Financial Performance - Nongfu Spring's total revenue for 2022 reached RMB 33.2 billion, representing a year-on-year increase of 11.9%[1] - The company's net profit for 2022 was RMB 7.2 billion, up 14.8% compared to the previous year[1] - Total revenue for 2022 reached RMB 33,239 million, an increase of 11.9% compared to 2021[28] - Profit attributable to owners of the parent increased to RMB 8,495 million in 2022, up from RMB 7,162 million in 2021[28] - Gross profit for 2022 was RMB 19,095 million, compared to RMB 17,656 million in 2021[28] - The company's gross profit margin improved to 59.7% in 2022, up from 58.8% in 2021[1] - Net profit for 2022 increased by 18.6% to RMB8,495 million compared to RMB7,162 million in 2021[73] - Earnings per share increased to RMB 0.76 in 2022, up from RMB 0.64 in 2021[28] - The company will recommend a cash dividend of RMB0.68 per share for the year ended December 31, 2022, amounting to a total dividend of approximately RMB7,647.6 million[32] - The company proposed a final cash dividend of RMB0.68 per share for the year ended December 31, 2022, totaling approximately RMB7,647.6 million[74][79] - The company's profit for the year increased by 18.6% from RMB7,162 million in 2021 to RMB8,495 million in 2022[78] Revenue Breakdown by Product Segment - Nongfu Spring's packaged drinking water segment contributed RMB 17.0 billion to total revenue, accounting for 51.2% of total sales[1] - The beverage segment, including tea, functional, and juice drinks, generated RMB 16.2 billion in revenue, representing 48.8% of total sales[1] - Revenue from packaged drinking water products accounted for 54.9% of total revenue in 2022, reaching RMB18,263 million, a 7.1% increase from 2021[42] - Revenue from tea beverage products accounted for 20.8% of total revenue in 2022, reaching RMB6,906 million, a significant increase from 15.4% in 2021[41] - Revenue from functional beverage products accounted for 11.5% of total revenue in 2022, reaching RMB3,838 million, slightly down from 12.4% in 2021[41] - Revenue from juice beverage products accounted for 8.7% of total revenue in 2022, reaching RMB2,879 million, slightly down from 8.8% in 2021[41] - Revenue from other products accounted for 4.1% of total revenue in 2022, reaching RMB1,353 million, down from 6.0% in 2021[41] - Packaged drinking water products revenue in 2022 was RMB18,263 million, a 7.1% increase from 2021, accounting for 54.9% of total revenue[43] - Tea beverage products revenue in 2022 was RMB6,906 million, a 50.8% increase from 2021, accounting for 20.8% of total revenue[45][46] - Functional beverage products revenue in 2022 was RMB3,838 million, a 3.9% increase from 2021, accounting for 11.5% of total revenue[51][53] - Juice beverage products revenue in 2022 was RMB2,879 million, a 10.1% increase from 2021, accounting for 8.7% of total revenue[52] - Revenue from juice beverage products in 2022 was RMB2,879 million, a 10.1% increase compared to 2021, accounting for 8.7% of total revenue[55] - Revenue from other products decreased by 22.7% to RMB1,353 million in 2022, accounting for 4.1% of total revenue[57][58] Operational Highlights - The company's operating cash flow increased by 18.5% year-on-year to RMB 9.8 billion in 2022[1] - The company's R&D expenditure in 2022 was RMB 320 million, representing 1.0% of total revenue[1] - The company completed and put into operation a new production base in Daming Mountain, Guangxi, increasing the number of water sources to 12[29] - The company continued to strengthen channel construction and development of sales outlets, particularly during the COVID-19 pandemic[30] - Information technology development was enhanced, including upgrades to the digital marketing system and optimization of production and logistics management[30] - The company introduced new packaging sizes for drinking water, such as 4.5L and 6L, to promote sales of larger-sized packaged drinking water[42] - The company launched new 4.5L and 6L capacity specifications for packaged drinking water to improve the product matrix[43] - "Tea π" introduced two new flavors, "Citrus Pu'er Lemon Tea" and "Green Grape Oolong Tea," and expanded its product matrix with 900ml packages[45][47] - "Oriental Leaf" launched seasonal limited products, including "Longjing Spring Tea" and "Osmanthus Oolong," to promote Chinese tea culture[48][49] - The company launched a new carbonated tea product, "Sparkling Tea Drink," with three innovative flavors in March 2022[50] - "Scream" beverage collaborated with Ultraman for co-branded bottles and themed activities, while "Vitamin Water" engaged in music and dance events[54] - "Nongfu Orchard" underwent a comprehensive upgrade, launching five new 30% mixed juice beverages with new branding and packaging in 2022[52] - The Group launched new flavors for "Tea π" and upgraded the "Farmer's Orchard" product line in 2022[59][62] - The Group upgraded its digital marketing system and launched order management and warehousing logistics systems in 2022[63] Corporate Governance and Board Structure - The company's executive directors include Mr. Zhong Shanshan (Chairman and General Manager), Mr. Guo Zhen, Mr. Zhou Li, Ms. Zhou Zhenhua, and Mr. Liao Yuan[11] - The company's independent non-executive directors include Mr. Stanley Yi Chang, Mr. Yang Lei Bob, and Mr. Lu Yuan[12] - The company's supervisor committee includes Mr. Zhong Jigang (Chairman), Mr. Liu Xiyue, and Mr. Rao Minghong[13] - The Board consists of five executive Directors, one non-executive Director, and three independent non-executive Directors, ensuring a strong independence element[130] - The Board consists of nine Directors, including five executive Directors, one non-executive Director, and three independent non-executive Directors as of December 31, 2022[132][134] - The Board is responsible for determining business strategies, investment plans, and implementing resolutions passed at Shareholders' general meetings[136][137] - The Board has established three special committees: Audit Committee, Nomination Committee, and Remuneration Committee to advise on decisions[138][141] - The Company has set up the Office of Public Policy & Sustainable Development to assist the Board in identifying and monitoring sustainable development risks[138] - The Chairman of the Board and General Manager roles are both performed by Mr. Zhong Shanshan[140] - The Board approved the "Mechanism for the Board to Obtain Independent Views and Opinions" to ensure independent perspectives are available[143] - The Board regularly reviews compliance with domestic and overseas regulatory requirements and internal corporate governance policies[142] - The Supervisor Committee oversees the performance of duties by the Board and senior management, as well as financial activities and risk management[138] - No changes in Directors, Supervisors, and senior management during the Reporting Period[145] - The term of the seventh session of the Board of Directors and Supervisory Committee will expire on March 5, 2023, with the eighth session to be established[146] - Nomination of candidates for the eighth session of the Board of Directors and Supervisory Committee, including Mr. Zhong Shanshan, Ms. Wu Limin, Mr. Xiang Xiansong, and Ms. Han Linyou as executive Directors[146] - Mr. Rao Minghong re-elected as the employee representative Supervisor of the eighth session of the Supervisory Committee on March 2, 2023[147] - The eighth session of the Board of Directors and Supervisory Committee will have a term of three years, effective from the date of approval at the Annual General Meeting[148] - Adjustments to senior management, including the appointment of Ms. Wu Limin as Chief Financial Officer and Authorized Representative, effective from the date of approval at the Annual General Meeting[150] - During the Reporting Period, the Company held 4 Board meetings and 2 general meetings, with all Directors attending all meetings[154] - The senior management provided timely information to the Board regarding business activities and development, with executive Directors frequently communicating with non-executive Directors[155] - The Company arranged and funded suitable training for Directors, ensuring compliance with the Corporate Governance Code and enhancing awareness of good corporate governance practices[157] Audit and Financial Controls - The Audit Committee reviewed the annual result announcement for the year ended December 31, 2022, confirming compliance with all applicable accounting standards and regulations, and sufficient disclosures were made[170] - The Audit Committee reviewed the Group's financial, operational, and compliance controls, as well as risk management for 2022, and was satisfied with the effectiveness and sufficiency of the internal control mechanism[170] - The Audit Committee recommended re-appointing Pan-China Certified Public Accountants LLP as the domestic auditors and Ernst & Young as the overseas