Company Information and Report Overview [Company Basic Information](index=1&type=section&id=1.1%20Company%20Basic%20Information) Zhejiang Chang'an Renheng Technology Co., Ltd. (stock code: 8139) is a company incorporated in the People's Republic of China, primarily engaged in the development, production, and sale of bentonite fine chemicals - Company Name: Zhejiang Chang'an Renheng Technology Co., Ltd., Stock Code: **8139**[1](index=1&type=chunk) - Main Business: Development, production, and sale of bentonite fine chemicals, including paper chemicals, bentonite for metallurgical pellets, and high-quality calcium-based clay[10](index=10&type=chunk) - Established on **December 4, 2000**, and restructured into a joint-stock company on **December 31, 2008**[10](index=10&type=chunk)[11](index=11&type=chunk) [GEM Characteristics and Directors' Responsibility Statement](index=1&type=section&id=1.2%20GEM%20Characteristics%20and%20Directors'%20Responsibility%20Statement) The report highlights that the GEM market offers listing opportunities for small and medium-sized companies, but with higher investment risks and market volatility, and directors are jointly and individually responsible for the accuracy, completeness, and non-misleading nature of the announcement's information - GEM Market Positioning: Provides a listing market for small and medium-sized companies, with higher investment risks and potentially greater market volatility[2](index=2&type=chunk) - Directors' Responsibility: Directors confirm the announcement's information is accurate, complete, not misleading or fraudulent, and without omissions[3](index=3&type=chunk) [Performance Highlights](index=2&type=section&id=1.3%20Performance%20Highlights) For the six months ended June 30, 2025, the company's revenue increased by 7.6% year-on-year, but gross profit decreased by 1.8%, with gross margin falling to 37.2%, resulting in a loss of approximately **RMB 3.005 million** and basic loss per share of **RMB 0.078**, with no interim dividend declared 2025 H1 Performance Highlights | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | Year-on-year change | | :--- | :--- | :--- | :--- | | Revenue | 98,023,000 | 91,123,000 | Increase 7.6% | | Gross profit | 36,507,000 | 37,184,000 | Decrease 1.8% | | Gross margin | 37.2% | 40.8% | Decrease 3.6 percentage points | | Loss / Profit attributable to equity holders of the Company for the period | (3,005,000) | 2,805,000 | Shift from profit to loss | | Basic Loss / Earnings per share | (0.078) | 0.073 | Shift from profit to loss | | Interim Dividend | Zero | Zero | No declaration | Unaudited Condensed Consolidated Financial Statements [Consolidated Statement of Comprehensive Loss / Income](index=3&type=section&id=2.1%20Consolidated%20Statement%20of%20Comprehensive%20Loss%20%2F%20Income) For the six months ended June 30, 2025, revenue increased to **RMB 98.0227 million**, but increased cost of sales, distribution costs, and administrative expenses led to a decrease in gross profit, resulting in a loss of **RMB 3.0052 million** for the period Key Data from Consolidated Statement of Comprehensive Loss / Income | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Revenue | 98,022,700 | 91,123,166 | | Cost of sales | (61,515,653) | (53,939,153) | | Gross profit | 36,507,047 | 37,184,013 | | Distribution costs | (17,011,145) | (12,938,361) | | Administrative expenses | (12,653,893) | (11,048,469) | | Research and development expenses | (6,264,694) | (8,068,052) | | Operating profit | 1,177,720 | 6,177,628 | | Finance costs – net | (3,871,417) | (3,140,291) | | Loss / Profit before income tax | (2,693,697) | 3,037,337 | | Income tax expense | (311,549) | (232,794) | | Loss / Profit attributable to equity holders of the Company for the period | (3,005,246) | 2,804,543 | | Basic Loss / Earnings per share | (0.078) | 0.073 | [Consolidated Statement of Financial Position](index=4&type=section&id=2.2%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets slightly increased, non-current assets remained stable, and current assets, including inventories, trade and other receivables, and cash and cash equivalents, all grew, while total equity slightly decreased and total liabilities increased, mainly due to a significant rise in current borrowings Key Data from Consolidated Statement of Financial Position | Indicator | 2025-06-30 (RMB) | 2024-12-31 (RMB) | | :--- | :--- | :--- | | Total assets | 345,336,078 | 337,982,310 | | Non-current assets | 149,071,870 | 146,955,912 | | Current assets | 196,264,208 | 191,026,398 | | Total equity | 115,682,426 | 118,694,270 | | Total liabilities | 229,653,652 | 219,288,040 | | Non-current liabilities | 14,520,565 | 21,274,123 | | Current liabilities | 215,133,087 | 198,013,917 | - Current borrowings increased from **RMB 158.19 million** at the end of 2024 to **RMB 176.24 million** at the end of June 2025, primarily contributing to the increase in current liabilities[7](index=7&type=chunk) [Consolidated Statement of Changes in Equity](index=6&type=section&id=2.3%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, total equity decreased from **RMB 118.694 million** at the beginning of the period to **RMB 115.682 million**, mainly due to a loss of **RMB 3.0052 million** and other comprehensive loss of **RMB 6,598** during the period Key Data from Consolidated Statement of Changes in Equity | Indicator | 2025-01-01 (RMB) | 2025-06-30 (RMB) | | :--- | :--- | :--- | | Share capital | 38,400,000 | 