Core Viewpoint - Dongguang Chemical (01702.HK) will hold a board meeting on August 27, 2025, to review and approve the interim results for the six months ending June 30, 2025, and to consider the proposal for an interim dividend distribution, if any [1] Summary by Relevant Categories - **Company Announcement** - Dongguang Chemical has scheduled a board meeting for August 27, 2025 [1] - The meeting will focus on the interim results for the six months ending June 30, 2025 [1] - The board will also consider the proposal for an interim dividend distribution [1]

（股份代號：1702） 香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負 責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不就因本公告全部 或任何部分內容而產生或因依賴該等內容而引致的任何損失承擔任何責任。 DONGGUANG CHEMICAL LIMITED 東光化工有限公司 （於開曼群島註冊成立的有限公司） 董事會會議日期 本公告乃根據香港聯合交易所有限公司證券上市規則第13.43條作出。 東 光 化 工 有 限 公 司（「本公司」）董 事 會（「董事會」）宣 佈，董 事 會 會 議 將 於2025年8月 27日（星 期 三）舉 行，以（其 中 包 括）考 慮 及 批 准 公 佈 本 公 司 及 其 附 屬 公 司 截 至2025 年6月30日 止 六 個 月 的 未 經 審 核 綜 合 財 務 報 表 以 及 考 慮 派 付 中 期 股 息（如 有）。 主 席 王春萌 中國，2025年8月15日 於本公告日期，董事會包括王春萌先生、王治河先生、孫祖善先生及 徐希江先生 為執行董事；及林秀香女士、劉金成先生及吳世良先生為獨立非執行董事。 承董事會命 東光化工有限公司 ...

致：香港交易及結算所有限公司 公司名稱: 東光化工有限公司(於開曼群島註冊成立的有限公司) 呈交日期: 2025年8月4日 I. 法定/註冊股本變動 FF301 股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年7月31日 狀態: 新提交 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | | 於香港聯交所上市 (註1) | 是 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 01702 | 說明 | 東光化工 | | | | | | | | | | | 法定/註冊股份數目 | | 面值 | | | 法定/註冊股本 | | | 上月底結存 | | | 500,000,000,000 | USD | | 0.0001 | USD | | 50,000,000 | | 增加 / 減少 (-) | | | | | | | USD | | | | 本月底結存 | | | 500,000,000,000 | USD | | 0.0001 ...

Financial Performance - The company's revenue for the fiscal year 2024 was RMB 2,575.4 million, a decrease of 11.8% compared to RMB 2,920.7 million in 2023[9][10] - Gross profit fell to RMB 172.0 million, representing a decline of 48.3% from RMB 333.0 million in the previous year[9][12] - Net profit for the year decreased by 55.5% to RMB 86.4 million, down from RMB 194.1 million in 2023[9][14][22] - The basic earnings per share dropped to RMB 13.6, compared to RMB 30.6 in the previous fiscal year[9] - Revenue fell by approximately RMB 345.3 million or 11.8% to about RMB 2,575.4 million, down from approximately RMB 2,920.7 million, primarily due to a decline in the average selling price of urea[28] - The average selling price of urea decreased by approximately RMB 347 per ton or 15.9% to about RMB 1,842 per ton, compared to approximately RMB 2,189 per ton for the previous year[29] - Urea revenue decreased by approximately RMB 263.2 million or 10.5% to about RMB 2,247.8 million, attributed to the drop in average selling price[29] - The gross margin fell from approximately 11.4% for the year ended December 31, 2023, to about 6.7% for the reporting period[34] - The net profit for the year decreased by approximately RMB 107.7 million or 55.5% from about RMB 194.1 million for the year ended December 31, 2023, to about RMB 86.4 million for the reporting period[41] Sales and Market Dynamics - Urea sales volume increased compared to last year, partially offsetting the impact of declining average selling prices[22] - The company faced significant challenges due to a sharp decline in urea prices and weak domestic demand, exacerbated by export restrictions[21][22] - The sales volume of urea increased by approximately 6.4% during the reporting period, despite the decline in revenue[29] - The company expects a gradual recovery in the Chinese urea market, driven by adjustments in production surplus and a rebound in product demand[25] - The company expects the Chinese urea market to gradually recover by 2025, despite ongoing challenges from global economic conditions and local policy changes[44] Operational Efficiency and Innovation - The company implemented several technical upgrades to existing production facilities, enhancing operational efficiency and reducing carbon emissions[22] - The company is actively upgrading its product lines to meet stricter market standards and customer demands, focusing on technological innovation and quality improvement[23] - The company plans to enhance operational efficiency and increase technological innovation to navigate future uncertainties and create long-term value for stakeholders[25] - The company is investing $50 million in research and development for new technologies aimed at enhancing product efficiency[62] - The company is investing $30 million in research and development for new technologies aimed at enhancing user experience[71] Governance and Compliance - The board proposed a final dividend of HKD 0.036 per ordinary share for the year ended December 31, 2024, totaling approximately HKD 22.4 million, down from HKD 49.7 million in 2023[55] - The company has adopted a share option scheme to incentivize eligible participants, including employees, based on their contributions[50] - The board has established effective communication policies with shareholders, encouraging