auditors for 2023, subject to shareholder approval[170] - The Audit Committee held three meetings during the reporting period, with all members attending all meetings[168] - The Audit Committee reviewed the interim report for the six months ended June 30, 2022, confirming compliance with applicable accounting principles, standards, and requirements[169] - The Audit Committee reviewed the remuneration of the auditors for 2022 and made recommendations for their re-appointment[170] - The Audit Committee ensured coordination between the internal audit department and the external audit agency[165] - The Audit Committee reviewed the Company's policies and practices on financing and accounting[165] - The Audit Committee ensured proper channels were established for employees to report potential improprieties in financial reporting or internal controls confidentially[165] - The Audit Committee reviewed the Explanatory Letter on Audit submitted by the external audit agency and any material questions raised regarding accounting records or internal controls[165] Sustainability and Corporate Responsibility - The company reduced water intensity by 12.7% compared to 2020, achieving 63.4% of the 2030 strategic target for water intensity reduction[115] - The company achieved 99% recyclable plastic packaging for water and beverage products[118] - The company established a three-level sustainable development structure with the Board of Directors as the top leader, assisted by the Office of Public Policy & Sustainable Development[109] - The company actively identified and updated the impact of climate change on its business in real time, formulating systematic response strategies[113] - The company improved energy efficiency and promoted clean energy replacement, while strengthening low-carbon management in the value chain[114] - The company optimized waste water, exhaust gas, and waste management, reducing the impact of operations on the natural environment[117] - The company committed to sustainable agriculture development, focusing on the potential impacts of agricultural production on water resources, soil health, and climate change[118] - The company has released its 2022 Sustainability Report, focusing on promoting social sustainable development[124] - The company has adopted sound governance and disclosure practices, aiming to establish a highly ethical corporate culture[127] - The company is committed to building a sustainable supply chain and improving supplier performance in environment, human rights, and integrity[122] Shareholder Communication and Governance - The Company has adopted a Shareholder Communication Policy to ensure equal and timely access to information for shareholders and investors[199][200] - The Company publishes updated business operations, financial data, and corporate governance practices on its website for public access[199][200] - The Board of Directors reviewed the implementation and effectiveness of the Shareholder Communication Policy during the reporting period and found it to be appropriate and effective[199] - Shareholders holding more than 3% of voting shares can propose new agenda items for the general meeting, with the convener required to issue a supplementary notice within 2 days[198] - The Company's Articles of Association were not amended during the reporting period[198] Employee and Management Incentives - Total employee benefit expenses, including directors' remuneration, amounted to RMB3,261 million in 2022[102] - The Group granted 6,636,400 H Shares under the Employee Share Incentive Scheme, representing 0.059% of total issued shares and 0.1318% of issued H Shares[106] - 2,610,000 incentive shares met the First Tranche Vesting conditions, while 44,184 shares were confiscated and sold in the open market[107] - The grant price for the Employee Share Incentive Scheme was HK$13.22 per share, calculated as 30% of the average closing price of H Shares in the 120 trading days before the grant date[107] - The Company's Employee Share Incentive Scheme was approved by the Remuneration Committee during the reporting period[188][189] Financial Position and Capital Management - Total assets grew to RMB 39,255 million in 2022, up from RMB 32,896 million in 2021[28] - Cash and bank balances increased to RMB 15,211 million in 2022, compared to RMB 14,784 million in 2021[28] - The company's long-term bank deposits, pledged deposits, cash, and bank balances increased by 21.4% to RMB19,316 million as of December 31, 2022, compared to RMB15,909 million in 2021[75][80] - Inventories increased by 16.5% to RMB2,108 million as of December 31, 2022, with inventory turnover days decreasing from 54.8 days to 50.5 days[82][83] - Trade and bills payables increased to RMB1,425 million as of December 31, 2022, with turnover days increasing from 30.8 days to 33.3 days[85][87] - The company's gearing ratio decreased to 10.5% as of December 31, 2022, compared to 12.5% in 2021, due to slower growth in interest-bearing borrowings relative to equity[88][91] - The company held HK$1,469 million, US$443 million, and a small amount of other foreign currencies as of December 31, 2022, with increased exchange rates for USD and HKD against RMB[76][90][94] - Capital commitments amounted to approximately RMB1,542 million as of December 31, 2022, primarily for the construction of production plants and purchase of production equipment[96][97] - The company did not have any significant contingent liabilities as of December 31, 2022[95] - The company gradually used the proceeds from the initial public offering for the intended purposes set out in the Prospectus from September 8, 2020, to December 31, 2022[98] - Total IPO proceeds and over-allotment option net proceeds amounted to HK$9,377 million, with HK$4,896 million (52.2%) utilized as of December 31, 2022, leaving HK$4,481 million unutilized[99] - Brand building utilized HK$1,003 million out of HK$2,344 million allocated, with HK$1,341 million remaining[100] - Purchasing sales equipment utilized HK$371 million out of HK$2,344 million allocated, with HK$1,973 million remaining[100] - Purchasing production facilities and building new factories utilized HK$1,434 million out of HK$1,875 million allocated, with HK$441 million remaining[100] - Strengthening fundamental capabilities utilized HK$212 million out of HK$838 million allocated, with HK$626 million remaining[100] Product Development and Innovation - The company introduced new packaging sizes for drinking water, such as 4.5L and 6L, to promote sales of larger-sized packaged drinking water[42] - The company launched new 4.5L and 6L capacity specifications for packaged drinking water to improve the product matrix[43] - "Tea π" introduced two new flavors, "Citrus Pu'er Lemon Tea" and "Green Grape Oolong Tea," and expanded its product matrix with 900ml packages[45][47] - "Oriental Leaf" launched seasonal limited products, including "Longjing Spring Tea" and "Osmanthus Oolong," to promote Chinese tea culture[48][49] - The company launched a new carbonated tea product, "Sparkling Tea Drink," with three innovative flavors in March 2022[50] - "Scream" beverage collaborated with Ultraman for co-branded bottles and themed activities, while "Vitamin Water" engaged in music and dance events[54] - "Nongfu Orchard" underwent a comprehensive upgrade, launching five new 30% mixed juice beverages with new branding and packaging in 2022[52] - The Group launched new flavors for "Tea π" and upgraded the "Farmer's Orchard" product line in 2022[59][62] Market Strategy and Expansion - The company implemented a multi-brand strategy and has built a super brand in the PRC soft beverage market[4] - The company's nationwide sales network covers all provinces, municipalities, and prefecture-level administrative divisions across China[3] - The company will continue to expand sales channels and market share in 2023, while exploring innovative and high-quality products to meet changing consumer needs[125] - The company will strengthen its understanding of consumer needs and adapt to market changes post-pandemic[125] - The company plans to strengthen the development and reserve of high-quality water resources and talent resources to ensure long-term sustainable development[33] Quality and Safety Management - Product external inspection and national random inspection qualification rate reached 100%[121] - The company has revised its internal health and safety system and set production safety management objectives to protect employee occupational health and safety[120] - The company adheres to the philosophy of developing "natural and healthy" products, integrating quality and safety into the entire product lifecycle[121] Corporate Culture and Ethics - The company achieved 100% employee coverage for the signed Code of Business Conduct and anti-corruption training[111] - The company has adopted sound

