Interim Results Announcement Summary Summary of Key Financials For the six months ended June 30, 2025, the company's total operating revenue significantly decreased by 68.55% year-on-year, shifting from a net profit to a net loss, with basic earnings per share also turning negative; the Board recommended no interim dividend | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 319,937 | 1,017,421 | -68.55% | | Net (Loss)/Profit | (15,499) | 13,857 | Turned to Loss | | Net (Loss)/Profit Attributable to Owners of the Parent | (15,621) | 16,487 | Turned to Loss | | Basic (Loss)/Earnings Per Share | (0.030) RMB | 0.0317 RMB | Turned to Loss | | Interim Dividend | None | None | No Change | Condensed Consolidated Financial Statements Condensed Consolidated Income Statement For the six months ended June 30, 2025, the company's total operating revenue significantly decreased year-on-year, leading to a shift from operating profit to loss and ultimately a net loss, with both main business revenue and operating costs substantially reduced | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 319,937 | 1,017,421 | -68.55% | | Main Business Revenue | 317,861 | 1,011,560 | -68.58% | | Total Operating Costs | 338,106 | 1,001,086 | -66.23% | | Operating (Loss)/Profit | (15,146) | 18,465 | Turned from Profit to Loss | | Net (Loss)/Profit | (15,499) | 13,857 | Turned from Profit to Loss | | Net (Loss)/Profit Attributable to Owners of the Parent | (15,621) | 16,487 | Turned from Profit to Loss | | Basic (Loss)/Earnings Per Share | (0.030) RMB | 0.03173 RMB | Turned from Profit to Loss | Condensed Consolidated Statement of Financial Position As of June 30, 2025, the company's total assets and liabilities both decreased, with cash, accounts receivable, and contract assets in current assets declining, while inventory increased, and short-term borrowings significantly rose as accounts payable decreased | Indicator | June 30, 2025 (RMB thousands) | Dec 31, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 1,178,038 | 1,232,947 | -4.46% | | Total Current Assets | 966,120 | 1,021,449 | -5.42% | | Cash and Cash Equivalents | 360,251 | 422,324 | -14.69% | | Accounts Receivable | 240,362 | 252,539 | -4.82% | | Inventories | 232,711 | 168,559 | +38.06% | | Contract Assets | 0 | 68,524 | -100% | | Total Liabilities | 778,942 | 822,939 | -5.47% | | Total Current Liabilities | 664,342 | 715,948 | -7.21% | | Short-term Borrowings | 50,000 | 14,992 | +233.51% | | Accounts Payable | 353,040 | 452,530 | -21.99% | | Total Equity | 399,096 | 410,008 | -2.66% | Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2025, the comprehensive loss attributable to owners of the parent led to a decrease in retained earnings, resulting in a decline in both total equity attributable to owners of the parent and total equity | Indicator | June 30, 2025 (RMB thousands) | Jan 1, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total Equity Attributable to Owners of the Parent | 370,684 | 416,347 | -11.09% | | Total Equity | 399,096 | 450,671 | -11.45% | | Retained Earnings | (241,114) | (160,983) | Loss Widened | Condensed Consolidated Cash Flow Statement For the six months ended June 30, 2025, cash flow from operating activities shifted from a net inflow to a net outflow, resulting in a negative net increase in cash and cash equivalents and a decrease in the period-end cash balance | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | (90,368) | 74,064 | Shifted from Inflow to Outflow | | Net Cash Flow from Investing Activities | 713 | (20,797) | Shifted from Outflow to Inflow | | Net Cash Flow from Financing Activities | 27,582 | 23,587 | Increased | | Net Increase in Cash and Cash Equivalents | (62,073) | 76,854 | Shifted from Increase to Decrease | | Cash and Cash Equivalents Balance as of June 30 | 360,251 | 417,649 | Decreased | Notes to the Condensed Consolidated Financial Statements General Information The company primarily operates in the plastic products manufacturing industry, encompassing the production, sales, installation of water-saving irrigation equipment, and related agricultural services; the scope of consolidated financial statements for this period includes 16 subsidiaries, with RMB as the functional currency - The company primarily engages in the production and sales of PVC/PE pipes for water supply, drip irrigation belts, agricultural films, and drip irrigators, also providing water-saving irrigation project construction, installation, and land agricultural services11 - The scope of consolidated financial statements for this period includes 16 subsidiaries12 Significant Accounting Policies and Estimates These condensed consolidated financial statements are prepared on a going concern basis, adhering to China Accounting Standards for Business Enterprises and HKEX Listing Rules disclosure requirements; accounting policies remain