武汉有机(02881) - 2024 - 中期财报

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