Group 1 - The company, Chang'an Renheng (08139), expects to report a loss of approximately RMB 3 million for the six months ending June 30, 2025, compared to a profit of about RMB 2.8 million for the same period in 2024 [1] - The anticipated loss is primarily attributed to a decline in gross profit margin during the current period compared to the previous period [1] - The increase in raw material and energy costs is identified as a key factor contributing to the lower gross profit margin [1] Group 2 - Additionally, the company has experienced an increase in distribution expenses, which has led to higher sales costs for the current period [1]

Group 1 - The company, Chang'an Renheng (08139.HK), expects to report a loss of approximately RMB 3 million for the six months ending June 30, 2025, compared to a profit of about RMB 2.8 million for the same period in 2024 [1] - As of August 22, 2025, Chang'an Renheng's stock closed at HKD 1.58, reflecting a 6.76% increase with a trading volume of 2,500 shares and a total turnover of HKD 3,940 [1] - The company has low attention from investment banks, with no ratings provided in the last 90 days [1] Group 2 - Chang'an Renheng's market capitalization is HKD 56.832 million, ranking 35th in the chemical products industry [1] - Key financial metrics for Chang'an Renheng compared to the industry average are as follows: - Return on Equity (ROE): 1.06% vs. -17.87% (industry average), ranking 18th [1] - Revenue: RMB 195 million vs. RMB 3.48 billion (industry average), ranking 33rd [1] - Net Profit Margin: 0.65% vs. -11.69% (industry average), ranking 20th [1] - Gross Profit Margin: 41.1% vs. 25.73% (industry average), ranking 9th [1] - Debt Ratio: 64.88% vs. 54.14% (industry average), ranking 22nd [1]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負責，對其 準確性或完整性亦不發表任何聲明，並明確表示概不就因本公告全部或任何部份內容而 產生或因依賴該等內容而引致之任何損失承擔任何責任。 Zhejiang Chang'an Renheng Technology Co., Ltd. * 8139 盈利警告 本公告乃浙江長安仁恒科技股份有限公司（「本公司」，及其附屬公司，統稱「本集團」）根 據香港聯合交易所有限公司GEM上市規則（「GEM上市規則」）第17.10條及香港法例第571 章證券及期貨條例（「證券及期貨條例」）第XIVA部之內幕消息條文（定義見GEM上市規則） 之規定而發出。 經初步評估本集團截至二零二五年六月三十日止六個月（「本期間」）之未經審核綜合管理 賬目，本公司董事（「董事」）會（「董事會」）謹此知會本公司之股東（「股東」）及潛在投資 者，本集團預期與截至二零二四年六月三十日止六個月（「前期間」）錄得純利約人民幣2.8 百萬元相比，本集團本期間將錄得虧損約人民幣3.0百萬元。 根據目前可得資料，雖銷售收入有所增加，預期虧損主要是由於與前期間相比，本集團 本期間之毛利率下降。其 ...

浙江長安仁恒科技股份有限公司（「本公司」，及其附屬公司，統稱「本集團」）之董事（「董 事」）會（「董事會」）茲通告，謹定於二零二五年八月二十九日星期五舉行董事會會議，目 的為審議並批准本集團截至二零二五年六月三十日止六個月之未經審計中期業績及建議 派付中期股息（如有），並處理任何其他事項。 香港交易及結算所有限公司及香港聯合交易所有限公司對本通告的內容概不負責，對其 準確性或完整性亦不發表任何聲明，並明確表示，概不就因本通告全部或任何部份內容 而產生或因依賴該等內容而引致的任何損失承擔任何責任。 Zhejiang Chang'an Renheng Technology Co., Ltd.* 浙江長安仁恒科技股份有限公司 （於中華人民共和國註冊成立之股份有限公司） （股份代號：8139） 董事會會議通告 本通告將自刊發日期最少七天於聯交所網站www.hkexnews.hk之「最新上公司資料」一頁內 刊載。本通告亦將刊載於本公司網站www.renheng.com。 承董事會命 浙江長安仁恒科技股份有限公司 主席 - 2 - 張有連 中國，浙江省，二零二五年八月十五日 於本通告日期，執行董事為張有連先生、佘文傑先生 ...

Group 1 - As of May 14, 78 stocks reached a 52-week high, with Chang'an Renheng (08139), Hengchang Group International (01421), and Lehua Entertainment (02306) leading the high rate at 65.38%, 42.59%, and 38.52% respectively [1] - The closing price of Chang'an Renheng was 1.370, with a peak price of 2.580, indicating a significant increase [1] - Hengchang Group International closed at 0.690, reaching a high of 0.770, reflecting a 42.59% increase [1] Group 2 - Lehua Entertainment's closing price was 1.510, with a maximum price of 1.690, showing a 38.52% rise [1] - XL Ernan CO (07711) and XL Ernan CO-U had increases of 27.75% and 26.89% respectively, with closing prices of 125.000 and 15.960 [1] - Other notable stocks include Madison Holdings (08057) with a 25.00% increase and Du Fu Wine Group (00986) with a 17.48% increase [1] Group 3 - The report also highlights stocks that reached 52-week lows, with XI Ernan CO (07311) dropping by 36.46% to a closing price of 26.500 [3] - XI Ernan CO-U saw a decrease of 35.53%, closing at 3.386 [3] - Other stocks with significant declines include Touyun Biotechnology (01332) at -22.46% and Aoweiholdings (01370) at -16.67% [3]

Financial Performance - Revenue increased by 20.1% to approximately RMB 194,863,000 (2023: RMB 162,278,000) [3] - Gross profit rose by 22.5% to approximately RMB 80,098,000 (2023: RMB 65,363,000) [3] - Gross margin improved to approximately 41.1% (2023: 40.3%) [3] - Profit before tax decreased by 45.8% to approximately RMB 1,429,000 (2023: RMB 2,638,000) [3] - Profit attributable to equity holders decreased by 44.9% to approximately RMB 1,270,000 (2023: RMB 2,303,000) [3] - Basic earnings per share decreased by 50.0% to approximately RMB 0.03 (2023: RMB 0.06) [3] - The net profit attributable to equity holders for the year ended December 31, 2024, was approximately RMB 1,270,000, a decrease of about RMB 1,033,000 or 44.9% compared to RMB 2,303,000 in 2023 [64] Assets and Liabilities - Total assets increased to RMB 337,982,310 (2023: RMB 292,849,380) [5] - Total liabilities increased to RMB 219,288,040 (2023: RMB 175,419,693) [6] - Non-current assets increased to RMB 146,955,912 (2023: RMB 131,631,817) [5] - Trade receivables increased to RMB 77,868,421 as of December 31, 2024, from RMB 71,469,009 in 2023, marking an increase of about 9.5% [36] - The total unused tax losses as of December 31, 2024, amounted to approximately RMB 25,090,999, an increase from RMB 16,284,584 as of December 31, 2023 [30] - Trade payables decreased significantly to RMB 18,994,736 in 2024 from RMB 39,371,472 in 2023, indicating a reduction of 51.8% [40] Expenses - Research and development expenses increased to RMB 15,542,097 (2023: RMB 11,585,685) [4] - The total cost of sales, selling expenses, administrative expenses, and impairment of financial assets amounted to RMB 187,975,221 for the year ending December 31, 2024, up from RMB 155,684,169 in 2023, representing an increase of approximately 20.7% [22] - The group’s employee benefit expenses increased to RMB 35,703,993 in 2024 from RMB 28,518,993 in 2023, reflecting a rise of approximately 25.4% [22] - Distribution costs increased by approximately RMB 10,220,000 or 42.1%, from RMB 24,249,000 in 2023 to RMB 34,469,000 in 2024, mainly due to higher transportation, marketing, and employee expenses [57] - The company's inventory cost recognized as cost of sales for the year ended December 31, 2024, was RMB 112,520,895, compared to RMB 94,900,017 in 2023, reflecting an increase of approximately 18.5% [35] Taxation - The company's income tax expense for the year ended December 31, 2024, was RMB (158,625) compared to RMB (334,849) for the year ended December 31, 2023, indicating a significant reduction in tax expenses [29] - The effective tax rate decreased from 12.7% in 2023 to 11.1% in 2024, with income tax expenses dropping from approximately RMB 335,000 to RMB 159,000, a decrease of about RMB 176,000 or 52.5% [63] Cash Flow and Capital Structure - Cash and cash equivalents as of December 31, 2024, amounted to RMB 16,330,972, up from RMB 14,888,159 in 2023, reflecting a growth of 9.7% [39] - Total borrowings increased to approximately RMB 172,958,000 in 2024 from RMB 111,401,000 in 2023 [80] - Capital debt ratio rose to 132.0% in 2024 from 82.2% in 2023, mainly due to increased bank borrowings [81] - Cash and cash equivalents increased by approximately RMB 1,443,000, driven by net cash inflow from operating activities of approximately RMB 7,847,000 [79] Research and Development - The company invested approximately RMB 15,542,000 in research and development in 2024, emphasizing its commitment to new product development [47] - Research and development expenses increased from approximately RMB 11,586,000 in 2023 to RMB 15,542,000 in 2024, an increase of about RMB 3,956,000 or 34.1%, primarily due to new projects in the environmental sector [60] Corporate Governance - The company has complied with all applicable provisions of the corporate governance code during the review period, except for deviations from provisions C.2.1 and C.1.8 [102] - The audit committee held two meetings during the review period, with all members in attendance, and reviewed the consolidated financial statements for the year ending December 31, 2024 [105] Future Outlook - In 2025, the group plans to expand its foreign customer market, particularly in North America, Europe, and Southeast Asia [91] - The group aims to develop high-value-added fine chemicals from bentonite resources, focusing on three product categories: organic bentonite series, water-based bentonite series, and inorganic gel series [90]