consistent with the prior year, except for the adoption of new and revised standards - The financial statements are prepared on a going concern basis, adhering to China Accounting Standards for Business Enterprises and the disclosure requirements of Appendix D2 of the HKEX Listing Rules14 Total Operating Revenue Breakdown For the six months ended June 30, 2025, the company's total operating revenue significantly decreased year-on-year, primarily due to substantial reductions in revenue from drip irrigation belts and accessories, PVC/PE pipes, trading, and installation services | Business Type | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Drip Irrigation Belts and Accessories | 293 | 33,274 | -99.12% | | PVC/PE Pipes | 74,678 | 161,552 | -53.79% | | Trading Revenue | 65,404 | 390,258 | -83.24% | | Provision of Installation Services | 170,564 | 416,650 | -59.04% | | Building Materials Products | 4,396 | 9,826 | -55.27% | | Other Business Revenue | 4,602 | 5,861 | -21.50% | | Total | 319,937 | 1,017,421 | -68.55% | Total Profit and Income Tax Expense Total profit has been net of depreciation and includes bank interest income; income tax expense significantly decreased, primarily benefiting from tax incentives such as High-Tech Enterprise status and Western Development policies enjoyed by the company and some subsidiaries | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Depreciation | 19,438 | 13,297 | +46.18% | | Bank Interest Income | 374 | 550 | -31.99% | | Corporate Income Tax | 721 | 4,334 | -83.38% | - The company obtained its High-Tech Enterprise certificate in November 2023, enjoying a 15% corporate income tax rate for the 2024 fiscal year19 - Some subsidiaries qualify for Western Development tax incentives, paying corporate income tax at a 15% rate for the 2024 fiscal year19 Earnings Per Share and Dividends Due to the net loss attributable to owners of the parent, basic earnings per share for the six months ended June 30, 2025, were a loss; the Board recommended no interim dividend - For the six months ended June 30, 2025, basic loss per share was approximately RMB 0.030, compared to a net gain of approximately RMB 0.03173 in the same period last year20 - The Board did not recommend the payment of an interim dividend for the six months ended June 30, 202521 Accounts Receivable and Payable As of June 30, 2025, total accounts receivable slightly increased, with the highest proportion aged within one year; total accounts payable significantly decreased, though accounts payable aged 1-2 years increased | Accounts Receivable Ageing | June 30, 2025 (RMB thousands) | Dec 31, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Within 1 year | 187,947 | 165,862 | +13.31% | | 1–2 years | 24,641 | 22,822 | +7.97% | | 2–3 years | 17,465 | 21,609 | -19.27% | | 3–4 years | 16,194 | 12,542 | +29.12% | | 4–5 years | 12,187 | 22,758 | -46.34% | | Over 5 years | 40,558 | 46,914 | -13.55% | | Total | 298,992 | 292,507 | +2.22% | | Accounts Payable Ageing | June 30, 2025 (RMB thousands) | Dec 31, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Within 1 year | 155,901 | 285,149 | -45.33% | | 1–2 years | 123,963 | 85,804 | +44.47% | | 2–3 years | 32,808 | 25,478 | +28.77% | | Over 3 years | 40,368 | 56,099 | -28.04% | | Total | 353,040 | 452,530 | -21.99% | Productive Biological Assets As of June 30, 2025, the company's productive biological assets (citrus trees) book value slightly increased, primarily due to current period external purchases | Item | June 30, 2025 (RMB thousands) | Dec 31, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Book Value of Citrus Trees | 34,499 | 34,473 | +0.075% | | Amount Increased in Current Period (External Purchase) | 26 | — | New Addition | Capital Commitments As of June 30, 2025, the Group's contracted capital expenditures for the acquisition of property, plant, and equipment, not yet provided for in the consolidated financial statements, decreased | Item | June 30, 2025 (RMB thousands) | Dec 31, 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Contracted Capital Expenditure Not Provided For | 400 | 730 | -45.21% | Related Party Transactions During the period, the Group engaged in several significant related party transactions with Tianye Holding Group, including sales of finished goods, purchases of raw materials, and rentals for premises and plant machinery; total remuneration for key management personnel slightly decreased | Nature of Transaction | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Sales of Finished Goods | 24,056 | 12,499 | +92.46% | | Purchases of Raw Materials | 34,307 | 43,214 | -20.61% | | Rental for Premises | 151 | 151 | 0% | | Rental for Plant and Machinery | 136 | 136 | 0% | | Total Remuneration for Key Management Personnel | 1,320 | 1,418 | -6.91% | Major Transactions with State-Controlled Entities The Group conducted significant