武汉有机(02881) - 2024 - 中期业绩

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