Financial Performance - Total revenue for 2022 reached RMB 33,239 million, an increase of 11.9% year-on-year[1] - Net profit attributable to the parent company's owners was RMB 8,495 million, up 18.6% compared to the previous year[1] - Basic earnings per share were RMB 0.76, representing an 18.8% increase from 2021[1] - Gross profit for 2022 was RMB 19,095 million, compared to RMB 17,656 million in 2021[2] - Pre-tax profit for 2022 was RMB 11,050,332 thousand, an 18.1% increase from RMB 9,354,300 thousand in 2021[16] - Net profit for 2022 increased by 18.6% to RMB 8,495 million[56] - The company's net profit attributable to shareholders increased from RMB 7,162 million in 2021 to RMB 8,495 million in 2022 (adjusted to RMB 8,295 million after excluding one-time non-operating gains/losses)[37] - Gross profit increased by 8.2% to RMB 19,095 million in 2022, with gross margin decreasing by 2.1% to 57.4% due to higher PET procurement costs[51] Revenue Breakdown by Segment - Segment revenue breakdown for 2022: Water products RMB 18,262,614 thousand, Ready-to-drink tea RMB 6,905,986 thousand, Functional drinks RMB 3,837,605 thousand, Juice drinks RMB 2,878,830 thousand, Other products RMB 1,354,152 thousand[14] - Packaged water products contributed 54.9% of total revenue, generating RMB 18,263 million, a 7.1% increase from 2021[42][43] - Tea beverage products saw a significant growth of 50.8%, contributing RMB 6,906 million, or 20.8% of total revenue[42][44] - Functional beverage products generated RMB 3,838 million, accounting for 11.5% of total revenue[42] - Juice beverage products contributed RMB 2,879 million, making up 8.7% of total revenue[42] - Other products, including soda water, flavored carbonated drinks, and coffee beverages, contributed RMB 1,353 million, or 4.1% of total revenue[42] - Functional beverage products revenue reached RMB 3,838 million in 2022, a 3.9% increase from 2021, accounting for 11.5% of total revenue[46] - Juice beverage products revenue grew by 10.1% to RMB 2,879 million in 2022, representing 8.7% of total revenue[47] - Other products revenue declined by 22.7% to RMB 1,353 million in 2022, making up 4.1% of total revenue[48] Expenses and Costs - Sales and distribution expenses increased to RMB 7,821 million in 2022 from RMB 7,233 million in 2021[2] - Sales and distribution expenses rose by 8.1% to RMB 7,821 million in 2022, but the expense ratio decreased by 0.9% to 23.5%[52] - Administrative expenses increased by 4.8% to RMB 1,835 million in 2022, with the expense ratio dropping by 0.4% to 5.5%[53] - Financial expenses increased to RMB 76,028 thousand in 2022 from RMB 52,945 thousand in 2021, primarily due to higher interest on interest-bearing borrowings, which rose to RMB 70,628 thousand from RMB 47,565 thousand[24] - R&D costs in 2022 were RMB 277,166 thousand, a 121.9% increase from RMB 124,912 thousand in 2021[22] - Depreciation and amortization for 2022 totaled RMB 1,972,362 thousand, a 4.7% increase from RMB 1,883,401 thousand in 2021[14] Assets and Liabilities - Total assets as of December 31, 2022, amounted to RMB 24,084 million, up from RMB 20,742 million in 2021[5] - Cash and bank balances stood at RMB 15,211 million at the end of 2022[4] - Property, plant, and equipment totaled RMB 853 million as of December 31, 2022[4] - The company's long-term bank deposits, pledged deposits, cash, and bank balances increased by 21.4% to RMB 19,316 million as of December 31, 2022, compared to RMB 15,909 million in 2021[57] - Inventory increased by 16.5% to RMB 2,108 million as of December 31, 2022, from RMB 1,809 million in 2021, with inventory turnover days decreasing from 54.8 days to 50.5 days[58] - Trade receivables and bills increased slightly to RMB 479 million as of December 31, 2022, from RMB 476 million in 2021, with turnover days increasing from 5.1 days to 5.2 days[59] - Trade payables and bills increased to RMB 1,425 million as of December 31, 2022, from RMB 1,153 million in 2021, with turnover days increasing from 30.8 days to 33.3 days[60] - The capital-to-debt ratio decreased to 10.5% as of December 31, 2022, from 12.5% in 2021, primarily due to slower growth in interest-bearing borrowings compared to equity growth[61] Dividends and Shareholder Returns - The company proposed a final dividend of RMB 0.68 per ordinary share[1] - The company proposed a final dividend of RMB 0.68 per share for 2022, amounting to approximately RMB 7,647,597 thousand, pending shareholder approval[29] - The company plans to distribute a final cash dividend of RMB 0.68 per share for 2022, totaling approximately RMB 7,647.6 million[38] - The company will propose a final cash dividend of RMB 0.68 per share for the year ended December 31, 2022, totaling approximately RMB 7,647.6 million[57] - The company proposed a final dividend of RMB 0.68 per share (tax inclusive) for the year ended December 31, 2022, totaling approximately RMB 7,647.6 million[75] International Financial Reporting Standards (IFRS) - The company has adopted revised International Financial Reporting Standards (IFRS) for the current year's financial statements, including amendments to IFRS 3, IAS 16, and IAS 37, with no significant financial impact[10] - The company has not yet applied newly issued but not yet effective IFRS standards, including amendments to IFRS 10, IAS 28, IAS 16, and IFRS 17, and is assessing their potential impact on operations and financial position[11][12] Operational Highlights - The company operates in five reportable segments, including manufacturing and sales of agricultural products and other beverage products, with performance evaluated based on adjusted pre-tax profit[13] - Over 99% of the company's revenue and operating profit come from customers in Mainland China[17] - No single customer accounted for 10% or more of the company's total revenue in 2022 or 2021[18] - The company completed the construction and commenced operations of a new production base in Guangxi, bringing the total number of water sources to 12[37] - The company continued to strengthen its information systems, including upgrading its marketing digital system and optimizing production and logistics management through warehouse logistics system improvements[37] Product Innovations and Launches - The company launched new packaging sizes for packaged water, including 4.5L and 6L, to expand its product matrix[43] - The "Teaπ" series introduced new flavors and launched a 900ml large-size packaging to meet diverse consumer needs[44] - The "Dongfang Shuye" brand released seasonal limited-edition products, such as "Longjing New Tea" and "Osmanthus Oolong," to promote Chinese tea culture[44] - In March 2022, the company introduced a new carbonated tea series, "Qi Tea," featuring innovative flavors like Passionfruit Oolong and Tangerine Pu'er[45] Government Subsidies and Grants - Government subsidies and grants related to income in 2022 were RMB 412,529 thousand, a 27.2% increase from RMB 324,271 thousand in 2021[21] Tax and Financial Expenses - Income tax expenses for 2022 totaled RMB 2,555,082 thousand, up from RMB 2,192,506 thousand in 2021, with the majority attributed to China's tax jurisdiction[25] - The company's Chinese subsidiaries are subject to a standard corporate income tax rate of 25%, but some qualify for a reduced rate of 15% due to being recognized as high-tech enterprises or operating in encouraged industries in western China[26] Trade Receivables and Payables - Trade receivables and notes receivable stood at RMB 478,587 thousand in 2022, slightly up from RMB 476,276 thousand in 2021, with 92% of receivables aged within 90 days[31][32] - Impairment losses on trade receivables decreased to RMB 30,511 thousand in 2022 from RMB 33,945 thousand in 2021, reflecting a net reversal of RMB 3,434 thousand[32] - The company's trade receivables expected credit loss rate for 2022 was 1.19% for within 90 days, 11.06% for 91-180 days, 45.47% for 181-365 days, and 100% for over 365 days[34] - The company's trade payables and notes within 90 days amounted to RMB 1,355,022 thousand in 2022, compared to RMB 1,001,840 thousand in 2021[36] - The company's trade receivables expected credit loss for 2022 was RMB 30,511 thousand, compared to RMB 33,945 thousand in 2021[34] Foreign Exchange and Capital Commitments - The company holds HKD 1,469 million and USD 443 million in foreign currencies as of December 31, 2022, with exchange rate fluctuations being monitored closely[63] - Capital commitments as of December 31, 2022, amounted to approximately RMB 1,542 million, primarily for the construction of production facilities and the purchase of production equipment[64] IPO Proceeds Utilization - As of December 31, 2022, the company had utilized approximately HKD 4,896 million (52.2%) of the total IPO proceeds of HKD 9,377 million, with the remaining HKD 4,481 million to be used according to the prospectus[67] Employee and Equity Incentives - Total number of employees exceeded 20,000 as of December 31, 2022, with employee welfare expenses (including