长安仁恒(08139) - 2025 - 中期财报

Performance Highlights The Group's revenue increased by 7.6% for the six months ended June 30, 2025, but gross profit decreased by 1.8%, leading to a net loss attributable to shareholders of RMB 3.005 million Overview of Key Financial Performance For the six months ended June 30, 2025, the Group's revenue increased by 7.6%, but gross profit decreased by 1.8%, with gross margin falling to 37.2%, resulting in a loss attributable to shareholders of approximately RMB 3.005 million and basic loss per share of RMB 0.078, with no interim dividend declared Performance Highlights for H1 2025 | Interim Dividend | Zero | Zero | No Change | Unaudited Condensed Consolidated Interim Results This section presents the unaudited condensed consolidated financial statements, including the statement of comprehensive loss, statement of financial position, statement of changes in equity, and statement of cash flows Condensed Consolidated Statement of Comprehensive (Loss) / Income During the reporting period, revenue grew by 7.6% to RMB 98.023 million, but a 14.0% increase in cost of sales led to a 1.8% decline in gross profit, with the company turning from a profit of RMB 2.805 million to a loss of RMB 3.005 million Condensed Consolidated Statement of Comprehensive (Loss) / Income (For the six months ended June 30) | Basic (Loss) / Earnings Per Share (RMB) | (0.078) | 0.073 | Turned from Profit to Loss | Condensed Consolidated Statement of Financial Position As of June 30, 2025, total assets increased to RMB 345 million, total liabilities rose to RMB 230 million primarily due to increased borrowings, and total shareholders' equity slightly decreased to RMB 116 million Condensed Consolidated Statement of Financial Position (As of June 30) | Total Liabilities (RMB) | 229,653,652 | 219,288,040 | 4.7% Increase | Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2025, total equity decreased from RMB 118.7 million to RMB 115.7 million, primarily due to a loss of RMB 3.005 million and other comprehensive loss of RMB 6,598 during the period Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Total Equity (RMB) | 115,682,426 | 118,694,270 | Decrease of 3,011,844 | Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2025, the company reported a net cash outflow of RMB 0.341 million from operating activities and RMB 3.765 million from investing activities, offset by a net cash inflow of RMB 7.583 million from financing activities, with cash and cash equivalents increasing to RMB 19.862 million at period-end Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Cash and Cash Equivalents at Period-End (RMB) | 19,862,374 | 27,318,038 | Notes to the Unaudited Condensed Consolidated Financial Statements This section provides detailed notes to the unaudited condensed consolidated financial statements, covering general information, basis of preparation, accounting policies, segment information, and specific financial line items 1 General Information Zhejiang Chang'an Renheng Technology Co., Ltd. and its subsidiaries specialize in bentonite fine chemicals for various industries, established in China in 2000 and listed on the GEM in 2015 - The Group's core business involves the development, production, and sale of bentonite fine chemicals, with products applied in paper-making, metallurgy, and other fields[10] - The company was established in China on December 4, 2000, and listed on the GEM of the Stock Exchange on January 16, 2015[10][12] 2 Basis of Preparation The interim financial information is prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and GEM Listing Rules disclosure requirements, to be read in conjunction with annual financial statements - The interim financial information is prepared in accordance with International Accounting Standard 34 and the GEM Listing Rules[14] 3 Accounting Policies The accounting policies adopted in this reporting period are consistent with the 2024 annual financial statements, with no significant impact expected from newly revised International Financial Reporting Standards - Accounting policies are consistent with the 2024 annual financial statements, and new revised standards are not expected to have a significant impact[15][17] 4 Segment Information The Group's entire business activity is focused on the production and sale of bentonite products, which management considers a single operating segment, thus no segment information is presented - The Group operates in a single operating segment, which is the production and sale of bentonite products[18] 5 Revenue For the six months ended June 30, 2025, total revenue increased by 7.6% to RMB 98.023 million, driven by significant growth in Bidi powder and high-quality calcium-based bentonite, while paper-making and other chemical revenues declined Revenue by Product Category (For the six months ended June 30) | Total (RMB '000) | 98,023 | 100.0 | 91,123 | 100.0 | 7.6% Increase | - The decrease in revenue from paper-making chemicals was primarily due to a 12.7% decrease in sales volume[45] - The significant increase in revenue from Bidi powder and high-quality calcium-based bentonite was mainly due to increased sales