38,400,000 | | Other reserves | 50,342,050 | 50,335,452 | | Retained earnings | 29,952,220 | 26,946,974 | | Total equity | 118,694,270 | 115,682,426 | - A loss of **RMB 3.005 million** and other comprehensive loss of **RMB 6,598** for the period led to a decrease in total equity[8](index=8&type=chunk) [Consolidated Statement of Cash Flows](index=7&type=section&id=2.4%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash flow from operating activities turned from a net inflow to a net outflow of **RMB 0.3407 million**, net cash outflow from investing activities slightly decreased, while net cash inflow from financing activities significantly increased, with cash and cash equivalents at period-end rising to **RMB 19.8624 million** Key Data from Consolidated Statement of Cash Flows | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Net cash (used in) / generated from operating activities | (340,739) | 11,427,084 | | Net cash used in investing activities | (3,764,645) | (3,998,033) | | Net cash generated from financing activities | 7,582,914 | 5,100,483 | | Net increase in cash and cash equivalents | 3,477,530 | 12,529,534 | | Cash and cash equivalents at end of period | 19,862,374 | 27,318,038 | - Net cash flow from operating activities shifted from a net inflow of **RMB 11.4271 million** in the same period of 2024 to a net outflow of **RMB 0.3407 million** in the first half of 2025[9](index=9&type=chunk) - Net cash inflow from financing activities increased from **RMB 5.1005 million** in the same period of 2024 to **RMB 7.5829 million** in the first half of 2025[9](index=9&type=chunk) Notes to the Financial Statements [General Information](index=8&type=section&id=3.1%20General%20Information) This section provides basic information about the company and its subsidiaries, including their main business, establishment history, controlling shareholder, registered address, and listing status - The Group is primarily engaged in the development, production, and sale of bentonite fine chemicals[10](index=10&type=chunk) - The controlling shareholder is **Mr. Zhang Youlian**[10](index=10&type=chunk) - The Company was listed on the GEM of the Stock Exchange on **January 16, 2015**[12](index=12&type=chunk) [Basis of Preparation and Accounting Policies](index=8&type=section&id=3.2%20Basis%20of%20Preparation%20and%20Accounting%20Policies) The interim financial information is prepared in accordance with IAS 34 and GEM Listing Rules, with accounting policies consistent with the 2024 annual financial statements, and new IFRS amendments are not expected to have a significant impact on the Group's performance or financial position - Basis of Preparation: International Accounting Standard 34 "Interim Financial Reporting" and the GEM Listing Rules[14](index=14&type=chunk) - Accounting Policies: Consistent with those adopted in the annual financial statements for the year ended **December 31, 2024**[15](index=15&type=chunk) - Impact of New Standards: Directors estimate that the newly revised International Financial Reporting Standards will have no significant impact on the Group's performance and financial position[15](index=15&type=chunk)[17](index=17&type=chunk) [Segment Information](index=9&type=section&id=3.3%20Segment%20Information) All of the Group's business activities revolve around the production and sale of bentonite products, which management considers a single operating segment, thus no segment information is presented - Operating Segment: The Group has only one operating segment, which is the production and sale of bentonite products[18](index=18&type=chunk) [Revenue Breakdown](index=9&type=section&id=3.4%20Revenue%20Breakdown) For the six months ended June 30, 2025, the company's total revenue was **RMB 98.0227 million**, with organic bentonite as the primary source, significant growth in "Bidi powder" and high-quality calcium-based clay, and a decrease in paper chemicals and other products Revenue by Product Category | Product | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Organic bentonite | 52,981,658 | 47,778,559 | | Paper chemicals | 17,085,650 | 19,653,930 | | Inorganic gel | 15,144,080 | 14,926,620 | | Dry strength agent | 5,854,968 | 5,137,843 | | Bidi powder | 2,991,464 | 207,618 | | High-quality calcium-based clay | 2,280,351 | 807,965 | | Others | 1,684,529 | 2,610,631 | | **Total revenue** | **98,022,700** | **91,123,166** | [Other Income – Net](index=10&type=section&id=3.5%20Other%20Income%20%E2%80%93%20Net) For the six months ended June 30, 2025, other income net was **RMB 0.5447 million**, a decrease from **RMB 1.0485 million** in the prior year, primarily due to reduced government grants Other Income – Net | Item | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Government grants – cost-related | 346,610 | 993,846 | | Government grants – asset-related | – | 196,734 | | Others | 198,111 | (142,083) | | **Total** | **544,721** | **1,048,497** | - Total government grants decreased from **RMB 1.1906 million** in the same period of 2024 to **RMB 0.3466 million** in the first half of 2025[21](index=21&type=chunk) [Finance Costs – Net](index=10&type=section&id=3.6%20Finance%20Costs%20%E2%80%93%20Net) For the six months ended June 30, 2025, finance costs net increased to **RMB 3.8714 million** from **RMB 3.1403 million** in the prior year, mainly due to higher interest expenses Finance Costs – Net | Item | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Finance income – interest income from