participation in annual meetings[89] - The company has established governance practices to ensure compliance with applicable laws, rules, and regulations[104] - The board is committed to providing balanced and clear assessments in all statutory and regulatory communications[108] Employee and Organizational Structure - As of December 31, 2024, the group employed 1,252 employees, a decrease from 1,292 employees as of December 31, 2023[50] - Total employee costs, including director remuneration, amounted to RMB 159.3 million for the reporting period, up from RMB 134.9 million for the year ended December 31, 2023[50] - The gender ratio of employees as of December 31, 2024, is 77% male and 23% female, reflecting the industrial nature of the business[174] - The company has maintained good relationships with employees, suppliers, and customers, with an acceptable employee turnover rate[184][185][186] Strategic Planning and Future Outlook - The company aims to enhance its market position and shareholder value through capacity expansion, improving product quality, and exploring acquisition opportunities[45] - Future outlook indicates a projected revenue growth of 15% for the next fiscal year, driven by new product launches and market expansion strategies[61] - Market expansion plans include entering three new international markets by the end of the fiscal year, targeting a 10% increase in market share[63] - New product launches are expected to contribute an additional $50 million in revenue in the upcoming year[70] Risk Management and Internal Controls - The company has established risk management procedures to address and manage all significant risks related to its business[169] - The company maintains a reasonable and effective internal control system, as confirmed by the board through the audit committee[109] - The audit committee regularly reviews the effectiveness of the internal control system[109] - An external professional firm was engaged to review the internal control system for effectiveness and efficiency, with no significant deficiencies identified[169] Corporate Social Responsibility - The company made charitable donations of approximately RMB 120,000 during the year ended December 31, 2024[195] - The company continues to update internal policies and plans to prevent environmental risks and ensure compliance with applicable standards and regulations[182]

Core Viewpoint - Dongguang Chemical is a key player in ensuring agricultural production and food security in China, particularly during the critical spring plowing season, by maintaining stable fertilizer supply and enhancing production capabilities [1][4][12]. Group 1: Production and Supply - Dongguang Chemical has achieved a daily fertilizer dispatch volume exceeding 5,000 tons since the beginning of spring plowing in 2025, reinforcing its role in safeguarding the nation's food supply [1][4]. - The company has invested 230 million yuan in 2024 to upgrade various production technologies, including ammonia synthesis and energy-saving modifications, which have significantly improved operational efficiency and product quality [5][9]. - Two urea production units are operating at full capacity to meet the high demand for fertilizers during the spring plowing peak [4][5]. Group 2: Logistics and Distribution - Dongguang Chemical has implemented a rapid logistics model, ensuring that fertilizer vehicles are loaded and dispatched immediately upon arrival, thus optimizing delivery efficiency [6][10]. - The company has established retail points at its facilities to facilitate convenient purchasing for farmers, ensuring timely access to fertilizers [6][10]. Group 3: Research and Development - The company has established a research center and collaborates with universities and research institutions to develop environmentally friendly and efficient fertilizers [9][10]. - New functional fertilizers have been introduced, including long-lasting fertilizers that reduce nutrient loss and improve soil conditions, enhancing crop resilience and fertilizer utilization [9][10]. Group 4: Quality Control and Compliance - Dongguang Chemical maintains a strict quality management system, ensuring traceability and compliance with production standards, with a 100% product qualification rate [12][13]. - The company has proactively secured 80,000 tons of raw material reserves to stabilize urea prices during the spring plowing season, while also combating counterfeit products [12][13]. Group 5: Commitment to Agricultural Support - The company has formed a professional agricultural technology service team to provide farmers with tailored fertilization advice and training, enhancing fertilizer application efficiency and reducing costs [10][11]. - Dongguang Chemical aims to continue its commitment to stable production and supply, focusing on technological innovation and high-quality service to support rural revitalization and modern agricultural development [13].

