Financial Performance - For the six months ended June 30, 2021, the Group's turnover was approximately RMB 1,609,364,000, representing a significant increase of 63.8% year-on-year compared to RMB 982,522,000 for the same period in 2020[23]. - The gross profit for the same period was RMB 303,187,000, with a gross profit margin of approximately 18.84%, compared to RMB 140,098,000 in the previous year[23]. - Profit and comprehensive income attributable to equity owners amounted to approximately RMB 51,633,000, a significant increase of RMB 42,890,000 year-on-year[23]. - Revenue for the six months ended June 30, 2021, was RMB 1,609,364, an increase of 63.7% compared to RMB 982,522 in 2020[29]. - EBITDA for the same period was RMB 166,708, up from RMB 85,335 in 2020, representing a growth of 95.5%[29]. - Profit attributable to the owners of the company for the period was RMB 51,633, compared to RMB 8,743 in 2020, marking a significant increase of 590.5%[29]. - Return on equity attributable to the owners of the company improved to 5.08% in 2021 from 0.94% in 2020[29]. - Total comprehensive income for the period was RMB 67,623, significantly higher than RMB 7,520 in 2020[41]. - For the six months ended June 30, 2021, profit before tax was RMB 78,880, compared to the restated profit before tax of RMB 30,616 in the same period of 2020[56]. Production and Operations - The Group's paper production increased by more than 50% due to the completion of upgrades at two papermaking bases in Zhongshan City, Guangdong Province[22]. - The increase in raw paper prices in the first half of the year contributed to the significant year-on-year increase in turnover, reaching a record high[22]. - The Group aims to strengthen the integration of the paper packaging and papermaking industry chain while controlling quality and costs to maintain competitive advantages in the market[25]. - The company is focusing on internal management integration and enhancing the paper packaging and paper production industry chain[27]. - The management team is actively seeking new business growth opportunities to create higher returns for shareholders[27]. Assets and Liabilities - Current assets increased to RMB 1,728,367 as of June 30, 2021, from RMB 1,402,887 at the end of 2020[44]. - Non-current assets rose to RMB 1,324,369 as of June 30, 2021, compared to RMB 1,279,888 at the end of 2020[44]. - As of June 30, 2021, total equity attributable to owners of the company was RMB 1,017,314, an increase from RMB 965,681 as of December 31, 2020, representing a growth of 5.35%[48]. - The total liabilities, including non-current liabilities, were RMB 1,490,950 as of June 30, 2021, compared to RMB 1,361,256 as of December 31, 2020, indicating a rise of 9.54%[48]. - The total trade and other receivables as of 30 June 2021 amounted to RMB 961,836,000, an increase from RMB 922,741,000 as of 31 December 2020[160]. - Trade payables amounted to RMB 164,414,000 as of June 30, 2021, up from RMB 139,194,000 as of December 31, 2020[183]. - Total bank borrowings amounted to 1,009,693,000, with secured borrowings at 882,594,000 and unsecured borrowings at 127,099,000[192]. - The total borrowings reached 1,289,191,000, an increase from 1,111,343,000 in the previous period[196]. Cash Flow and Financing - Operating cash flows before movements in working capital for the six months ended June 30, 2021, were RMB 162,098, showing a significant increase compared to the previous year[58]. - The company reported a net cash outflow from investing activities of RMB 189,721 for the six months ended June 30, 2021, compared to RMB 110,452 in the same period of 2020[60]. - Net cash from financing activities increased significantly to RMB 504,148,000 in 2021 from RMB 132,250,000 in 2020, representing a growth of approximately 280%[62]. - Cash and cash equivalents at June 30, 2021, reached RMB 338,745,000, up from RMB 144,534,000 at the same date in 2020, indicating an increase of about 134%[62]. - The repayment of bank and other borrowings was RMB 924,850,000 in 2021, a significant increase from RMB 432,271,000 in 2020, marking an increase of about 114%[62]. - The net increase in cash and cash equivalents for the first half of 2021 was RMB 153,378,000, contrasting with a net decrease of RMB 86,555,000 in the same period of 2020[62]. Accounting and Compliance - The company has maintained consistent accounting policies in preparing its financial statements, aligning with the standards set by the Hong Kong Institute of Certified Public Accountants[69]. - The amendments to accounting standards applied in the current period had no material impact on the Group's financial positions and performance[88]. - The income tax expense for the six months ended 30 June 2021 was RMB 11,257,000, with no provision for Hong Kong Profits Tax as the Group had no assessable profits for both periods[133]. - The Group's subsidiaries in China are subject to a corporate income tax rate of 25%, with certain subsidiaries benefiting from a reduced rate of 15% as advanced-technology enterprises[137]. - The Group did not declare any interim dividends for the six months ended 30 June 2021, consistent with the previous year[138].