[Performance Highlights](index=2&type=section&id=Performance%20Highlights) This section provides an overview of the company's financial performance for the six months ended June 30, 2024 [Performance Summary](index=2&type=section&id=Performance%20Summary) Revenue increased by **20.2%** and gross profit by **23.2%**, but profit attributable to equity holders decreased by **30.4%**, with no interim dividend declared Key Financial Indicators for H1 2024 | Indicator | H1 2024 (RMB) | H1 2023 (RMB) | Year-on-Year Change (RMB) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Revenue | 91,123,000 | 75,830,000 | +15,293,000 | +20.2% | | Gross Profit | 37,184,000 | 30,177,000 | +7,007,000 | +23.2% | | Gross Profit Margin | 40.8% | 39.8% | +1.0% | - | | Profit Attributable to Equity Holders | 2,805,000 | 4,028,000 | -1,223,000 | -30.4% | | Basic Earnings Per Share | 0.073 | 0.105 | -0.032 | -30.5% | - The Board resolved not to declare any interim dividend for the six months ended June 30, 2024 (2023: zero)[3](index=3&type=chunk) [Unaudited Condensed Consolidated Interim Results](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Interim%20Results) This section presents the unaudited condensed consolidated interim financial statements, including the statement of profit or loss, financial position, changes in equity, and cash flows [Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Revenue and gross profit increased, but profit for the period decreased due to higher operating expenses and lower other income Key Data from Statement of Profit or Loss and Other Comprehensive Income | Indicator | H1 2024 (RMB) | H1 2023 (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | 91,123,166 | 75,829,682 | +20.2% | | Cost of Sales | (53,939,153) | (45,652,436) | +18.1% | | Gross Profit | 37,184,013 | 30,177,246 | +23.2% | | Distribution Costs | (12,938,361) | (10,329,206) | +25.3% | | Administrative Expenses | (11,048,469) | (8,778,337) | +25.9% | | Research and Development Expenses | (8,068,052) | (5,343,483) | +51.0% | | Other Income - Net | 1,048,497 | 1,954,712 | -46.3% | | Operating Profit | 6,177,628 | 7,680,932 | -19.6% | | Net Finance Costs | (3,140,291) | (3,477,455) | -9.7% | | Profit Before Income Tax | 3,037,337 | 4,203,477 | -27.7% | | Income Tax Expense | (232,794) | (174,996) | +33.0% | | Profit Attributable to Equity Holders | 2,804,543 | 4,028,481 | -30.4% | | Basic Earnings Per Share | 0.073 | 0.105 | -30.5% | [Unaudited Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Total assets increased by **5.5%** to **RMB 308.9 million**, with cash and liabilities rising, leading to an increased debt-to-asset ratio Key Data from Statement of Financial Position | Indicator | June 30, 2024 (RMB) | December 31, 2023 (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Total Non-Current Assets | 135,377,396 | 131,631,817 | +2.8% | | Total Current Assets | 173,526,005 | 161,217,563 | +7.6% | | Total Assets | 308,903,401 | 292,849,380 | +5.5% | | **Equity** | | | | | Total Equity | 120,234,230 | 117,429,687 | +2.4% | | **Liabilities** | | | | | Total Non-Current Liabilities | 26,221,847 | 26,105,811 | +0.4% | | Total Current Liabilities | 162,447,324 | 149,313,882 | +8.8% | | Total Liabilities | 188,669,171 | 175,419,693 | +7.6% | - Cash and cash equivalents increased by **83.5%** from **RMB 14.89 million** at the end of 2023 to **RMB 27.32 million** as of June 30, 2024[5](index=5&type=chunk) - Trade and other receivables and prepayments decreased by **4.2%** from **RMB 72.26 million** at the end of 2023 to **RMB 69.21 million**[5](index=5&type=chunk) [Unaudited Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Total comprehensive income attributable to equity holders was **RMB 2.80 million**, increasing total equity to **RMB 120.23 million** by period-end Key Data from Statement of Changes in Equity | Indicator | June 30, 2024 (RMB) | January 1, 2024 (RMB) | June 30, 2023 (RMB) | | :--- | :--- | :--- | :--- | | Share Capital | 38,400,000 | 38,400,000 | 38,400,000 | | Other Reserves | 50,347,405 | 50,347,405 | 50,058,545 | | Retained Earnings | 31,486,825 | 28,682,282 | 30,696,947 | | Total Equity | 120,234,230 | 117,429,687 | 119,155,492 | | Profit for the Period | 2,804,543 | - | 4,028,481 | [Unaudited Condensed Consolidated Statement of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Cash and cash equivalents increased by **RMB 12.53 million**, primarily from operating and financing activities, with stable investing outflows Key Data from Statement of Cash Flows | Indicator | H1 2024 (RMB) | H1 2023 (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | 11,427,084 | 2,126,229 | +437.4% | | Net Cash Used in Investing Activities | (3,998,033) | (4,034,335) | -0.9% | | Net Cash from Financing Activities | 5,100,483 | 1,103,114 | +362.4% | | Net Increase/(Decrease) in Cash and Cash Equivalents | 12,529,534 | (804,992) | N/A | | Cash and Cash Equivalents at End of Period | 27,318,038 | 18,558,337 | +47.2% | [Notes to Unaudited Condensed Consolidated Interim Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated interim financial statements, covering general information, accounting policies, segment information, and specific financial line items [General Information](index=8&type=section&id=General%20Information) The Group primarily engages in bentonite fine chemical business, established in 2000 and listed on GEM in 2015 - The Group primarily engages in the development, production, and sale of bentonite fine chemical products, including paper-making chemicals, metallurgical pelletizing bentonite, high-quality calcium-based soil, and other products[9](index=9&type=chunk) - The company was established in China on December 4, 2000, and listed on the GEM of the Stock Exchange on January 16, 2015[9](index=9&type=chunk) [Basis of Preparation and Accounting Policies](index=8&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) Interim financial information is prepared under IAS 34 and GEM Listing Rules, consistent with 2023 policies, with no significant impact from new IFRS - The unaudited condensed consolidated interim financial information is prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the disclosure requirements of the GEM Listing Rules[10](index=10&type=chunk) - The accounting policies adopted are consistent with those applied in the annual financial statements for the year ended December 31, 2023[11](index=11&type=chunk) [Segment Information](index=9&type=section&id=Segment%20Information) Management identifies only one operating segment: the production and sale of bentonite products, hence no segment information is presented - All business activities of the Group are considered to be primarily dependent on the performance of bentonite product production and sales, and management believes there is only one operating segment[12](index=12&type=chunk) [Revenue Details](index=9&type=section&id=Revenue%20Details) Total revenue reached **RMB 91.12 million**, with strong growth in most product categories, except for a slight decline in organic bentonite Revenue by Product Category | Product | H1 2024 (RMB Thousand) | Share (%) | H1 2023 (RMB Thousand) | Share (%) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Paper-making Chemicals | 19,654 | 21.6 | 15,021 | 19.8 | +30.8 | | Organic Bentonite | 47,778 | 52.4 | 50,023 | 66.0 | -4.5 | | Inorganic Gels | 14,927 | 16.4 | 8,907 | 11.7 | +67.6 | | Dry Strength Agents | 5,138 | 5.6 | 252 | 0.4 | +1,938.9 | | High-Quality Calcium-Based Soil | 808 | 0.9 | 249 | 0.3 | +224.5 | | Others | 2,818 | 3.1 | 1,378 | 1.8 | +104.5 | | Total | 91,123 | 100.0 | 75,830 | 100.0 | +20.2 | - Revenue from paper-making chemicals increased by **30.8%**, primarily due to a **27.9%** increase in sales volume[13](index=13&type=chunk) - Revenue from organic bentonite decreased by **4.5%**, mainly due to a reduction in sales volume[14](index=14&type=chunk) [Other Income - Net](index=10&type=section&id=Other%20Income%20-%20Net) Net other income decreased by **46.3%** to **RMB 1.05 million**, primarily due to reduced government grants Other Income - Net | Item | H1 2024 (RMB) | H1 2023 (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Government Grants - Asset-Related | 196,734 | 26,235 | +649.9% | | Government Grants - Cost-Related | 993,846 | 1,888,897 | -47.4% | | Others | (142,083) | 39,580 | N/A | | Total | 1,048,497 | 1,954,712 | -46.3% | - The decrease in net other income was mainly due to a reduction in government grants from approximately **RMB 1.92 million** to approximately **RMB 1.19 million**[41](index=41&type=chunk) [Net Finance Costs](index=10&type=section&id=Net%20Finance%20Costs) Net finance costs decreased by **9.7%** to **RMB 3.14 million**, mainly due to a lower average borrowing interest rate Net Finance Costs | Item | H1 2024 (RMB) | H1 2023 (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Finance Income - Interest Income from Bank Deposits | 49,628 | 22,868 | +117.0% | | Finance Costs - Interest Expense | (3,251,827) | (3,484,126) | -6.7% | | Net Finance Costs | (3,140,291) | (3,477,455) | -9.7% | - The decrease in net finance costs was primarily attributable to a reduction in the average borrowing interest rate[42](index=42&type=chunk) [Profit for the Period](index=11&type=section&id=Profit%20for%20the%20Period) Profit for the period was **RMB 3.04 million**, with increases in depreciation and various amortization expenses Profit for the Period Related Expenses | Item | H1 2024 (RMB) | H1 2023 (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Depreciation | 3,211,070 | 2,479,192 | +29.5% | | Amortization of Prepaid Lease Payments for Land | 91,254 | 82,759 | +10.3% | | Amortization of Mining Rights | 57,800 | 57,800 | 0.0% | | Amortization of Leasehold Improvements | 1,212,070 | 659,930 | +83.7% | [Income Tax Expense](index=11&type=section&id=Income%20Tax%20Expense) Income tax expense increased by **33.0%** to **RMB 0.23 million**, with the company benefiting from a **15%** high-tech enterprise tax incentive Income Tax Expense | Item | H1 2024 (RMB) | H1 2023 (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Current Income Tax | (232,794) | (198,637) | +17.2% | | Deferred Income Tax | – | 23,641 | N/A | | Income Tax Expense | (232,794) | (174,996) | +33.0% | - The company and its subsidiary, Yangyuan Renheng Fine Clay Co., Ltd., enjoy a high-tech enterprise tax incentive with a tax rate of **15%**[17](index=17&type=chunk) - The company enjoys an additional tax deduction for R&D expenses (calculated at **100%** of actual R&D expenses recognized under China GAAP)[18](index=18&type=chunk) [Earnings Per Share](index=12&type=section&id=Earnings%20Per%20Share) Basic earnings per share decreased by **30.5%** to **RMB 0.073**, with diluted earnings per share remaining identical due to no dilutive ordinary shares Earnings Per Share | Indicator | H1 2024 | H1 2023 | Change Rate | | :--- | :--- | :--- | :--- | | Profit Attributable to Equity Holders (RMB) | 2,804,543 | 4,028,481 | -30.4% | | Weighted Average Number of Ordinary Shares Issued | 38,400,000 | 38,400,000 | 0.0% | | Basic Earnings Per Share (RMB per share) | 0.073 | 0.105 | -30.5% | - Diluted earnings per share for the six months ended June 30, 2024, and 2023 were the same as basic earnings per share, as there were no potentially dilutive ordinary shares[21](index=21&type=chunk) [Dividends](index=13&type=section&id=Dividends) The Board resolved not to declare any interim dividend for the six months ended June 30, 2024 - The Board resolved not to declare any interim dividend for the six months ended June 30, 2024 (2023: zero)[22](index=22&type=chunk) [Property, Plant and Equipment](index=13&type=section&id=Property%2C%20Plant%20and%20Equipment) The Group purchased **RMB 14.04 million** in property, plant, and equipment, an increase from the prior period - For the six months ended June 30, 2024, the Group purchased approximately **RMB 14.04 million** (2023: approximately **RMB 9.90 million**) in property, plant, and equipment[23](index=23&type=chunk) [Trade and Other Receivables and Prepayments](index=13&type=section&id=Trade%20and%20Other%20Receivables%20and%20Prepayments) Net trade and other receivables and prepayments decreased to **RMB 69.21 million**, driven by lower trade receivables and higher prepayments Trade and Other Receivables and Prepayments | Item | June 30, 2024 (RMB) | December 31, 2023 (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Trade Receivables - Net | 59,973,658 | 65,023,210 | -7.8% | | Other Receivables - Net | 386,468 | 855,075 | -54.8% | | Prepayments | 8,849,077 | 6,386,017 | +38.6% | | Trade and Other Receivables and Prepayments - Net | 69,209,203 | 72,264,302 | -4.2% | Ageing Analysis of Trade Receivables | Ageing | June 30, 2024 (RMB) | December 31, 2023 (RMB) | | :--- | :--- | :--- | | Within 180 days | 42,102,295 | 47,396,394 | | 180 days to 1 year | 15,975,713 | 16,369,448 | | 1 year to 2 years | 5,936,417 | 3,538,361 | | 2 years to 3 years | 892,457 | 2,271,548 | | Over 3 years | 1,512,575 | 1,893,258 | | Total | 66,419,457 | 71,469,009 | - The credit period granted to customers is generally a maximum of **180 days**[25](index=25&type=chunk) [Share Capital](index=14&type=section&id=Share%20Capital) Issued and fully paid ordinary share capital remained at **RMB 38.40 million**, consistent with prior issuances Share Capital Information | Item | Number of Ordinary Shares | RMB | | :--- | :--- | :--- | | As of June 30, 2024 (Unaudited) | 38,400,000 | 38,400,000 | - The company issued **8,000,000** H shares on January 16, 2015, increasing the total number of issued shares to **32,000,000**[26](index=26&type=chunk) - The company issued **6,400,000** new H shares by way of placing on November 29, 2018, with net proceeds of **RMB 6,400,000** credited to share capital and **RMB 13,007,799** to share premium[26](index=26&type=chunk) [Trade and Other Payables](index=15&type=section&id=Trade%20and%20Other%20Payables) Total trade and other payables decreased by **26.6%** to **RMB 43.21 million**, primarily due to reductions in trade payables and staff benefits Trade and Other Payables | Item | June 30, 2024 (RMB) | December 31, 2023 (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Trade Payables | 30,933,724 | 39,371,472 | -21.5% | | Other Payables | 7,932,683 | 12,184,777 | -34.9% | | Accrued Staff Salaries and Benefits | 3,803,892 | 6,051,355 | -37.1% | | Accrued Taxes (excluding income tax) | 540,573 | 1,244,006 | -56.5% | | Total | 43,210,872 | 58,851,610 | -26.6% | Ageing Analysis of Trade Payables | Ageing | June 30, 2024 (RMB) | December 31, 2023 (RMB) | | :--- | :--- | :--- | | Within 6 months | 26,810,094 | 35,105,842 | | 6 months to 1 year | 638,484 | 367,291 | | 1 year to 2 years | 56,624 | 316,111 | | 2 years to 3 years | 220,649 | 157,970 | | Over 3 years | 3,207,873 | 3,424,258 | | Total | 30,933,724 | 39,371,472 | [Management Discussion and