Financial Performance - Total revenue for the year ended December 31, 2024, was RMB 2,575,397, a decrease of 11.8% compared to RMB 2,920,711 in 2023[4] - Gross profit for the same period was RMB 172,047, down 48.7% from RMB 332,961 in 2023[4] - Net profit for the year was RMB 86,413, representing a decline of 55.6% from RMB 194,107 in the previous year[4] - Basic and diluted earnings per share decreased to RMB 13.6 from RMB 30.6, a drop of 55.7%[4] - Urea sales contributed RMB 2,247,802,000, down from RMB 2,510,964,000, reflecting a decline of 10.5%[15] - The company's profit decreased significantly from approximately RMB 194.1 million for the year ended December 31, 2023, to about RMB 86.4 million, a reduction of RMB 107.7 million or 55.5%[57] - Total revenue fell from approximately RMB 2,920.7 million to about RMB 2,575.4 million, a decrease of RMB 345.3 million or 11.8%[45] - The average selling price of urea decreased by approximately RMB 347 per ton or 15.9%, from RMB 2,189 per ton to RMB 1,842 per ton[45] - Urea revenue declined by approximately RMB 263.2 million or 10.5%, from RMB 2,511.0 million to RMB 2,247.8 million[45] - The gross profit decreased from approximately RMB 333.0 million to about RMB 172.0 million, a reduction of RMB 160.9 million or 48.3%[50] - The company's gross margin decreased from approximately 11.4% to about 6.7%[50] Assets and Liabilities - Non-current assets totaled RMB 1,035,733, an increase from RMB 985,424 in 2023[6] - Current assets decreased to RMB 987,279 from RMB 1,115,787, a decline of 11.5%[6] - Current liabilities decreased significantly to RMB 174,646 from RMB 294,146, a reduction of 40.5%[7] - Total equity attributable to owners of the company increased to RMB 1,804,473 from RMB 1,758,498, reflecting a growth of 2.6%[7] - Inventory as of December 31, 2024, was RMB 85,869,000, down from RMB 114,774,000 in 2023, reflecting a decrease of approximately 25.2%[30] - Trade receivables increased to RMB 5,636,000 as of December 31, 2024, compared to RMB 4,130,000 in 2023, representing an increase of 36.5%[31] - Other receivables, net of impairment losses, totaled RMB 214,979,000 as of December 31, 2024, compared to RMB 194,396,000 in 2023, indicating an increase of 10.7%[34] - Trade payables decreased significantly to RMB 32,738,000 as of December 31, 2024, from RMB 68,674,000 in 2023, a reduction of approximately 52.4%[36] - The total amount of accrued expenses was RMB 26,553,000 for the year ended December 31, 2024, compared to RMB 22,381,000 in 2023, reflecting an increase of 18.8%[38] - As of December 31, 2024, the group reported net assets of approximately RMB 1,811.0 million, an increase from RMB 1,767.2 million as of December 31, 2023[58] - The group had cash and bank balances of approximately RMB 702.1 million as of December 31, 2024, down from RMB 797.8 million as of December 31, 2023[59] - The group has no interest-bearing bank borrowings, resulting in a debt-to-equity ratio of 0% as of December 31, 2024[59] Expenses - Administrative expenses rose to RMB 77,584, up from RMB 73,994 in the previous year, indicating a 6.5% increase[4] - Employee benefits expenses, including salaries and bonuses, rose to RMB 159,347,000 from RMB 134,906,000, an increase of 18.1%[21] - The total employee cost for the reporting period was approximately RMB 159.3 million, an increase from RMB 134.9 million for the year ended December 31, 2023[66] - The total remuneration for key management personnel was RMB 1,121,000 for the year ended December 31, 2024, down from RMB 1,356,000 in 2023, a decrease of 17.4%[40] Other Income and Expenses - The company reported a foreign exchange gain of RMB 6,552 from overseas operations, compared to RMB 3,515 in 2023[4] - The net loss from foreign exchange was RMB 7,604,000, increasing from RMB 5,117,000 in 2023[17] - The total income from bank interest increased to RMB 13,225,000, compared to RMB 7,141,000 in 2023, a growth of 85.5%[15] - Government grants recognized as other income amounted to RMB 1,949,000, compared to RMB 3,476,000 in 2023, a decrease of 44.0%[16] - Other income increased by approximately RMB 18.5 million or 104.3%, from RMB 17.8 million to RMB 36.3 million[51] - The income tax expense decreased by approximately RMB 37.9 million or 50.9%, from RMB 74.5 million to RMB 36.6 million[56] Dividends - The final dividend for the year ended December 31, 2023, was HKD 0.08 per share, totaling HKD 49,675,520, paid on June 7, 2024[26] - The proposed final dividend for the year ending December 31, 2024, is HKD 0.036 per share, totaling HKD 22,353,984, subject to shareholder approval[26] - The board proposed a final dividend of HKD 0.036 per ordinary share, totaling approximately HKD 22.4 million, down from HKD 49.7 million in 2023[71] Future Outlook and Plans - The group anticipates a gradual recovery in the Chinese urea market by 2025, influenced by global economic conditions and local policy changes[60] - The group plans to enhance production capacity and improve product quality while expanding its value chain into urea-related products[61] Corporate Governance - The audit committee, chaired by Mr. Wu Shiliang, consists of independent non-executive directors and has reviewed the accounting principles and standards adopted by the group[74] - The financial statements for the year ending December 31, 2024, have been verified by Hong Kong Lixin Dehao CPA Limited, confirming consistency with the audited financial statements[75] - The board has adopted the corporate governance code as per the listing rules and confirmed compliance throughout the reporting period[76] - The company has implemented a strict code of conduct for directors' securities trading, ensuring compliance with the standard code throughout the reporting period[77] - The final results announcement and annual report will be published on the Hong Kong Stock Exchange and the company's website[78] - The board expresses gratitude to the management, employees, shareholders, and clients for their support and hard work[79]