ZHENGYE INTERNATIONAL 正業國際控股有限公司 ZHENGYE INTERNATIONAL HOLDINGS COMPANY LIMITED (Incorporated in Bermuda with limited Tability)《於百慕達註冊成立的狗限公司) Stock Code 股份代號 : 3363.HK www.zhengye-cn.com 2020 INTERIM REPORT中期報告 Contents 2 6 7 8 12 16 Corporate Information 公司資料 | --- | --- | |-----------------------------------------------------------------------------------|-------------------------------| | | | | | | | Financial Highlights | 財務摘要 | | Condensed Consolidated Statement of Profit or Loss and Other Comprehensi ...

Financial Performance - Revenue for the year ended December 31, 2019, was RMB 2,367,151, a decrease of 16.8% from RMB 2,848,016 in 2018[8] - Profit attributable to the owners of the company for 2019 was RMB 82,184, down 25% from RMB 109,358 in 2018[8] - Return on equity attributable to the owners of the company decreased to 8.88% in 2019 from 12.24% in 2018[10] - Dividend per share for 2019 was RMB 3.00, reduced from RMB 10.00 in 2018[12] - The financial summary highlights a significant decline in both revenue and profit, indicating challenges in the market environment[4] - The Group's total revenue for the year was approximately RMB2,367,151,000, representing a year-on-year decrease of 16.88% compared to RMB2,848,016,000 in 2018[26] - Profit attributable to equity owners amounted to RMB82,184,000, a decrease of 24.85% year-on-year[26] - The Group's profit before tax for 2019 was approximately RMB119,180,000, a decrease of 22.62% from RMB154,014,000 in 2018[83] - The gross profit for 2019 was RMB448,813,000, a decrease of 11.95% compared to RMB509,702,000 in 2018[91] Operational Efficiency - The Group is committed to improving production efficiency and reducing costs to cope with market uncertainties[31] - The Group's efforts in production deployment and upgrading facilities led to enhanced operational efficiency and cost advantages[70] - The Group plans to promote technological research and development to improve operational efficiency and overall competitiveness[86] - The gross profit margin increased to 18.96% during the year, up from 17.9% in the previous year[26] - The average gross profit margin increased from 17.90% in 2018 to 18.96% in 2019[91] Market and Product Development - The management discussion and analysis section indicates a focus on market expansion and new product development strategies[13] - The company is actively pursuing new technologies in its product offerings to enhance competitiveness[13] - The Company aims to enhance its product research and development to address the impacts of the economic downturn[31] - The Group successfully developed 48 g/m2 low-gram-weight high-strength corrugated medium paper products in 2019, which gained customer recognition for its market scarcity and high cost performance[43] Corporate Governance - The company is committed to improving its corporate governance and risk management practices[17] - The board of directors consists of seven members, including three executive directors and three independent non-executive directors, ensuring a balanced composition of skills and experience[171] - The company has complied with the Corporate Governance Code throughout the year ended December 31, 2019[167] - The Board established five committees: Audit Committee, Remuneration Committee, Nomination Committee, Risk Management Committee, and Budget Management Committee, which adhered to their principles throughout the year ended December 31, 2019[186] - The company has adopted a board diversity policy to enhance the effectiveness of the Board by considering factors such as gender, age, cultural background, and professional experience[184] Challenges and Risks - The company faces fierce market competition in the packaging and papermaking industries, with major players expanding production capacity[160] - Fluctuations in raw material prices significantly impact profits, as raw material costs account for a high proportion of production costs[160] - Quality risks are present due to the inability to meet industry product quality standards, leading to potential losses from waste or inventory[161] - The management is closely monitoring operational risks arising from macroeconomic control, which may indirectly affect sales and profits due to policy adjustments[159] Employee and Staff Management - The Group employed 2,684 employees as of December 31, 2019, a decrease from 2,956 employees in the previous year[151] - Staff costs for the year ended December 31, 2019, amounted to RMB 239,911,000, down from RMB 261,922,000 in the previous year[151] - The company has adopted a share option scheme and a share award scheme to motivate employees and reward their contributions[155] - The company is committed to providing appropriate training and professional development opportunities for all employees[154] Financial Position - The Group's bank borrowings and other borrowings amounted to RMB873,312,000 as of December 31, 2019, a decrease of RMB91,605,000 from RMB964,917,000[84] - The net gearing ratio was reported at 54.25%[112] - Total borrowings amounted to RMB873,312,000, compared to RMB957,471,000 in the previous year[118] - The inventories decreased by 15.15% to RMB 137,275,000 compared to RMB 161,778,000 as of December 31, 2018[134] - Trade receivables amounted to RMB 429,804,000, down from RMB 502,272,000 as of December 31, 2018, with trade receivables turnover days extending to 72 days[135]