volume[47] 6 Other Income – Net For the six months ended June 30, 2025, other income – net decreased to RMB 0.545 million from RMB 1.048 million in the prior year, primarily due to a significant reduction in government grants Other Income – Net (For the six months ended June 30) | Total (RMB) | 544,721 | 1,048,497 | 48.1% Decrease | 7 Finance Costs – Net For the six months ended June 30, 2025, finance costs – net increased to RMB 3.871 million, primarily due to higher interest expenses, partially offset by foreign exchange gains Finance Costs – Net (For the six months ended June 30) | Finance Costs – Net (RMB) | (3,871,417) | (3,140,291) | 23.3% Increase | 8 Profit/Loss for the Period The loss for the period was primarily influenced by non-cash expenses such as depreciation and amortization, with increases in depreciation and amortization of leasehold improvements (Loss) / Profit for the Period Deductions (For the six months ended June 30) | Amortization of Leasehold Improvements (RMB) | 1,577,272 | 1,212,070 | 30.1% Increase | 9 Income Tax Expense For the six months ended June 30, 2025, income tax expense increased to RMB 0.312 million, with the company and certain subsidiaries benefiting from preferential tax rates as high-tech or small-profit enterprises, while US operations are taxed at 21% Income Tax Expense (For the six months ended June 30) | Income Tax Expense (RMB) | (311,549) | (232,794) | 34.7% Increase | - The Company and Yangyuan Renheng Fine Clay Co., Ltd. enjoy a preferential tax rate of 15% as high-tech enterprises[28][29] - Zhejiang Chang'an Renheng Chemical Co., Ltd., as a small-profit enterprise, enjoys a preferential income tax rate of 20%[29] - Income tax for US operations is calculated at the prevailing rate of 21%[29] 10 (Loss) / Earnings Per Share For the six months ended June 30, 2025, the company reported a basic loss per share of RMB 0.078, a reversal from the prior year's earnings per share of RMB 0.073, with no potential dilutive effects on ordinary shares Basic (Loss) / Earnings Per Share (For the six months ended June 30) | Basic (Loss) / Earnings Per Share (RMB) | (0.078) | 0.073 | - For the six months ended June 30, 2025 and 2024, diluted (loss) / earnings per share were the same as basic (loss) / earnings per share, with no potential dilutive effects[31] 11 Dividends The Board resolved not to declare any interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board resolved not to declare an interim dividend for the first half of 2025[32] 12 Property, Plant and Equipment For the six months ended June 30, 2025, the Group acquired property, plant and equipment of approximately RMB 10.657 million, a decrease compared to the same period last year Acquisition of Property, Plant and Equipment (For the six months ended June 30) | Acquisition Amount (RMB) | 10,656,702 | 14,035,835 | 24.1% Decrease | 13 Trade and Other Receivables, Prepayments and Other Current Assets As of June 30, 2025, the net amount of trade and other receivables, prepayments, and other current assets was RMB 84.351 million, largely consistent with the end of 2024, with a slight decrease in net trade receivables and an increase in prepayments, and a typical credit period of 90 to 180 days Trade and Other Receivables, Prepayments and Other Current Assets (As of June 30) | Total Net Amount (RMB) | 84,351,417 | 84,016,939 | 0.4% Increase | - The credit period for trade receivables is generally 90 to 180 days, and impairment provisions have been made[38] 14 Trade and Other Payables As of June 30, 2025, total trade and other payables amounted to RMB 38.274 million, a slight decrease from the end of 2024, with an increase in trade payables and a decrease in salaries and welfare payable to employees Trade and Other Payables (As of June 30) | Total (RMB) | 38,273,516 | 39,221,460 | 2.4% Decrease | - Ageing analysis of trade payables shows that amounts due within six months account for the highest proportion[40] Management Discussion and Analysis This section provides an in-depth review of the Group's market and industry, business operations, financial performance, liquidity, capital structure, and future development strategies Market and Industry Review The Group specializes in bentonite fine chemicals for diverse applications, operating within a growing Chinese non-metallic mineral market supported by policies promoting high-value mineral functional materials and a modernizing paper-making industry - The Group's core business is bentonite fine chemicals, with products widely used in paints and coatings, paper-making, water treatment, oilfields, and other applications[41] - China's demand for non-metallic mineral products is in a growth opportunity period, with policies encouraging the development of mineral functional materials for emerging industries such as national defense, new energy, and environmental protection[41] - The bentonite industry is evolving towards high quality, high efficiency, and high utilization through technological R&D and innovation, transforming from "resource advantage" to "technological advantage" and "economic advantage"[42] Business Review In the first half of 2025, the Group focused