Financial Performance - The company's net profit increased by approximately RMB 15.3 million or 20.5% to about RMB 89.8 million for the six months ended June 30, 2024, compared to approximately RMB 74.5 million for the same period in 2023[5]. - Revenue decreased by approximately RMB 282.6 million or 17.4% to about RMB 1,337.2 million for the six months ended June 30, 2024, from approximately RMB 1,619.8 million for the same period in 2023[5]. - Gross profit increased by approximately RMB 19.0 million or 15.3% to about RMB 143.4 million, with the gross margin rising from 7.7% to 10.7%[12]. - Net profit for the period increased by approximately RMB 15.3 million or 20.5% to about RMB 89.8 million, driven by higher gross profit and reduced administrative expenses[18]. - Profit before tax increased to RMB 125,439,000, up 25.1% from RMB 100,335,000 in the previous year[33]. - Basic and diluted earnings per share for the period were both RMB 14.5, compared to RMB 11.4 in the same period last year, reflecting a 27.2% increase[33]. - The total comprehensive income for the period was RMB 83,556 thousand, compared to RMB 95,850 thousand in the previous year, showing a decline of approximately 12.8%[37]. Revenue and Sales - Sales revenue from automotive urea solution products decreased by approximately RMB 49.5 million or 47.6% to about RMB 54.5 million for the six months ended June 30, 2024, compared to approximately RMB 104.0 million for the same period in 2023[9]. - The average selling price of automotive urea solution decreased by approximately 47.8% to about RMB 979 per ton, down from approximately RMB 1,876 per ton in the same period of 2023[9]. - Urea sales volume decreased by approximately 7.4% compared to the six months ended June 30, 2023[8]. - Urea sales contributed RMB 1,159,211,000, down from RMB 1,372,940,000, reflecting a decline of 15.5%[48]. - Revenue from other products fell by approximately RMB 13.1 million or 18.7% to about RMB 57.1 million, primarily due to decreased demand for compound fertilizers[11]. Costs and Expenses - Sales costs decreased by approximately RMB 301.5 million or 20.2% to about RMB 1,193.8 million, mainly due to reduced raw material costs[12]. - The cost of goods sold was RMB 1,193,807,000 for the six months ended June 30, 2024, down from RMB 1,495,341,000 in the same period of 2023, representing a decrease of approximately 20.2%[53]. - The total income tax expense for the six months ended June 30, 2024, was RMB 35,644,000, up from RMB 25,878,000 in the same period in 2023, indicating an increase of approximately 37.6%[54]. Assets and Liabilities - As of June 30, 2024, the company had net assets of approximately RMB 1,813.9 million, an increase from RMB 1,767.2 million as of December 31, 2023[20]. - The company maintained a zero debt ratio, with no interest-bearing bank loans as of June 30, 2024[20]. - Total current assets decreased to RMB 1,033,404,000 from RMB 1,115,787,000, a decline of 7.4%[33]. - Total current liabilities decreased to RMB 183,318,000 from RMB 294,146,000, a reduction of 37.7%[33]. - Non-current liabilities totaled RMB 42,366 thousand, up from RMB 39,897 thousand at the end of 2023, primarily due to an increase in deferred income[35]. Strategic Initiatives - The company implemented several strategies to maintain competitiveness and growth potential despite market challenges[5]. - The company is focusing on technological innovation and product upgrades to meet stricter market standards and customer demands[5]. - The company aims to enhance fine management and energy efficiency to promote sustainable development and long-term shareholder value[6]. - The company is actively adapting to the low-carbon green development trend in the urea industry, aiming to improve production processes and reduce costs while enhancing product quality[21]. - The company is focused on enhancing resource allocation and maximizing the efficiency of raw materials and energy usage to improve overall synergy[21]. Shareholder Information - As of June 30, 2024, the major shareholder, Timely Moon, holds a controlled interest in 460,000,000 shares, representing approximately 74.08% of the company's issued shares[24]. - Sino-Coal Holding and Bloom Ocean, both significant shareholders, hold 279,680,000 shares (45.04%) and 180,320,000 shares (29.04%) respectively, indicating concentrated ownership[26]. Employee and Management - The total employee cost, including director remuneration, was approximately RMB 64.0 million for the reporting period, up from RMB 61.2 million for the six months ended June 30, 2023[23]. - As of June 30, 2024, the company employed 1,302 staff, an increase from 1,292 employees as of December 31, 2023, reflecting growth in workforce[23]. - Total remuneration for key management personnel was RMB 711 thousand for the six months ended June 30, 2024, an increase of 7.2% from RMB 663 thousand for the same period in 2023[67]. Other Financial Information - The company did not declare an interim dividend for the reporting period[31]. - There were no significant acquisitions or disposals of subsidiaries or associates during the reporting period[31]. - The company has not made any major investments during the reporting period[31]. - The company has no significant contingent liabilities as of June 30, 2024, maintaining a stable financial position[23]. - The company has no pledged assets as of June 30, 2024, indicating a strong asset position without encumbrances[23].