director remuneration) totaling RMB 3,261 million[71] - The company granted 6,636,400 H shares under the employee equity incentive plan, representing 0.059% of the total issued shares and 0.1318% of the issued H shares[72] - 2,610,000 incentive shares met the first vesting condition and were allocated to the corresponding incentive recipients, while 44,184 shares were forfeited and sold in the open market[72] - The grant price for the incentive shares was set at 30% of the average closing price of the company's H shares over the 120 trading days prior to the grant date, amounting to HKD 13.22 per share[72] - 108 incentive recipients were granted shares, including two supervisors and one employee from the Yangshengtang Group, with the remaining 105 being employees of the company[73] Corporate Governance and Compliance - The audit committee consists of three directors, including two independent non-executive directors and one non-executive director, with Stanley Yi Chang as the chairman[80] - The independent auditor, Ernst & Young, has agreed with the financial figures in the consolidated financial statements for the year ended December 31, 2022[81] - The company has adopted all code provisions of the Corporate Governance Code, except for a deviation from Code Provision C.2.1 regarding the separation of the roles of chairman and CEO[82] - The board of directors includes five executive directors, one non-executive director, and three independent non-executive directors, ensuring a high level of independence[82] - The board will periodically review its structure to ensure it supports the execution of the company's business strategy and maximizes operational efficiency[83] - All directors and supervisors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers for the year ended December 31, 2022[83] - The 2022 annual report will be distributed to shareholders and published on the Hong Kong Stock Exchange and the company's website[84] Shareholder Meetings and Dividend Distribution - The company will suspend share registration from May 11 to May 16, 2023, and from May 20 to May 25, 2023, for the annual general meeting and final dividend distribution, respectively[78] Securities Transactions - No purchase, sale, or redemption of the company's listed securities was conducted by the company or its subsidiaries during the year ended December 31, 2022[79] Financial Resources and Future Operations - The company has sufficient financial resources to continue operations in the foreseeable future, based on current financial forecasts and available financing[69]

Financial Performance - Nongfu Spring reported a revenue of RMB 12.5 billion for the first half of 2022, representing a year-on-year increase of 15%[2] - The company achieved a net profit of RMB 3.2 billion, which is a 20% increase compared to the same period last year[2] - The company has set a performance guidance of RMB 30 billion in revenue for the full year 2022, representing a growth target of 12%[2] - The Group recorded a revenue of RMB 16,599 million for the first half of 2022, representing a year-on-year increase of 9.4%[11] - During the reporting period, the company recorded revenue of RMB 16,599 million, an increase of 9.4% compared to RMB 15,175 million in the same period last year[27] - Profit for the period increased by 14.8% to RMB 4,608 million from RMB 4,013 million in the first half of last year[40] - Profit before tax increased to RMB 6,069,255, up 13.9% from RMB 5,326,778 in the prior year[109] - The profit for the period as of June 30, 2022, was RMB 10,620,039,000, compared to RMB 4,608,325,000 for the previous period, showing an increase of approximately 130.3%[115] Revenue Breakdown - Revenue from packaged drinking water products was RMB 9,349 million, accounting for 56.3% of total revenue, with a growth of 4.8% compared to the same period last year[13] - Revenue from beverage products increased by 18.8% year-on-year, contributing 43.0% to total revenue[11] - Revenue from tea beverage products was RMB 3,307 million, accounting for 19.9% of total revenue, with a significant increase of 51.6% year-on-year[12] - Revenue from functional beverage products was RMB 2,023 million, representing a slight increase of 0.9% compared to the previous year[12] - Juice beverage products generated revenue of RMB 1,275 million, a 4.2% increase year-on-year, making up 7.7% of total revenue[23] - Other products, including soda water and coffee beverages, recorded revenue of RMB 645 million, a decrease of 23.8% compared to the previous year, accounting for 3.9% of total revenue[25] Market Expansion and Product Development - User data indicates that Nongfu Spring has expanded its customer base to over 500 million users, reflecting a growth of 10% year-on-year[2] - The company plans to launch three new product lines in the next quarter, focusing on health-oriented beverages[2] - Nongfu Spring is exploring market expansion into Southeast Asia, targeting a 15% market share within the next two years[2] - The company launched a new carbonated tea series "Sparkling Tea Drink" in March 2022, featuring innovative flavors like passion fruit oolong and citrus pu'er[20] - The promotion of health awareness among consumers during the pandemic has created new growth opportunities for natural and healthy products[10] Cost Management and Investments - Nongfu Spring is investing RMB 1 billion in new technology for production efficiency improvements, aiming for a 25% reduction in operational costs[2] - The international oil prices experienced rapid rises, impacting the production cost of PET, a key raw material for packaging[10] - The company plans to maintain its focus on natural and healthy products while dynamically adjusting operations to address challenges posed by external factors such as the Ukraine crisis and rising costs[26] Financial Position and Liquidity - As of June 30, 2022, the total of long-term bank deposits, pledged deposits, cash, and bank balances amounted to RMB 20,659 million, an increase of 29.9% compared to RMB 15,909 million as of December 31, 2021[42] - Cash and bank balances increased to RMB 21,481,227 from RMB 14,783,577 at the end of 2021, indicating strong liquidity[112] - Total current liabilities rose to RMB 17,835,935, compared to RMB 11,588,911 at the end of 2021, reflecting increased operational activities[112] - Net current assets decreased to RMB 3,645,292 from RMB 6,246,743 at the end of 2021, indicating a tighter working capital position[112] Corporate Governance and Compliance - The company has confirmed compliance with the Model Code for Securities Transactions by Directors, with all directors and supervisors adhering to the requirements during the interim report period[59] - The Board consists of five executive directors, one non-executive director, and three independent non-executive directors, ensuring a strong element of independence[59] - The Group has complied with all relevant laws and regulations in China and Hong Kong, with no material noncompliance reported during the period ended June 30, 2022[82] Employee and Shareholder Information - As of June 30, 2022, the total number of employees exceeded 20,000, with total employee benefit expenses amounting to RMB 1,552 million[48] - The Employee Share Incentive Scheme was adopted to retain key employees, with 6,636,400 H Shares granted, accounting for 0.059% of total issued shares and 0.1318% of issued H Shares[48] - The Group declared dividends of RMB 5,060,910,000 for the year-end dividend of 2021, which amounts to RMB 0.45 per share for 11,246,466,400 shares[158] Sustainability and Social Responsibility - The Group released its 2021 Sustainability Report (ESG Report) on April 28, 2022, emphasizing its commitment to sustainable development[52] - By 2030, carbon emission intensity and comprehensive energy consumption intensity will be reduced by 20% compared to 2019, and water consumption intensity will be lowered by 20% compared to 2020[54] - The company actively participates in social welfare activities, including setting up ice water stations during high summer temperatures to support citizens[58]