bank deposits | 28,712 | 49,628 | | Finance costs – interest expenses | (3,895,296) | (3,251,827) | | Finance costs – exchange gains on borrowings, cash and cash equivalents – net | 53,872 | 61,908 | | Finance costs – interest expense on lease liabilities | (58,705) | – | | **Finance costs – net** | **(3,871,417)** | **(3,140,291)** | - Interest expenses increased from **RMB 3.2518 million** in the same period of 2024 to **RMB 3.8953 million** in the first half of 2025[22](index=22&type=chunk) [Loss / Profit Before Income Tax](index=11&type=section&id=3.7%20Loss%20%2F%20Profit%20Before%20Income%20Tax) For the six months ended June 30, 2025, the company reported a loss before income tax of **RMB 2.6937 million**, compared to a profit of **RMB 3.0373 million** in the prior year, with increased depreciation and amortization of leasehold improvements Loss / Profit for the period after charging the following | Item | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Depreciation | 3,484,314 | 3,211,070 | | Amortisation of prepaid lease payments for land | 107,992 | 91,254 | | Amortisation of mining rights | 57,800 | 57,800 | | Amortisation of leasehold improvements | 1,577,272 | 1,212,070 | [Income Tax Expense](index=11&type=section&id=3.8%20Income%20Tax%20Expense) For the six months ended June 30, 2025, income tax expense increased to **RMB 0.3115 million**, with the company and some subsidiaries enjoying a 15% preferential tax rate for high-tech enterprises, some subsidiaries a 20% preferential tax rate for small low-profit enterprises, and US operations taxed at 21% Income Tax Expense | Item | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Current income tax | (131,862) | (232,794) | | Deferred income tax | (179,687) | – | | **Income tax expense** | **(311,549)** | **(232,794)** | - The Company and its subsidiary, Yangyuan Renheng Fine Clay Co., Ltd., enjoy a **15%** preferential tax rate as high-tech enterprises[24](index=24&type=chunk) - The subsidiary, Zhejiang Chang'an Renheng Chemical Co., Ltd., enjoys a **20%** preferential income tax rate as a small low-profit enterprise[25](index=25&type=chunk) - Profits from the United States are subject to income tax at a rate of **21%**[25](index=25&type=chunk) [Loss / Earnings Per Share](index=12&type=section&id=3.9%20Loss%20%2F%20Earnings%20Per%20Share) For the six months ended June 30, 2025, the company reported a basic loss per share of **RMB 0.078**, compared to earnings per share of **RMB 0.073** in the prior year, with diluted loss per share being the same as basic loss per share due to the absence of potentially dilutive ordinary shares Loss / Earnings Per Share | Indicator | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Loss / Profit attributable to equity holders of the Company (RMB) | (3,005,246) | 2,804,543 | | Weighted average number of ordinary shares in issue | 38,400,000 | 38,400,000 | | Basic Loss / Earnings per share (RMB per share) | (0.078) | 0.073 | - Diluted Loss / Earnings per share is the same as basic Loss / Earnings per share, as there are no potentially dilutive ordinary shares[28](index=28&type=chunk) [Dividends](index=12&type=section&id=3.10%20Dividends) The Board of Directors resolved not to declare any interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board of Directors resolved not to declare any interim dividend for the six months ended **June 30, 2025**[29](index=29&type=chunk) [Property, Plant and Equipment](index=12&type=section&id=3.11%20Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2025, the Group acquired property, plant, and equipment totaling approximately **RMB 10.6567 million**, a decrease from **RMB 14.0358 million** in the prior year Acquisition of Property, Plant and Equipment | Item | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Acquisition of property, plant and equipment | 10,656,702 | 14,035,835 | [Trade and Other Receivables, Prepayments and Other Current Assets](index=13&type=section&id=3.12%20Trade%20and%20Other%20Receivables%2C%20Prepayments%20and%20Other%20Current%20Assets) As of June 30, 2025, net trade and other receivables, prepayments, and other current assets totaled **RMB 84.3514 million**, a slight increase from the end of 2024, with a decrease in net trade receivables but a significant increase in prepayments, and credit terms generally ranging from 90 to 180 days Trade and Other Receivables, Prepayments and Other Current Assets | Item | 2025-06-30 (RMB) | 2024-12-31 (RMB) | | :--- | :--- | :--- | | Trade receivables – net | 69,060,244 | 71,606,234 | | Other receivables – net | 2,189,385 | 2,714,251 | | Prepayments | 12,733,150 | 8,898,261 | | Other current assets | 368,638 | 798,193 | | **Total** | **84,351,417** | **84,016,939** | Ageing Analysis of Trade Receivables | Ageing | 2025-06-30 (RMB) | 2024-12-31 (RMB) | | :--- | :--- | :--- | | Within 180 days | 54,315,596 | 54,627,569 | | 180 days to 1 year | 12,710,874 | 12,961,088 | | 1 year to 2 years | 4,223,054 | 6,699,565 | | 2 years to 3 years | 226,813 | 262,213 | | Over 3 years | 2,972,837 | 3,317,986 | | **Total** | **74,449,174** | **77,868,421** | - Credit terms granted to customers generally range from **90 to 180 days**[33](index=33&type=chunk) [Trade and Other Payables](index=15&type=section&id=3.13%20Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables were **RMB 38.2735 million**, a slight decrease from the end of 2024, with an increase in trade payables and a decrease in accrued staff salaries and