[Company Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This section provides an overview of the company's board of directors, committees, and essential corporate details [Board of Directors and Committees](index=3&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83) This section outlines the composition of the company's Board of Directors (executive, non-executive, independent non-executive directors) and its key committees (Audit, Remuneration, Nomination Committees) - Executive Directors include Mr. Zou Xiaohong and Mr. Chen Ping[3](index=3&type=chunk) - Independent Non-Executive Directors include Dr. Liu Zhongdong, Dr. Yuan Kang, and Mr. Liao Qiyu[3](index=3&type=chunk) - Mr. Liao Qiyu chairs both the Audit Committee and Remuneration Committee, while Mr. Zou Xiaohong chairs the Nomination Committee[3](index=3&type=chunk) [Company Basic Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E5%9F%BA%E6%9C%AC%E4%BF%A1%E6%81%AF) This section provides fundamental company information, including registration details, contact information, auditors, compliance advisors, legal advisors, principal place of business, share registrar, and principal bankers - The company was incorporated in the Cayman Islands, with stock code **2881**[3](index=3&type=chunk) - The company's website is www.chinaorganic.com[3](index=3&type=chunk) - The auditor is Ernst & Young[3](index=3&type=chunk) [Financial Performance Summary](index=4&type=section&id=%E8%B2%A1%E5%8B%99%E6%A5%AD%E7%B8%BE%E6%91%98%E8%A6%81) This section presents a high-level overview of the company's key financial results for the reporting period [Key Financial Highlights](index=4&type=section&id=%E4%B8%BB%E8%A6%81%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) This section summarizes the company's financial performance, highlighting growth in revenue, profit, and earnings per share Key Financial Highlights for the Six Months Ended June 30 | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | Change (RMB thousands) | Growth Rate | | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,651,158 | 1,263,372 | 387,786 | 30.7% | | Gross Profit | 186,676 | 185,606 | 1,070 | 0.6% | | Profit for the Period | 48,049 | 44,547 | 3,502 | 7.9% | | Profit Attributable to Owners of the Parent | 48,049 | 44,547 | 3,502 | 7.9% | | Basic and Diluted Earnings Per Share (RMB per share) | 0.63 | 0.59 | 0.04 | 6.8% | [Management Discussion and Analysis](index=5&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) This section provides management's perspective on the company's operational and financial performance, outlook, and key financial metrics [Performance Review](index=5&type=section&id=%E6%A5%AD%E7%B8%BE%E5%9B%9E%E9%A1%A7) This section reviews the company's revenue growth and export expansion, highlighting the impact of competitive pricing on gross profit margins - The company is a renowned supplier of toluene derivatives in China and global markets, primarily focusing on manufacturing toluene oxidation products and toluene chlorination products and their derivatives, and engaging in product trading[7](index=7&type=chunk) - During the reporting period, the Group's overall revenue increased by **30.7%** to **RMB 1,651.2 million** compared to the same period in 2023, with overall gross profit increasing by **0.6%** to **RMB 186.7 million**[10](index=10&type=chunk) - The overall gross profit margin decreased by **3.4 percentage points** year-on-year to **11.3%**, mainly due to the strategy of selling products at lower prices to maintain market share and production facility utilization[10](index=10&type=chunk) - Profit attributable to owners of the parent company increased by **7.9%** to **RMB 48.0 million**, with net profit margin decreasing by **0.6 percentage points** to **2.9%**[10](index=10&type=chunk) [Performance by Product Type](index=5&type=section&id=%E5%88%86%E7%94%A2%E5%93%81%E9%A1%9E%E5%9E%8B%E6%A5%AD%E7%B8%BE) This section details revenue and sales volume changes across product segments, highlighting shifts in gross profit margins Performance by Product Type Comparison (For the Six Months Ended June 30) | Product Type | 2024 Revenue (RMB thousands) | 2023 Revenue (RMB thousands) | Revenue Change Rate | 2024 Sales Volume (tons) | 2023 Sales Volume (tons) | Sales Volume Change Rate | 2024 Gross Profit Margin | 2023 Gross Profit Margin | Gross Profit Margin Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Toluene Oxidation Products and Derivatives | 1,025,415 | 618,900 | 65.7% | 126,315 | 73,492 | 71.9% | 11.6% | 15.0% | -3.4% | | Toluene Chlorination Products and Derivatives | 335,685 | 370,689 | -9.4% | 42,343 | 54,519 | -22.3% | 18.8% | 22.2% | -3.4% | | Product Trading | 290,058 | 273,783 | 5.9% | 42,845 | 40,625 | 5.5% | 1.4% | 3.8% | -2.4% | | **Total** | **1,651,158** | **1,263,372** | **30.7%** | **211,503** | **168,636** | **25.4%** | **11.3%** | **14.7%** | **-3.4%** | [Export Performance](index=7&type=section&id=%E5%87%BA%E5%8F%A3) During the reporting period, the company's export revenue significantly increased by **52.7%** to **RMB 432.1 million**, with its proportion of total revenue rising by **3.8 percentage points** to **26.2%**, primarily due to seizing market share from a major overseas competitor's reduced supply capacity - Export revenue was approximately **RMB 432.1 million**, an increase of approximately **52.7%** compared to the same period in 2023[14](index=14&type=chunk) - Export revenue accounted for approximately **26.2%** of total revenue, an increase of **3.8 percentage points** compared to the same period in 2023[14](index=14&type=chunk) - Export growth was primarily due to the Group seizing market share lost by its largest overseas competitor in toluene oxidation products, whose supply capacity decreased[14](index=14&type=chunk) [Business Outlook](index=8&type=section&id=%E6%A5%AD%E5%8B%99%E5%B1%95%E6%9C%9B) The company plans to enhance profitability through market expansion, operational optimization, and new production facility commissioning - Facing global and Chinese economic uncertainties and geopolitical tensions, the company reduced product selling prices to compete effectively, maintain market position, and sustain production facility utilization[16](index=16&type=chunk) - Future financial performance will be improved through optimizing production processes, strengthening energy management, actively exploring domestic and international markets, developing new customers, maintaining customer relationships, and reinforcing raw material supplier relationships[16](index=16&type=chunk) - The first phase of the Hubei Xinxuanhong production base (designed capacity of **40,000 tons**, including benzyl acetate, benzyl toluene, and dibenzylamine) is expected to commence operations in the second half of 2024, which is anticipated to further promote business growth[16](index=16&type=chunk) [Financial Review](index=8&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This section reviews key financial indicators, including revenue, profit, expenses, liquidity, and capital structure [Revenue and Gross Profit](index=8&type=section&id=%E6%94%B6%E5%85%A5%E5%8F%8A%E6%AF%9B%E5%88%A9) During the reporting period, revenue increased by **30.7%** year-on-year to **RMB 1,651.2 million**, and gross profit increased by **0.6%** year-on-year to **RMB 186.7 million**, with the gross profit margin decreasing from **14.7%** in the prior year to **11.3%** Revenue and Gross Profit Comparison | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | Change (RMB thousands) | Growth Rate | | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,651,200 | 1,263,400 | 387,800 | 30.7% | | Gross Profit | 186,700 | 185,600 | 1,100 | 0.6% | | Gross Profit Margin | 11.3% | 14.7% | -3.4% | - | [Other Income and Gains](index=9&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E5%8F%8A%E6%94%B6%E7%9B%8A) Other income and gains significantly increased by **RMB 19.7 million** to **RMB 30.7 million**, primarily due to an increase in additional VAT deductions - Other income and gains amounted to approximately **RMB 30.7 million**, an increase of approximately **RMB 19.7 million** compared to the same period in 2023, mainly due to increased additional VAT deductions during the period[19](index=19&type=chunk) [Selling and Distribution Expenses](index=9&type=section&id=%E9%8A%B7%E5%94%AE%E5%8F%8A%E5%88%86%E9%8A%B7%E9%96%8B%E6%94%AF) Selling and distribution expenses increased by **RMB 1.9 million** to **RMB 13.4 million**, primarily due to sales expansion, increased staff remuneration, and business entertainment expenses, with its proportion of revenue slightly decreasing to **0.8%** - Selling and distribution expenses were approximately **RMB 13.4 million**, an increase of approximately **RMB 1.9 million** compared to the same period in 2023, mainly due to sales expansion, increased staff remuneration, and business entertainment expenses[20](index=20&type=chunk) - Selling and distribution expenses accounted for approximately **0.8%** of the Group's revenue (2023: **0.9%**)[20](index=20&type=chunk) [Administrative Expenses](index=9&type=section&id=%E8%A1%8C%E6%94%BF%E9%96%8B%E6%94%AF) Administrative expenses increased by **RMB 11.6 million** to **RMB 60.2 million**, primarily due to increased staff remuneration, listing fees, and taxes, with its proportion of revenue slightly decreasing to **3.6%** - Administrative expenses were approximately **RMB 60.2 million**, an increase of approximately **RMB 11.6 million** compared to the same period in 2023, mainly due to increased staff remuneration, listing fees, and taxes[21](index=21&type=chunk) - Administrative expenses accounted for approximately **3.6%** of the Group's revenue (2023: **3.8%**)[21](index=21&type=chunk) [Research and Development Expenses](index=9&type=section&id=%E7%A0%94%E7%99%BC%E9%96%8B%E6%94%AF) Research and development expenses increased by **RMB 4.2 million** to **RMB 58.9 million**, primarily due to increased staff remuneration and depreciation and amortization, with its proportion of revenue decreasing to **3.6%** - Research and development expenses were approximately **RMB 58.9 million**, an increase of approximately **RMB 4.2 million** compared to the same period in 2023, mainly due to increased staff remuneration and depreciation and amortization[22](index=22&type=chunk) - Research and development expenses accounted for approximately **3.6%** of the Group's revenue (2023: **4.3%**)[22](index=22&type=chunk) [Finance Costs](index=9&type=section&id=%E8%B2%A1%E5%8B%99%E6%88%90%E6%9C%AC) Finance costs increased by **RMB 3.2 million** to **RMB 21.1 million**, primarily due to increased borrowings to support business operations - Finance costs were approximately **RMB 21.1 million**, an increase of approximately **RMB 3.2 million** compared to the same period in 2023, mainly due to increased borrowings to support business operations[23](index=23&type=chunk) [Income Tax Expense](index=9&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) Income tax expense increased by **RMB 1.5 million** to **RMB 15.4 million**, primarily due to increased profit before tax, with the effective tax rate slightly rising to **24.2%** - Income tax expense was approximately **RMB 15.4 million**, an increase of approximately **RMB 1.5 million** compared to the same period in 2023, mainly due to increased profit before tax during the reporting period[24](index=24&type=chunk) - The effective tax rate slightly increased from **23.8%** in the same period of 2023 to **24.2%** in the reporting period[24](index=24&type=chunk) [Profit for the Period](index=9&type=section&id=%E6%9C%AC%E6%9C%9F%E6%BA%A2%E5%88%A9) Net profit for the reporting period increased by **7.9%** to **RMB 48.0 million**, with the net profit margin decreasing by **0.6 percentage points** to **2.9%** - The Group recorded a net profit of approximately **RMB 48.0 million**, an increase of approximately **RMB 3.5 million** or **7.9%** compared to the same period in 2023[25](index=25&type=chunk) - The net profit margin was approximately **2.9%** (2023: **3.5%**), a decrease of approximately **0.6 percentage points**[25](index=25&type=chunk) [Basic and Diluted Earnings Per Share](index=10&type=section&id=%E6%AF%8F%E8%82%A1%E5%9F%BA%E6%9C%AC%E5%8F%8A%E6%94%A4%E8%96%84%E7%9B%88%E5%88%A9) Basic and diluted earnings per share increased by **6.8%** year-on-year to **RMB 0.63** - Basic and diluted earnings per share attributable to ordinary equity holders of the parent company were approximately **RMB 0.63**, an increase of approximately **RMB 0.04** or approximately **6.8%** compared to the same period in 2023[27](index=27&type=chunk) [Financial Policy, Liquidity, and Capital Structure](index=10&type=section&id=%E8%B2%A1%E6%94%BF%E6%94%BF%E7%AD%96%E3%80%81%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B3%87%E6%9C%AC%E7%B5%90%E6%A7%8B) The company maintains a sound liquidity position, with primary funding sources being operating