长安仁恒(08139) - 2024 - 中期业绩

Performance Highlights This section provides an overview of the company's financial performance for the six months ended June 30, 2024 Performance Summary 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] Unaudited Condensed Consolidated Interim Results 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 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 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] - 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] Unaudited Condensed Consolidated Statement of Changes in Equity 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 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 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 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] - The company was established in China on December 4, 2000, and listed on the GEM of the Stock Exchange on January 16, 2015[9] Basis of Preparation and Accounting Policies 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] - The accounting policies adopted are consistent with those applied in the annual financial statements for the year ended December 31, 2023[11] Segment Information 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] Revenue Details 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] - Revenue from organic bentonite decreased by 4.5%, mainly due to a reduction in sales volume[14] Other Income - Net 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] Net Finance Costs 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] Profit for the Period 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 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] - The company enjoys an additional tax deduction for R&D expenses (calculated at 100% of actual R&D expenses recognized under China GAAP)[18] Earnings Per Share 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] 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] Property, Plant and Equipment 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] Trade and Other Receivables and Prepayments 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] Share Capital 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] - 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] Trade and Other Payables 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 This section provides management's perspective on the Group's business and financial performance, liquidity, capital structure, and future outlook Business Review 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] - The Group's bentonite products feature low viscosity and easy dispersion, resulting in low-viscosity, high-solid content coatings with improved application performance[30] - 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] Financial Review Revenue grew by 20.2% driven by strong sales, but increased operating costs and expenses led to a decrease in profit Revenue 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] - 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] Cost of Sales 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] Gross Profit and Gross Profit Margin 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] - 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] Distribution Costs 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] Administrative Expenses 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] Research and Development Expenses 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] Other Income - Net 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] Net Finance Costs 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] Income Tax Expense 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] Profit Attributable to Equity Holders of the Company 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] Liquidity and Capital Resources 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] - 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] - As of June 30, 2024, the Group had cash and cash equivalents of RMB 27.32 million[45] Cash Flow 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] 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 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] - 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] - 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] Capital Commitments 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] Exchange Rate Risk 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] - 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] Contingent Liabilities, Legal Proceedings and Potential Litigation 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] Significant Acquisitions and Disposals 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] Going Concern 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] Future Outlook 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] - 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][53] - 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] - For the Group's business development needs, the Board of Directors has approved the establishment of an overseas US branch[53] Other Information 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 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] - During the reporting period, total staff costs were approximately RMB 13.31 million (2023: approximately RMB 10.66 million)[54] - 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] Directors', Supervisors' and Chief Executive's Interests in Shares, Debentures and Related Shares 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 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 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] Connected Transactions 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] Interests of Directors, Supervisors and Controlling Shareholders in Competing Business 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] Public Float 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] Purchase, Sale or Redemption of the Company's Listed Securities 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] 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)[61] Corporate Governance Practices 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] - 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] - 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] Standard Code for Securities Transactions 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] - 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] Audit Committee 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] - 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] - 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] Events After Reporting Period 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] Disclosure of Information 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)