benefits Trade and Other Payables | Item | 2025-06-30 (RMB) | 2024-12-31 (RMB) | | :--- | :--- | :--- | | Trade payables | 21,910,049 | 18,994,736 | | Other payables | 10,559,412 | 11,612,247 | | Accrued staff salaries and benefits | 4,318,431 | 7,395,042 | | Accrued taxes (excluding income tax) | 1,485,624 | 1,219,435 | | **Total** | **38,273,516** | **39,221,460** | Ageing Analysis of Trade Payables | Ageing | 2025-06-30 (RMB) | 2024-12-31 (RMB) | | :--- | :--- | :--- | | Within 6 months | 18,477,698 | 15,225,818 | | 6 months to 1 year | 38,169 | 99,152 | | 1 year to 2 years | 37,605 | 75,116 | | 2 years to 3 years | 33,552 | 22,291 | | Over 3 years | 3,323,025 | 3,572,359 | | **Total** | **21,910,049** | **18,994,736** | Operating and Financial Review [Market and Industry Review](index=16&type=section&id=4.1%20Market%20and%20Industry%20Review) China's non-metallic mineral product demand is in a growth opportunity period, with rapid development in the bentonite industry and diverse products, while national policies encourage classified mining, technological innovation, and deep processing to promote high-value development, and the paper industry is moving towards efficiency, quality, and low consumption - China's non-metallic mineral product demand is in a growth opportunity period characterized by "quality and quantity improvement in traditional sectors, accelerated expansion in emerging sectors, and effective promotion of demand and supply"[36](index=36&type=chunk) - The bentonite industry has successfully developed products such as edible oil decolorizing agents, drilling mud viscosifiers, and mycotoxin detoxifiers[36](index=36&type=chunk) - National plans guide the classified mining of bentonite mineral resources, enhancing technological R&D and deep processing capabilities to transform "resource advantages" into "technological advantages" and "economic advantages"[37](index=37&type=chunk) - The paper industry continues to develop towards a modern large-scale industry characterized by high efficiency, high quality, high benefits, low consumption, and low emissions[38](index=38&type=chunk) [Business Review](index=17&type=section&id=4.2%20Business%20Review) In the first half of 2025, the Group focused on promoting bentonite for paints and coatings, bentonite for oilfields, and putty mortar products, securing supply contracts with major oil companies for oilfield bentonite, while its US subsidiary operated normally and successfully passed mining permit reviews, with R&D expenses of approximately **RMB 6.265 million** - Business Focus: Promoting bentonite for paints and coatings, bentonite for oilfields, and putty mortar products[39](index=39&type=chunk) - Market Expansion: Oilfield bentonite products have secured supply contracts with companies such as **Sinopec** and **PetroChina**[39](index=39&type=chunk) - Subsidiary Operations: The US subsidiary operates normally, and Yangyuan Renheng Fine Clay Co., Ltd. successfully passed its mining permit review[39](index=39&type=chunk) - R&D Investment: R&D expenses for the first half of 2025 were approximately **RMB 6.265 million**[39](index=39&type=chunk) [Revenue Analysis](index=18&type=section&id=4.3%20Revenue%20Analysis) For the six months ended June 30, 2025, total revenue increased by **7.6%** year-on-year, with significant growth in organic bentonite, "Bidi powder" (up **1338.0%**), and high-quality calcium-based clay, while paper chemicals and other chemicals saw a decrease Revenue and Proportion by Product Category | Product | 2025 H1 (RMB Thousand) | Proportion (%) | 2024 H1 (RMB Thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Organic bentonite | 52,982 | 54.1 | 47,778 | 52.4 | | Paper chemicals | 17,086 | 17.4 | 19,654 | 21.6 | | Inorganic gel | 15,144 | 15.4 | 14,927 | 16.4 | | Dry strength agent | 5,855 | 6.0 | 5,138 | 5.6 | | Bidi powder | 2,991 | 3.1 | 208 | 0.2 | | High-quality calcium-based clay | 2,280 | 2.3 | 808 | 0.9 | | Others | 1,685 | 1.7 | 2,610 | 2.9 | | **Total** | **98,023** | **100.0** | **91,123** | **100.0** | - Organic bentonite revenue increased by **10.9%** to **RMB 52.982 million**, primarily due to increased sales volume[41](index=41&type=chunk) - "Bidi powder" revenue significantly increased by **1338.0%** to **RMB 2.991 million**[41](index=41&type=chunk) - Paper chemicals revenue decreased by **13.1%** to **RMB 17.086 million**, primarily due to decreased sales volume[40](index=40&type=chunk) [Cost of Sales Analysis](index=19&type=section&id=4.4%20Cost%20of%20Sales%20Analysis) For the six months ended June 30, 2025, cost of sales increased by **14.0%** year-on-year to **RMB 61.516 million**, with raw material costs being the main component, increasing by **13.9%** due to higher average purchase unit prices and consumption of CPAM Cost of Sales Breakdown | Item | 2025 H1 (RMB Thousand) | Proportion (%) | 2024 H1 (RMB Thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Raw material costs | 48,058 | 78.1 | 42,180 | 78.2 | | Manufacturing overhead costs | 9,166 | 14.9 | 7,929 | 14.7 | | Direct labor costs | 3,322 | 5.4 | 3,021 | 5.6 | | Others | 970 | 1.6 | 809 | 1.5 | | **Total** | **61,516** | **100.0** | **53,939** | **100.0** | - Cost of sales increased by **14.0%** to **RMB 61.516 million**[43](index=43&type=chunk) - Raw material costs increased by **13.9%** to **RMB 48.058 million**, primarily due to an increase in the average purchase unit price and consumption of CPAM (a key raw material for bentonite