Analysis](index=16&type=section&id=Management%20Discussion%20and%20Analysis) This section provides management's perspective on the Group's business and financial performance, liquidity, capital structure, and future outlook [Business Review](index=16&type=section&id=Business%20Review) The Group focuses on promoting bentonite products for paints and coatings, with **RMB 8.07 million** in R&D expenses and high-tech enterprise re-evaluation - The Group continues to focus on promoting bentonite for paints and coatings, especially high-solid content products, to meet national VOC emission policy requirements[30](index=30&type=chunk) - The Group's bentonite products feature low viscosity and easy dispersion, resulting in low-viscosity, high-solid content coatings with improved application performance[30](index=30&type=chunk) - During the reporting period, the Group's R&D expenses amounted to **RMB 8.07 million**, and it continued to undertake two provincial-level new product development projects[30](index=30&type=chunk) [Financial Review](index=17&type=section&id=Financial%20Review) Revenue grew by **20.2%** driven by strong sales, but increased operating costs and expenses led to a decrease in profit [Revenue](index=17&type=section&id=Revenue_FinancialReview) Total revenue increased by **20.2%** to **RMB 91.12 million**, with strong growth in most product categories, except for organic bentonite Revenue by Product Category (Financial Review) | Product | H1 2024 (RMB Thousand) | Share (%) | H1 2023 (RMB Thousand) | Share (%) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Paper-making Chemicals | 19,654 | 21.6 | 15,021 | 19.8 | +30.8 | | Organic Bentonite | 47,778 | 52.4 | 50,023 | 66.0 | -4.5 | | Inorganic Gels | 14,927 | 16.4 | 8,907 | 11.7 | +67.6 | | Dry Strength Agents | 5,138 | 5.6 | 252 | 0.4 | +1,938.9 | | High-Quality Calcium-Based Soil | 808 | 0.9 | 249 | 0.3 | +224.5 | | Others | 2,818 | 3.1 | 1,378 | 1.8 | +104.5 | | Total | 91,123 | 100.0 | 75,830 | 100.0 | +20.2 | - Paper-making chemicals revenue increased by **30.8%**, primarily due to a **27.9%** increase in sales volume from approximately **3,779 tonnes** for the six months ended June 30, 2023, to approximately **4,833 tonnes** for the six months ended June 30, 2024[31](index=31&type=chunk) - Dry strength agent revenue increased by **1,938.9%**, high-quality calcium-based soil revenue increased by **224.5%**, and inorganic gel revenue increased by **67.6%**, mainly due to increased sales volume[32](index=32&type=chunk) [Cost of Sales](index=18&type=section&id=Cost%20of%20Sales) Cost of sales increased by **18.2%** to **RMB 53.94 million**, mainly due to a **20.3%** rise in raw material costs, especially CPAM Cost of Sales Breakdown | Item | H1 2024 (RMB Thousand) | Share (%) | H1 2023 (RMB Thousand) | Share (%) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Raw Material Costs | 42,180 | 78.2 | 35,061 | 76.8 | +20.3 | | Direct Labor Costs | 3,021 | 5.6 | 2,648 | 5.8 | +14.1 | | Manufacturing Fixed Costs | 7,929 | 14.7 | 7,213 | 15.8 | +9.9 | | Others | 809 | 1.5 | 730 | 1.6 | +10.8 | | Total | 53,939 | 100.0 | 45,652 | 100.0 | +18.2 | - Raw material costs increased by **20.3%**, primarily due to an increase in the average purchase unit price and consumption of CPAM (a major raw material for bentonite products)[35](index=35&type=chunk) [Gross Profit and Gross Profit Margin](index=19&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) Gross profit increased by **23.2%** to **RMB 37.18 million**, with gross margin improving to **40.8%** due to product mix and lower raw material costs - Gross profit increased by approximately **RMB 7.01 million** or **23.2%** from approximately **RMB 30.18 million** for the six months ended June 30, 2023, to approximately **RMB 37.18 million** for the current reporting period[37](index=37&type=chunk) - Gross profit margin increased from **39.8%** for the six months ended June 30, 2023, to **40.8%** for the six months ended June 30, 2024, mainly due to changes in the sales product mix and lower average cost prices for raw materials and energy compared to last year[37](index=37&type=chunk) [Distribution Costs](index=19&type=section&id=Distribution%20Costs) Distribution costs increased by **25.3%** to **RMB 12.94 million**, primarily due to higher transportation expenses - Distribution costs increased by approximately **RMB 2.61 million** or **25.3%**, mainly due to an increase in transportation expenses from approximately **RMB 3.94 million** for the six months ended June 30, 2023, to approximately **RMB 5.00 million** for the six months ended June 30, 2024[38](index=38&type=chunk) [Administrative Expenses](index=19&type=section&id=Administrative%20Expenses) Administrative expenses increased by **25.9%** to **RMB 11.05 million**, mainly due to higher staff costs and professional fees - Administrative expenses increased by approximately **RMB 2.27 million** or **25.9%** from approximately **RMB 8.78 million** for the six months ended June 30, 2023, to approximately **RMB 11.05 million** for the six months ended June 30, 2024, primarily due to increases in staff costs and professional fees[39](index=39&type=chunk) [Research and Development Expenses](index=19&type=section&id=Research%20and%20Development%20Expenses) R&D expenses significantly increased by **51.0%** to **RMB 8.07 million**, driven by increased environmental protection R&D projects - R&D expenses increased by approximately **RMB 2.73 million** or **51.0%** from approximately **RMB 5.34 million** for the six months ended June 30, 2023, to approximately **RMB 8.07 million** for the six months ended June 30, 2024, mainly due to increased work on environmental protection R&D projects with Jilin Petrochemical Design Institute[40](index=40&type=chunk) [Other Income - Net](index=20&type=section&id=Other%20Income%20-%20Net_FinancialReview) Net other income decreased by **46.3%** to **RMB 1.05 million**, primarily due to reduced government grants - Net other income decreased, mainly due to a reduction in government grants from approximately **RMB 1.92 million** for the six months ended June 30, 2023, to approximately **RMB 1.19 million** for the six months ended June 30, 2024[41](index=41&type=chunk) [Net Finance Costs](index=20&type=section&id=Net%20Finance%20Costs_FinancialReview) Net finance costs decreased by **9.7%** to **RMB 3.14 million**, mainly due to a lower average borrowing interest rate - Net finance costs decreased from approximately **RMB 3.48 million** for the six months ended June 30, 2023, to **RMB 3.14 million** for the current reporting period, primarily due to a reduction in the average borrowing interest rate[42](index=42&type=chunk) [Income Tax Expense](index=20&type=section&id=Income%20Tax%20Expense_FinancialReview) Income tax expense increased by **33.0%** to **RMB 0.23 million** - For the six months ended June 30, 2024, income tax expense was approximately **RMB 0.23 million**, compared to approximately **RMB 0.18 million** for the six months ended June 30, 2023[43](index=43&type=chunk) [Profit Attributable to Equity Holders of the Company](index=20&type=section&id=Profit%20Attributable%20to%20Equity%20Holders%20of%20the%20Company) Profit attributable to equity holders decreased by **30.4%** to **RMB 2.81 million**, due to increased expenses and reduced other income - Due to the aforementioned reasons, profit attributable to equity holders of the company for the six months ended June 30, 2024, was approximately **RMB 2.81 million**, compared to approximately **RMB 4.03 million** for the six months ended June 30, 2023[44](index=44&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) The Group relies on operating cash and borrowings for liquidity, with **RMB 27.32 million** in cash and sufficient working