Company Overview and History - Nongfu Spring Co., Ltd. was established in 1996 and is a leader in the packaged drinking water and beverage industry in China[2][3] - The company was transformed into a joint stock company in June 2001 and listed on the Hong Kong Stock Exchange in September 2020 (stock code: 9633. HK)[2][3] - The company's H Shares were listed on the Hong Kong Stock Exchange on September 8, 2020, with the stock code 9633[10] - Nongfu Spring celebrated its 25th anniversary in 2021, expanding from one water source to eleven major sources nationwide[21] Product Portfolio and Market Strategy - Nongfu Spring's major products include packaged drinking water, tea beverage, functional beverage, and juice beverage[2][3] - The company sources all its packaged drinking water from quality natural water sources containing natural mineral elements[4] - The company launched new products such as "Tea brewing water" and "Changbai Snow" to enrich its drinking water product line[32][34] - The "Teaπ" brand expanded its presence by entering convenience stores and collaborating with QQ Music for marketing campaigns[35] - The company celebrated the 10th anniversary of its "Oriental Leaf" tea beverage and introduced new flavors like "Qinggan Pu'er" and "Genmaicha"[36] - The "Mix Milk Tea" product was launched in September 2021 with three flavors and a winter-limited cocoa milk tea variant in December[39][40] - The "Scream" beverage introduced China's first isotonic sports drink series with two flavors targeting different exercise intensities[41][43] - The "Vitamin Water" brand collaborated with the Strawberry Music Festival and Strawberry MDSK Music Festival to enhance brand awareness among young consumers[44] - The company launched a new sparkling soda water series in 2021, emphasizing 0 sugar, 0 calories, 0 fat, and 0 potassium sorbate[45] - The company pioneered a new category of "isotonic" professional sports drinks in China with an osmotic pressure range of 250-340mOsmol/L[46] - The company achieved a 9-month shelf life for its sparkling soda water beverages without adding preservatives[46] Financial Performance - Total revenue in 2021 reached RMB 29,696 million, a 29.8% increase compared to 2020[18][20] - Profit attributable to the owners of the parent increased to RMB 7,162 million in 2021, up from RMB 5,277 million in 2020[18][20] - Cash flow from operating activities in 2021 increased by 35.2% year-on-year to RMB 11,400 million[18][20] - Gross profit in 2021 was RMB 17,656 million, compared to RMB 13,508 million in 2020[16] - Total assets increased to RMB 32,896 million in 2021, up from RMB 25,859 million in 2020[17] - Cash and bank balances rose to RMB 14,784 million in 2021, compared to RMB 9,119 million in 2020[17] - The Board recommended a cash dividend of RMB 0.45 per share for the year ended December 31, 2021, totaling approximately RMB 5,061 million[21] - Revenue from tea beverage products in 2021 was RMB4,579 million, a 48.3% increase compared to 2020, accounting for 15.4% of total revenue[37] - Revenue from functional beverage products in 2021 was RMB3,695 million, a 32.3% increase compared to 2020, accounting for 12.4% of total revenue[41][42] - Revenue from juice beverage products in 2021 was RMB2,614 million, a 32.2% increase compared to 2020, accounting for 8.8% of total revenue[45] - Revenue from other products in 2021 was RMB1,750 million, a 66.0% increase compared to 2020, accounting for 6.0% of total revenue[45] - Revenue in 2021 increased by 29.8% to RMB29,696 million compared to RMB22,877 million in 2020[47] - Gross profit in 2021 increased by 30.7% to RMB17,656 million compared to RMB13,508 million in 2020[47] - Gross profit margin in 2021 was 59.5%, maintaining the level of 59.0% in 2020[47] - Sales and distribution expenses in 2021 increased by 31.2% to RMB7,233 million compared to RMB5,511 million in 2020[47] - Administrative expenses in 2021 increased by 32.3% to RMB1,751 million compared to RMB1,324 million in 2020[47] - Exchange losses in 2021 were RMB117 million, mainly due to foreign currencies obtained from funds raising[47] - Profit for the year increased by 35.7% from RMB5,277 million in 2020 to RMB7,162 million in 2021[48] - Long-term bank deposits, pledged deposits, and cash and bank balances increased by 74.5% from RMB9,119 million in 2020 to RMB15,909 million in 2021[48] - Interest-bearing borrowings increased by 3.6% from RMB2,414 million in 2020 to RMB2,500 million in 2021[48] - Inventory turnover days decreased from 69.5 days in 2020 to 54.8 days in 2021[48] - Trade and bills receivables increased from RMB358 million in 2020 to RMB476 million in 2021, with turnover days decreasing from 5.3 days to 5.1 days[48] - Trade and bills payables increased from RMB882 million in 2020 to RMB1,153 million in 2021, with turnover days decreasing from 32.6 days to 30.8 days[49][51] - Gearing ratio decreased from 15.9% in 2020 to 12.5% in 2021, mainly due to slower growth in interest-bearing borrowings compared to equity[50][52] - Capital commitments amounted to approximately RMB2,146 million as of December 31, 2021, mainly for construction of production plants and purchase of production equipment[57] - The Group held HK$1,485 million, US$491 million, and a small amount of other foreign currencies as of December 31, 2021, with exchange rates for USD and HKD both declining[55][56] - Bank deposits of RMB3.6 million were pledged by the Group as of December 31, 2021[58] - The Group's total number of employees exceeded 20,000 as of December 31, 2021, with total employee benefit expenses amounting to RMB2,882 million in 2021[59] Corporate Governance and Leadership - The company's registered office and headquarters are located at No. 181 Geyazhuang, Xihu District, Hangzhou, Zhejiang, China[10] - The company's principal place of business in Hong Kong is at Room F, 6/F, CNT Tower, 338 Hennessy Road, Wan Chai, Hong Kong[10] - The company's board of directors includes executive directors Mr. Zhong Shanshan (Chairman and General Manager), Mr. Guo Zhen, Mr. Zhou Li, Ms. Zhou Zhenhua, and Mr. Liao Yuan[10] - The company's supervisory committee is chaired by Mr. Zhong Jigang, with members Mr. Liu Xiyue and Mr. Rao Minghong[10] - The company's joint company secretaries are Ms. Han Linyou and Ms. Mak Po Man Cherie[10] - The Company's Board consists of nine Directors, including five executive Directors, one non-executive Director, and three independent non-executive Directors as of December 31, 2021[86] - Mr. Zhong Shanshan serves as both the Chairman of the Board and General Manager, a dual role that the Board considers beneficial for the Company's management[83] - The Board has established three specialized committees to assist in decision-making and ensure effective governance[91] - The Company's senior management is responsible for daily operations and implementing strategies set by the Board, reporting to both the Board and the Supervisor Committee[91] - The Board reviews its structure periodically to ensure it aligns with the Group's business strategies and maximizes operational efficiency[84][87] - The Company adheres to the Corporate Governance Code, with the exception of code provision C.2.1, which allows the Chairman and General Manager roles to be held by the same individual[83] - The Board is responsible for setting business strategies, investment plans, and ensuring compliance with legal and regulatory requirements[91] - The Company has implemented a Model Code for securities transactions by Directors, Supervisors, and related employees, with all confirming compliance during the reporting period[85][88] - The Board ensures a balance of power and authority through its experienced and high-caliber composition, including five executive Directors and three independent non-executive Directors[83][86] - The Supervisor Committee oversees the Board and senior management's performance, as well as the Company's financial activities, risk management, and internal control[91] - The Board established an audit committee, a remuneration committee, and a nomination committee, each providing recommendations to the Board based on their respective terms of reference[95] - During the reporting period, the Board focused on improving the corporate governance system, including developing internal management rules, arranging professional training for Directors, and ensuring compliance with regulatory requirements[96] - Ms. Qiu Hongying resigned as Supervisor and Chairman of the Supervisory Committee on April 16, 2021, and Mr. Zhong Jigang was appointed as her successor on June 25, 2021[98][99] - The Company held 5 Board meetings and 1 general meeting during the reporting period, with all Directors maintaining full attendance[100][101] - The senior management provided timely updates on business activities and development to the Board, and Directors with conflicts of interest abstained from voting on relevant resolutions[102] - All Directors participated in continuous professional development, including seminars, training courses, and reading materials on corporate governance, to enhance their knowledge and skills[103][104] - The Company arranged and funded suitable training for Directors, ensuring compliance with the Corporate Governance Code and providing updates on regulatory developments[104] - The Audit Committee consists of three members, including two independent non-executive directors and one non-executive director, with Mr. Stanley Yi Chang serving as the chairman[108] - The Audit Committee held two meetings during the reporting period, with all members attending both meetings[110] - The Audit Committee reviewed the interim report for the six months ended June 30, 2021, confirming compliance with applicable accounting principles and