products)[44](index=44&type=chunk) [Gross Profit and Gross Margin](index=20&type=section&id=4.5%20Gross%20Profit%20and%20Gross%20Margin) For the six months ended June 30, 2025, gross profit decreased by **1.8%** year-on-year to **RMB 36.507 million**, and gross margin declined from **40.8%** to **37.2%**, mainly due to changes in the sales product mix and higher average costs of raw materials and energy Gross Profit and Gross Margin | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Gross profit | 36,507,000 | 37,184,000 | | Gross margin | 37.2% | 40.8% | - The decrease in gross margin was primarily due to changes in the sales product mix and higher average costs of raw materials and energy compared to the previous year[46](index=46&type=chunk) [Expense Analysis](index=20&type=section&id=4.6%20Expense%20Analysis) This section details changes in distribution costs, administrative expenses, and research and development expenses, with distribution and administrative costs increasing, while R&D expenses significantly decreased due to reduced project work [Distribution Costs](index=20&type=section&id=4.6.1%20Distribution%20Costs) For the six months ended June 30, 2025, distribution costs increased by **31.5%** year-on-year to **RMB 17.011 million**, primarily due to higher transportation expenses Distribution Costs | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Distribution costs | 17,011,000 | 12,938,000 | - The increase in distribution costs was primarily due to higher transportation expenses[47](index=47&type=chunk) [Administrative Expenses](index=20&type=section&id=4.6.2%20Administrative%20Expenses) For the six months ended June 30, 2025, administrative expenses increased by **14.5%** year-on-year to **RMB 12.654 million**, mainly due to higher staff costs and professional fees Administrative Expenses | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Administrative expenses | 12,654,000 | 11,048,000 | - The increase in administrative expenses was primarily due to higher staff costs and professional fees[48](index=48&type=chunk) [Research and Development Expenses](index=20&type=section&id=4.6.3%20Research%20and%20Development%20Expenses) For the six months ended June 30, 2025, research and development expenses decreased by **22.3%** year-on-year to **RMB 6.265 million**, mainly due to reduced work on environmental R&D projects with Jilin Petrochemical Design Institute Research and Development Expenses | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Research and development expenses | 6,265,000 | 8,068,000 | - The decrease in research and development expenses was primarily due to reduced work on environmental R&D projects with Jilin Petrochemical Design Institute[49](index=49&type=chunk) [Other Income – Net](index=21&type=section&id=4.7%20Other%20Income%20%E2%80%93%20Net) For the six months ended June 30, 2025, other income net was **RMB 0.545 million**, a decrease from **RMB 1.048 million** in the prior year, primarily due to reduced government grants Other Income – Net | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Other income – net | 545,000 | 1,048,000 | - The decrease in other income net was primarily due to government grants reducing from **RMB 1.191 million** to **RMB 0.347 million**[50](index=50&type=chunk) [Finance Costs – Net](index=21&type=section&id=4.8%20Finance%20Costs%20%E2%80%93%20Net) For the six months ended June 30, 2025, finance costs net increased to **RMB 3.871 million**, primarily due to an increase in average bank borrowings Finance Costs – Net | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Finance costs – net | 3,871,000 | 3,140,000 | - The increase in finance costs net was primarily due to an increase in average bank borrowings[51](index=51&type=chunk) [Income Tax Expense](index=21&type=section&id=4.9%20Income%20Tax%20Expense) For the six months ended June 30, 2025, income tax expense was **RMB 0.312 million**, an increase from **RMB 0.233 million** in the prior year Income Tax Expense | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Income tax expense | 312,000 | 233,000 | [Loss / Profit Attributable to Equity Holders of the Company for the Period](index=21&type=section&id=4.10%20Loss%20%2F%20Profit%20Attributable%20to%20Equity%20Holders%20of%20the%20Company%20for%20the%20Period) Due to the combined effect of the aforementioned factors, the loss attributable to equity holders of the Company for the six months ended June 30, 2025, was **RMB 3.005 million**, compared to a profit of **RMB 2.805 million** in the prior year Loss / Profit Attributable to Equity Holders of the Company for the Period | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Loss / Profit attributable to equity holders of the Company for the period | (3,005,000) | 2,805,000 | Financial Position and Future Outlook [Liquidity and Sources of Funds](index=21&type=section&id=5.1%20Liquidity%20and%20Sources%20of%20Funds) The Group primarily meets its working capital needs through cash generated from operations and long-term and short-term bank borrowings, with cash and cash equivalents totaling **RMB 19.862 million** as of June 30, 2025, and the Board believes the Group has sufficient working capital for at least the next twelve months - Sources of Funds: Primarily from cash generated from operations, long-term and short-term bank borrowings, and other borrowings[54](index=54&type=chunk) - The weighted average effective annual interest rates for bank borrowings and other borrowings were **4.29%** and **4.22%**, respectively[54](index=54&type=chunk) Cash and Cash Equivalents | Indicator | 2025-06-30 (RMB) | | :--- | :--- | | Cash and cash equivalents | 19,862,000 | - The Group's cash and cash equivalents increased by approximately **RMB 3.531 million**, primarily contributed by net cash inflow from financing activities[55](index=55&type=chunk) [Capital Structure and Indebtedness](index=22&type=section&id=5.2%20Capital%20Structure%20and%20Indebtedness) As of June 30, 2025, the Group's total borrowings were approximately **RMB 184.6 million**, an increase from the end of 2024, and the Group encountered no difficulties in renewing bank loans during the reporting period Total Borrowings | Indicator | 2025-06-30 (RMB) | 2024-12-31 (RMB) | | :--- | :--- | :--- | | Total borrowings | 184,604,000 | 172,958,000 | - The Group encountered no difficulties in renewing bank loans with lenders during the reporting period[56](index=56&type=chunk) [Gearing Ratio](index=22&type=section&id=5.3%20Gearing%20Ratio) As of June 30, 2025, the Group's gearing ratio was **142.4%**, an increase from **132.0%** at the end of 2024, primarily due to an increase in total equity Gearing Ratio | Indicator | 2025-06-30 | 2024-12-31 | | :--- | :--- | :--- | | Gearing ratio | 142.4% | 132.0% | - The increase in the gearing ratio was primarily due to an increase in total equity[57](index=57&type=chunk) [Pledge of Assets](index=22&type=section&id=5.4%20Pledge%20of%20Assets) As of June 30, 2025, the Group pledged assets including buildings, fixtures and fittings, land use rights, and time deposits totaling approximately **RMB 13.477 million** to banks, a decrease from **RMB 15.463 million** at the end of 2024 Pledge of Assets | Indicator | 2025-06-30 (RMB) | 2024-12-31 (RMB) | | :--- | :--- | :--- | | Total pledged assets | 13,477,000 | 15,463,000 | [Capital Expenditure](index=22&type=section&id=5.5%20Capital%20Expenditure) For the six months ended June 30, 2025, the Group's capital expenditure was approximately **RMB 10.657 million**, a decrease from **RMB 14.036 million** in the prior year Capital Expenditure | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | | :--- | :--- | :--- | | Capital expenditure | 10,657,000 | 14,036,000 | [Exchange Rate Risk](index=23&type=section&id=5.6%20Exchange%20Rate%20Risk) The Group's primary business is in China, with transactions mainly in RMB, and most assets and liabilities denominated in RMB; despite the non-convertibility of RMB posing exchange rate risk, the Group believes its exposure to exchange rate fluctuations among HKD, USD, and RMB is not significant and has not engaged in hedging transactions - Primary Business and Transaction Currency: Within mainland China, conducted in **RMB**[60](index=60&type=chunk) - Exchange Rate Risk: RMB is not freely convertible, posing a risk that actions by the Chinese government could affect exchange rates[60](index=60&type=chunk) - Risk Assessment: The Group believes its exposure to exchange rate fluctuations among **HKD**, **USD**, and **RMB** is not significant[60](index=60&type=chunk) - Hedging Strategy: The Group has not entered into any hedging transactions to manage foreign currency fluctuation risks[60](index=60&type=chunk) [Contingent Liabilities, Legal and Potential Proceedings](index=23&type=section&id=5.7%20Contingent%20Liabilities%2C%20Legal%20and%20Potential%20Proceedings) As of June 30, 2025, the Group had no significant contingent liabilities, legal proceedings, or potential proceedings - The Group had no significant contingent liabilities, legal proceedings, or potential proceedings[61](index=61&type=chunk) [Significant Acquisitions and Disposals](index=23&type=section&id=5.8%20Significant%20Acquisitions%20and%20Disposals) For the six months ended June 30, 2025, the Group did not undertake any significant acquisitions or disposals - The Group did not undertake any significant acquisitions or disposals[62](index=62&type=chunk) [Going Concern](index=23&type=section&id=5.9%20Going%20Concern) Based on its current financial position and available financing, the Group has sufficient financial resources to continue operating for the foreseeable future, thus the financial statements are prepared on a going concern basis - The Group has sufficient financial resources to continue operating for the foreseeable future, and the financial statements are prepared on a going concern basis[63](index=63&type=chunk) [Future Development](index=23&type=section&id=5.10%20Future%20Development) The Group will continue to focus on high-value and high-end utilization of bentonite and its associated minerals, develop strategic new products like organic bentonite, water-based bentonite, and inorganic gels, emphasize green and environmentally friendly product development, and target overseas markets such as North America, Europe, and Southeast Asia, driven by profit and innovation to maximize shareholder value - Product Strategy: Continue to focus on transitioning bentonite from traditional low-value, low-end utilization to high-value, high-end utilization, and research and develop bentonite mineral functional materials and related products[64](index=64&type=chunk) - New Product Development: Develop high-solid rheological additives for coatings, high-solid oil-based pesticide suspending agents, bentonite products for deep, ultra-deep, and offshore drilling, and focus on green and environmentally friendly product R&D[65](index=65&type=chunk) - Market Expansion: Focus on