capital for the next 12 months - The Group primarily meets its working capital needs through cash generated from operations and various short-term and long-term bank and other borrowings[45](index=45&type=chunk) - During the reporting period, the weighted average effective annual interest rates for bank borrowings and other borrowings were **5.01%** and **2.30%**, respectively[45](index=45&type=chunk) - As of June 30, 2024, the Group had cash and cash equivalents of **RMB 27.32 million**[45](index=45&type=chunk) [Cash Flow](index=21&type=section&id=Cash%20Flow) Cash and cash equivalents increased by **RMB 12.43 million**, driven by higher net cash inflows from operating and financing activities - During the reporting period, the Group's cash and cash equivalents increased by approximately **RMB 12.43 million**[46](index=46&type=chunk) Cash Flow Components | Activity | H1 2024 (RMB) | H1 2023 (RMB) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 11,427,084 | 2,126,229 | | Net Cash Used in Investing Activities | (3,998,033) | (4,034,335) | | Net Cash from Financing Activities | 5,100,483 | 1,103,114 | | Net Increase/(Decrease) in Cash and Cash Equivalents | 12,529,534 | (804,992) | [Capital Structure](index=21&type=section&id=Capital%20Structure) Total borrowings increased to **RMB 140.27 million**, raising the debt-to-asset ratio to **93.9%**, with **RMB 14.97 million** in pledged assets - The Group's total borrowings as of June 30, 2024, were approximately **RMB 140.27 million** (December 31, 2023: approximately **RMB 111.40 million**)[47](index=47&type=chunk) - As of June 30, 2024, the Group's debt-to-asset ratio was approximately **93.9%** (December 31, 2023: **82.2%**), with the increase mainly due to an increase in total equity[48](index=48&type=chunk) - As of June 30, 2024, the Group pledged assets including certain buildings, plant and machinery, land use rights, and time deposits totaling approximately **RMB 14.97 million** to banks[49](index=49&type=chunk) [Capital Commitments](index=21&type=section&id=Capital%20Commitments) Capital commitments decreased to **RMB 3.74 million** as of June 30, 2024 - As of June 30, 2024, the Group's capital commitments were approximately **RMB 3.74 million** (December 31, 2023: **RMB 4.68 million**)[60](index=60&type=chunk) [Exchange Rate Risk](index=22&type=section&id=Exchange%20Rate%20Risk) The Group's primary operations are in China, with most transactions in RMB, deeming exchange rate risk insignificant and undertaking no hedging - The Group's main operations are located in China, and most major transactions are conducted in RMB; except for certain amounts payable to professionals denominated in HKD, most of the Group's assets and liabilities are denominated in RMB[51](index=51&type=chunk) - The Group believes that the exchange rate fluctuation risk between HKD, USD, and RMB is not significant, and the Group has not entered into any hedging transactions to manage potential foreign currency fluctuation risks[51](index=51&type=chunk) [Contingent Liabilities, Legal Proceedings and Potential Litigation](index=22&type=section&id=Contingent%20Liabilities%2C%20Legal%20Proceedings%20and%20Potential%20Litigation) As of June 30, 2024, the Group had no significant contingent liabilities, legal proceedings, or potential litigation - As of June 30, 2024, the Group had no significant contingent liabilities, legal proceedings, or potential litigation[51](index=51&type=chunk) [Significant Acquisitions and Disposals](index=22&type=section&id=Significant%20Acquisitions%20and%20Disposals) The Group did not undertake any significant acquisitions or disposals during the reporting period - For the six months ended June 30, 2024, the Group did not have any significant acquisitions or disposals[51](index=51&type=chunk) [Going Concern](index=22&type=section&id=Going%20Concern) The Group has sufficient financial resources to continue operations in the foreseeable future, thus financial statements are prepared on a going concern basis - Based on its current financial position and available financing, the Group has sufficient financial resources to continue operations in the foreseeable future, and therefore, the financial statements have been prepared on a going concern basis[51](index=51&type=chunk) [Future Outlook](index=22&type=section&id=Future%20Outlook) The Group aims to develop advanced bentonite products, promote special mortar sales, invest in a **5.6MW** green power project, and establish an overseas US branch - The Group is committed to developing a series of bentonite products to replace foreign products, fill domestic gaps, and enhance the technical level and global competitiveness of China's bentonite industry[52](index=52&type=chunk) - Products are categorized into three main series: high-dispersibility organic bentonite, water-based bentonite, and inorganic gels, aiming to address the high viscosity and thickness issues of solvent-free coatings, reduce production costs in the coating industry, and better achieve energy saving and emission reduction[52](index=52&type=chunk)[53](index=53&type=chunk) - In the second half of 2024, the Group will focus on promoting the sales of special mortar and plans to invest **RMB 23.5 million** in a **5.6MW** wind-solar integrated green power generation project in Yangyuan Renheng, which is expected to generate approximately **10 million kWh** of clean energy annually upon completion[53](index=53&type=chunk) - For the Group's business development needs, the Board of Directors has approved the establishment of an overseas US branch[53](index=53&type=chunk) [Other Information](index=24&type=section&id=Other%20Information) This section covers additional information including human resources, interests of directors and substantial shareholders, capital commitments, exchange rate risk, and corporate governance practices [Human Resources and Training](index=24&type=section&id=Human%20Resources%20and%20Training) The Group had **202** employees with total staff costs of **RMB 13.31 million**, adhering to a "people-oriented" philosophy with incentive mechanisms - As of June 30, 2024, the Group had a total of **202** employees[54](index=54&type=chunk) - During the reporting period, total staff costs were approximately **RMB 13.31 million** (2023: approximately **RMB 10.66 million**)[54](index=54&type=chunk) - The Group adheres to a "people-oriented" management philosophy, actively building a management and development platform for employees, and implementing various incentive mechanisms to enhance employee work efficiency[54](index=54&type=chunk) [Directors', Supervisors' and Chief Executive's Interests in Shares, Debentures and Related Shares](index=24&type=section&id=Directors%27%2C%20Supervisors%27%20and%20Chief%20Executive%27s%20Interests%20in%20Shares%2C%20Debentures%20and%20Related%20Shares) Key individuals, including Mr. Zhang Youlian (**50.05%**), Ms. Zhang Jinhua (**1.04%**), and Mr. Xu Qinshi (**0.26%**), held interests in the company's shares Directors'/Supervisors' Long Positions in Ordinary Shares of the Company | Director/Supervisor Name | Nature of Interest | Number of Shares Held in the Company | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhang Youlian | Beneficial Owner | 19,220,600 | 50.05% | | Ms. Zhang Jinhua | Beneficial Owner | 398,400 | 1.04% | | Mr. Xu Qinshi (i) | Spouse's Interest | 100,000 | 0.26% | [Substantial Shareholders' and Other Persons' Interests in Shares and Related Shares](index=25&type=section&id=Substantial%20Shareholders%27%20and%20Other%20Persons%27%20Interests%20in%20Shares%20and%20Related%20Shares) Ms. Yu Hua held **9.31%** of the company's shares, qualifying her as a substantial shareholder Substantial Shareholders' and Other Persons' Long Positions in Shares | Shareholder Name | Nature of Interest | Number of Shares Held in the Company | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Ms. Yu Hua | Beneficial Owner | 3,576,000 | 9.31% | [Rights of Directors and Supervisors to Acquire Shares or Debentures](index=26&type=section&id=Rights%20of%20Directors%20and%20Supervisors%20to%20Acquire%20Shares%20or%20Debentures) No directors, supervisors, or their associates were granted or exercised any rights to acquire company shares or debentures during the period - During the reporting period, no directors or supervisors or their respective spouses or minor children were granted any rights to acquire benefits by acquiring shares or debentures of the company, nor did they exercise any such rights[58](index=58&type=chunk) [Connected Transactions](index=26&type=section&id=Connected%20Transactions) The Group did not enter into any connected or continuing connected transactions requiring disclosure under GEM Listing Rules - During the reporting period, the Group did not enter into any connected transactions or continuing connected transactions required to be disclosed in this announcement under the GEM Listing Rules[59](index=59&type=chunk) [Interests of Directors, Supervisors and Controlling Shareholders in Competing Business](index=26&type=section&id=Interests%20of%20Directors%2C%20Supervisors%20and%20Controlling%20Shareholders%20in%20Competing%20Business) No directors, supervisors, controlling shareholders, or their associates engaged in competing businesses or held conflicting interests - During the reporting period, no directors or supervisors or controlling shareholders or their respective associates engaged in any business that competes or may compete with the Group's business, or held any interests therein that conflict with the Group's interests[59](index=59&type=chunk) [Public Float](index=26&type=section&id=Public%20Float) At least **25%** of the company's issued share capital was held by public shareholders, complying with listing requirements - Based on publicly available information and to the best knowledge of the Directors, at least **25%** of the company's issued share capital was held by public shareholders from the reporting period to the date of this announcement[60](index=60&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=26&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities during the reporting period - During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[60](index=60&type=chunk) [Dividends](index=27&type=section&id=Dividends_OtherInformation) The Board resolved not to declare any interim dividend for the six months ended June 30, 2024 - The Board resolved not to declare any interim dividend for the six months ended June 30, 2024 (2023: zero)[61](index=61&type=chunk) [Corporate Governance Practices](index=27&type=section&id=Corporate%20Governance%20Practices) The company complies with the Corporate Governance Code, with deviations in Chairman/CEO roles and D&O liability insurance, which the Board is addressing - The company has consistently complied with all applicable code provisions in the Corporate Governance Code, except for deviations from code provisions C.2.1 and C.1.8 of the Corporate Governance Code[62](index=62&type=chunk) - Deviation from C.2.1: The roles of Chairman and Chief Executive should be separate and not performed by the same individual; currently, Mr. Zhang Youlian serves as both Chairman of the Board and Chief Executive[62](index=62&type=chunk) - Deviation from C.1.8: The company should purchase appropriate insurance for directors and officers against liabilities arising from legal actions; during the reporting period, the company did not purchase directors' and officers' liability insurance covering directors' liabilities arising from legal actions[62](index=62&type=chunk) [Standard Code for Securities Transactions](index=27&type=section&id=Standard%20Code%20for%20Securities%20Transactions) The company adopted a standard code for securities transactions, and all directors confirmed full compliance during the reporting period - The company has adopted a standard code for its directors' securities transactions no less exacting than that set out in Rules 5.48 to 5.67 of the GEM Listing Rules[63](index=63&type=chunk) - Following specific inquiries with all directors, all directors have confirmed their full compliance with the required standards of dealing set out in the Standard Code during the reporting period[63](index=63&type=chunk) [Audit Committee](index=28&type=section&id=Audit%20Committee) The Audit Committee, established in 2014, reviews financial reports, internal controls, and auditor independence, approving the interim financial statements - The company established an Audit Committee on March 26, 2014, and has set out its terms of reference in writing in compliance with the Corporate Governance Code[64](index=64&type=chunk) - As of the date of this announcement, the Audit Committee has three members: Mr. Zhang Lei, Mr. Chen Jianping, and Mr. Tang Jingyan (all independent non-executive directors), with Mr. Zhang Lei appointed as Chairman of the Audit Committee[64](index=64&type=chunk) - The Audit Committee has reviewed the company's unaudited consolidated financial statements for the six months ended June 30, 2024, this results announcement, and the interim report, and has confirmed that the accounting treatments adopted by the Group and the preparation of the financial statements in this results announcement comply with current accounting standards and the requirements of the GEM Listing Rules, with sufficient disclosures made[64](index=64&type=chunk) [Events After Reporting Period](index=28&type=section&id=Events%20After%20Reporting%20Period) As of the announcement date, there were no significant events after the reporting period - As of the date of this announcement, there were no significant events after the reporting period[64](index=64&type=chunk) [Disclosure of Information](index=28&type=section&id=Disclosure%20of%20Information) The interim report for the six months ended June 30, 2024, will be dispatched to shareholders and published online - The company will dispatch the interim report for the six months ended June 30, 2024, to its shareholders in due course and will publish it on the company's website www.renheng.com and the HKEX website www.hkexnews.hk[64](index=64&type=chunk)

Financial Performance - The company recorded revenue of approximately RMB 162,278,000 for the year ended December 31, 2023, an increase of 7.6% compared to RMB 150,818,000 in 2022[9]. - The profit attributable to equity holders of the company was approximately RMB 2,303,000, representing a 62.2% increase from RMB 1,420,000 in the previous year[15]. - Basic earnings per share increased to RMB 0.06, a rise of 50.0% from RMB 0.04 in the previous year[15]. - Total revenue for the year ended December 31, 2023, was approximately RMB 162,278,000, an increase of 7.6% compared to RMB 150,818,000 in 2022, primarily driven by increased sales of organic bentonite[27]. - Gross profit increased by approximately RMB 10,073,000 or 18.2% to RMB 65,363,000, with a gross margin of 40.3%, up 3.6 percentage points from 36.7%[34]. - The net profit attributable to equity holders increased by approximately RMB 883,000 or 62.2% to RMB 2,303,000[44]. Cost and Expenses - Sales costs increased from approximately RMB 95,527,000 in 2022 to RMB 96,915,000 in 2023, representing a rise of about 1.5%[29]. - Raw materials and consumables costs constituted 72.0% of total sales costs in 2023, slightly down from 72.5% in 2022[30]. - Direct labor costs rose by 3.2% from approximately RMB 9,648,000 in 2022 to RMB 9,959,000 in 2023, accounting for 10.3% of sales costs[33]. - Distribution costs rose by approximately RMB 3,944,000 or 