adequate disclosures[112] - The Audit Committee reviewed the annual result announcement for the year ended December 31, 2021, confirming compliance with all applicable accounting standards and sufficient disclosures[113] - The Audit Committee reviewed the remuneration of the auditors for 2021 and recommended re-appointing Pan-China Certified Public Accountants LLP and Ernst & Young as domestic and overseas auditors for 2022, respectively[114] - The Audit Committee reviewed the Company's financial control system, risk management, and internal control systems, ensuring effective systems were established by management[108] - The Audit Committee reviewed the Company's policies and practices on financing and accounting[109] - The Audit Committee ensured proper channels were established for employees to report potential improprieties in financial reporting or internal controls confidentially[109] - The Audit Committee reviewed the Explanatory Letter on Audit submitted by the external audit agency and any material questions raised by the external audit agency regarding accounting records, financial accounts, or internal control systems[109] - The Audit Committee was satisfied with the effectiveness and sufficiency of the internal control mechanism in its operations[113] - The Nomination Committee comprises three Directors, including one executive Director and two independent non-executive Directors, with Mr. Zhong Shanshan serving as the chairman[115] - The Nomination Committee is responsible for formulating nomination procedures and standards for Director candidates, including reviewing the Board's structure and composition annually[115] - The Nomination Committee conducts research on the criteria, procedures, and methods for selecting directors and senior management members[115] - The Nomination Committee identifies qualified candidates for directors and senior management members within the Company and the talent market[118] - The Nomination Committee evaluates candidates for directors and senior management members and makes recommendations to the Board[118] - The Nomination Committee assesses the independence of independent non-executive directors[115] - The Nomination Committee reviews and approves compensation for executive directors and senior management members to ensure fairness and reasonableness[123] - The Nomination Committee holds one meeting during the reporting period, with all members in attendance[120] - The Nomination Committee has implemented a Board diversity policy, considering factors such as gender, age, and professional experience[119] - The Nomination Committee annually reviews the Board diversity policy to ensure its effectiveness[119] - The Remuneration Committee consists of three Directors, including one executive Director and two independent non-executive Directors, with Mr. Lu Yuan serving as the chairman[124] - The Remuneration Committee held one meeting during the reporting period, with all members attending[128] - The Remuneration Committee approved the Employee Share Incentive Scheme and reviewed the remuneration policy and structure of the company[129] - The company paid RMB 6,789,000 for statutory audit services and RMB 460,000 for non-audit services, mainly for ESG reporting consultancy[133] - The Directors confirmed that the Group's financial statements were prepared in accordance with legal requirements and applicable accounting principles[135] - Shareholders holding more than 10% of the company's shares can request an extraordinary general meeting, but their shareholding must not fall below 10% before the meeting announcement[136] - Shareholders holding more than 3% of voting shares can propose new agenda items at least 10 days before a general meeting, and the convener must issue a supplementary notice within 2 days of receiving the proposal[136] - The company amended its Articles of Association on June 25, 2021, to comply with regulatory requirements, including updates on shareholders' capital contribution information and general meeting procedures[136] - The company completed the registration and filing of the amended Articles of Association with the Zhejiang Administration for Industry and Commerce on July 5, 2021[136] - At the time of establishment, the company issued 147,000,000 ordinary shares with a par value of RMB 1 per share, and the capital contribution was made in the form of net assets on April 28, 2001[139] - Yangshengtang Co., Ltd. holds 61.43% of the company's shares, making it the largest shareholder[140] - Hainan Baoyi Agricultural Products Processing Co., Ltd. holds 23.21% of the company's shares[140] - Hainan Yangpu Bochuang Investment Management Co., Ltd. holds 10% of the company's shares[140] - Shanghai New Century High Technology Services Ltd. holds 5% of the company's shares[140] - Hainan Damen Advertising Co., Ltd. holds 0.36% of the company's shares[140] - The company has effectively improved investor relations in 2021 by participating in multiple investor/analyst communication meetings, investment forums, and investor events[143][144] - The company plans to maintain ongoing and effective communication with shareholders and investors through roadshows after interim and annual results announcements, as well as through general meetings[143][144] - Mr. Zhong Shanshan and Yangshengtang have complied with the terms of the Non-Competition Undertaking during the year ended December 31, 2021, and no remedy action was taken by the company[145][146][147] - Any new business opportunities that directly or indirectly compete with the Restricted Business in China during the term of the Non-Competition Undertaking should be recommended or introduced to the Group[148] - The company has established a risk management and internal control system to manage risks related to business objectives, financial reporting, and compliance with laws and regulations[150][152] - The risk management system includes three lines of defense: departments as the first line, the Board office and management as the second line, and audit, legal, and supervisory committees as the third line[151][153] - Major risks in 2021 included business risks (e.g., pandemic, competition, supply chain), financial risks (e.g., taxation, currency), compliance risks, and internal control risks[154] - The company has adopted financial risk management policies to control exposure to taxation, currency, and financial reporting risks[154] - Compliance risks are managed through internal procedures, professional advisors, and employee training on responsible marketing, anti-corruption, and intellectual property[155] - The company has implemented information management system controls to prevent the leakage of sensitive information and ensure proper handling of inside information[155] - The risk management framework includes policies, procedures, and a three-line defense system to identify and control major risks within acceptable levels[155] - The effectiveness of the risk management and internal control systems is evaluated through management, business units, audit teams, external auditors, and consultants[155] - The Group's audit and inspection team focuses on business risks, financial risks, and compliance risks, achieving more comprehensive and accurate risk control through agile audits[157] - The Group's financial reporting and information disclosure processes strictly comply with the Listing Rules, with established procedures for information reporting, reviewing, and disclosure[158] - The Board reviewed the risk management and internal control system and concluded it is effective and sufficient, with no material deficiencies or weaknesses identified[160] - Ms. Han Linyou and Ms. Mak Po Man received no less than 15 hours of professional training in the last financial year, complying with Rule 3.29 of the Listing Rules[164] - Mr. Zhong Shanshan, the founder and Chairman, is responsible for the company's overall development strategies, business plans, and major operational decisions[166] - Mr. Zhong Shanshan served as the chairman of Beijing Wantai Biological Pharmaceutical Enterprise Co., Ltd. from November 2001 to January 2021[167] - Mr. Guo Zhen was appointed as an executive Director in December 2019 and a Deputy General Manager of the Company in March 2020, responsible for overall production and operation[167] - Mr. Zhou Li was appointed as an executive Director in September 2019 and the Deputy General Manager of the Company since July 2019, responsible for product research and development, quality management, technology-related regulations, and legal affairs[167] - Ms. Zhou Zhenhua was appointed as an executive Director in September 2019 and as the Chief Financial Officer in November 2007, responsible for financial matters and external investment[170] - Ms. Zhou Zhenhua has been assisting Mr. Zhong Shanshan in managing the overall operations of the Company as an assistant to the General Manager since March 2014[170] - Mr. L