developing overseas customer markets in North America, Europe, Southeast Asia, and expanding foreign trade business[65](index=65&type=chunk) - Development Strategy: Adhere to a profit-centric approach, driven by innovation, actively developing new products, and opening new markets[65](index=65&type=chunk) Corporate Governance and Shareholder Information [Human Resources and Training](index=24&type=section&id=6.1%20Human%20Resources%20and%20Training) As of June 30, 2025, the Group had **232** employees with total staff costs of approximately **RMB 17.637 million**, adhering to a "people-oriented" management philosophy and enhancing employee efficiency and performance through strict selection, annual sales guidelines, quarterly marketing strategies, and various incentive mechanisms Number of Employees and Staff Costs | Indicator | 2025-06-30 | 2024 H1 (RMB) | | :--- | :--- | :--- | | Total number of employees | 232 | - | | Total staff costs | 17,637,000 | 16,959,000 | - Management Philosophy: Adhering to a "people-oriented" approach, building a management and development platform[66](index=66&type=chunk) - Performance Management: Annually issuing sales guidelines, formulating quarterly marketing strategies, and implementing various incentive mechanisms to enhance employee work efficiency[66](index=66&type=chunk) [Interests of Directors, Supervisors and Chief Executive](index=25&type=section&id=6.2%20Interests%20of%20Directors%2C%20Supervisors%20and%20Chief%20Executive) As of June 30, 2025, Mr. Zhang Youlian held **50.05%** of the company's shares, Ms. Zhang Jinhua held **1.04%**, and Mr. Xu Qinshi held **0.26%** through his spouse; no other directors, supervisors, or chief executive held disclosable interests in shares or related shares Long Positions of Directors / Supervisors in the Ordinary Shares of the Company | Name of Director / Supervisor | Nature of interest | Number of shares in the Company held | 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% | - Save as disclosed above, no other directors or supervisors and chief executive held any interests or short positions required to be registered or notified to the Stock Exchange[68](index=68&type=chunk) [Interests of Substantial Shareholders and Other Persons](index=26&type=section&id=6.3%20Interests%20of%20Substantial%20Shareholders%20and%20Other%20Persons) As of June 30, 2025, apart from directors, supervisors, and the chief executive, Ms. Yu Hua was the only other person holding **5%** or more interest in the company, with **9.31%** of the shares Long Positions of Substantial Shareholders and Other Persons in Shares | Name of Shareholder | Nature of interest | Total number of shares in the Company held | Approximate percentage of issued share capital | | :--- | :--- | :--- | :--- | | Ms. Yu Hua | Beneficial owner | 3,576,000 | 9.31% | - Save as disclosed above, no other persons held any interests or short positions required to be registered[69](index=69&type=chunk) [Rights of Directors and Supervisors to Acquire Shares or Debentures](index=26&type=section&id=6.4%20Rights%20of%20Directors%20and%20Supervisors%20to%20Acquire%20Shares%20or%20Debentures) During the reporting period, no director, supervisor, or their spouse or minor children were granted or exercised any rights to acquire shares or debentures of the company - During the reporting period, no director or supervisor or their respective spouses or minor children were granted or exercised any rights to acquire shares or debentures of the Company[70](index=70&type=chunk) [Connected Transactions](index=26&type=section&id=6.5%20Connected%20Transactions) During the reporting period, the Group did not enter into any connected transactions or continuing connected transactions requiring disclosure under the GEM Listing Rules - The Group did not enter into any connected transactions or continuing connected transactions requiring disclosure under the GEM Listing Rules[71](index=71&type=chunk) [Interests of Directors, Supervisors and Controlling Shareholders in Competing Businesses and Conflicts of Interest](index=26&type=section&id=6.6%20Interests%20of%20Directors%2C%20Supervisors%20and%20Controlling%20Shareholders%20in%20Competing%20Businesses%20and%20Conflicts%20of%20Interest) During the reporting period, no director, supervisor, controlling shareholder, or their associates engaged in any business competing or likely to compete with the Group's business, or held any interests that would create a conflict of interest with the Group - No director, supervisor, or controlling shareholder or their respective associates engaged in any business competing or likely to compete with the Group's business, or held any interests therein that would create a conflict of interest with the Group[72](index=72&type=chunk) [Public Float](index=27&type=section&id=6.7%20Public%20Float) From the reporting period to the date of this announcement, at least **25%** of the Company's issued share capital was held by public shareholders - At least **25%** of the Company's issued share capital is held by public shareholders[73](index=73&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=27&type=section&id=6.8%20Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[74](index=74&type=chunk) [Capital Commitments](index=27&type=section&id=6.9%20Capital%20Commitments) As of June 30, 2025, the Group's capital commitments were approximately **RMB 1.254 million**, a decrease from **RMB 1.672 million** at the end of 2024 Capital