao Flavours's shareholders less the non-recurring items	456,688,390	420,655,353	8.57%
Net cash flows arising from operating activities	480,886,526	543,169,015	-11.47%
Basic earnings per share (RMB/share)	0.88	0.83	6.02%
Diluted earnings per share (RMB/share)	0.88	0.83	6.02%
Weighted average return on net assets	7.10%	9.84%	-2.74%
End of the current reporting period	End of last year	Increase/ decrease of the end of the current reporting period as compared with the end of last year
Total assets	8,920,104,153	6,220,790,520	43.39%
Net assets attributable to Huabao Flavours's shareholders	8,324,996,663	5,604,468,679	48.54%

APPENDIX II.

SIGNIFICANT CHANGES IN MAJOR ASSETS

Major Assets	Description on significant changes
Equity assets	No significant changes
Fixed assets	No significant changes
Intangible assets	No significant changes
Construction in progress	Closing balance as at the end of the reporting period was RMB2,298.86 (in ten thousands), representing an increase of 675.31% as compared with the beginning of the reporting period, mainly due to the increase in investment in the first phase of the Huabao Yingtan Food Flavors and Food Ingredients Production Base Project.
Cash at bank and on hand	Closing balance as at the end of the reporting period was RMB604,749.13 (in ten thousands), representing an increase of 86.26% as compared with the beginning of the reporting period, mainly due to the increase in funds raised from initial public offering.
Other receivables	Closing balance as at the end of the reporting period was RMB3,583,32 (in ten thousands), including the interest receivable of RMB1,353.95 (in ten thousands) and other receivables of RMB2,229.37 (in ten thousands), representing an increase of 115.45% as compared with the beginning of the reporting period, mainly due to the increase in time deposits leading an increase in interest receivable.
Other current assets	Closing balance as at the end of the reporting period was RMB5,858.49 (in ten thousand), representing a decrease of 36.47% as compared with the beginning of the reporting period, mainly due to the disposal of the available-for-sale financial assets and the decrease in input tax to be certified.

APPENDIX III.

ANALYSIS OF CHANGES IN MAJOR FINANCIAL DATA

Current reporting period	Same reporting period of last year	Increase/ Decrease	Reasons for changes
Sales revenue	957,824,685	953,651,063	0.44%
Cost of goods sold	212,881,945	219,962,483	-3.22%
Selling and distribution expenses	83,103,699	59,336,192	40.06%	Mainly due to product strategy upgrades which lead to the increase in business and marketing promotion fees
Administrative expenses	98,362,516	114,503,635	-14.10%
Finance expenses	-69,701,755	-28,192,540	147.23%	Mainly due to the increase in interest income from deposit
Income tax expenses	97,519,267	75,998,712	28.32%
Research and development expenses	70,710,025	66,359,855	6.56%
Net cash flows from operating activities	480,886,526	543,169,015	-11.47%	Mainly due to the increases in purchasing of raw materials and tax payment during current period
Net cash flows from investing activities	-995,856,406	80,975,159	-1,329.83%	Mainly due to the new placement of fixed deposits (for 3 months or more but within 1 year) during the current period
Net cash flows from financing activities	2,307,217,619	-91,676,853	2,616.69%	Mainly due to the funds raised from Initial Public Offering
Net increase in cash and cash equivalents	1,797,822,822	527,959,685	240.52%	Mainly due to the fund raised from initial public offering
Asset impairment losses	733,191	5,979,077	-87.74%	Mainly due to absence of impairment of goodwill during the current period
Gain on disposal of assets	2,767,622	-40,858	6,873.76%	Mainly due to the increase in gain on disposal of vehicles and licenses during the current period
Profit and loss arising from changes in fair value	-	-41,182,011	-100.00%	Mainly due to the fact that there was no investment in financial assets held for trading in current period and therefore no related gain or loss occurred
Investment income	4,879,356	33,553,193	-85.46%	Mainly due to the fact that there was no gain or loss from the disposal of investment in financial assets held for trading in current period
Other income	79,618,023	57,503,016	38.46%	Mainly due to the increase in government grants received during the current period
Non-operating income	27,185	2,719,001	-99.00%	Mainly due to the decrease in amount of accounts payable forfeited during current period
Non-operating expenses	284,525	1,034,877	-72.51%	Mainly due to the decrease in irrecoverable prepayments during the current period

APPENDIX IV.