on promoting bentonite products for paints, oilfields, and putty mortar, securing supply contracts with major oil companies, while its US subsidiary successfully passed its mining permit review - In the first half of 2025, the Group focused on promoting bentonite for paints and coatings, bentonite for oilfields, putty mortar, and other products[44] - Bentonite products for oilfields have secured supply contracts with companies such as Sinopec and PetroChina[44] - The US subsidiary operated normally and successfully passed its mining permit review[44] - The Group's R&D expenses for the first half of the year were approximately RMB 6.265 million[44] Financial Review This section provides a detailed review of various financial indicators during the reporting period, including revenue, cost of sales, gross profit, various expenses, and the final profit or loss, along with an analysis of the main reasons for these changes Revenue Total revenue increased by 7.6% during the reporting period, with significant growth in Bidi powder and high-quality calcium-based bentonite, while paper-making chemicals and other chemicals experienced declines Revenue Changes by Product Category (For the six months ended June 30) | Other Chemicals (RMB '000) | 1,685 | 2,610 | -925 | -35.4% | - | Cost of Sales Cost of sales increased by 14.0% year-on-year to RMB 61.516 million, primarily due to higher average purchase prices and consumption of CPAM, along with increases in manufacturing overheads and direct labor costs Cost of Sales Composition and Changes (For the six months ended June 30) | Total (RMB '000) | 61,516 | 100.0 | 53,939 | 100.0 | +7,577 | +14.0% | - The increase in raw material costs was primarily due to higher average purchase prices and consumption of CPAM (a key raw material for bentonite products)[49] Gross Profit and Gross Margin Gross profit decreased by 1.8% to RMB 36.507 million, with gross margin falling from 40.8% to 37.2%, mainly due to changes in product mix and increased cost of sales from higher raw material and energy prices Gross Profit and Gross Margin Changes (For the six months ended June 30) | Gross Margin | 37.2% | 40.8% | -3.6 percentage points | - | - The decrease in gross margin was mainly due to changes in the sales product mix and higher average prices of raw materials and energy[53] Distribution Costs Distribution costs increased by 31.5% year-on-year to RMB 17.011 million, primarily driven by higher transportation expenses Distribution Costs Changes (For the six months ended June 30) | Distribution Costs (RMB '000) | 17,011 | 12,938 | +4,073 | +31.5% | - The increase in distribution costs was primarily due to higher transportation expenses[54] Administrative Expenses Administrative expenses increased by 14.5% year-on-year to RMB 12.654 million, mainly due to higher staff costs and professional fees Administrative Expenses Changes (For the six months ended June 30) | Administrative Expenses (RMB '000) | 12,654 | 11,048 | +1,606 | +14.5% | - The increase in administrative expenses was primarily due to higher staff costs and professional fees[55] Research and Development Expenses Research and development expenses decreased by 22.3% year-on-year to RMB 6.265 million, primarily due to reduced work on environmental R&D projects with Jilin Petrochemical Design Institute Research and Development Expenses Changes (For the six months ended June 30) | Research and Development Expenses (RMB '000) | 6,265 | 8,068 | -1,803 | -22.3% | - The decrease in R&D expenses was primarily due to reduced work on environmental R&D projects with Jilin Petrochemical Design Institute[56] Other Income – Net Other income – net decreased by 48.0% year-on-year to RMB 0.545 million, primarily due to a significant reduction in government grants Other Income – Net Changes (For the six months ended June 30) | Other Income – Net (RMB '000) | 545 | 1,048 | -503 | -48.0% | - The decrease in other income – net was primarily due to government grants falling from RMB 1.191 million to RMB 0.347 million[57] Finance Costs – Net Finance costs – net increased by 23.3% year-on-year to RMB 3.871 million, primarily due to an increase in average bank borrowings Finance Costs – Net Changes (For the six months ended June 30) | Finance Costs – Net (RMB '000) | 3,871 | 3,140 | +731 | +23.3% | - The increase in finance costs – net was primarily due to an increase in average bank borrowings[58] Income Tax Expense Income tax expense increased by 34.7% year-on-year to RMB 0.312 million Income Tax Expense Changes (For the six months ended June 30) | Income Tax Expense (RMB '000) | 312 | 233 | +79 | +34.7% | (Loss) / Profit for the Period Attributable to Owners of the Company Due to the combined effect of various factors, the (loss) / profit for the period attributable to owners of the Company turned from a profit of RMB 2.805 million in the same period last year to a loss of RMB 3.005 million (Loss) / Profit for the Period Attributable to Owners of the Company (For the six months ended June 30) | (Loss) / Profit for the Period Attributable to Owners of the Company (RMB '000) | (3,005) | 2,805 | Turned from Profit to Loss | Liquidity and Capital