transactions with other state-controlled entities, including sales of goods, purchases of raw materials, and interest expenses, with both sales of goods and raw material purchases decreasing | Nature of Transaction | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Sales of Goods | 67,040 | 114,860 | -41.63% | | Purchases of Raw Materials | 34,660 | 55,648 | -37.73% | | Interest Expense | 1,714 | 1,899 | -9.64% | | Balance Type | June 30, 2025 (RMB thousands) | June 30, 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Bank Balances | 360,251 | 417,649 | -13.75% | | Trade and Other Receivables | 23,900 | 31,066 | -23.07% | | Trade and Other Payables | 51,595 | 47,411 | +8.82% | Management Discussion and Analysis Business Review For the six months ended June 30, 2025, the company's total operating revenue significantly decreased by 68.55%, primarily due to market environment changes and government policy adjustments, with reduced high-standard farmland construction projects leading to a decline in PVC pipe sales and engineering business revenue - Total operating revenue was approximately RMB 319,937,000, representing a year-on-year decrease of approximately 68.55%31 - The decline in revenue was primarily due to changes in market conditions and government policy adjustments, with a significant reduction in high-standard farmland construction projects leading to a substantial decrease in PVC pipe product sales and engineering business revenue31 Gross Profit Analysis Despite a significant decrease in operating revenue, the gross profit margin for the period increased by 1.94 percentage points to 7.70%, primarily due to higher product gross profit | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Gross Profit | 24,641 | 58,598 | -57.94% | | Gross Profit Margin | 7.70% | 5.76% | +1.94 percentage points | Operating Costs and Expenses Analysis Selling expenses decreased due to lower product sales, while administrative expenses increased, and finance costs slightly rose due to reduced interest income; both asset impairment losses and credit impairment losses were reversed | Expense Type | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Selling Expenses | 7,407 | 8,284 | -10.58% | | Administrative Expenses | 29,789 | 27,077 | +10.02% | | Net Finance Costs | 1,397 | 1,388 | +0.65% | | Reversal of Asset Impairment Loss | 256 | 0 | New Addition | | Reversal of Credit Impairment Loss | 1,398 | 614 | +127.69% | Net Loss Attributable to Owners of the Parent The Group recorded a net loss attributable to owners of the parent of approximately RMB 15,621,000, primarily due to market changes and government policy adjustments reducing high-standard farmland construction projects, which impacted PVC pipe sales and engineering business revenue, leading to a significant decrease in overall gross profit - Net loss attributable to owners of the parent was approximately RMB 15,621,000, compared to a net profit of approximately RMB 16,487,000 in the same period last year36 - The loss was primarily attributable to changes in market conditions and government policy adjustments, with a significant reduction in high-standard farmland construction projects leading to a substantial decline in PVC pipe product sales, a corresponding decrease in engineering business revenue, and a significant reduction in overall gross profit levels36 Future Outlook Future Outlook The company will focus on the entire water-saving agriculture industry chain, aligning with the national rural revitalization strategy, emphasizing five key business segments: plastic product R&D and production, construction and water conservancy engineering, plastic product sales, planting and land transfer, and smart agriculture information networks; future plans include increasing R&D investment, expanding markets, optimizing industrial chain layout, and promoting digital transformation - The company will focus on the entire water-saving agriculture industry chain, prioritizing five key business segments: plastic product R&D and production, construction and water conservancy engineering, plastic product sales, planting and land transfer, and smart agriculture information networks37 - In the future, the company will continue to increase R&D investment in water-saving irrigation technology, deepen industry-academia-research cooperation, actively expand domestic and international markets, further extend its agricultural full industry chain layout, and focus on developing digital agricultural services and agricultural trade logistics38 - The company will increase investment in digital and intelligent equipment production, promote automation and intelligent transformation of production, drive product innovation, and actively fulfill its social responsibilities38 Other Information Liquidity, Financial Resources and Capital Structure The Group primarily funds its operations