19.4% to RMB 24,249,000, primarily due to increased transportation expenses[35]. - Administrative expenses increased by approximately RMB 4,140,000 or 24.6% to RMB 20,953,000, mainly due to higher professional service fees and employee costs[36]. - R&D expenses rose by approximately RMB 973,000 or 9.2% to RMB 11,586,000, attributed to increased work on new environmental research projects[38]. Research and Development - The company’s R&D expenses for 2023 amounted to RMB 11,586,000, reflecting a strong commitment to new product development[22]. - The company undertook the development of two provincial-level new products in 2023, including a high solid content paint rheological agent and active montmorillonite for concrete applications[16]. - The company aims to promote high-end organic montmorillonite and high-end water-based montmorillonite applications as part of its future development strategy[17]. - The company is focusing on promoting high solid content coatings, aligning with national VOC emission reduction policies[21]. Market and Product Development - Organic bentonite accounted for 60.4% of total revenue in 2023, up from 57.1% in 2022, indicating a growing demand in the market[26]. - The company aims to develop a series of montmorillonite products to replace imported products, enhancing the domestic industry's technological level and competitiveness[74]. - The company has established a production line with an annual capacity of 200,000 tons for special mortar and will implement a full-staff sales strategy to expand the special mortar market[17]. - In 2024, the company will focus on promoting the sales of special mortars, with a production line capable of producing 200,000 tons annually[75]. Financial Position and Ratios - The capital debt ratio improved to 82.2%, down from 87.4% in the previous year, indicating a reduction in financial leverage[9]. - The current financial condition and cash flow are believed to sufficiently support the company's long-term development[15]. - Total borrowings as of December 31, 2023, were approximately RMB 111,401,000, down from RMB 120,016,000 in 2022[63]. - The capital debt ratio improved to approximately 82.2% in 2023 from 87.4% in 2022, mainly due to an increase in bank borrowings[64]. Corporate Governance - The board of directors decided not to declare any final dividend for the year ended December 31, 2023, consistent with the previous year[79]. - The board consists of seven members, including three executive directors, one non-executive director, and three independent non-executive directors[102]. - The independent non-executive directors have confirmed their independence annually, and the company considers them independent according to the relevant regulations[108]. - The audit committee, established on March 26, 2014, has three members, all of whom are independent non-executive directors, responsible for overseeing financial reporting and internal controls[118]. - The board is committed to developing the overall strategy, approving annual development plans and budgets, and monitoring financial and operational performance[109]. Compliance and Risk Management - The company has no significant violations of applicable laws and regulations that would materially affect its business operations during the review year[164]. - The company has identified market risk, currency risk, and liquidity risk as significant factors that could impact its financial performance[166][168][170]. - The company has maintained a focus on operational risk management through standard operating procedures and regular assessments[171]. - The company has implemented various procedures to enhance the confidentiality of insider information and ensure compliance with relevant regulations[136]. Social Responsibility - The company made charitable donations of approximately RMB 260,000 during the review year, compared to RMB 132,000 in 2022, reflecting an increase of approximately 96.21%[179]. - The company is committed to environmental sustainability and promotes green practices within its operations[163].

Financial Performance - Revenue increased by 7.6% to approximately RMB 162,278,000 (2022: RMB 150,818,000) [5] - Gross profit rose by 18.2% to approximately RMB 65,363,000 (2022: RMB 55,290,000) [5] - Gross margin improved to approximately 40.3% (2022: 36.7%) [5] - Profit before tax surged by 63.9% to approximately RMB 2,638,000 (2022: RMB 1,610,000) [5] - Net profit attributable to equity holders increased by 62.2% to approximately RMB 2,303,000 (2022: RMB 1,420,000) [5] - Basic earnings per share rose by 50.0% to approximately RMB 0.06 (2022: RMB 0.04) [5] - Total revenue for the year ended December 31, 2023, was approximately RMB 162,278,000, an increase of 7.6% compared to RMB 150,818,000 in 2022, primarily driven by increased sales of organic bentonite [103] - The company reported a net profit attributable to shareholders of RMB 2,302,676 for 2023, compared to RMB 1,420,207 in 2022, representing a growth of 62% [79] Assets and Liabilities - Total assets amounted to RMB 292,849,380 as of December 31, 2023, compared to RMB 278,152,459 in 2022 [8] - Total liabilities increased to RMB 175,419,693 from RMB 163,025,448 in the previous year [8] - Cash and cash equivalents decreased to RMB 14,888,159 in 2023 from RMB 19,355,608 in 2022, a decline of 23.5% [89] - Total trade and other payables rose to RMB 58,851,610 in 2023, compared to RMB 40,158,141 in 2022, marking a significant increase of 46.3% [91] - Total borrowings as of December 31, 2023, were approximately RMB 111,401,000, down from RMB 120,016,000 as of December 31, 2022 [136] - The debt-to-equity ratio improved to approximately 82.2% as of December 31, 2023, from 87.4% as of December 31, 2022, primarily due to an increase in bank borrowings [137] Research and Development - Research and development expenses were approximately RMB 11,585,685, up from RMB 10,613,283 in 2022 [6] - The company's R&D expenses for 2023 amounted to RMB 11,586,000, representing a 9.2% increase from RMB 10,613,000 in 2022, attributed to new environmental research projects [114] - Research expenditures are recognized as expenses when incurred, while development costs can be recognized as intangible assets if the project is likely to succeed and costs can be reliably measured [52] - Research and development expenses were supported by additional tax deductions, allowing for 100% deduction of actual R&D costs under applicable tax laws [77] Expenses - The company incurred total expenses of RMB 155,684,169 in 2023, compared to RMB 143,834,528 in 2022, marking an increase of 8.2% [72] - Distribution costs rose by RMB 3,944,000 or 19.4% to RMB 24,249,000 in 2023, mainly due to increased transportation expenses [110] - Administrative expenses increased by RMB 4,140,000 or 24.6% to RMB 20,953,000 in 2023, primarily due to higher professional service fees and employee costs [111] - Financial costs for the year were RMB (6,535,024), slightly higher than RMB (6,448,244) in 2022, indicating a marginal increase in financial burden [74] Inventory and Receivables - As of December 31, 2023, the total inventory cost was RMB 65,889,150, an increase of 8.5% from RMB 60,820,690 in 2022 [10] - Trade receivables increased to RMB 71,469,009 in 2023 from RMB 64,611,918 in 2022, reflecting a growth of 8.5% [82] - The net trade receivables after impairment provisions were RMB 65,023,210 in 2023, up from RMB 60,279,241 in 2022, indicating a 7.5% increase [82] - The impairment provision for trade receivables increased to RMB 6,445,799 in 2023 from RMB 4,332,677 in 2022, reflecting a rise of 48.8% [86] Taxation - Current and deferred tax expenses are adjusted based on applicable tax rates and temporary differences arising from deferred tax assets and liabilities [40] - The effective tax rate for the company was influenced by a preferential tax rate of 15% due to high-tech enterprise certification, which is valid for three years [76] - Income tax expenses rose from approximately RMB 190,000 for the year ended December 31, 2022, to approximately RMB 335,000 for the year ended December 31, 2023, an increase of approximately RMB 145,000 or 76.3% due to an increase in profit before tax [117] - The actual tax rates for the years ended December 31, 2023, and December 31, 2022, were 8.6% and 11.8%, respectively [117] Corporate Governance - The company has complied with all applicable provisions of the Corporate Governance Code during the review period, except for deviations from provisions C.2.1 and C.1.8 [161] - The Audit Committee held four meetings during the review period, with all members in attendance [165] - The company has not purchased, sold, or redeemed any of its listed securities during the year ended December 31, 2023 [169] - At least 25% of the issued share capital is held by public shareholders as of the review period [168] Future Plans and Developments - The company plans to develop a series of montmorillonite products to replace imported products, enhancing domestic industry technology and competitiveness [148] - A production line for special mortar with an annual capacity of 200,000 tons has been established, with a focus on profit-centered and innovation-driven development strategies in 2024 [149] - The company has developed a production line with an annual capacity of 200,000 tons of special mortar putty, located at the headquarters in Zhejiang Changxing [99] Other Information - The company did not recommend any final dividend for the year ended December 31, 2023 (2022: nil) [5] - There are no significant events after the reporting period as of the announcement date [170] - The annual report for the year ended December 31, 2023, will be sent to shareholders and published on the company's website [171]

Financial Performance - Revenue increased by 9.2% to approximately RMB 120,276,000 for the nine months ended September 30, 2023, compared to RMB 110,137,000 in the same period of 2022[6] - Gross profit rose by 27.3% to approximately RMB 48,462,000, with a gross margin of 40.3%, up from 34.6% in 2022[6] - The company reported a profit attributable to equity holders of approximately RMB 6,244,000, a significant turnaround from a loss of RMB 363,000 in the same period last year[6] - Basic earnings per share were approximately RMB 0.16, compared to a loss per share of RMB 0.01 in the previous year[6] - Operating profit for the nine months was RMB 11,594,569, compared to RMB 4,630,274 in the same period of 2022[7] - The company’s total comprehensive income attributable to equity holders for the nine months was RMB 6,244,278, compared to a loss of RMB 362,655 in the same period last year[8] - For the nine months ended September 30, 2023, the company's revenue was approximately RMB 120,275,526, an increase of about RMB 10,138,817 or 9.2% compared to RMB 110,136,709 for the same period in 2022[27] - The profit attributable to equity holders for the nine months ended September 30, 2023, was approximately RMB 6,244,278, compared to a loss of approximately RMB 363,000 for the same period in 2022[30] Expenses and Costs - Research and development expenses increased to RMB 8,279,460 for the nine months, up from RMB 7,636,134 in the previous year[7] - Distribution costs for the nine months ended September 30, 2023, were approximately RMB 16,601,000, an increase of about RMB 2,401,000 or 16.9% from RMB 14,200,000 in the same period of 2022, primarily due to increased transportation costs[29] - Administrative expenses for the nine months ended September 30, 2023, were approximately RMB 13,650,000, an increase of about RMB 749,000 or 5.8% from RMB 12,901,000 in the same period of 2022, mainly due to rising labor and professional costs[29] - R&D expenses increased from approximately RMB 7,636,000 for the nine months ended September 30, 2022, to approximately RMB 8,279,000 for the same period in 2023, an increase of about RMB 643,000 or 8.4%, primarily due to the development of national energy-saving low-carbon materials[30] Business Operations - The company primarily engages in the development, production, and sale of bentonite fine chemicals, with a focus on paper chemicals and metallurgical pellets[10] - The sales of organic bentonite and inorganic gel contributed significantly to the revenue increase during the reporting period[27] - The company has undertaken two provincial-level new product development projects and has applied for six patents during the reporting period[26] - The company has established a key laboratory for the development and application of critical mineral materials in collaboration with Wuhan University of Technology[26] - The company continues to focus on promoting bentonite for paint and coatings, with significant growth in sales and profits for organic bentonite products[26] - The company is developing high-dispersion bentonite for high solid content and solvent-free coatings, achieving a solid content of up to 70% and eliminating the need for organic solvents during use[33] - The company aims to transition from traditional coatings to green coatings by strictly controlling VOC emissions during production and coating processes[31] - The company is leveraging its bentonite resources to assist paper companies in sustainable development through comprehensive resource utilization and environmental protection efforts[34] Equity and Dividends - The board of directors resolved not to declare any interim dividend for the nine months ended September 30, 2023, consistent with the previous year[6] - As of September 30, 2023, total equity attributable to equity holders was RMB 121,371,289, reflecting an increase from RMB 113,344,149 at the same time last year[8] - The company has maintained a public shareholding of at least 25% of its issued share capital during the reporting period[44] Taxation and Incentives - The company has received tax incentives with a rate of 15% for high-tech enterprises, valid for three years from December 1, 2020, to November 30, 2023[21] - The company has reported current tax expenses of RMB (657,871) for the nine months ended September 30, 2023, compared to a tax credit of RMB 170,503 for the same period in 2022[21] Corporate Governance - The audit committee has reviewed the unaudited condensed consolidated financial report for the nine months ended September 30, 2023, and agreed that the accounting treatment adopted is in compliance with current accounting standards and GEM listing rules[51] - The company has adhered to all applicable provisions of the corporate governance code, with some deviations noted in sections C.2.1 and C.1.8[46] - The audit committee consists of three independent non-executive directors, ensuring effective oversight of financial reporting and internal controls[49] - The company is committed to enhancing its internal control systems and continuous professional training for directors[46] - The chairman and CEO roles are currently held by the same individual, which the board believes provides strong leadership[46] Miscellaneous - No purchases, sales, or redemptions of the company's listed securities were conducted by the company or its subsidiaries during the reporting period[45] - There are no significant post-reporting period events as of the report date[52] - The company has not purchased any liability insurance for directors and officers due to ongoing considerations of proposals from different underwriters[47] - The company will issue the quarterly report for the nine months ended September 30, 2023, to shareholders and publish it on its website and the stock exchange[53]