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 1,337,234 thousand, a decrease of 17.4% compared to RMB 1,619,754 thousand for the same period in 2023[2] - Gross profit increased to RMB 143,427 thousand, up 15.3% from RMB 124,413 thousand in the previous year[2] - Profit before tax rose to RMB 125,439 thousand, representing a 25.0% increase from RMB 100,335 thousand in the prior year[2] - Net profit for the period was RMB 89,795 thousand, an increase of 20.5% compared to RMB 74,457 thousand in the same period last year[2] - Basic earnings per share increased to RMB 14.5, up from RMB 11.4, reflecting a growth of 27.2%[2] Assets and Liabilities - Total non-current assets amounted to RMB 1,006,197 thousand, an increase from RMB 985,424 thousand as of December 31, 2023[3] - Current assets decreased to RMB 1,033,404 thousand from RMB 1,115,787 thousand at the end of 2023, a decline of 7.4%[3] - Current liabilities decreased significantly to RMB 183,318 thousand from RMB 294,146 thousand, a reduction of 37.7%[4] - Total equity attributable to owners of the company increased to RMB 1,809,498 thousand from RMB 1,758,498 thousand, reflecting a growth of 2.9%[4] Sales and Revenue Breakdown - Urea sales contributed RMB 1,159,211,000, down from RMB 1,372,940,000, reflecting a decline of 15.5% year-over-year[10] - The revenue from automotive urea solution products dropped from approximately RMB 104 million to approximately RMB 54.5 million, a decrease of about RMB 49.5 million or 47.6%[35] - The revenue from methanol decreased from approximately RMB 72.6 million to approximately RMB 66.5 million, a decline of about RMB 6.1 million or 8.4%[36] - The revenue from other products decreased from approximately RMB 70.2 million to approximately RMB 57.1 million, a decline of about RMB 13.1 million or 18.7%[38] Costs and Expenses - The cost of goods sold for the six months ended June 30, 2024, was RMB 1,193,807,000, down from RMB 1,495,341,000, indicating a decrease of 20.2%[15] - Employee benefits expenses, including salaries and wages, rose to RMB 49,640,000 from RMB 46,333,000, an increase of 5.0%[15] - Administrative expenses decreased by approximately RMB 3.1 million or 12.6% to about RMB 21.5 million, mainly due to reduced maintenance and repair costs[42] Other Income and Losses - Other losses for the six months ended June 30, 2024, totaled RMB (7,837,000), compared to RMB (6,571,000) for the same period in 2023[12] - Bank interest income increased to RMB 9,488,000 from RMB 3,355,000, marking a significant increase of 182.5% year-over-year[10] - Other income rose by approximately RMB 4.7 million or 48.0% to about RMB 14.5 million, mainly due to increased bank interest income[41] - Net other losses increased by approximately RMB 1.2 million or 18.2% to about RMB 7.8 million, primarily due to investment losses recognized at fair value[42] Tax and Dividends - The company's income tax expense for the six months ended June 30, 2024, was RMB 35,644,000, an increase of 37.8% compared to RMB 25,878,000 for the same period in 2023[16] - The company approved a final dividend of HKD 0.08 per share, totaling approximately HKD 49,675,520 (equivalent to about RMB 45,181,000) for the year ended December 31, 2023[18] - The board decided not to declare an interim dividend for the reporting period[56] Employment and Governance - As of June 30, 2024, the group employed 1,302 employees, an increase from 1,292 employees as of December 31, 2023[54] - Total employee costs, including director remuneration, amounted to RMB 64.0 million for the reporting period, compared to RMB 61.2 million for the six months ended June 30, 2023[54] - The company has adopted a code of corporate governance and confirmed compliance throughout the reporting period[58] - All directors confirmed adherence to the standards of the code governing securities transactions during the reporting period[59] Market Outlook and Strategy - The outlook for the Chinese urea market indicates challenges and opportunities, with demand from the agricultural sector expected to remain a key support[48] - The company plans to improve production processes, reduce costs, and enhance product quality in line with industry trends towards green and low-carbon products[49] - The company implemented several technical innovation projects, including energy-saving and carbon-reduction upgrades to urea production equipment, enhancing its market competitiveness and customer loyalty[32] Audit and Compliance - The audit committee reviewed the interim performance and found no discrepancies in the accounting treatments and principles adopted by the group[57] - The interim results announcement is available on the Hong Kong Stock Exchange and the company's website[60]