Financial Performance - The Group recorded revenue of RMB 15,175 million for the six months ended June 30, 2021, representing a year-on-year increase of 31.4% compared to RMB 11,545 million in the same period of 2020[16]. - Total revenue for the six months ended June 30, 2021 was RMB 15,175 million, representing a 31.4% increase compared to RMB 11,545 million in 2020[18]. - Profit for the period was RMB 4,013 million, an increase of 40.1% compared to RMB 2,864 million in the corresponding period of 2020[28]. - Gross profit amounted to RMB 9,241 million, up 33.7% from RMB 6,910 million in the previous year, with a gross profit margin of 60.9%[26]. - Profit before tax increased to RMB 5,326,778, a growth of 40.4% from RMB 3,795,295 in the previous year[77]. - Basic and diluted earnings per share attributable to ordinary equity holders of the parent increased to RMB 0.36 from RMB 0.27, reflecting a growth of 33.3%[77]. Market Trends and Consumer Demand - The Group's revenue growth was driven by an overall improvement in the beverage market and consumer demand[15]. - The beverage industry in China experienced further development during the reporting period, contributing to improved market sales[15]. - The report period reflects a stable economic environment conducive to the beverage industry's growth[15]. - The total retail sales of beverage consumer goods in China amounted to RMB 135.4 billion in the first half of 2021, reflecting a year-on-year growth of 29.2%[15]. - The total retail sales of consumer goods in China reached RMB 21,190.4 billion, marking a year-on-year increase of 23.0%[15]. Product Innovation and Development - Revenue from packaged drinking water products increased by 25.6% to RMB 8,919 million for the six months ended June 30, 2021[20]. - Revenue from tea beverage products rose by 36.4% to RMB 2,182 million during the same period[20]. - New products launched include "Nongfu Spring drinking natural spring water for tea brewing" and "Nongfu Spring Changbai Snow natural Jokul mineral water" to enrich the product line[20]. - The company introduced two new flavors, "Ganpu Tea" and "Brown Rice Tea," to celebrate the 10th anniversary of the "Oriental Leaf" brand[20]. - The overall revenue growth reflects the company's successful market expansion and product innovation strategies[20]. Corporate Governance and Management - The company has complied with the corporate governance code since January 1, 2021, with a commitment to best practices[39]. - The board consists of five executive directors, one non-executive director, and three independent non-executive directors, ensuring a strong element of independence[42]. - Mr. Zhong's dual role as chairman and general manager is deemed beneficial for the company's management[39]. - The board will continue to review and monitor practices to maintain high standards of corporate governance[39]. Sustainability and Corporate Social Responsibility - The Group established a sustainable development governance and management structure, releasing its first "Sustainability (ESG) Report" as of April 30, 2021[35]. - The Group's commitment to corporate social responsibility includes a decade-long initiative of providing free water to college entrance examination candidates[36]. - The Group actively coordinates the upstream and downstream industrial chains to promote mutual benefit and sustainable development of the value chain[36]. - The Group was awarded the title of "Most Influential Green Corporate Brand" at the 7th Green Development Forum of Xinhua News Agency during the Reporting Period[36]. Financial Position and Cash Flow - Total cash and bank balances increased to RMB 12,777 million, a 40.1% increase from RMB 9,119 million as of December 31, 2020[28]. - The net cash flows used in investing activities amounted to RMB (4,708,201,000) for the six months ended June 30, 2021, compared to RMB (693,762,000) in 2020[94]. - The total current assets as of June 30, 2021, were RMB 15,666,630, up from RMB 12,191,639 at the end of 2020, indicating a growth of 28.4%[80]. - Cash and cash equivalents increased significantly to RMB 12,776,635 from RMB 9,118,880, representing a growth of 40.5%[80]. Employee and Management Compensation - As of June 30, 2021, the Group had a total of 20,773 employees, with total employee benefits expenses amounting to RMB 1,260 million during the Reporting Period[35]. - Total compensation paid to key management personnel was RMB 8,811,000, up from RMB 7,584,000 in the previous year[153]. Share Capital and Ownership - Mr. Zhong Shanshan holds 6,211,800,000 domestic shares, representing approximately 55.23% of the total issued share capital[42]. - The total number of issued shares as of June 30, 2021, is 11,246,466,400[44]. - The issued and fully paid share capital remained unchanged at 11,246,466,400 shares as of June 30, 2021, consistent with the figure from December 31, 2020[143].

Financial Performance - Nongfu Spring reported a significant increase in revenue, achieving RMB 24.5 billion in 2020, representing a year-on-year growth of 20%[2] - The company’s net profit for the year was RMB 6.5 billion, reflecting a 25% increase compared to the previous year[2] - The company reported a revenue of RMB 24.5 billion for the year 2020, representing a year-on-year increase of 12.3%[6] - The net profit for the year was RMB 6.8 billion, which is an increase of 15.5% compared to the previous year[6] - Future guidance indicates a projected revenue growth of 15-20% for the upcoming fiscal year, driven by increased consumer demand and market expansion[2] - The Group's total equity increased to RMB 15,492 million in 2020[18] - The gross profit for 2020 was RMB 13,508 million, representing an increase of 1.5% from RMB 13,311 million in 2019, with a gross profit margin rising to 59.0% from 55.4%[45] - The Board recommended a cash dividend of RMB 0.17 per share for the year ended December 31, 2020, totaling approximately RMB 1,912 million[21] Market Presence and Strategy - The total sales volume of packaged drinking water reached 10.5 billion liters, accounting for a market share of approximately 20% in China[3] - Nongfu Spring has established a nationwide sales network covering all provinces and municipalities, enhancing its market penetration[4] - The company plans to launch new product lines, including functional beverages and tea drinks, to diversify its offerings and capture more market segments[3] - Nongfu Spring aims to expand its market presence through strategic partnerships and potential acquisitions in the beverage sector[4] - The company plans to expand its market presence in Southeast Asia, targeting a 20% increase in market share by 2023[6] - The company maintains a multi-brand strategy to strengthen brand recognition and consumer loyalty across different product categories[3] Product Development and Innovation - Research and development efforts are ongoing, with a focus on improving product quality and exploring new health-oriented beverage options[5] - New product launches are expected to contribute an additional RMB 1 billion in revenue in 2021[6] - The Group launched several innovative products in 2020, including the "SODA" series and "TOT" sparkling beverages, addressing market trends and consumer preferences[42][44] - The company launched new products in 2020, including "TOT" carbonated drinks and "炭➞" cup coffee, expanding its product offerings[39] Challenges and Impact of COVID-19 - The COVID-19 pandemic and floods in July 2020 negatively impacted product delivery and sales, leading to temporary closures of some retail points[25] - The pandemic has increased consumer focus on health and accelerated the acceptance of digitalized shopping[24] - The pandemic led to increased consumer purchases of medium- to large-size packaged drinking water products, reflecting a shift in consumer behavior[31] - During the pandemic, the company increased the supply of packaged drinking water products in modern channels and established unmanned convenient water supply points in residential areas, partially offsetting the decline in retail sales[73] Corporate Governance - The company is committed to high standards of corporate governance and has complied with all provisions of the Corporate Governance Code during the reporting period[77] - The Board consists of nine Directors, including five executive Directors and three independent non-executive Directors[80] - The Company held 6 Board meetings and 4 general meetings during the Reporting Period[89] - The Audit Committee consists of three Directors, including two independent non-executive Directors and one non-executive Director, with Mr. Stanley Yi Chang serving as the chairman[96] Environmental, Social, and Governance (ESG) Initiatives - The company has established an ESG management system and identified key ESG issues important to its operations[57] - The company has developed a series of ESG-related institutional documents to improve its