SIGNIFICANT CHANGES IN ASSETS COMPONENTS

End of current reporting period		Same reporting period end of last year		Proportion Increase or decrease	Reasons for significant
Proportion to total assets	Amount	Proportion to total assets	changes
					Amount
Cash at bank and on hand	6,047,491,252	67.80%	3,246,826,030	52.19%	15.61%	Mainly due to the increase in funds raised from initial public offering
Accounts receivables and notes receivable	748,228,939	8.39%	887,544,199	14.27%	- 5.88%	The decrease in closing balance was mainly due to the prompt repayment from customers
Inventories	362,366,402	4.06%	323,294,571	5.20%	-1.14%
Long-term equity investments	56,407,110	0.63%	57,935,374	0.93%	-0.30%
Fixed assets	263,657,226	2.96%	275,621,132	4.43%	-1.47%
Construction in progress	22,988,589	0.26%	2,965,100	0.05%	0.21%	Due to the increase in investment in the first phase of the Huabao Yingtan Food Flavors and Food Ingredients Production Base Project
Others receivable	35,833,202	0.40%	16,631,431	0.27%	0.13%	Mainly due to the increase in interest receivable arising from the increase in fixed deposit balance
Other current assets	58,584,891	0.66%	92,214,932	1.48%	-0.82%	Mainly due to the disposal of the available-for-sale financial assets and the decrease in the input tax to be certified
Intangible assets	75,294,427	0.84%	71,908,082	1.16%	-0.32%
Goodwill	1,194,550,741	13.39%	1,194,550,741	19.20%	-5.81%
Deferred tax assets	38,027,773	0.43%	39,211,142	0.63%	-0.20%
Accounts payables and notes payable	108,650,402	1.22%	147,739,867	2.37%	-1.15%	Mainly due to the increase in payment for purchases
Salaries payable	36,960,952	0.41%	38,813,740	0.62%	-0.21%
Tax payable	152,487,771	1.71%	254,588,763	4.09%	-2.38%	Mainly due to decreases in VAT income tax payables the and
Other payables	156,631,050	1.76%	19,666,245	0.32%	1.44%	Mainly due to the increase in dividend payable of RMB130 million at the end of the current period
Other current liabilities	24,342,034	0.27%	33,416,663	0.54%	-0.27%

APPENDIX V. General Usage of the Funds Raised

Unit: RMB (Ten Thousands)

Total funds raised	231,184.21
Total funds used during the reporting period	65,360.23
Accumulated funds used	65,360.23
Funds raised that changed purposes of usage during the reporting period	0
Accumulated funds raised that changed purposes of usage	0
Proportion of accumulated funds raised that changed purposes of usage (%)	0.00%
Description of usage of funds raised from initial public offering
(1) Following the approval "Approval of the Initial Public Offering of Huabao Flavours & Fragrances Co., Ltd." (ZhengJianXuKe [2018] No.261) by the China Securities Regulatory Commission, the Company issued 61,590,000 ordinary shares in RMB (A shares) (nominal value of RMB1.00 per share) to the public at an issuance price of RMB38.60 per share. Total funds raised was RMB2,377,374,000.00 and after deduction of the relevant issuance costs, the total net funds raised was RMB2,311,842,118.86. The above funds raised were credited to the designated accounts of Huabao Flavours on 26 February 2018. PricewaterhouseCoopers Zhong Tian LLP conducted a verification regarding the fund raised in the initial public offering, and issued the "PricewaterhouseCoopers Zhong Tian (2018) No.0108 Capital Verification Report" on 27 February 2018. (2) Status of usage and balance of the funds raised: Funds used during the reporting period was RMB653,602,337.39, accumulated funds used was RMB653,602,337.39. The accumulated interest income generated from the designated bank accounts for the raised funds was RMB20,386,552.62 and the remaining balance of the unused raised funds was RMB1,710,573,309.57.