Corporate Governance - The board has established procedures for directors to seek independent professional advice when necessary, with costs covered by the company[1]. - Significant transactions involving major shareholders or directors will be reviewed at board meetings, allowing for principle approvals and further processing through written resolutions if applicable[1]. - The company ensures timely provision of sufficient information to the board and its committees, facilitating regular and informal contact between directors and management[1]. - The management is responsible for providing adequate explanations and information to the board for informed evaluations of financial and other data presented for approval[9]. - All directors receive monthly updates on the company's performance, conditions, and prospects, ensuring they can fulfill their responsibilities effectively[9]. - The board is committed to providing balanced, clear, and easily understandable assessments in all statutory and regulatory communications regarding the group's status[11]. - The company secretary plays a crucial role in supporting the board, ensuring effective communication among members and adherence to policies and procedures[5]. - The board is responsible for evaluating the nature and extent of risks acceptable in achieving strategic objectives, ensuring effective risk management and internal control systems are in place[11]. - The company has adopted the corporate governance code effective for the year ending December 31, 2023, ensuring compliance with relevant regulations[48]. Risk Management and Internal Control - The company maintains a reasonable, robust, and effective internal control system as assessed by the board[12]. - The board conducts annual reviews of the internal control system, including financial monitoring and risk management functions[14]. - There were no significant changes in the nature and severity of major risks since the last review, including environmental, social, and governance risks[16]. - The company has established an internal audit function, which is reviewed annually for necessity[18]. - A whistleblowing policy and system have been adopted, allowing confidential reporting of concerns regarding misconduct[18]. - The audit committee's responsibilities include specific duties as outlined in the corporate governance code effective for the year ending December 31, 2023[20]. - The audit committee has the authority to seek independent professional advice as needed to fulfill its responsibilities, with costs covered by the company[26]. - The board confirmed its responsibility for the overall internal control framework, acknowledging that the system cannot eliminate all errors and violations, providing reasonable but not absolute assurance against significant misstatements or losses[40]. - As of December 31, 2023, the internal control and risk management systems for financial, operational, and compliance risks were deemed sufficient and effective by the board and audit committee[41]. - An external professional company was engaged to review the group's internal control and risk management functions, identifying weaknesses and recommending measures to mitigate risks[40]. - The audit committee reviews the effectiveness of measures taken based on recommendations from external auditors and professional companies[41]. - The company has established risk management procedures to address all significant risks related to its business[104]. - The board believes that the risk management and internal control systems are reasonable, effective, and adequate as of December 31, 2023[107]. Financial Reporting and Audit - The independent auditor's report will outline the auditor's responsibilities regarding the financial statements, ensuring transparency and accountability[11]. - The audit committee has discussed and reviewed the financial performance for the year ending December 31, 2023[22]. - The company ensures transparency in financial reporting and maintains appropriate relationships with auditors[24]. - The audit committee reviewed the adequacy and effectiveness of the internal control system and provided recommendations to improve risk management[80]. - The audit committee discussed issues encountered during the interim and annual audits and any matters the auditors deemed necessary to discuss[79]. - The audit committee monitored the company's financial statements and reviewed key financial reporting judgments[79]. - The external auditor's fee for audit services was RMB 1,729,000[94]. Remuneration and Compensation - The company disclosed its director remuneration policy and provided details of senior management compensation by salary level in the annual report[31]. - The total compensation for Mr. Wang Zhihe was RMB 1,320,000, which includes a salary of RMB 634,000[60]. - The total compensation for Mr. Sun Zushan was RMB 638,000, with a salary of RMB 312,000[60]. - The total compensation for Mr. Xu Xijiang was RMB 432,000, with a salary of RMB 106,000[60]. - The total compensation for Mr. Wang Chunmeng was RMB 236,000, with a salary of RMB 73,000[60]. - The total compensation for Mr. Wu Shiliang was RMB 163,000, with no additional benefits[60]. - The total compensation for Ms. Lin Xiuxiang was RMB 163,000, with no additional benefits[60]. - The total compensation for Mr. Liu Jincheng was RMB 163,000, with no additional benefits[60]. - The remuneration committee has conducted an annual review of the compensation for all directors and senior management to ensure alignment with their responsibilities and the company's performance[58]. - The remuneration policy aims to provide appropriate rewards to encourage performance improvement and recognize individual contributions to the company's success[58]. - The remuneration committee members abstained from voting on matters related to their own compensation[59]. Shareholder Engagement - The board is responsible for maintaining ongoing dialogue with shareholders, particularly through the annual general meeting[32]. - The company has ensured that the chairman and committee chairs attended the annual general meeting to answer