Revenue and Profitability - Revenue for the period ended June 30, 2019, was RMB 1,188,875, a decrease of 15.6% compared to RMB 1,409,130 in 2018[20] - The Group's total revenue for the six months ended June 30, 2019, was approximately RMB 1,188,875,000, representing a year-on-year decrease of 15.63% compared to RMB 1,409,130,000 for the same period in 2018[31] - Profit attributable to the owners of the Company for the period was RMB 51,382,000, representing a year-on-year increase of approximately 1.74%[31] - Total comprehensive income for the period was RMB 64,673, an increase of 12.8% compared to RMB 57,354 in 2018[50] - The profit for the period attributable to owners of the Company for the six months ended 30 June 2019 was RMB 51,382,000, compared to RMB 50,503,000 for the same period in 2018, representing an increase of 1.7%[195] Earnings and Financial Metrics - EBITDA for the period attributable to owners of the company was RMB 143,951, an increase of 10.0% from RMB 130,679 in 2018[20] - Basic earnings per share amounted to approximately RMB 0.10[31] - Earnings per share remained stable at RMB 0.10 for both 2019 and 2018[50] - Segment profit for corrugated paper was RMB 71,744,000, while medium paper-based packaging generated a profit of RMB 14,402,000, leading to a total segment profit of RMB 86,146,000[148] Assets and Liabilities - Non-current assets totaled RMB 1,080,685, an increase from RMB 1,052,206 as of December 31, 2018[53] - Current assets decreased to RMB 1,360,964 from RMB 1,505,617 at the end of 2018[53] - Total liabilities were RMB 1,269,522, down from RMB 1,438,339 at the end of 2018[55] - Equity attributable to owners of the Company increased to RMB 895,107 from RMB 893,725 at the end of 2018[56] - The total carrying amount of non-current assets, including property, plant, and equipment, was RMB 886,948,000 after adjustments related to HKFRS 16[142] Cash Flow and Financing - The net cash from operating activities for the six months ended June 30, 2019, was RMB 60,054,000, a decline from RMB 140,036,000 in the previous year[66] - The company reported a net cash used in financing activities of RMB 41,304,000, compared to RMB 20,660,000 in the previous year, indicating an increase of approximately 100%[69] - The company paid dividends totaling RMB 50,000,000 during the period, consistent with the previous year[69] - Interest income increased to RMB 2,161,000 from RMB 1,417,000 year-over-year, reflecting a growth of approximately 52%[67] - The company incurred finance costs of RMB 20,825,000, a decrease from RMB 23,898,000 in the prior year, showing a reduction of approximately 13%[69] Accounting Policies and Changes - The Group has applied HKFRS 16 for the first time in the current interim period, superseding HKAS 17 Leases[82] - Key changes in accounting policies include the recognition of right-of-use assets at the commencement date of the lease, measured at cost less accumulated depreciation and impairment losses[85] - The application of HKFRS 16 has resulted in significant changes in accounting policies affecting the Group's financial statements[82] - The Group recognizes right-of-use assets as a separate line item on the condensed consolidated statement of financial position[90] - The Group has applied HKFRS 16 retrospectively with the cumulative effect recognized at the date of initial application, January 1, 2019, without restating comparative information[110] Market and Industry Trends - The market for corrugated core paper and cardboard paper has entered a new production cycle after nearly three years of rapid price increases, leading to increased pressure on sales during the period[25] - The paper-based packaging industry is expected to benefit from China's rigorous environmental protection policies, which will favor recyclable paper packaging over plastic[45] - The concentration of the domestic paper packaging industry is expected to increase, with large-scale enterprises gaining competitive advantages[45] - Zhengye International is exploring upstream and downstream supply chain services in the paper and packaging industry, including R&D, procurement, manufacturing, and waste paper recycling[33] - The Group aims to continuously optimize its industrial chain and enrich its product portfolio to enhance market position[47]