Resources The Group primarily relies on cash from operations and bank borrowings for working capital, with RMB 19.862 million in cash and cash equivalents as of June 30, 2025, and sufficient resources for the next twelve months - The Group primarily meets its working capital requirements through cash generated from operations and long-term and short-term bank borrowings[61] - The weighted average effective annual interest rates for bank borrowings and other borrowings were 4.29% and 4.22% respectively[61] Cash and Cash Equivalents (As of June 30) | Cash and Cash Equivalents at Period-End (RMB) | 19,862,000 | 27,318,038 | - During the reporting period, cash and cash equivalents increased by approximately RMB 3.531 million, primarily contributed by net cash inflow from financing activities of RMB 7.583 million[62] Capital Structure As of June 30, 2025, the Group's total borrowings were approximately RMB 184.6 million, an increase from the end of 2024, with smooth renewal of bank loans during the reporting period Total Borrowings (As of June 30) | Total Borrowings (RMB) | 184,604,000 | 172,958,000 | 6.7% Increase | Gearing Ratio As of June 30, 2025, the Group's gearing ratio increased to 142.4% from 132.0% at the end of 2024, primarily due to a decrease in total equity Gearing Ratio (As of June 30) | Gearing Ratio | 142.4% | 132.0% | 10.4 percentage points increase | - The increase in gearing ratio was primarily due to a decrease in total equity[64] Pledge of Assets As of June 30, 2025, the Group's assets pledged to banks amounted to approximately RMB 13.477 million, a decrease from the end of 2024 Total Pledged Assets (As of June 30) | Total Pledged Assets (RMB) | 13,477,000 | 15,463,000 | 12.8% Decrease | Capital Expenditure During the reporting period, the Group's capital expenditure was approximately RMB 10.657 million, primarily for the acquisition of plant and equipment and construction in progress, a decrease compared to the same period last year Capital Expenditure (For the six months ended June 30) | Capital Expenditure (RMB) | 10,657,000 | 14,036,000 | 24.1% Decrease | Exchange Rate Risk The Group's primary business is in China, with transactions mainly in RMB and a few in HKD, posing a risk of changes in China's exchange rate policy, though the Group considers the fluctuation risk among HKD, USD, and RMB to be insignificant without hedging - The Group's primary business is in China, with transactions denominated in RMB and a few amounts in HKD[67] - RMB is not freely convertible, posing a risk of changes in the Chinese government's exchange rate policy[67] - The Group has not entered into hedging transactions and considers the exchange rate fluctuation risk to be insignificant[67] Contingent Liabilities, Legal and Potential Proceedings As of June 30, 2025, the Group had no significant contingent liabilities, legal proceedings, or potential proceedings - The Group has no significant contingent liabilities, legal proceedings, or potential proceedings[68] Material Acquisitions and Disposals For the six months ended June 30, 2025, the Group did not undertake any material acquisitions or disposals - No material acquisitions or disposals occurred during the reporting period[69] Going Concern Based on its current financial position and available financing, the Group has sufficient financial resources to continue as a going concern for the foreseeable future - The Group possesses sufficient financial resources to support its continued operations[70] Future Developments The Group plans to develop three strategic new bentonite product series focusing on high-value, green applications, while expanding into overseas markets like North America, Europe, and Southeast Asia, driven by innovation to create shareholder value - Strategic new product development focuses on three series: organic bentonite, water-based bentonite, and inorganic gels[71] - Emphasis is placed on green and environmentally friendly product R&D, developing bentonite products for deep, ultra-deep, and offshore drilling[71] - Key focus on developing overseas customer markets in North America, Europe, Southeast Asia, and expanding foreign trade business[71] Other Information This section covers human resources, directors' and substantial shareholders' interests, related party transactions, corporate governance, and post-reporting period events Human Resources and Training As of June 30, 2025, the Group employed 232 staff with total costs of approximately RMB 17.637 million, adhering to a "people-oriented" management philosophy to enhance efficiency through rigorous selection, incentives, and regular evaluations Number of Employees and Staff Costs (As of June 30) | Total Staff Costs (RMB '000) | 17,637 | 16,959 | - The Group adopts a "people-oriented" management philosophy, enhancing employee efficiency through rigorous selection, incentive mechanisms, and regular evaluations[72] Directors', Supervisors' and Chief Executive's Interests in Shares, Debentures and Underlying Shares of the Company or any Associated Corporation As of June 30, 2025, Mr. Zhang Youlian held 50.05% of the company's shares, Ms. Zhang Jinhua held 1.04%, and Supervisor