cash flow, bank borrowings, and proceeds from the global offering, resulting in a significant increase in cash and cash equivalents and a **10.0%** increase in total interest-bearing bank and other borrowings - The Group has adopted a prudent financial management approach for its financial strategy, maintaining a sound liquidity position[28](index=28&type=chunk) - Working capital for daily operations is primarily sourced from cash flows generated from ordinary business activities, bank borrowings, and net proceeds from the global offering[29](index=29&type=chunk) Liquidity and Capital Structure Key Indicators | Indicator | June 30, 2024 (RMB millions) | December 31, 2023 (RMB millions) | Change (RMB millions) | Growth Rate | | :--- | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 207.0 | 65.4 | 141.6 | 216.5% | | Pledged Deposits | 73.0 | 40.1 | 32.9 | 82.0% | | Total Interest-Bearing Bank and Other Borrowings | 1,009.0 | 917.5 | 91.4 | 10.0% | - As of June 30, 2024, the Group had unused bank credit facilities of **RMB 560 million**[29](index=29&type=chunk) [Gearing Ratio](index=10&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E6%AF%94%E7%8E%87) The gearing ratio decreased from **158.5%** as of December 31, 2023, to **116.7%** as of June 30, 2024 - As of June 30, 2024, the Group's gearing ratio (calculated as net debt divided by total equity) was approximately **116.7%**, a decrease from approximately **158.5%** as of December 31, 2023[30](index=30&type=chunk) [Current Assets](index=10&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E7%94%A2) Total current assets increased to **RMB 1,033.3 million**, primarily driven by increases in cash and cash equivalents, trade and bills receivables, while inventories and prepayments and other receivables decreased Current Assets Composition Comparison | Indicator | June 30, 2024 (RMB millions) | December 31, 2023 (RMB millions) | Change (RMB millions) | | :--- | :--- | :--- | :--- | | Total Current Assets | 1,033.3 | 832.6 | 200.7 | | Inventories | 275.2 | 285.3 | -10.1 | | Trade and Bills Receivables | 354.4 | 296.3 | 58.1 | | Prepayments and Other Receivables | 123.7 | 145.4 | -21.6 | | Cash and Cash Equivalents | 207.0 | 65.4 | 141.6 | | Pledged Deposits | 73.0 | 40.1 | 32.9 | [Inventories](index=11&type=section&id=%E5%AD%98%E8%B2%A8) Total inventories decreased by **RMB 10.1 million** to **RMB 275.2 million**, with inventory turnover days falling from **47 days** to **35 days**, mainly due to a low-price sales strategy to accelerate turnover - Total inventories amounted to approximately **RMB 275.2 million**, a decrease of approximately **RMB 10.1 million** compared to December 31, 2023[33](index=33&type=chunk) - Inventory turnover days decreased from **47 days** for the year ended December 31, 2023, to **35 days** during the reporting period, primarily due to the Group's low-price sales strategy to accelerate turnover in response to market competition[33](index=33&type=chunk) [Trade and Bills Receivables](index=11&type=section&id=%E8%B2%BF%E6%98%93%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85%E5%8F%8A%E6%87%89%E6%94%B6%E7%A5%A8%E6%93%9A) Trade and bills receivables increased by **RMB 58.1 million** to **RMB 354.4 million**, mainly due to increased revenue, while turnover days decreased from **42 days** to **35 days** due to a higher proportion of derecognized bills receivable with improved credit ratings - Trade and bills receivables amounted to approximately **RMB 354.4 million**, an increase of approximately **RMB 58.1 million** compared to December 31, 2023, mainly due to increased revenue during the reporting period[34](index=34&type=chunk) - Turnover days for trade and bills receivables decreased from **42 days** for the year ended December 31, 2023, to **35 days** during the reporting period, primarily because the proportion of derecognized bills receivable with improved credit ratings from issuing banks increased[34](index=34&type=chunk) [Prepayments and Other Receivables](index=11&type=section&id=%E9%A0%90%E4%BB%98%E6%AC%BE%E9%A0%85%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) Prepayments and other receivables decreased by **RMB 21.6 million** to **RMB 123.7 million**, primarily due to a reduction in related party loan amounts - Prepayments and other receivables amounted to approximately **RMB 123.7 million**, a decrease of approximately **RMB 21.6 million** compared to December 31, 2023, mainly due to a reduction in related party loan amounts[35](index=35&type=chunk) [Current Liabilities](index=11&type=section&id=%E6%B5%81%E5%8B%95%E8%B2%A0%E5%82%B5) Total current liabilities increased to **RMB 1,623.1 million**, primarily driven by increases in trade and bills payables and interest-bearing bank and other borrowings, while other payables, accruals, and income tax payables decreased Current Liabilities Composition Comparison | Indicator | June 30, 2024 (RMB millions) | December 31, 2023 (RMB millions) | Change (RMB millions) | | :--- | :--- | :--- | :--- | | Total Current Liabilities | 1,623.1 | 1,422.7 | 200.4 | | Trade and Bills Payables | 259.3 | 149.7 | 109.6 | | Other Payables, Accruals, and Contract Liabilities | 338.3 | 373.0 | -34.7 | | Interest-Bearing Bank and Other Borrowings | 1,009.0 | 852.0 | 157.0 | | Lease Liabilities | 14.2 | 15.9 | -1.7 | | Income Tax Payable | 2.3 | 32.1 | -29.8 | [Trade and Bills Payables](index=11&type=section&id=%E8%B2%BF%E6%98%93%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85%E5%8F%8A%E6%87%89%E4%BB%98%E7%A5%A8%E6%93%9A) Trade and bills payables increased by **RMB 109.6 million** to **RMB 259.3 million**, primarily due to increased purchases corresponding to higher sales, with turnover days remaining consistent at **25 days** - Trade and bills payables amounted to approximately **RMB 259.3 million**, an increase of approximately **RMB 109.6 million** compared to December 31, 2023, mainly due to increased sales and corresponding purchases during the reporting period[37](index=37&type=chunk) - Turnover days for trade and bills payables remained consistent at **25 days** compared to the year ended December 31, 2023[37](index=37&type=chunk) [Other Payables, Accruals, and Contract Liabilities](index=12&type=section&id=%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85%E5%8F%8A%E6%87%89%E8%A8%88%E8%B2%BB%E7%94%A8%E4%BB%A5%E5%8F%8A%E5%90%88%E7%B4%84%E8%B2%A0%E5%82%B5) Other payables, accruals, and contract liabilities decreased by **RMB 34.7 million** to **RMB 338.3 million**, primarily due to the payment of dividends payable - Total other payables, accruals, and contract liabilities amounted to approximately **RMB 338.3 million**, a decrease of approximately **RMB 34.7 million** compared to December 31, 2023, mainly due to the payment of dividends payable[39](index=39&type=chunk) [Pledge of Assets](index=12&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of June 30, 2024, the company pledged property, plant, and equipment with a net book value of approximately **RMB 264.2 million** to secure bank borrowings and credit facilities - As of June 30, 2024, certain property, plant and equipment with a net book value of approximately **RMB 264.2 million** were pledged to obtain bank and other borrowings and bank credit facilities granted to the Group[40](index=40&type=chunk) [Material Acquisitions, Disposals, and Major Investments](index=12&type=section&id=%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E3%80%81%E5%87%BA%E5%94%AE%E5%8F%8A%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87) Aside from the expansion of the Hubei Xinxuanhong production base, there were no other material acquisitions, disposals, or major investments during the reporting period - Other than the production expansion of the Hubei Xinxuanhong production base disclosed above, the Group had no other material acquisitions, disposals, or major investments during the reporting period[41](index=41&type=chunk) [Capital Expenditure and Capital Commitments](index=12&type=section&id=%E8%B3%87%E6%9C%AC%E9%96%8B%E6%94%AF%E5%8F%8A%E8%B3%87%E6%9C%AC%E6%89%BF%E6%93%94) Capital expenditure for the reporting period amounted to **RMB 104.3 million**, primarily for the purchase of property, plant and equipment, and leasehold land - During the reporting period, the Group's capital expenditure amounted to **RMB 104.3 million**, primarily related to the purchase of property, plant and equipment and leasehold land[42](index=42&type=chunk) [Future Plans for Major Investments or Capital Assets](index=12&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E6%88%96%E8%B3%87%E6%9C%AC%E8%B3%87%E7%94%A2%E4%B9%8B%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) Aside from the Hubei Xinxuanhong production base expansion plan, the company has no other plans for major investments or acquisitions of capital assets - Other than the production expansion plan for the Hubei Xinxuanhong production base disclosed above and in the prospectus, as of June 30, 2024, and the date of this interim report, the Group had no other plans for major investments or acquisitions of capital assets[43](index=43&type=chunk) [Contingent Liabilities](index=12&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) As of June 30, 2024, the company had no significant contingent liabilities - As of June 30, 2024, the Group had no significant contingent liabilities (December 31, 2023: nil)[44](index=44&type=chunk) [Foreign Exchange and Interest Rate Risks](index=12&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA%E5%8F%8A%E5%88%A9%E7%8E%87%E9%A2%A8%E9%9A%AA) The company's primary business is denominated in RMB, facing no significant foreign exchange risk, and currently has no foreign currency hedging policy; interest rate risk is considered extremely low and controllable, with most bank borrowings bearing fixed interest rates - The Group's principal business is conducted in China and primarily denominated in RMB, thus management believes there is no significant foreign exchange risk, and currently no foreign currency hedging policy is in place[45](index=45&type=chunk) - Except for unsecured bank loans of **RMB 23.5 million** bearing floating interest rates, all bank loans and other borrowings are denominated in RMB and bear fixed interest rates, and management considers interest rate risk to be extremely low and controllable, requiring no hedging activities[45](index=45&type=chunk) [Use of Proceeds from Global Offering](index=13&type=section&id=%E5%85%A8%E7%90%83%E7%99%BC%E5%94%AE%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E7%94%A8%E9%80%94) This section details the allocation of net proceeds from the global offering, primarily for capacity expansion, R&D, and working capital - The Company's shares were listed on the Main Board of the Stock Exchange on June 18, 2024 (the Listing Date), with net proceeds from the global offering of approximately **HKD 25.9 million**[47](index=47&type=chunk) Use of Net Proceeds from Global Offering | Purpose | Proportion (%) | Net Proceeds from Global Offering (HKD millions) | Amount Utilized as of June 30, 2024 (HKD millions) | Unutilized Amount as of June 30, 2024 (HKD millions) | Expected Timeframe for Full Utilization | | :--- | :--- | :--- | :--- | :--- | :--- | | Construction of new production facilities to increase capacity at Hubei Xinxuanhong production base | 82.0 | 21.2 | — | 21.2 | On or before December 2028 | | Research and development activities | 3.0 | 0.8 | — | 0.8 | On or before December 2026 | | Sales and marketing activities | 5.0 | 1.3 | — | 1.3 | On or before December 2026 | | Working capital and general corporate purposes | 10.0 | 2.6 | — | 2.6 | On or before December 2025 | | **Total** | **100** | **25.9** | **—** | **25.9** | | [Employees and Remuneration Policy](index=13&type=section&id=%E5%83%B1%E5%93%A1%E5%8F%8A%E8%96%AA%E9%85%AC%E6%94%BF%E7%AD%96) The company maintains an incentive-based remuneration system and training programs for its **625 employees**, with increased staff costs - The Group has established human resources policies and systems aimed at incorporating more incentive-based rewards and bonuses into its remuneration system, and providing diverse employee training and personal development programs[48](index=48&type=chunk) - As of June 30, 2024, the Group had a total of **625 employees** (December 31, 2023: **625 employees**)[48](index=48&type=chunk) - During the reporting period, the Group's total staff costs were approximately **RMB 51.1 million** (2023: approximately **RMB 41.5 million**), with the increase mainly attributable to higher performance bonuses corresponding to achieving performance targets during the period[48](index=48&type=chunk) [Other Information](index=14&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) This section covers corporate governance, directors' and major shareholders' interests, and other statutory disclosures [Purchase, Sale or Redemption of the Company's Listed