through cash generated from business activities; the gearing ratio slightly increased, but the directors confirmed no liquidity issues were encountered - The Group primarily funds its operations through cash generated from business activities39 | Indicator | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Gearing Ratio | 12.53% | 11.49% | +1.04 percentage points | Contingent Liabilities and Foreign Exchange Risk As of June 30, 2025, the company had no significant contingent liabilities, and as its business is primarily conducted in China and denominated in RMB, it did not undertake significant foreign exchange risk - As of June 30, 2025, the company had no significant contingent liabilities40 - The Group's business is primarily conducted in China, with receipts and payments denominated in RMB, thus not undertaking significant foreign exchange risk41 Employees and Remuneration Policy The Group has approximately 469 full-time employees, with remuneration plans determined by individual performance, experience, and market levels; the company provides social insurance and housing provident fund schemes - The Group has approximately 469 full-time employees42 - Remuneration plans are determined by individual employee performance, work experience, and prevailing market remuneration levels42 - The Group provides employees with old-age, medical, unemployment, work injury, and maternity insurance schemes, along with a housing provident fund scheme4344 Major Investments, Acquisitions and Disposals As of June 30, 2025, the Group had no major investment plans, significant acquisitions, or disposals - As of June 30, 2025, the Group had no major investment plans45 - As of June 30, 2025, the Group had no significant acquisitions or disposals46 Directors' and Substantial Shareholders' Interests As of June 30, 2025, directors and chief executives held no interests in the company's shares, related shares, or debentures; major shareholder Tianye Holding held approximately 60.42% of the company's total share capital in domestic shares, while Changmao Holdings Limited and its associates held approximately 2.77% of the total share capital in H shares - At no time during the six months ended June 30, 2025, did the company, its holding company, or any of its subsidiaries enter into any arrangements enabling directors or chief executives of the company and their respective associates to benefit from acquiring shares or debt securities of the company or any other relevant corporate body47 | Shareholder Name | Capacity | Number of Shares Held | Approximate Percentage of Total Share Capital | | :--- | :--- | :--- | :--- | | Xinjiang Tianye (Group) Co., Ltd. | Beneficial Owner | 313,886,921 (Domestic Shares) | 60.42% | | Changmao Holdings Limited | Beneficial Owner | 14,407,000 (H Shares) | 2.77% | | Mr. Ding Wei | Interest in Controlled Corporation | 14,407,000 (H Shares) | 2.77% | | Ms. Wang Bing | Spouse's Interest | 14,407,000 (H Shares) | 2.77% | Corporate Governance and Compliance The Board confirmed that for the six months ended June 30, 2025, no directors engaged in businesses competing with the Group's operations; the company complied with the Corporate Governance Code and the Model Code for Securities Transactions by Directors as set out in Appendix C1 of the Listing Rules - The directors are not aware of any business or interest engaged in or owned by directors, the company's management, the company's shareholders, and their respective associates that directly or indirectly competes or may compete with the Group's business53 - The Group complied with the code provisions (the "Corporate Governance Code") set out in Appendix C1 of the Listing Rules during the six months ended June 30, 202556 - All directors of the company confirmed that they have complied with the required standards set out in the Model Code throughout the six months ended June 30, 202557 Other Corporate Matters The Board did not recommend an interim dividend; the Audit Committee reviewed the interim financial accounts; there are no pre-emptive rights provisions in the company's articles of association or Chinese law; neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities during the reporting period, and no significant events occurred after the reporting period - The Board did not recommend the payment of an interim dividend for the six months ended June 30, 202554 - The Audit Committee reviewed the accounting principles and practices adopted by the Group with management and discussed internal control and financial reporting matters55 - There are no provisions for pre-emptive rights in the company's articles of association or under Chinese law58 - During the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities59 - No significant events occurred from the end of the reporting period up to the date of this announcement60
天业节水(00840) - 2025 - 中期业绩