ESG framework[56] - The company conducted a series of ESG training and awareness-raising activities, including a climate change workshop[56] - The company actively engages in ecological protection work around water sources to mitigate the impact of production and operations on the environment[60] Financial Position and Assets - Total assets as of December 31, 2020, amounted to RMB 25,859 million, while total liabilities were RMB 10,367 million[18] - Cash flow from operating activities in 2020 increased by 12.8% compared to 2019, reaching RMB 8,429 million[21] - Cash and cash equivalents rose significantly to RMB 9,119 million in 2020[18] - Interest-bearing borrowings amounted to RMB 2,414 million as of December 31, 2020, an increase of 141% from RMB 1,000 million as of December 31, 2019[46] Risk Management - The Group established a risk management and internal control system to ensure the reliability of financial reports and compliance with applicable laws[137] - Major risks identified for the year 2020 include business risks, financial risks, compliance risks, and risks related to inside information and internal control[138] - The Group has adopted financial risk management policies to control exposure to taxation risks, currency risks, and financial reporting risks, with regular monitoring by the Board[139] Shareholder Engagement - The Group aims to maintain ongoing communication with shareholders through roadshows after interim and annual results announcements[133] - The Group participated in multiple investor communication meetings and events to enhance communication with shareholders and investors[132] - The Company allows shareholders holding more than 10% of shares to request an extraordinary general meeting[126] Continuing Connected Transactions - The Company has established continuing connected transactions with Yangshengtang, a substantial shareholder, under the framework agreements[194] - The actual transaction amounts for purchases from Yangshengtang and its associates were RMB 171.5 million against a proposed cap of RMB 215 million[187] - The independent non-executive Directors confirmed that the non-fully exempt continuing connected transactions were conducted in the ordinary course of business and on normal commercial terms[197]

Financial Performance - The Group recorded revenue of RMB 11,545 million for the first half of 2020, a decrease of 6.2% compared to RMB 12,310 million in the first half of 2019[18]. - The Group's performance was significantly affected by the COVID-19 outbreak, impacting sales revenue[18]. - Total revenue for the first half of 2020 was RMB 11,545 million, a decrease of 6.2% compared to RMB 12,310 million in the same period of 2019[30]. - Revenue from packaged drinking water products was RMB 7,102 million, accounting for 61.5% of total revenue, with a year-on-year increase of over 26.2% for medium- to large-sized products[22][23]. - Revenue from tea beverage products decreased by 10.7% to RMB 1,600 million compared to the first half of 2019[24]. - Revenue from functional beverage products decreased by 36.4% to RMB 1,448 million compared to the first half of 2019[28]. - Revenue from juice beverage products decreased by 9.7% to RMB 942 million compared to the first half of 2019[28]. - Revenue from other products increased by 210.3% to RMB 453 million compared to the first half of 2019[28]. - Gross profit for the first half of 2020 was RMB 6,910 million, remaining stable compared to RMB 6,907 million in the same period of 2019, with a gross margin increase from 56.1% to 59.9%[30]. - Profit for the period decreased by 0.7% to RMB 2,864 million from RMB 2,883 million in the first half of 2019[35]. - The total comprehensive income for the period was RMB 2,884,127,000, reflecting strong financial performance[84]. COVID-19 Impact - China's total retail sales of consumer goods decreased by 16.2% in the first four months of 2020 compared to the same period in 2019[17]. - The Group adjusted its business strategies in response to the macroeconomic environment and the impact of COVID-19[17]. - The Group ensured compliance with state and local government regulations to promote the resumption of work and safeguard employee health and safety[17]. - The company established unmanned convenient water supply points in over 5,000 communities to enhance consumer access to products during the COVID-19 outbreak[27]. - The company anticipates that the negative impacts from the COVID-19 outbreak and subsequent flooding will be temporary and will not significantly affect long-term business development[29]. Corporate Governance - The Group's independent auditors, Ernst & Young, reviewed the interim financial information in accordance with relevant standards[16]. - The Group's board of directors presented the unaudited interim condensed consolidated financial information for the six months ended June 30, 2020[16]. - The Company has adopted the Model Code for Directors' securities transactions upon listing, ensuring compliance since the listing date[55]. - The Board consists of five executive Directors, one non-executive Director, and three independent non-executive Directors, ensuring a strong element of independence[56]. - The Board will continue to monitor practices to comply with the Corporate Governance Code and maintain high standards of corporate governance[56]. - The Company has confirmed compliance with the corporate governance code provisions since its listing date[55]. Employee and Social Responsibility - The Group actively participated in social responsibility efforts during the COVID-19 outbreak, donating packaged drinking water products to medical staff and relief agencies[17]. - The Group is committed to creating an equal and fair employment environment and a safe workplace for employees, focusing on their welfare and development[54]. - The Company respects and protects the basic rights and interests of every employee, emphasizing their development and growth[54]. - The Company has actively conducted healthy drinking water promotion campaigns in various locations as part of its social welfare initiatives[54]. - The total employee benefits expenses, including Directors' emoluments, were RMB939 million during the period under review[49]. Capital and Investments - Capital expenditures for the six months ended June 30, 2020, were approximately RMB1,305 million, mainly for the construction of production facilities and acquisition of production equipment[42]. - The Group did not have any plans for acquiring other material investments or capital assets beyond those disclosed in the prospectus[49]. - The Group did not pledge any assets as of June 30, 2020[47]. - The Group did not hold any significant investments or have any material acquisition or disposal of subsidiaries, associates, and joint ventures during the review period[49]. Shareholder Information - The company declared RMB7,800 million as dividends to shareholders, fully paid in cash on August 31, 2020[50]. - As of the listing date on September 8, 2020, the company's issued share capital was RMB1,118,823,180, consisting of 11,188,231,800 ordinary shares[50]. - The Company has maintained a minimum public float of approximately 13.66% of the total issued share capital since the listing date[73]. - The basic earnings per share attributable to ordinary equity holders of the parent for the six months ended June 30, 2020, was calculated based on a weighted average of 10,800,000,000 shares[117]. Financial Position - Cash and bank balances increased significantly to RMB5,662 million as of June 30, 2020, from RMB1,083 million on December 31, 2019[35]. - Trade and bills receivables increased to RMB483 million from RMB306 million, with turnover days increasing from 4.0 days to 6.2 days[39]. - Inventories decreased by 4.5% to RMB1,683 million, with inventory turnover days increasing from 62.5 days to 67.7 days[38]. - Gearing ratio increased to 18.2% as of June 30, 2020, from 10.5% on December 31, 2019[40]. - The Group reported a net current liabilities of RMB (964,282,000) as of June 30, 2020, an improvement from RMB (3,069,130,000) at the end of 2019[79]. Research and Development - The company launched new products including "TOT" sparkling flavored beverages and "Tan Bing Cup Coffee" in 2020[28]. - Research and development costs rose to RMB 71,443, up from RMB 51,960, highlighting the Group's commitment to innovation[107]. Related Party Transactions - Sales to related parties amounted to RMB 123,794,000 for products and services provided to the ultimate holding company, and RMB 2,181,000 for sales to fellow subsidiaries during the six months ended June 30, 2020[142]. - The company reported a gain on the disposal of subsidiaries of RMB 1,621,000, contributing to the total consideration received[134]. - The company distributed a cash dividend of RMB 0.50 per share for its 360,000,000 shares, along with a share dividend of 20 new shares for every 10 shares held[130].