Securities](index=14&type=section&id=%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B9%8B%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) From the listing date up to the report date, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed shares - From the Listing Date up to the date of this interim report, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed shares[49](index=49&type=chunk) [Compliance with Corporate Governance Code](index=14&type=section&id=%E9%81%B5%E5%AE%88%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) The company has complied with all applicable code provisions of the Corporate Governance Code since its listing date - From the Listing Date up to the date of this interim report, the Company has complied with all applicable code provisions contained in the Corporate Governance Code[50](index=50&type=chunk) [Compliance with Model Code for Securities Transactions by Directors](index=14&type=section&id=%E9%81%B5%E5%AE%88%E8%91%A3%E4%BA%8B%E9%80%B2%E8%A1%8C%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%AE%88%E5%89%87) Upon enquiry, all directors confirmed their compliance with the standard requirements set out in the Model Code since the listing date - Following specific enquiries made to all Directors, each Director has confirmed that they have complied with the standard requirements set out in the Model Code from the Listing Date up to the date of this interim report[51](index=51&type=chunk) [Audit Committee and Review of Financial Statements](index=14&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83%E5%8F%8A%E5%AF%A9%E9%96%B1%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) The Audit Committee has reviewed the unaudited interim condensed consolidated financial statements for the six months ended June 30, 2024, and independent auditor Ernst & Young has performed an independent review - The Audit Committee has reviewed the Group's unaudited interim condensed consolidated financial statements for the six months ended June 30, 2024[52](index=52&type=chunk) - The Company's independent auditor, Ernst & Young, performed an independent review of the Group's interim condensed consolidated financial information for the six months ended June 30, 2024, in accordance with Hong Kong Standard on Review Engagements 2410[52](index=52&type=chunk) [Changes in Information of Directors and/or Senior Management](index=14&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E2%81%A0%2F%E6%88%96%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E5%B1%A4%E8%B3%87%E6%96%99%E4%B9%8B%E8%AE%8A%E6%9B%B4) From the date of the prospectus up to the report date, there have been no changes in the information of any of the company's directors or chief executive requiring disclosure under the Listing Rules - From the date of the prospectus up to the date of this interim report, there have been no changes in the information of any of the Company's Directors or chief executive requiring disclosure under Rule 13.51B(1) of the Listing Rules[53](index=53&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=15&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E6%9C%80%E9%AB%98%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E6%96%BC%E8%82%A1%E4%BB%BD%E3%80%81%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E5%8F%8A%E5%82%B5%E6%AC%8A%E8%AD%89%E4%B8%AD%E6%93%81%E6%9C%89%E7%9A%84%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) This section discloses directors' and chief executive's interests in the company's shares and related securities Directors' Interests in the Company's Shares and Underlying Shares (As of June 30, 2024) | Director Name | Nature of Interest | Number of Ordinary Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Gao Lei | Interest in controlled corporation | 50,150,842 (L) | 53.75% | | Mr. Shen Yingming | Interest in controlled corporation | 12,537,710 (L) | 13.44% | [Directors' Rights to Acquire Shares or Debentures](index=16&type=section&id=%E8%91%A3%E4%BA%8B%E8%B3%BC%E8%B2%B7%E8%82%A1%E4%BB%BD%E6%88%96%E5%82%B5%E6%AC%8A%E8%AD%89%E7%9A%84%E6%AC%8A%E5%88%A9) During the reporting period, neither the company nor its subsidiaries entered into any arrangements enabling directors to acquire benefits by purchasing shares or debentures of the company or any other body corporate - Neither the Company nor its subsidiaries entered into any arrangements during the reporting period that would enable Directors to acquire benefits by purchasing shares or debentures of the Company or any other body corporate[57](index=57&type=chunk) [Directors' Interests in Material Contracts](index=16&type=section&id=%E8%91%A3%E4%BA%8B%E6%96%BC%E9%87%8D%E5%A4%A7%E5%90%88%E7%B4%84%E4%B9%8B%E6%AC%8A%E7%9B%8A) As of the end of the reporting period or at any time during the reporting period, neither the company nor any of its subsidiaries entered into any material contracts in which a director had a direct or indirect material interest - As of the end of the reporting period or at any time during the reporting period, neither the Company nor any of its subsidiaries entered into any material contracts in which a Director had a direct or indirect material interest[58](index=58&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares](index=16&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E6%96%BC%E8%82%A1%E4%BB%BD%E5%8F%8A%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E4%B8%AD%E7%9A%84%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) This section details substantial shareholders' interests in the company's shares and related securities Substantial Shareholders' Interests in the Company's Shares and Underlying Shares (As of June 30, 2024) | Shareholder Name | Capacity/Nature of Interest | Number of Ordinary Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Vastocean Capital Limited | Beneficial owner | 50,150,842 (L) | 53.75% | | Mr. Gao Lei | Interest in controlled corporation | 50,150,842 (L) | 53.75% | | SYM Holdings Limited | Beneficial owner | 12,537,710 (L) | 13.44% | | Mr. Shen Yingming | Interest in controlled corporation | 12,537,710 (L) | 13.44% | | Custodian Capital Ltd. | Interest of agent | 7,271,448 (L) | 7.79% | [Pre-emptive Rights](index=17&type=section&id=%E5%84%AA%E5%85%88%E8%B3%BC%E8%B2%B7%E6%AC%8A) There are no pre-emptive rights provisions under the Articles of Association or Cayman Islands law requiring the company to offer new shares to existing shareholders on a pro-rata basis - There are no pre-emptive rights provisions under the Articles of Association or Cayman Islands law that would oblige the Company to offer new shares on a pro-rata basis to existing shareholders[61](index=61&type=chunk) [Interim Dividend](index=17&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board does not recommend the payment of an interim dividend for the reporting period - The Board does not recommend the payment of an interim dividend for the reporting period (for the six months ended June 30, 2023: nil)[61](index=61&type=chunk) [Events After Reporting Period](index=17&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) As of the date of this interim report, the company had no other significant events after the reporting period - The Group had no other significant events after June 30, 2024, up to the date of this interim report[61](index=61&type=chunk) [Independent Review Report](index=18&type=section&id=%E7%8D%A8%E7%AB%8B%E5%AF%A9%E9%96%B1%E5%A0%B1%E5%91%8A) This section presents the independent auditor's review report on the interim condensed consolidated financial information [Introduction](index=18&type=section&id=%E5%BC%95%E8%A8%80) Ernst & Young has reviewed the company's interim financial information for the six months ended June 30, 2024, prepared in accordance with Hong Kong Accounting Standard 34 - Ernst & Young has reviewed the condensed consolidated statement of financial position of Wuhan Organic Holdings Company Limited and its subsidiaries as of June 30, 2024, and the related condensed consolidated statement of profit or loss, statement of comprehensive income, statement of changes in equity, and statement of cash flows for the six-month period then ended, and explanatory notes[62](index=62&type=chunk) - The interim financial information report is prepared in compliance with the relevant requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants[62](index=62&type=chunk) [Scope of Review](index=18&type=section&id=%E5%AF%A9%E9%96%B1%E7%AF%84%E5%9C%8D) The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, with a scope narrower than an audit, thus no audit opinion is expressed - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants[63](index=63&type=chunk) - A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit; accordingly, we do not express an audit opinion[63](index=63&type=chunk) [Conclusion](index=18&type=section&id=%E7%B5%90%E8%AB%96) Based on the review, no matters were identified that would lead the auditor to believe that the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 - Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[64](index=64&type=chunk) [Interim Condensed Consolidated Statement of Profit or Loss](index=19&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8) This section provides the interim condensed consolidated statement detailing the company's revenues, expenses, and net profit [Key Profit or Loss Statement Data](index=19&type=section&id=%E6%90%8D%E7%9B%8A%E8%A1%A8%E4%B8%BB%E8%A6%81%E6%95%B8%E6%93%9A) For the six months ended June 30, 2024, the company's revenue was **RMB 1,651,158 thousand**, gross profit **RMB 186,676 thousand**, profit for the period **RMB 48,049 thousand**, and basic and diluted earnings per share **RMB 0.63** Interim Condensed Consolidated Statement of Profit or Loss Key Data (For the Six Months Ended June 30) | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 1,651,158 | 1,263,372 | | Cost of Sales | (1,464,482) | (1,077,766) | | Gross Profit | 186,676 | 185,606 | | Other Income and Gains | 30,746 | 11,049 | | Selling and Distribution Expenses | (13,414) | (11,451) | | Administrative Expenses | (60,205) | (48,633) | | Research and Development Expenses | (58,855) | (54,695) | | Finance Costs | (21,134) | (17,919) | | Profit Before Tax | 63,424 | 58,462 | | Income Tax Expense | (15,375) | (13,915) | | Profit for the Period | 48,049 | 44,547 | | Earnings Per Share Attributable to Ordinary Equity Holders of the Parent (RMB per share) | 0.63 | 0.59 | [Interim Condensed Consolidated Statement of Comprehensive Income](index=20&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) This section presents the interim condensed consolidated statement of comprehensive income, including profit for the period and other comprehensive income [Key Comprehensive Income Data](index=20&type=section&id=%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E4%B8%BB%E8%A6%81%E6%95%B8%E6%93%9A) For the six months ended June 30, 2024, profit for the period was **RMB 48,049 thousand**, and with exchange differences on translation of overseas operations of **RMB 26 thousand**, total comprehensive income for the period was **RMB 48,075 thousand** Interim Condensed Consolidated Statement of Comprehensive Income Key Data (For the Six Months Ended June 30) | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Profit for the Period | 48,049 | 44,547 | | Other Comprehensive Income: Exchange differences on translation of overseas operations | 26 | 345 | | Total Comprehensive Income for the Period | 48,075 | 44,892 | | Attributable to Owners of the Parent | 48,075 | 44,892 | [Interim Condensed Consolidated Statement of Financial Position](index=21&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) This section details the company's assets, liabilities, and equity at the end of the reporting period [Key Financial Position Statement Data](index=21&type=section&id=%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8%E4%B8%BB%E8%A6%81%E6%95%B8%E6%93%9A) As of June 30, 2024, the company's total non-current assets were **RMB 1,334,419 thousand**, total current assets **RMB 1,033,296 thousand**, total current liabilities **RMB 1,623,056 thousand**, and net assets **RMB 643,326 thousand** Interim Condensed Consolidated Statement of Financial Position Key Data (As of June 30) | Indicator | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | **Non-Current Assets** | | | | Property, Plant and Equipment | 1,051,929 | 1,020,081 | | Right-of-Use Assets | 194,148 | 190,527 | | Total Non-Current Assets | 1,334,419 | 1,283,308 | | **Current Assets** | | | | Inventories | 275,167 | 285,333 | | Trade and Bills Receivables | 354,379 | 296,314 | | Cash and Cash Equivalents | 207,011 | 65,433 | | Total Current Assets | 1,033,296 | 832,574 | | **Current Liabilities** | | | | Trade and Bills Payables | 259,308 | 149,705 | | Interest-Bearing Bank and Other Borrowings | 1,008,950 | 852,020 | | Total Current Liabilities | 1,623,056 | 1,422,654 | | Net Current Liabilities | (589,760) | (590,080) | | **Non-Current