Commitments | Indicator | 2025-06-30 (RMB) | 2024-12-31 (RMB) | | :--- | :--- | :--- | | Capital commitments | 1,254,000 | 1,672,000 | [Dividends](index=27&type=section&id=6.10%20Dividends) The Board of Directors resolved not to declare any interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board of Directors resolved not to declare any interim dividend for the six months ended **June 30, 2025**[76](index=76&type=chunk) [Corporate Governance Practices](index=27&type=section&id=6.11%20Corporate%20Governance%20Practices) The Company is committed to complying with the Corporate Governance Code but has deviations regarding the combined roles of Chairman and Chief Executive and directors' and officers' liability insurance; the Board believes the current structure is beneficial and is considering liability insurance proposals - The Company complies with all applicable provisions of the Corporate Governance Code, but with two deviations[77](index=77&type=chunk) - Deviation from Code Provision C.2.1: The roles of Chairman and Chief Executive are combined and held by **Mr. Zhang Youlian**, which the Board believes provides strong and consistent leadership[77](index=77&type=chunk) - Deviation from Code Provision C.1.8: Directors' and officers' liability insurance covering directors' liabilities arising from legal proceedings was not purchased during the reporting period, as the Board required time to consider the proposal[78](index=78&type=chunk) [Standard Code for Securities Transactions](index=28&type=section&id=6.12%20Standard%20Code%20for%20Securities%20Transactions) The Company has adopted a standard code for securities transactions no less exacting than the GEM Listing Rules, and all directors have confirmed full compliance with the code after inquiry - The Company has adopted a standard code for securities transactions no less exacting than the GEM Listing Rules[79](index=79&type=chunk) - All directors confirmed full compliance with the required dealing standards set out in the Standard Code during the reporting period[79](index=79&type=chunk) [Nomination Committee](index=28&type=section&id=6.13%20Nomination%20Committee) The Company's Nomination Committee was established on March 26, 2014, with its terms of reference revised on June 30, 2025, and comprises Mr. Fan Fang (Executive Director), Mr. Zhang Lei, and Mr. Tang Jingyan (Independent Non-executive Directors), with Mr. Tang serving as Chairman - The Nomination Committee was established on **March 26, 2014**, and its terms of reference were revised on **June 30, 2025**[80](index=80&type=chunk) - Committee Members: **Mr. Fan Fang** (Executive Director), **Mr. Zhang Lei**, and **Mr. Tang Jingyan** (Independent Non-executive Directors)[80](index=80&type=chunk) - Chairman: **Mr. Tang Jingyan**[80](index=80&type=chunk) [Audit Committee](index=28&type=section&id=6.14%20Audit%20Committee) The Company's Audit Committee, established on March 26, 2014, comprises Mr. Zhang Lei (Chairman), Mr. Chen Jianping, and Mr. Tang Jingyan (all Independent Non-executive Directors), with primary duties including reviewing financial reports, internal control effectiveness, external auditor independence, and audit process effectiveness, and has reviewed the interim financial statements - The Audit Committee was established on **March 26, 2014**, and its terms of reference have been set out in compliance with the Corporate Governance Code[81](index=81&type=chunk) - Committee Members: **Mr. Zhang Lei** (Chairman), **Mr. Chen Jianping**, and **Mr. Tang Jingyan** (all Independent Non-executive Directors)[81](index=81&type=chunk) - Primary Responsibilities: Providing independent review and oversight of financial reporting, reviewing the effectiveness of internal controls, ensuring the independence of external auditors, and the effectiveness of the audit process[81](index=81&type=chunk) - The unaudited consolidated financial statements of the Company for the six months ended **June 30, 2025**, have been reviewed[82](index=82&type=chunk) Post-Reporting Period Events and Information Disclosure [Events After the Reporting Period](index=29&type=section&id=7.1%20Events%20After%20the%20Reporting%20Period) As of the date of this announcement, the Group has no significant events after the reporting period - As of the date of this announcement, there are no significant events after the reporting period[83](index=83&type=chunk) [Information Disclosure](index=29&type=section&id=7.2%20Information%20Disclosure) The Company will dispatch the interim report for the six months ended June 30, 2025, to shareholders in due course and will publish it on the company's website and the Stock Exchange's website - The interim report will be dispatched to shareholders and published on the Company's website www.renheng.com and the Stock Exchange's website www.hkexnews.hk[84](index=84&type=chunk)

Core Viewpoint - Chang'an Renheng (08139.HK) anticipates a loss of approximately RMB 3 million for the six months ending June 30, 2025, compared to a net profit of about RMB 2.8 million for the same period ending June 30, 2024 [1] Financial Performance - The company expects a decline in profit despite an increase in sales revenue, primarily due to a decrease in gross profit margin [1] - The anticipated loss is attributed to rising costs of raw materials and energy [1] - Increased distribution expenses have also contributed to higher sales costs during the period [1]

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].