shareholder questions[36]. - The company has ensured that the voting procedures at the annual general meeting were clearly explained to shareholders[36]. - The company has a policy for shareholders to express their opinions and seek clarifications during the annual general meeting[95]. - The company encourages shareholder participation in the annual general meeting, with notices and related documents sent according to regulations[111]. - The company ensures high transparency in communications with shareholders regarding performance and prospects[89]. Board Composition and Diversity - The Nomination Committee is responsible for identifying qualified candidates for the board and making recommendations for appointments[64]. - The committee reviews the performance of directors annually and assesses the overall effectiveness of the board[69]. - The board has adopted a diversity policy aimed at ensuring a balanced skill set and diverse perspectives among its members[70]. - The company aims to maintain a diverse board in terms of skills, professional experience, and gender, without setting measurable targets at this time[69]. - The Nomination Committee has conducted a performance review of the board for the year ending December 31, 2023, and found no significant issues[69]. - The company has established a director nomination policy that outlines selection criteria and procedures to ensure a balanced skill set and leadership continuity[70]. - The board's composition is reviewed to ensure it meets the business needs and market environment changes[66]. - Independent non-executive directors are evaluated for their independence and contributions to the board[66]. - The company ensures that all directors are re-elected at least every three years, with new appointees standing for election at the next annual general meeting[69]. - The Nomination Committee will regularly review measurable targets to ensure the effectiveness of the board's diversity policy[70]. Corporate Social Responsibility - The company is committed to environmental protection and corporate social responsibility, continuously updating internal policies to prevent environmental risks[122]. - The group made charitable donations of approximately RMB 120,000 during the year ended December 31, 2023[175]. Share Capital and Financial Performance - The total issued share capital of the company as of December 31, 2023, is approximately $62,094, divided into 620,944,000 ordinary shares with a par value of $0.0001 each[117]. - The company has not issued any bonds during the fiscal year ending December 31, 2023[118]. - The company’s total revenue is primarily derived from the sales of urea products, which significantly impacts profit margins and profitability due to fluctuations in average selling prices and coal procurement costs[120]. - The company aims to diversify its product categories to mitigate risks associated with reliance on a single product and continuously improve production efficiency to reduce unit production costs[120]. - Sales to the top five customers accounted for about 22% of the total annual sales for the year ended December 31, 2023[188]. - Purchases from the top five suppliers represented approximately 31% of the total annual purchases, with the largest supplier accounting for about 12%[188]. Compliance and Legal Matters - The company has complied with relevant laws and regulations that significantly impact its business and operations during the fiscal year ending December 31, 2023[123]. - The company confirmed compliance with non-competition agreements for the year ended December 31, 2023[156]. - The board confirmed that there are no significant uncertainties affecting the group's ability to continue as a going concern[92]. - The company has not made any changes to its constitutional documents for the year ending December 31, 2023[99]. - There were no related party transactions that constituted connected transactions for the year ended December 31, 2023[152]. - The company had no interest-bearing bank borrowings as of December 31, 2023[172]. - The board confirmed that there were no claims made against directors during the year ended December 31, 2023[161]. - The company did not purchase, sell, or redeem any of its listed securities during the year ended December 31, 2023[179]. - There were no management or administrative contracts related to the company's business in effect during the year ended December 31, 2023[157]. Stock Options - The stock option plan allows for a total of 62,000,000 shares to be issued, representing approximately 9.98% of the company's issued share capital as of the board report date[182]. - The stock option plan is valid for ten years from the adoption date, with approximately three years remaining[182]. - No stock options have been granted, exercised, or canceled under the stock option plan since its adoption up to December 31, 2023[187]. - The maximum number of shares that can be issued under the stock option plan, if exercised, cannot exceed 30% of the issued shares at any time[182]. - The stock option exercise price will be determined by the board but cannot be lower than the highest of the closing price on the offer date or the average closing price over the preceding five business days[186]. - The company is eligible to revise the general scheme limit of the stock option plan with shareholder approval, not exceeding 10% of the issued shares at the time of approval[182].