Liabilities** | | | | Total Non-Current Liabilities | 101,333 | 163,611 | | **Net Assets** | 643,326 | 529,617 | | **Total Equity** | 643,326 | 529,617 | [Interim Condensed Consolidated Statement of Changes in Equity](index=22&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) This section outlines the changes in the company's equity components over the reporting period [Key Equity Movement Data](index=22&type=section&id=%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E4%B8%BB%E8%A6%81%E6%95%B8%E6%93%9A) As of June 30, 2024, the company's total equity was **RMB 643,326 thousand**, an increase from the beginning of the year, with profit for the period at **RMB 48,049 thousand**, new share issuance contributing **RMB 91,687 thousand**, and share issue expenses of **RMB 26,263 thousand** Interim Condensed Consolidated Statement of Changes in Equity Key Data (For the Six Months Ended June 30) | Indicator | January 1, 2024 (RMB thousands) | Profit for the Period (RMB thousands) | Issue of New Shares (RMB thousands) | Share Issue Expenses (RMB thousands) | June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Share Capital | 48 | — | 13 | — | 61 | | Merger Reserve | 64,802 | — | — | — | 64,802 | | Capital Reserve | (32,670) | — | 91,674 | (26,263) | 32,741 | | Other Reserves | 1,257 | — | — | — | 1,467 | | Statutory Reserve | 68,712 | — | — | — | 68,712 | | Exchange Fluctuation Reserve | 593 | 26 | — | — | 619 | | Retained Profits | 426,875 | 48,049 | — | — | 474,924 | | **Total Equity** | **529,617** | **48,075** | **91,687** | **(26,263)** | **643,326** | [Interim Condensed Consolidated Statement of Cash Flows](index=25&type=section&id=%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E4%B8%BB%E8%A6%81%E6%95%B8%E6%93%9A) This section presents the company's cash inflows and outflows from operating, investing, and financing activities [Key Cash Flow Statement Data](index=25&type=section&id=%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E4%B8%BB%E8%A6%81%E6%95%B8%E6%93%9A) For the six months ended June 30, 2024, net cash from operating activities was **RMB 126,124 thousand**, net cash used in investing activities was **RMB 28,097 thousand**, net cash from financing activities was **RMB 43,525 thousand**, and cash and cash equivalents at the end of the period were **RMB 207,011 thousand** Interim Condensed Consolidated Statement of Cash Flows Key Data (For the Six Months Ended June 30) | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Net Cash From Operating Activities | 126,124 | 23,285 | | Net Cash (Used In)/From Investing Activities | (28,097) | 4,909 | | Net Cash From Financing Activities | 43,525 | 25,351 | | Net Increase in Cash and Cash Equivalents | 141,552 | 53,545 | | Cash and Cash Equivalents at Beginning of Period | 65,433 | 83,451 | | Cash and Cash Equivalents at End of Period | 207,011 | 137,341 | [Notes to Interim Condensed Consolidated Financial Information](index=26&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E8%B3%87%E6%96%99) This section provides detailed explanatory notes supporting the interim condensed consolidated financial statements [1. Company and Group Information](index=27&type=section&id=1.%20%E5%85%AC%E5%8F%B8%E5%8F%8A%E9%9B%86%E5%9C%98%E8%B3%87%E6%96%99) Wuhan Organic Holdings Company Limited was incorporated in the Cayman Islands on September 23, 2016, primarily engaged in the manufacturing and sale of toluene oxidation products, toluene chlorination products, and their derivatives, with its shares listed on the Main Board of the Stock Exchange since June 18, 2024 - Wuhan Organic Holdings Company Limited was incorporated as an exempted company in the Cayman Islands on September 23, 2016[93](index=93&type=chunk) - The Company's principal subsidiaries are primarily engaged in the manufacturing and sale of toluene oxidation products, toluene chlorination products, and their derivatives in China[93](index=93&type=chunk) - The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since June 18, 2024[93](index=93&type=chunk) [2. Basis of Preparation](index=27&type=section&id=2.%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) The interim condensed consolidated financial information for the six months ended June 30, 2024, has been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the accountant's report contained in the company's prospectus - The interim condensed consolidated financial information for the six months ended June 30, 2024, has been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting[94](index=94&type=chunk) - The interim condensed consolidated financial information should be read in conjunction with the accountant's report contained in the Company's prospectus dated June 7, 2024[94](index=94&type=chunk) [3. Changes in Accounting Policies](index=27&type=section&id=3.%20%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E8%AE%8A%E5%8B%95) This period saw the initial adoption of revised Hong Kong Financial Reporting Standards, including amendments to HKFRS 16, HKAS 1, and HKAS 7 & HKFRS 7, which had no material impact on the company's financial position or performance - The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the accountant's report, except for the initial adoption of the following revised Hong Kong Financial Reporting Standards during the current period: amendments to HKFRS 16, HKAS 1, and HKAS 7 & HKFRS 7[95](index=95&type=chunk) - The amendments to HKFRS 16 had no impact on the Group's financial position or performance[95](index=95&type=chunk) - The amendments to HKAS 1 and HKAS 7 & HKFRS 7 had no impact on the Group's financial position or performance[97](index=97&type=chunk) [4. Operating Segment Information](index=28&type=section&id=4.%20%E7%B6%93%E7%87%9F%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The company's directors, as the chief operating decision-makers, review the Group's overall financial performance, thus no separate operating segment financial information is presented; all non-current assets are located in mainland China, and there were no single external customer transactions accounting for **10%** or more of total revenue during the reporting period - For resource allocation and performance assessment, information reported to the Company's Directors (the chief operating decision-makers) does not contain separate operating segment financial information, as the Directors review the Group's overall financial performance; therefore, no further information on operating segments is presented[98](index=98&type=chunk) - As of June 30, 2024, and December 31, 2023, all of the Group's non-current assets were located in mainland China[99](index=99&type=chunk) - For the six months ended June 30, 2023, and 2024, no revenue from transactions with a single external customer accounted for **10%** or more of the Group's total revenue[100](index=100&type=chunk) [5. Revenue](index=29&type=section&id=5.%20%E6%94%B6%E5%85%A5) Total revenue from customer contracts amounted to **RMB 1,651,158 thousand**, primarily derived from toluene oxidation products (**RMB 1,025,415 thousand**), toluene chlorination products (**RMB 335,685 thousand**), and product trading (**RMB 290,058 thousand**), with sales in mainland China accounting for the vast majority of total revenue Revenue from Customer Contracts Breakdown (For the Six Months Ended June 30) | Type of Goods or Services | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Toluene Oxidation Products | 1,025,415 | 618,900 | | Toluene Chlorination Products | 335,685 | 370,689 | | Product Trading | 290,058 | 273,783 | | **Total** | **1,651,158** | **1,263,372** | Revenue by Geographical Market (For the Six Months Ended June 30) | Geographical Market | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Mainland China | 1,219,025 | 980,344 | | Asia (excluding Mainland China) | 171,413 | 134,162 | | European Union | 135,583 | 76,457 | | Americas | 111,118 | 63,688 | | Other Countries/Regions | 14,019 | 8,721 | | **Total** | **1,651,158** | **1,263,372** | [6. Profit Before Tax](index=30&type=section&id=6.%20%E9%99%A4%E7%A8%85%E5%89%8D%E6%BA%A2%E5%88%A9) Profit before tax was **RMB 63,424 thousand**, primarily influenced by cost of inventories sold, R&D costs, depreciation and amortization, listing expenses, additional VAT deductions, and government grants, with total employee benefit expenses amounting to **RMB 51,123 thousand** Profit Before Tax Adjustments (For the Six Months Ended June 30) | Item | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Cost of Inventories Sold | 1,464,482 | 1,077,766 | | Research and Development Costs | 58,855 | 54,695 | | Depreciation of Property, Plant and Equipment | 58,757 | 55,429 | | Depreciation of Right-of-Use Assets | 9,999 | 10,287 | | Listing Expenses | 9,481 | 8,739 | | Additional Deductions for Input VAT | (11,486) | (1,517) | | Government Grants Related to Income | (3,705) | (400) | | Government Grants Related to Assets | (2,735) | (2,634) | Employee Benefit Expenses (For the Six Months Ended June 30) | Item | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Salaries, Allowances and Benefits in Kind | 41,436 | 33,322 | | Performance Bonuses | 2,205 | — | | Contributions to Pension Schemes | 7,272 | 7,920 | | **Total** | **51,123** | **41,452** | [7. Income Tax Expense](index=31&type=section&id=7.%20%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) Total income tax expense was **RMB 15,375 thousand**, primarily comprising PRC enterprise income tax and deferred income tax, with Hong Kong profits tax accrued at **16.5%** and PRC enterprise income tax at a statutory rate of **25%**, though high-tech enterprises enjoy a preferential rate of **15%** Income Tax Expense Components (For the Six Months Ended June 30) | Item | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Current — Hong Kong | 92 | 47 | | Current — Mainland China | 6,371 | 9,166 | | Deferred Income Tax | 8,912 | 4,702 | | **Total Tax Expense for the Period** | **15,375** | **13,915** | - During the reporting period, Hong Kong profits tax was provided at a rate of **16.5%** on the estimated assessable profits arising in Hong Kong, except for one subsidiary of the Group which is a qualifying entity under the two-tiered profits tax regime, subject to tax rates of **8.25%** and **16.5%**[112](index=112&type=chunk) - Enterprise income tax in mainland China is provided at the statutory rate of **25%** on assessable profits in accordance with the PRC Enterprise Income Tax Law, except that Wuhan Organic Industrial Co., Ltd. and Qianjiang Xinyihong Organic Chemical Co., Ltd. were recognized as high-tech enterprises and enjoyed a preferential income tax rate of **15%** during the reporting period[113](index=113&type=chunk) [8. Dividends](index=31&type=section&id=8.%20%E8%82%A1%E6%81%AF) For the six months ended June 30, 2024, the company did not declare any dividends to ordinary shareholders - For the six months ended June 30, 2024, no dividends were declared to ordinary shareholders of the Company (for the six months ended June 30, 2023: nil)[114](index=114&type=chunk) [9. Earnings Per Share Attributable to Owners of the Company](index=32&type=section&id=9.%20%E6%AF%8D%E5%85%AC%E5%8F%B8%E6%99%AE%E9%80%9A%E8%82%A1%E6%AC%8A%E7%9B%8A%E6%8C%81%E6%9C%89%E4%BA%BA%E6%87%89%E4%BD%B5%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) Basic and diluted earnings per share were **RMB 0.63**, calculated based on profit for the period attributable to ordinary equity holders of the parent company and the weighted average number of **76,307,143** ordinary shares outstanding during the reporting period Earnings Per Share Calculation (For the Six Months Ended June 30) | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Profit Attributable to Ordinary Equity Holders of the Company | 48,049 | 44,547 | | Weighted Average Number of Ordinary Shares Outstanding During the Period (shares) | 76,307,143 | 75,000,000 | | Earnings Per Share (Basic and Diluted, RMB per share) | 0.63 | 0.59 | - For the six months ended June 30, 2024, and 2023, the Company had no potential dilutive share options or other financial instruments related to issued ordinary shares[116](index=116&type=chunk) [10. Property, Plant and Equipment](index=32&type=section&id=10.%20%E7%89%A9%E6%A5%AD%E3%80%81%E5%BB%A0%E6%88%BF%E5%8F%8A%E8%A8%AD%E5%82%99) During the reporting period, the company acquired assets at a cost of **RMB 90,654 thousand** and disposed of assets with a net book value of **RMB 49 thousand**, and as of June 30, 2024, certain buildings with a gross book value of **RMB 125,049 thousand** were pledged - For the six months ended June 30, 2024, the Group acquired assets at a cost of **RMB 90,654,000**[116](index=116&type=chunk) - For the six months ended June 30, 2024, the Group disposed of assets with a net book value of **RMB 49,000**[117](index=117&type=chunk) - As of June 30, 2024, certain buildings with a gross book value of **RMB 125,049,000** were pledged to obtain bank loans and other borrowings for the Group[117](index=117&type=chunk) [11. Trade and Bills Receivables](index=33&type=section&id=11.%20%E8%B2%BF%E6%98%93%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85%E5%8F%8A%E6%87%89%E6%94%B6%E7%A5%A8%E6%93%9A) As of June 30, 2024, total trade and bills receivables amounted to **RMB 354,379 thousand**, comprising **RMB 171,374 thousand** in trade receivables and **RMB 184,069 thousand** in bills receivables, with most trade receivables aged within **4 months** Trade and Bills Receivables (As of June 30) | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Trade Receivables | 171,374 | 97,211 | | Bills Receivables | 184,069 | 199,727 | | Impairment | (1,064) | (624) | | **Total** | **354,379** | **296,314** | Ageing Analysis of Trade Receivables (As of June 30) | Ageing | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Within 4 months | 133,141 | 95,913 | | Over 4 months but within 6 months | 36,937 | — | | Over 6 months but within 12 months | 232 | 674 | | **Total** | **170,310** | **96,587** | [12. Trade and Bills Payables](index=34&type=section&id=12.%20%E8%B2%BF%E6%98%93%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85%E5%8F%8A%E6%87%89%E4%BB%98%E7%A5%A8%E6%93%9A) As of June 30, 2024, total trade and bills payables amounted to **RMB 259,308 thousand**, with the majority aged within **1 year** Ageing Analysis of Trade and Bills Payables (As of June 30) | Ageing | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Within 1 year | 259,247 | 149,444 | | 1 to 2 years | 35 | 152 | | Over 2 years | 26 | 109 | | **Total** | **259,308** | **149,705** | [13. Interest-Bearing Bank and Other Borrowings](index=34&type=section&id=13.%20%E8%A8%88%E6%81%AF%E9%8A%80%E8%A1%8C%E5%8F%8A%E5%85%B6%E4%BB%96%E5%80%9F%E6%AC%BE) As of June 30, 2024, total interest-bearing bank and other borrowings amounted to **RMB 1,008,950 thousand**, with most being current borrowings, secured by plant, equipment, buildings, and leasehold land Interest-Bearing Bank and Other Borrowings (As of June 30) | Type | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Current Bank Loans — Secured | 160,500 | 268,020 | | Current Bank Loans — Unsecured | 709,950 | 514,000 | | Current Portion of Long-Term Bank Loans — Secured | 49,000 | 12,000 | | Current Portion of Long-Term Bank Loans — Unsecured | 40,500 | 18,000 | | Other Borrowings — Unsecured | 49,000 | 40,000 | | **Total Current** | **1,008,950** | **852,020** | | Non-Current Bank Loans — Secured | — | 42,000 | | Non-Current Bank Loans — Unsecured | — | 23,500 | | **Total Non-Current** | **—** | **65,500** | | **Total** | **1,008,950** | **917,520** | - The Group's bank loans and other borrowings are secured by plant, equipment, and buildings (gross book value of **RMB 125,049,000**) and leasehold land (gross book value of **RMB 139,193,000**) located in mainland China[121](index=121&type=chunk) - Except for unsecured bank loans amounting to **RMB 23,500,000** as of June 30, 2024, which bear floating interest rates, all other bank loans and borrowings of the Group are denominated in RMB and bear fixed interest rates[121](index=121&type=chunk) [14. Share Capital](index=35&type=section&id=14.%20%E8%82%A1%E6%9C%AC) As of June 30, 2024, the issued and fully paid share capital consisted of **93,300,000** ordinary shares of **USD 0.0001** each, totaling **RMB 61 thousand**, with **18,300,000** new shares issued during the reporting period due to the initial public offering Issued Share Capital (As of June 30) | Indicator | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Issued and Fully Paid Ordinary Shares (shares) | 93,300,000 | 75,000,000 | | Share Capital (RMB thousands) | 61 | 48 | - For the Company's Hong Kong public offering and international offering on June 18, 2024, **18,300,000** ordinary shares of **USD 0.0001** each were issued and allotted at an offer price of **HKD 5.50** per share, for a total consideration of **HKD 100,650,000** (equivalent to **RMB 91,687,000**)[123](index=123&type=chunk) [15. Cash and Cash Equivalents and Pledged Deposits](index=36&type=section&id=15.%20%E7%8F%BE%E9%87%91%E5%8F%8A%E7%8F%BE%E9%87%91%E7%AD%89%E5%83%B9%E7%89%A9%E4%BB%A5%E5%8F%8A%E5%B7%B2%E6%8A%B5%E6%8A%BC%E5%AD%98%E6%AC%BE) As of June 30, 2024, cash and bank balances totaled **RMB 280,012 thousand**, including pledged deposits of **RMB 73,001 thousand** (for bills payable and letters of credit), resulting in net cash and cash equivalents of **RMB 207,011 thousand** Cash and Cash Equivalents and Pledged Deposits (As of June 30) | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Cash and Bank Balances | 280,012 | 105,560 | | Less: Pledged Time Deposits | (73,001) | (40,127) | | **Cash and Cash Equivalents** | **207,011** | **65,433** | - Pledged time deposits include **RMB 24,001 thousand** pledged for bills payable and **RMB 49,000 thousand** pledged for letters of credit[123](index=123&type=chunk) [16. Commitments](index=36&type=section&id=16.%20%E6%89%BF%E6%93%94) As of June 30, 2024, the Group's contracted but unprovided capital commitments primarily related to plant and machinery, amounting to **RMB 51,050 thousand** - The Group had the following contractual commitments at the end of the reporting period: contracted but unprovided plant and machinery amounted to **RMB 51,050 thousand**[124](index=124&type=chunk) [17. Related Party Transactions](index=37&type=section&id=17.%20%E9%97%9C%E8%81%AF%E6%96%B9%E4%BA%A4%E6%98%93) This section outlines significant transactions with related parties, including purchases, sales, services, and loans - Related parties include entities controlled by Mr. Gao Yuankun, father of Mr. Gao Lei (such as Linuo Group, Wuhan Linuo Investment Holding Group Co., Ltd.), entities related to Executive Director Mr. Zou Xiaohong (such as Yingcheng Wuhuan Organic Materials Co., Ltd.), and the joint venture Hebei Kangshi[125](index=125&type=chunk)[126](index=126&type=chunk) Significant Related Party Transactions (For the Six Months Ended June 30) | Transaction Type | Related Party | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | :--- | | Purchase of Goods or Services | Hebei Kangshi | 66,220 | 68,596 | | Purchase of Machinery | Xinkang Chemical | 77,150 | 80,170 | | Sale of Goods | Hubei Tuopu | 14,849 | 5,783 | | Provision of Services | Xinkang Chemical | 1,620 | 597 | | Loans to Related Parties | Hebei Kangshi | 8,489 | — | | Settlement of Loans from Related Parties | Hebei Kangshi | 53,572 | — | Outstanding Balances with Related Parties (As of June 30) | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Total Amounts Due from Related Parties | 19,447 | 61,024 | | Total Amounts Due to Related Parties | 8,692 | 5,966 | [18. Fair Value and Fair Value Hierarchy of Financial Instruments](index=41&type=section&id=18.%20%E9%87%91%E8%9E%8D%E5%B7%A5%E5%85%B7%E7%9A%84%E5%85%AC%E5%B9%B3%E5%80%BC%E5%8F%8A%E5%85%AC%E5%B9%B3%E5%80%BC%E5%B1%A4%E7%B4%9A) This section discusses the fair value measurement of financial instruments, with most fair values approximating carrying amounts - Management assesses that the fair value of financial assets such as cash and cash equivalents, pledged deposits, trade receivables, and current financial liabilities is similar to their carrying amounts, largely due to the short-term maturity of these instruments[151](index=151&type=chunk) Assets Measured at Fair Value (As of June 30) | Item | Fair Value Hierarchy Level | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | :--- | | Bills Receivables | Level 2 | 184,069 | 199,727 | | Fund Investments | Level 2 | — | 10,500 | | **Total** | | **184,069** | **210,227** | - During the six months ended June 30, 2024, there were no transfers between Level 1 and Level 2 fair value measurements, nor any transfers into or out of Level 3 fair value measurements for financial assets[154](index=154&type=chunk) [19. Events After the Reporting Period](index=43&type=section&id=19.%20%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) As of the publication date of these interim condensed consolidated financial information, the company has no post-June 30, 2024, events requiring disclosure - As of the publication date of these interim condensed consolidated financial information, the Company has no post-June 30, 2024, events requiring disclosure[156](index=156&type=chunk) [20. Approval of Interim Condensed Consolidated Financial Information](index=43&type=section&id=20.%20%E6%89%B9%E5%87%86%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E8%B3%87%E6%96%99) The interim condensed consolidated financial information was approved by the Board of Directors and authorized for issue on August 23, 2024 - The interim condensed consolidated financial information was approved by the Board of Directors and authorized for issue on August 23, 2024[156](index=156&type=chunk) [Definitions](index=43&type=section&id=%E9%87%8B%E7%BE%A9) This section provides definitions for key terms and abbreviations used throughout the report [Definitions of Key Terms](index=43&type=section&id=%E9%97%9C%E9%8D%B5%E8%A9%9E%E5%BD%99%E5%AE%9A%E7%BE%A9) This section provides definitions for key terms used in the report, such as "the Company", "Board", "Global Offering", and "Listing Rules" - This section provides definitions for key terms used in the report, such as "the Company", "Board", "Global Offering", and "Listing Rules"[157](index=157&type=chunk)[158](index=158&type=chunk)

[Financial Summary and Performance Announcement](index=1&type=section&id=Financial%20Summary%20and%20Performance%20Announcement) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Wuhan Organic Holdings reported a 30.7% revenue increase to 1,651.2 million RMB, with net profit up 7.9% to 48.0 million RMB and EPS growing 6.8% to 0.63 RMB for H1 2024 H1 2024 Financial Highlights | Indicator | H1 2024 (million RMB) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Revenue | 1,651.2 | 30.7% | | Gross Profit | 186.7 | 0.6% | | Net Profit | 48.0 | 7.9% | | Basic and Diluted EPS (RMB) | 0.63 | 6.8% | [Introduction to Performance Announcement](index=1&type=section&id=Introduction%20to%20Performance%20Announcement) The Board announced the unaudited condensed consolidated interim results for H1 2024, providing comparable data for the prior year - This announcement presents the unaudited condensed consolidated interim results of the Company and its subsidiaries for the six months ended June 30, 2024[2](index=2&type=chunk) [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Revenue significantly grew for H1 2024, but gross margin declined, while both profit for the period and total comprehensive income increased Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (thousand RMB) | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Revenue | 1,651,158 | 1,263,372 | | Cost of Sales | (1,464,482) | (1,077,766) | | Gross Profit | 186,676 | 185,606 | | Other Income and Gains | 30,746 | 11,049 | | Selling and Distribution Expenses | (13,414) | (11,451) | | Administrative Expenses | (60,205) | (48,633) | | Research and Development Expenses | (58,855) | (54,695) | | Impairment Loss on Financial Assets | (440) | 141 | | Other Expenses | (7,291) | (2,021) | | Finance Costs | (21,134) | (17,919) | | Share of Profits and Losses of Joint Ventures | 3,860 | (5,867) | | Share of Profits and Losses of Associates | 3,481 | 2,252 | | Profit Before Tax | 63,424 | 58,462 | | Income Tax Expense | (15,375) | (13,915) | | Profit for the Period | 48,049 | 44,547 | | Profit Attributable to Owners of the Parent | 48,049 | 44,547 | | Earnings Per Share Attributable to Ordinary Equity Holders of the Parent (RMB) | 0.63 | 0.59 | | Total Comprehensive Income for the Period | 48,075 | 44,892 | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Total assets and equity increased as of June 30, 2024, with growth in both non-current and current assets, though net current liabilities remained negative Condensed Consolidated Statement of Financial Position (thousand RMB) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, Plant and Equipment | 1,051,929 | 1,020,081 | | Right-of-use Assets | 194,148 | 190,527 | | Total Non-current Assets | 1,334,419 | 1,283,308 | | **Current Assets** | | | | Inventories | 275,167 | 285,333 | | Trade and Bills Receivables | 354,379 | 296,314 | | Cash and Cash Equivalents | 207,011 | 65,433 | | Total Current Assets | 1,033,296 | 832,574 | | **Current Liabilities** | | | | Trade and Bills Payables | 259,308 | 149,705 | | Interest-bearing Bank and Other Borrowings | 1,008,950 | 852,020 | | Total Current Liabilities | 1,623,056 | 1,422,654 | | Net Current Liabilities | (589,760) | (590,080) | | Net Assets | 643,326 | 529,617 | | Total Equity | 643,326 | 529,617 | [Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Total equity increased for H1 2024 due to profit, other comprehensive income, and new share issuance, with share capital growing from 48 thousand RMB to 61 thousand RMB