Financial Performance - The company's profit decreased slightly from approximately RMB 202.1 million for the year ended December 31, 2022, to approximately RMB 194.1 million, a reduction of about RMB 8.0 million or 4.0% due to increased administrative expenses [23]. - Revenue fell from approximately RMB 3,130.8 million for the year ended December 31, 2022, to approximately RMB 2,920.7 million, a decrease of about RMB 210.1 million or 6.7%, primarily due to a drop in the average selling price of urea [23]. - The company's net profit for the year ended December 31, 2023, was RMB 190,080,000, a decrease of 2.3% from RMB 194,380,000 in 2022 [99]. - Total revenue for the year ended December 31, 2023, was RMB 2,920,711,000, a decrease of 6.7% from RMB 3,130,781,000 in 2022 [91]. - Profit before tax for the year was RMB 268,643,000, down from RMB 276,226,000 in 2022, reflecting a decrease of 2.1% [82]. - Net profit for the year was RMB 194,107,000, compared to RMB 202,139,000 in 2022, representing a decline of 4.0% [82]. - Earnings per share for the year was RMB 30.6, down from RMB 31.3 in the previous year, indicating a decrease of 2.2% [82]. Revenue and Sales - Urea sales revenue decreased by approximately RMB 116.5 million or 4.4% to about RMB 2,511.0 million, with a slight increase in sales volume of about 4.0% [47]. - Methanol revenue decreased by approximately RMB 20.8 million or 13.7% to about RMB 130.7 million, primarily due to a reduction in sales volume [48]. - Revenue from the sale of automotive urea solution decreased by approximately RMB 34.6 million or 17.4% to about RMB 164.1 million, compared to approximately RMB 198.7 million for the year ended December 31, 2022 [161]. - Revenue from other products decreased by approximately RMB 38.2 million or 24.9% to about RMB 114.9 million, primarily due to reduced market demand for liquid ammonia and decreased average selling prices for liquefied natural gas [162]. - The total cost of sales decreased by approximately RMB 213.4 million or 7.6% to about RMB 2,587.8 million, mainly due to a reduction in raw material costs [142]. Expenses and Costs - Administrative expenses increased by approximately RMB 20.8 million or 39.1% to about RMB 74.0 million, mainly due to higher employee salaries and maintenance costs [29]. - Distribution expenses increased by approximately RMB 0.5 million or 13.9% to about RMB 4.1 million for the reporting period, primarily due to higher employee salaries and benefits [52]. - Total employee costs for the reporting period were approximately RMB 134.9 million, compared to RMB 129.2 million for the year ended December 31, 2022 [171]. Assets and Liabilities - The company's total trade payables as of December 31, 2023, were RMB 48,137 thousand for 0 to 90 days, compared to RMB 29,605 thousand for the same period in 2022 [18]. - The total current liabilities increased to RMB 294.1 million from RMB 212.1 million in the previous year, reflecting a rise in trade payables and contract liabilities [66]. - The net assets of the group increased to RMB 1,767.2 million as of December 31, 2023, compared to RMB 1,620.4 million in the previous year [66]. - Non-current assets decreased to RMB 985.4 million from RMB 1,057.0 million in the previous year, primarily due to a decline in property, plant, and equipment [65]. - Trade receivables decreased to RMB 4.1 million from RMB 9.8 million in the previous year, indicating a reduction in credit sales [65]. Dividends and Shareholder Returns - The board proposed a final dividend of HKD 0.08 per share for the year ended December 31, 2023, totaling approximately HKD 49.7 million, unchanged from the previous year [61]. - The company declared a final dividend of HKD 0.08 per share, totaling HKD 49,675,520, which was paid on June 9, 2023 [127]. Other Financial Information - The company reported a foreign exchange loss of RMB 5,117,000 for the year, compared to a loss of RMB 2,298,000 in 2022, reflecting increased volatility [77]. - Other income for the year was RMB 17,785,000, significantly higher than RMB 9,882,000 in 2022, showing a positive trend [91]. - Other net losses decreased by approximately RMB 2.4 million or 53.3% to about RMB 2.1 million, mainly due to increased net revenue from waste sales [51]. - The company recognized an impairment loss of RMB 5,368,000 due to the unlikelihood of recovering a deposit from a supplier following a court ruling [131]. Strategic Focus and Future Plans - The company aims to maintain flexibility and adaptability in response to commodity price fluctuations and global economic uncertainties, emphasizing strategic planning and continuous innovation [149]. - The group aims to expand shareholder value by increasing production capacity, enhancing product quality, and exploring acquisition opportunities for sustainable development [168]. - The group plans to establish strategic relationships and identify acquisition opportunities to address future challenges and provide more efficient and environmentally friendly products [168]. Employment and Workforce - The group employed 1,292 employees as of December 31, 2023, a slight decrease from 1,312 employees as of December 31, 2022 [171].