Condensed Consolidated Statement of Changes in Equity (thousand RMB) | Item | January 1, 2024 (Audited) | Profit for the Period | Other Comprehensive Income for the Period | Issue of New Shares | Share Issue Expenses | Share-based Payments | June 30, 2024 (Unaudited) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Share Capital | 48 | — | — | 13 | — | — | 61 | | Reserves | 529,569 | 48,049 | 26 | 91,674 | (26,263) | 210 | 643,265 | | Total Equity | 529,617 | 48,049 | 26 | 91,687 | (26,263) | 210 | 643,326 | - As of June 30, 2024, consolidated reserves amounted to **643,265 thousand RMB**[7](index=7&type=chunk) [Notes to the Financial Information](index=7&type=section&id=Notes%20to%20the%20Financial%20Information) [Company and Group Information](index=7&type=section&id=Company%20and%20Group%20Information) Wuhan Organic Holdings, incorporated in the Cayman Islands, manufactures toluene derivatives in China and was listed on the HKEX Main Board on June 18, 2024 - The Company was incorporated in the Cayman Islands on September 23, 2016, primarily engaged in the manufacturing and sale of toluene oxidation products, toluene chlorination products, and their derivatives[9](index=9&type=chunk) - The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since **June 18, 2024**[9](index=9&type=chunk) [Basis of Preparation and Changes in Accounting Policies](index=7&type=section&id=Basis%20of%20Preparation%20and%20Changes%20in%20Accounting%20Policies) Interim financial information is prepared under HKAS 34 and adopts revised HKFRSs, with no significant impact on the Group's financial position or performance - The condensed consolidated interim financial information is prepared in accordance with **Hong Kong Accounting Standard 34 Interim Financial Reporting**[10](index=10&type=chunk) - Revised Hong Kong Financial Reporting Standards, including amendments to HKFRS 16, HKAS 1, and HKAS 7 and HKFRS 7, were first adopted in the current period[11](index=11&type=chunk)[12](index=12&type=chunk)[14](index=14&type=chunk) - After evaluation, these changes in accounting policies had no impact on the Group's financial position or performance[12](index=12&type=chunk)[13](index=13&type=chunk)[14](index=14&type=chunk) [Operating Segment Information](index=9&type=section&id=Operating%20Segment%20Information) Operating segment information is not separately presented as the Board reviews overall financial performance; all non-current assets are in Mainland China, with no single customer exceeding 10% of total revenue - The Directors review the Group's overall financial performance, thus no further information on operating segments is presented[15](index=15&type=chunk) - All of the Group's non-current assets are located in **Mainland China**[15](index=15&type=chunk) - For the six months ended June 30, 2024, no revenue from a single external customer transaction accounted for **10% or more** of the Group's total revenue[16](index=16&type=chunk) [Revenue](index=10&type=section&id=Revenue) For H1 2024, Group revenue was 1,651,158 thousand RMB, mainly from toluene oxidation and chlorination products and trading, with Mainland China as the largest market Revenue Analysis (thousand RMB) | Category | H1 2024 | H1 2023 | | :--- | :--- | :--- | | **Type of Goods or Services** | | | | Toluene Oxidation Products | 1,025,415 | 618,900 | | Toluene Chlorination Products | 335,685 | 370,689 | | Product Trading | 290,058 | 273,783 | | **Geographical Market** | | | | Mainland China | 1,219,025 | 980,344 | | Asia (excluding Mainland China) | 171,413 | 134,162 | | European Union | 135,583 | 76,457 | | Americas | 111,118 | 63,688 | | Other Countries/Regions | 14,019 | 8,721 | | **Total** | 1,651,158 | 1,263,372 | - All revenue is recognized from goods transferred at a point in time[18](index=18&type=chunk) [Profit Before Tax](index=11&type=section&id=Profit%20Before%20Tax) Profit before tax for H1 2024 was 63,424 thousand RMB, impacted by cost of sales, R&D, depreciation, and employee benefits Key Deductions/Additions to Profit Before Tax (thousand RMB) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Cost of Inventories Sold | 1,464,482 | 1,077,766 | | Research and Development Costs | 58,855 | 54,695 | | Depreciation of Property, Plant and Equipment | 58,757 | 55,429 | | Depreciation of Right-of-use Assets | 9,999 | 10,287 | | Total Employee Benefit Expenses | 51,123 | 41,452 | | Additional Deduction for Input VAT | (11,486) | (1,517) | | Net Exchange Differences | (5,881) | (2,339) | | Government Grants Related to Income | (3,705) | (400) | | Government Grants Related to Assets | (2,735) | (2,634) | - Amortization of other intangible assets is included in 'Administrative expenses'[19](index=19&type=chunk) [Income Tax Expense](index=12&type=section&id=Income%20Tax%20Expense) Income tax expense for H1 2024 was 15,375 thousand RMB, mainly from Mainland China, with some subsidiaries benefiting from preferential high-tech enterprise tax rates Income Tax Expense Analysis (thousand RMB) | Category | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Current — Hong Kong | 92 | 47 | | Current — Mainland China | 6,371 | 9,166 | | Deferred Income Tax | 8,912 | 4,702 | | Total Tax Expense for the Period | 15,375 | 13,915 | - Subsidiaries in the Cayman Islands and British Virgin Islands are not subject to income tax[22](index=22&type=chunk) - The statutory corporate income tax rate in Mainland China is **25%**, but Wuhan Organic Industrial Co., Ltd. and Qianjiang Xinyihong Organic Chemical Co., Ltd. enjoy a preferential tax rate of **15%** as high-tech enterprises[24](index=24&type=chunk) [Earnings Per Share Attributable to Owners of the Parent](index=13&type=section&id=Earnings%20Per%20Share%20Attributable%20to%20Owners%20of%20the%20Parent) Basic and diluted EPS for H1 2024 was 0.63 RMB, an increase from the prior year, with no potential dilutive share options or financial instruments Earnings Per Share Calculation (thousand RMB/share) | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Profit Attributable to Ordinary Equity Holders of the Company | 48,049 | 44,547 | | Weighted Average Number of Ordinary Shares in Issue for the Period | 76,307,143 | 75,000,000 | | Earnings Per Share (Basic and Diluted, RMB per share) | 0.63 | 0.59 | - The Company had no potential dilutive share options or other financial instruments related to issued ordinary shares[25](index=25&type=chunk) [Property, Plant and Equipment](index=14&type=section&id=Property%2C%20Plant%20and%20Equipment) Asset acquisition cost for H1 2024 was 90,654 thousand RMB, with some buildings pledged for bank loans - The Group's cost of acquiring assets was **90,654 thousand RMB**, a significant increase from **48,263 thousand RMB** in the prior year[26](index=26&type=chunk) - As of June 30, 2024, certain buildings with a gross carrying amount of **125,049 thousand RMB** were pledged to secure bank loans and other borrowings[26](index=26&type=chunk) - No impairment losses were recognized during the reporting period[26](index=26&type=chunk) [Trade and Bills Receivables](index=14&type=section&id=Trade%20and%20Bills%20Receivables) Total trade and bills receivables were 354,379 thousand RMB as of June 30, 2024, with most trade receivables due within 4 months Trade and Bills Receivables (thousand RMB) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Trade Receivables | 171,374 | 97,211 | | Bills Receivables | 184,069 | 199,727 | | Impairment | (1,064) | (624) | | Total | 354,379 | 296,314 | Trade Receivables Aging Analysis (thousand RMB) | Aging | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Within 4 months | 133,141 | 95,913 | | Over 4 months but within 6 months | 36,937 | — | | Over 6 months but within 12 months | 232 | 674 | | Total | 170,310 | 96,587 | Bills Receivables Maturity Analysis (thousand RMB) | Maturity | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Within 3 months | 80,288 | 80,859 | | Over 3 months but within 6 months | 103,781 | 118,868 | | Total | 184,069 | 199,727 | [Trade and Bills Payables](index=15&type=section&id=Trade%20and%20Bills%20Payables) Total trade and bills payables were 259,308 thousand RMB as of June 30, 2024, with most due within one year Trade and Bills Payables Aging Analysis (thousand RMB) | Aging | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Within 1 year | 259,247 | 149,444 | | 1 to 2 years | 35 | 152 | | Over 2 years | 26 | 109 | | Total | 259,308 | 149,705 | [Interest-Bearing Bank and Other Borrowings](index=16&type=section&id=Interest-Bearing%20Bank%20and%20Other%20Borrowings) Total interest-bearing borrowings were 1,008,950 thousand RMB as of June 30, 2024, mainly current bank loans at fixed rates, secured by property and leasehold land Interest-Bearing Bank and Other Borrowings Analysis (thousand RMB) | Category | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Current** | | | | Bank Loans — Secured | 160,500 | 268,020 | | Bank Loans — Unsecured | 709,950 | 514,000 | | Current Portion of Long-term Bank Loans — Secured | 49,000 | 12,000 | | Current Portion of Long-term Bank Loans — Unsecured | 40,500 | 18,000 | | Other Borrowings — Unsecured | 49,000 | 40,000 | | **Non-current** | | | | Bank Loans — Secured | — | 42,000 | | Bank Loans — Unsecured | — | 23,500 | | **Total** | 1,008,950 | 917,520 | - The Group's bank and other borrowings are secured by plant, equipment, and buildings in Mainland China (gross carrying amount of **125,049 thousand RMB**) and leasehold land (gross carrying amount of **139,193 thousand RMB**)[33](index=33&type=chunk) - All bank and other borrowings are denominated in RMB and bear fixed interest rates, except for **23,500 thousand RMB** of unsecured bank loans which bear floating interest rates[33](index=33&type=chunk) [Share Capital](index=17&type=section&id=Share%20Capital) Issued share capital increased to 93,300,000 shares, totaling 61 thousand RMB, as of June 30, 2024, mainly from new share issuance during the IPO Summary of Changes in Issued Share Capital | Item | Number of Issued Shares | Share Capital (thousand RMB) | | :--- | :--- | :--- | | As of December 31, 2023 (Audited) | 75,000,000 | 48 | | Shares Issued During Initial Public Offering | 18,300,000 | 13 | | As of June 30, 2024 (Unaudited) | 93,300,000 | 61 | - During the initial public offering, **18,300,000 ordinary shares** were issued and allotted at **HKD 5.50 per share**, for a total consideration of **HKD 100,650,000** (approximately **91,687 thousand RMB**)[34](index=34&type=chunk) [Commitments](index=18&type=section&id=Commitments) Contracted but unprovided capital commitments for plant and machinery totaled 51,050 thousand RMB as of June 30, 2024 Contractual Commitments (thousand RMB) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Contracted but unprovided: Plant and Machinery | 51,050 | 42,700 | [Management Discussion and Analysis](index=19&type=section&id=Management%20Discussion%20and%20Analysis) [Performance Review](index=19&type=section&id=Performance%20Review) H1 revenue grew 30.7% due to increased toluene oxidation product sales, but overall gross margin declined from low-price strategies, and toluene chlorination products saw reduced revenue and sales - The Group is a well-known supplier of toluene derivatives in China and global markets, primarily manufacturing toluene oxidation and chlorination products and their derivatives, while also engaging in toluene trading[36](index=36&type=chunk) - Overall revenue increased by approximately **30.7%** to **1,651.2 million RMB**, primarily due to a **406.5 million RMB** increase in revenue from toluene oxidation products and their derivatives[40](index=40&type=chunk) - Overall gross profit margin decreased by approximately **3.4 percentage points** year-on-year to approximately **11.3%**, mainly due to adopting lower selling prices to maintain market share and production facility utilization[40](index=40&type=chunk) - Profit attributable to owners of the parent increased by approximately **7.9%** to **48.0 million RMB**, but net profit margin decreased by approximately **0.6 percentage points** to approximately **2.9%**[40](index=40&type=chunk) [Performance by Product Type](index=19&type=section&id=Performance%20by%20Product%20Type) Toluene oxidation product revenue and sales grew significantly, but gross margin declined; toluene chlorination products saw revenue, sales, and gross margin decrease; product trading revenue slightly increased, but gross margin dropped Performance Overview by Product Type (H1 2024 vs H1 2023) | Product Type | Revenue (thousand RMB) 2024 | Revenue (thousand RMB) 2023 | Sales Volume (tons) 2024 | Sales Volume (tons) 2023 | Gross Margin (%) 2024 | Gross Margin (%) 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Toluene Oxidation Products and Their Derivatives | 1,025,415 | 618,900 | 126,315 | 73,492 | 11.6% | 15.0% | | Toluene Chlorination Products and Their Derivatives | 335,685 | 370,689 | 42,343 | 54,519 | 18.8% | 22.2% | | Product Trading | 290,058 | 273,783 | 42,845 | 40,625 | 1.4% | 3.8% | | **Total** | **1,651,158** | **1,263,372** | **211,503** | **168,636** | **11.3%** | **14.7%** | [Revenue by Customer Geographical Location](index=20&type=section&id=Revenue%20by%20Customer%20Geographical%20Location) Both domestic and export sales grew in H1 2024, with export sales demonstrating more significant growth Revenue by Customer Geographical Location (thousand RMB) | Sales Type | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Domestic Sales | 1,219,025 | 980,344 | | Export Sales | 432,133 | 283,028 | | Total | 1,651,158 | 1,263,372 | [Toluene Oxidation Products and Their Derivatives](index=21&type=section&id=Toluene%20Oxidation%20Products%20and%20Their%20Derivatives) This product series saw revenue grow 65.7% to 1,025.4 million RMB and sales up 71.9% to 126,315 tons, but gross margin fell 3.4 percentage points to 11.6% due to competitive pricing - Revenue from toluene oxidation products and their derivatives increased by approximately **65.7%** to **1,025.4 million RMB**, with sales increasing by approximately **71.9%** to **126,315 tons**[41](index=41&type=chunk) - The gross profit margin for this product series decreased by approximately **3.4 percentage points** to approximately **11.6%**, mainly due to adopting lower selling prices to cope with market competition[41](index=41&type=chunk) - This product series accounted for approximately **62.1%** of the Group's total revenue (H1 2023: **49.0%**)[41](index=41&type=chunk) [Toluene Chlorination Products and Their Derivatives](index=21&type=section&id=Toluene%20Chlorination%20Products%20and%20Their%20Derivatives) This product series saw revenue fall 9.4% to 335.7 million RMB and sales drop 22.3% to 42,343 tons, with gross margin down 3.4 percentage points to 18.8%, mainly due to weak downstream demand - Revenue from toluene chlorination products and their derivatives decreased by approximately **9.4%** to **335.7 million RMB**, with sales decreasing by **22.3%** to **42,343 tons**[41](index=41&type=chunk)[42](index=42&type=chunk) - The gross profit margin for this product series decreased by approximately **3.4 percentage points** to approximately **18.8%**[42](index=42&type=chunk) - The decrease in revenue was primarily due to weak demand in downstream markets, particularly the real estate sector[41](index=41&type=chunk) [Product Trading](index=22&type=section&id=Product%20Trading) Product trading revenue grew 5.9% to 290.1 million RMB from increased toluene trading, but gross margin fell to 1.4% to maintain raw material supply and customer relationships - Product trading revenue increased by **5.9%** to **290.1 million RMB**, primarily due to increased toluene trading[42](index=42&type=chunk) - The gross profit margin for product trading decreased to approximately **1.4%** (H1 2023: **3.8%**)[42](index=42&type=chunk) - The primary purpose of product trading is to maintain a stable and sufficient supply of raw materials, foster customer relationships, and manage inventory[42](index=42&type=chunk) [Exports](index=22&type=section&id=Exports) Export revenue grew 52.7% to 432.1 million RMB, representing 26.2% of total revenue, as the Group gained market share from overseas competitors - Export revenue increased by approximately **52.7%** to **432.1 million RMB**[43](index=43&type=chunk) - Export revenue accounted for approximately **26.2%** of total revenue, an increase of **3.8 percentage points** from the prior year[43](index=43&type=chunk) - The increase in export revenue was primarily due to the Group seizing opportunities to gain market share lost by overseas competitors[43](index=43&type=chunk) [Business Outlook](index=23&type=section&id=Business%20Outlook) Despite a complex global economy, the Group will pursue a proactive strategy to enhance profitability and market share through process optimization, energy management, market expansion, supplier relations, and production base expansion - Global manufacturing is recovering, China's export demand foundation is good, but demand in the real estate sector is weak, and international crude oil prices remain strong[44](index=44&type=chunk) - The Group will continue to maintain a proactive and stable development strategy, leveraging its technological, cost, and brand advantages in toluene oxidation and chlorination products to expand market share[44](index=44&type=chunk) - Future measures include: improving production processes and strengthening energy management to reduce costs; actively expanding domestic and international markets and developing new customers; maintaining and strengthening relationships with raw material suppliers to obtain favorable prices[44](index=44&type=chunk) - Phase I of the Hubei Xinxuanhong production base is expected to commence operations in **H2 2024**, which will further promote business growth[44](index=44&type=chunk) [Financial Review](index=24&type=section&id=Financial%20Review) [Revenue and Gross Profit](index=24&type=section&id=Revenue%20and%20Gross%20Profit) Revenue grew 30.7% to 1,651.2 million RMB, gross profit slightly increased to 186.7 million RMB, but gross margin declined from 14.7% to 11.3% Revenue and Gross Profit Overview (million RMB) | Indicator | H1 2024 | H1 2023 | Year-on-Year Growth (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,651.2 | 1,263.4 | 30.7% | | Gross Profit | 186.7 | 185.6 | 0.6% | | Gross Profit Margin | 11.3% | 14.7% | -3.4 percentage points | [Other Income and Gains](index=24&type=section&id=Other%20Income%20and%20Gains) Other income and gains significantly increased by 19.7 million RMB to 30.7 million RMB, mainly due to higher additional VAT deductions Other Income and Gains (million RMB) | Indicator | H1 2024 | H1 2023 | Year-on-Year Increase (million RMB) | | :--- | :--- | :--- | :--- | | Other Income and Gains | 30.7 | 11.0 | 19.7 | - The increase in other income and gains was primarily due to increased additional VAT deductions during the period[46](index=46&type=chunk) [Selling and Distribution Expenses](index=24&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses rose 1.9 million RMB to 13.4 million RMB due to sales expansion and increased staff costs, though their revenue proportion slightly decreased Selling and Distribution Expenses (million RMB) | Indicator | H1 2024 | H1 2023 | Year-on-Year Increase (million RMB) | | :--- | :--- | :--- | :--- | | Selling and Distribution Expenses | 13.4 | 11.5 | 1.9 | - The increase in selling and distribution expenses was primarily due to sales expansion, increased staff salaries, and business entertainment expenses[47](index=47&type=chunk) - Selling and distribution expenses accounted for **0.8%** of the Group's revenue (H1 2023: **0.9%**)[47](index=47&type=chunk) [Administrative Expenses](index=24&type=section&id=Administrative%20Expenses) Administrative expenses rose 11.6 million RMB to 60.2 million RMB due to increased staff salaries, listing fees, and taxes, with their revenue proportion slightly decreasing Administrative Expenses (million RMB) | Indicator | H1 2024 | H1 2023 | Year-on-Year Increase (million RMB) | | :--- | :--- | :--- | :--- | | Administrative Expenses | 60.2 | 48.6 | 11.6 | - The increase in administrative expenses was primarily due to increased staff salaries, listing fees, and taxes[48](index=48&type=chunk) - Administrative expenses accounted for **3.6%** of the Group's revenue (H1 2023: **3.8%**)[48](index=48&type=chunk) [Research and Development Expenses](index=25&type=section&id=Research%20and%20Development%20Expenses) R&D expenses rose 4.2 million RMB to 58.9 million RMB due to increased staff salaries and depreciation, though their revenue proportion decreased Research and Development Expenses (million RMB) | Indicator | H1 2024 | H1 2023 | Year-on-Year Increase (million RMB) | | :--- | :--- | :--- | :--- | | Research and Development Expenses | 58.9 | 54.7 | 4.2 | - The increase in R&D expenses was primarily due to increased staff salaries and depreciation and amortization[49](index=49&type=chunk) - R&D expenses accounted for **3.6%** of the Group's revenue (H1 2023: **4.3%**)[49](index=49&type=chunk) [Finance Costs](index=25&type=section&id=Finance%20Costs) Finance costs rose 3.2 million RMB to 21.1 million RMB, mainly due to increased loans for business operations Finance Costs (million RMB) | Indicator | H1 2024 | H1 2023 | Year-on-Year Increase (million RMB) | | :--- | :--- | :--- | :--- | | Finance Costs | 21.1 | 17.9 | 3.2 | - The increase in finance costs was primarily due to increased borrowings drawn to support business operations[50](index=50&type=chunk) [Income Tax Expense](index=25&type=section&id=Income%20Tax%20Expense) Income tax expense rose 1.5 million RMB to 15.4 million RMB due to higher profit before tax, with the effective tax rate slightly increasing to 24.2% Income Tax Expense (million RMB) | Indicator | H1 2024 | H1 2023 | Year-on-Year Increase (million RMB) | | :--- | :--- | :--- | :--- | | Income Tax Expense | 15.4 | 13.9 | 1.5 | - The increase in income tax expense was primarily due to higher profit before tax during the reporting period[51](index=51&type=chunk) - The effective tax rate slightly increased from **23.8%** to **24.2%**[51](index=51&type=chunk) [Profit for the Period](index=25&type=section&id=Profit%20for%20the%20Period) Net profit increased by 3.5 million RMB or 7.9% to 48.0 million RMB, but net profit margin declined from 3.5% to 2.9% Profit for the Period (million RMB) | Indicator | H1 2024 | H1 2023 | Year-on-Year Increase (million RMB) | Year-on-Year Growth (%) | | :--- | :--- | :--- | :--- | :--- | | Net Profit | 48.0 | 44.5 | 3.5 | 7.9% | | Net Profit Margin | 2.9% | 3.5% | -0.6 percentage points | - | [Financial Policy](index=25&type=section&id=Financial%20Policy) The Group maintains a prudent financial management approach and robust liquidity, with the Board closely monitoring to meet funding needs - The Group has adopted a prudent financial management approach for its financial policy, maintaining a robust liquidity position[53](index=53&type=chunk) - The Board closely monitors the Group's liquidity position to ensure that the liquidity structure of assets, liabilities, and other commitments can meet funding requirements[53](index=53&type=chunk) [Liquidity and Capital Structure](index=26&type=section&id=Liquidity%20and%20Capital%20Structure) Working capital is from operating cash flow, bank borrowings, and global offering proceeds; as of June 30, 2024, cash and borrowings increased, but unused bank credit facilities remain ample - Daily working capital sources primarily include cash flows generated from ordinary business operations, bank borrowings, and net proceeds from the global offering[54](index=54&type=chunk) Liquidity Overview (million RMB) | Indicator | June 30, 2024 | December 31, 2023 | Change (million RMB) | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 207.0 | 65.4 | +141.6 | | Pledged Deposits | 73.0 | 40.1 | +32.9 | | Interest-bearing Bank and Other Borrowings | 1,009.0 | 917.5 | +91.4 | | Unused Bank Credit Facilities | 560.0 | - | - | - Net current liabilities primarily arise from bank and other borrowings, expected to be repaid on schedule through extensions, cash flows from business operations, and additional debt financing[54](index=54&type=chunk) [Gearing Ratio](index=26&type=section&id=Gearing%20Ratio) The Group's equity-to-debt ratio decreased to approximately 116.7% as of June 30, 2024, indicating improved financial leverage Gearing Ratio | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Equity-to-Debt Ratio | 116.7% | 158.5% | [Basic and Diluted Earnings Per Share](index=26&type=section&id=Basic%20and%20Diluted%20Earnings%20Per%20Share) Basic and diluted earnings per share for H1 2024 were 0.63 RMB, a year-on-year increase of approximately 6.8% Basic and Diluted Earnings Per Share (RMB) | Indicator | H1 2024 | H1 2023 | Year-on-Year Increase (RMB) | Year-on-Year Growth (%) | | :--- | :--- | :--- | :--- | :--- | | Basic and Diluted Earnings Per Share | 0.63 | 0.59 | 0.04 | 6.8% | [Current Assets](index=26&type=section&id=Current%20Assets) Total current assets increased to 1,033.3 million RMB as of June 30, 2024, driven by higher trade and bills receivables, cash, and pledged deposits Current Assets Overview (million RMB) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | 1,033.3 | 832.6 | | Inventories | 275.2 | 285.3 | | Trade and Bills Receivables | 354.4 | 296.3 | | Prepayments and Other Receivables | 123.7 | 145.4 | | Cash and Cash Equivalents | 207.0 | 65.4 | | Pledged Deposits | 73.0 | 40.1 | [Inventories](index=27&type=section&id=Inventories) Total inventories decreased by 10.1 million RMB to 275.2 million RMB, with turnover days falling from 47 to 35, due to a low-price sales strategy Inventories Overview (million RMB) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Inventories | 275.2 | 285.3 | | Inventory Turnover Days | 35 days | 47 days | - The decrease in inventory balance and turnover days was primarily due to the company adopting a low-price sales strategy to accelerate turnover in response to market competition[59](index=59&type=chunk) [Trade and Bills Receivables](index=27&type=section&id=Trade%20and%20Bills%20Receivables) Trade and bills receivables increased by 58.1 million RMB to 354.4 million RMB due to higher revenue; turnover days decreased from 42 to 35 due to improved bill issuer credit ratings Trade and Bills Receivables Overview (million RMB) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Trade and Bills Receivables | 354.4 | 296.3 | | Turnover Days | 35 days | 42 days | - The increase in trade and bills receivables was primarily due to increased revenue during the reporting period[60](index=60&type=chunk) - The decrease in turnover days was primarily due to improved credit ratings of the issuers of bills receivables received by the Group, leading to a higher proportion of bills receivables qualifying for derecognition[60](index=60&type=chunk) [Prepayments and Other Receivables](index=27&type=section&id=Prepayments%20and%20Other%20Receivables) Prepayments and other receivables decreased by 21.6 million RMB to 123.7 million RMB, mainly due to reduced related party borrowings Prepayments and Other Receivables Overview (million RMB) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Prepayments and Other Receivables | 123.7 | 145.4 | - The decrease was primarily due to a reduction in related party borrowings[61](index=61&type=chunk) [Current Liabilities](index=28&type=section&id=Current%20Liabilities) Total current liabilities were 1,623.0 million RMB as of June 30, 2024, mainly due to increased trade and bills payables and interest-bearing borrowings Current Liabilities Overview (million RMB) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Trade and Bills Payables | 259.3 | 149.7 | | Other Payables and Accruals and Contract Liabilities | 338.3 | 373.0 | | Interest-bearing Bank and Other Borrowings | 1,009.0 | 852.0 | | Lease Liabilities | 14.2 | 15.9 | | Income Tax Payable | 2.3 | 32.1 | [Trade and Bills Payables](index=28&type=section&id=Trade%20and%20Bills%20Payables) Trade and bills payables increased by 109.6 million RMB to 259.3 million RMB due to higher sales and purchases, with turnover days stable at 25 Trade and Bills Payables Overview (million RMB) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Trade and Bills Payables | 259.3 | 149.7 | | Turnover Days | 25 days | 25 days | - The increase was primarily due to higher sales and corresponding purchases during the reporting period[63](index=63&type=chunk) [Other Payables and Accruals and Contract Liabilities](index=28&type=section&id=Other%20Payables%20and%20Accruals%20and%20Contract%20Liabilities) Other payables, accruals, and contract liabilities decreased by 34.7 million RMB to 338.3 million RMB, mainly due to dividend payments Other Payables and Accruals and Contract Liabilities Overview (million RMB) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Other Payables and Accruals and Contract Liabilities | 338.3 | 373.0 | - The decrease was primarily due to the payment of dividends payable[64](index=64&type=chunk) [Pledge of Assets](index=28&type=section&id=Pledge%20of%20Assets) As of June 30, 2024, the Group pledged property, plant and equipment with a net carrying amount of 264.2 million RMB for bank borrowings and credit facilities Net Carrying Amount of Pledged Assets (million RMB) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Property, Plant and Equipment | 264.2 | 270.5 | - Pledged assets are used to secure bank and other borrowings and bank credit facilities granted to the Group[65](index=65&type=chunk) [Significant Acquisitions, Disposals, and Major Investments](index=28&type=section&id=Significant%20Acquisitions%2C%20Disposals%2C%20and%20Major%20Investments) Excluding the Hubei Xinxuanhong production base expansion, the Group had no other significant acquisitions, disposals, or major investments during the period - Aside from the production expansion of the Hubei Xinxuanhong production base, the Group had no other significant acquisitions, disposals, or major investments during the reporting period[66](index=66&type=chunk) [Capital Expenditure and Capital Commitments](index=29&type=section&id=Capital%20Expenditure%20and%20Capital%20Commitments) Capital expenditure for the period was 104.3 million RMB, mainly for property, plant and equipment, and leasehold land - During the reporting period, the Group's capital expenditure amounted to **104.3 million RMB**[67](index=67&type=chunk) - Capital expenditure was primarily related to the purchase of property, plant and equipment, and leasehold land[67](index=67&type=chunk) [Future Plans for Major Investments or Capital Assets](index=29&type=section&id=Future%20Plans%20for%20Major%20Investments%20or%20Capital%20Assets) Excluding the Hubei Xinxuanhong production base expansion, the Group had no other major investment or capital asset acquisition plans at period-end or announcement date - Aside from the Hubei Xinxuanhong production base expansion plan, the Group has no other plans for any major investments or acquisitions of capital assets[68](index=68&type=chunk) - The Hubei Xinxuanhong production base expansion plan will be funded by the Group's internal resources, bank borrowings, or net proceeds from the global offering[68](index=68&type=chunk) [Contingent Liabilities](index=29&type=section&id=Contingent%20Liabilities) The Group had no significant contingent liabilities as of June 30, 2024 - As of June 30, 2024, the Group had no significant contingent liabilities[69](index=69&type=chunk) [Foreign Exchange and Interest Rate Risks](index=29&type=section&id=Foreign%20Exchange%20and%20Interest%20Rate%20Risks) The Group's RMB-denominated business faces no significant foreign exchange risk or hedging policy; interest rate risk is low and manageable, with most borrowings at fixed rates - The Group's primary business is denominated in RMB, and it does not have significant financial assets or liabilities denominated in currencies other than the functional currency of its respective subsidiaries, thus facing no significant foreign exchange risk[70](index=70&type=chunk) - Currently, the Group does not have a foreign currency hedging policy[70](index=70&type=chunk) - All of the Group's bank and other borrowings are denominated in RMB and bear fixed interest rates, except for **23.5 million RMB** of unsecured bank loans which bear floating interest rates[70](index=70&type=chunk) - Management considers interest rate risk to be very low and manageable, and believes no hedging activities are necessary[70](index=70&type=chunk) [Other Information](index=30&type=section&id=Other%20Information) [Use of Proceeds from Global Offering](index=30&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering) Net proceeds of approximately 25.9 million HKD from the global offering are primarily for new production facilities at Hubei Xinxuanhong, with remaining funds for R&D, sales, marketing, and working capital - The net proceeds from the issuance of a total of **18,300,000 shares** in the Company's global offering amounted to approximately **25.9 million HKD**[71](index=71&type=chunk) Planned Use of Net Proceeds from Global Offering (million HKD) | Use of Proceeds | Proportion (%) | Net Proceeds | Amount Utilized as of June 30, 2024 | Amount Unutilized as of June 30, 2024 | Expected Timeline for Full Utilization | | :--- | :--- | :--- | :--- | :--- | :--- | | Construction of new production facilities to increase capacity at Hubei Xinxuanhong production base | 82.0% | 21.2 | — | 21.2 | On or before December 2028 | | Research and development activities | 3.0% | 0.8 | — | 0.8 | On or before December 2026 | | Sales and marketing activities | 5.0% | 1.3 | — | 1.3 | On or before December 2026 | | Working capital and general corporate purposes | 10.0% | 2.6 | — | 2.6 | On or before December 2025 | | **Total** | **100%** | **25.9** | **—** | **25.9** | - | [Employees and Remuneration Policy](index=31&type=section&id=Employees%20and%20Remuneration%20Policy) The Group has 625 employees, with total staff costs rising to 51.1 million RMB due to higher performance bonuses, offering incentive-based remuneration, benefits, and training - The Group has a total of **625 employees** (December 31, 2023: **625 employees**)[72](index=72&type=chunk) - Total staff costs were approximately **51.1 million RMB** (H1 2023: **41.5 million RMB**), with the increase primarily due to higher performance bonuses corresponding to the achievement of performance targets during the reporting period[72](index=72&type=chunk) - The Company provides an incentive-based remuneration system, employee benefits (including bonuses, pensions, medical coverage, and housing provident funds), and diverse training and development programs[72](index=72&type=chunk) [Events After Reporting Period](index=31&type=section&id=Events%20After%20Reporting%20Period) No other significant events after the reporting period have occurred for the Group since June 30, 2024, up to this announcement date - No other significant events after the reporting period have occurred for the Group from June 30, 2024, up to the date of this announcement[73](index=73&type=chunk) [Interim Dividend](index=31&type=section&id=Interim%20Dividend) The Board does not recommend an interim dividend payment for the reporting period - The Board does not recommend the payment of an interim dividend for the reporting period (H1 2023: nil)[74](index=74&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=31&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the Company nor its subsidiaries have purchased, sold, or redeemed any listed securities from the listing date to this announcement date - From the listing date up to the date of this announcement, neither the Company nor any of its subsidiaries has purchased, sold, or redeemed any of the Company's listed shares[75](index=75&type=chunk) [Compliance with Corporate Governance Code](index=32&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company has complied with all applicable code provisions of the Corporate Governance Code in Appendix C1 to the Listing Rules since its listing date - The Group is committed to maintaining high standards of corporate governance to protect shareholders' interests and enhance corporate value and accountability[76](index=76&type=chunk) - The Company has adopted the Corporate Governance Code set out in Appendix C1 to the Listing Rules as its own code of conduct[76](index=76&type=chunk) - From the listing date up to the date of this announcement, the Company has complied with all applicable code provisions contained in the Corporate Governance Code[77](index=77&type=chunk) [Compliance with Model Code for Securities Transactions by Directors](index=32&type=section&id=Compliance%20with%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) All Directors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers from the listing date to this announcement, with no non-compliance found - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 to the Listing Rules as its own code of conduct[78](index=78&type=chunk) - Each Director has confirmed compliance with the required standards set out in the Model Code from the listing date up to the date of this announcement, and the Company has not noted any non-compliance by Directors during the reporting period[78](index=78&type=chunk) [Audit Committee and Review of Financial Statements](index=32&type=section&id=Audit%20Committee%20and%20Review%20of%20Financial%20Statements) The Audit Committee reviewed the Group's unaudited interim financial statements for H1 2024, with an independent review performed by Ernst & Young - The Audit Committee comprises Mr. Liao Qiyu (Chairman), Dr. Liu Zhongdong, Dr. Yuan Kang, Mr. Gao Lei, and Mr. Shen Yingming[79](index=79&type=chunk) - The Audit Committee has reviewed the Group's unaudited interim financial statements for the six months ended June 30, 2024[79](index=79&type=chunk) - The Company's independent auditor, Ernst & Young, has performed an independent review of the interim financial information in accordance with **Hong Kong Standard on Review Engagements 2410**[79](index=79&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=33&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) This interim results announcement is published on the HKEX and Company websites; the interim report will be dispatched to shareholders and published online in due course - This interim results announcement has been published on the HKEX website **www.hkexnews.hk** and the Company's website **www.chinaorganic.com**[80](index=80&type=chunk) - The Company's interim report for the six months ended June 30, 2024, will be dispatched to the Company's shareholders and published on the aforementioned websites in due course[80](index=80&type=chunk)