Mr. Xu Qinshi held 0.26% through his spouse, with no other disclosable interests Directors'/Supervisors' Long Positions in Ordinary Shares of the Company (As of June 30) | Mr. Xu Qinshi | Spouse's Interest | 100,000 | 0.26% | Substantial Shareholders' and Other Persons' Interests in Shares and Underlying Shares As of June 30, 2025, Ms. Yu Hua held 9.31% of the Company's shares, qualifying her as a substantial shareholder, in addition to the interests of Directors, Supervisors, and Chief Executives Substantial Shareholders' Long Positions in Shares of the Company (As of June 30) | Ms. Yu Hua | Beneficial Owner | 3,576,000 | 9.31% | Directors' and Supervisors' Rights to Acquire Shares or Debentures During the reporting period, no Director or Supervisor, or their spouse or minor children, was granted or exercised any right to acquire shares or debentures of the Company - During the reporting period, no Director or Supervisor or their associates were granted or exercised any right to acquire shares or debentures of the Company[76] Connected Transactions During the reporting period, the Group did not enter into any connected transactions or continuing connected transactions requiring disclosure under the GEM Listing Rules - No disclosable connected transactions occurred during the reporting period[77] Directors', Supervisors' and Controlling Shareholders' Interests in Competing Businesses and Conflicts of Interest During the reporting period, no Director, Supervisor, or controlling shareholder and their associates engaged in any business that competes or is likely to compete with the Group's business, or had any conflicts of interest - No Directors, Supervisors, controlling shareholders, or their associates had competing businesses or conflicts of interest[78] Public Float During the reporting period, at least 25% of the Company's issued share capital was held by public shareholders, in compliance with regulations - At least 25% of the Company's issued share capital is held by public shareholders[79] Purchase, Sale or Redemption of the Company's Listed Securities During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the reporting period, neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities[80] Capital Commitments As of June 30, 2025, the Group's capital commitments amounted to approximately RMB 1.254 million, a decrease from the end of 2024 Capital Commitments (As of June 30) | Capital Commitments (RMB) | 1,254,000 | 1,672,000 | 25.0% Decrease | Dividends The Board resolved not to declare any interim dividend for the six months ended June 30, 2025 - The Board resolved not to declare an interim dividend for the first half of 2025[82] Corporate Governance Practices The Company strives for corporate governance compliance but deviates on the combined roles of Chairman and Chief Executive and the absence of directors' and officers' liability insurance, with the Board believing strong leadership and independent directors balance power, and liability insurance under consideration - The Company complies with the Corporate Governance Code, with two deviations: combined roles of Chairman and Chief Executive (Code Provision C.2.1) and no directors' and officers' liability insurance (Code Provision C.1.8)[83][84] - The Board believes that combining the roles of Chairman and Chief Executive provides strong and consistent leadership, and the presence of independent non-executive directors balances power[83] - Proposals from various underwriters for directors' and officers' liability insurance are under consideration[84] Standard Code for Securities Transactions The Company has adopted a standard code for securities transactions no less exacting than required by the GEM Listing Rules, with all Directors confirming full compliance during the reporting period - The Company has adopted a standard code for securities transactions, and all Directors have confirmed full compliance[85] Nomination Committee The Company's Nomination Committee, established in 2014, revised its terms of reference on June 30, 2025, and comprises Mr. Fan Fang, Mr. Zhang Lei, and Mr. Tang Jingyan, with Mr. Tang serving as Chairman - The Nomination Committee was established in 2014 and revised its terms of reference on June 30, 2025[86] - The committee members include Mr. Fan Fang, Mr. Zhang Lei, and Mr. Tang Jingyan, with Mr. Tang serving as Chairman[86] Audit Committee The Company's Audit Committee, established in 2014, comprises Mr. Zhang Lei (Chairman), Mr. Chen Jianping, and Mr. Tang Jingyan, all independent non-executive directors, and has reviewed the interim report and financial statements, confirming compliance with accounting standards and GEM Listing Rules - The Audit Committee was established in 2014, comprising Mr. Zhang Lei (Chairman), Mr. Chen Jianping, and Mr. Tang Jingyan[87] - The committee has reviewed this interim report and financial statements, confirming compliance with accounting standards and GEM Listing Rules requirements[88] Events After the Reporting Period As of the date of this report, there were no significant events after the reporting period - No significant events occurred after the reporting period[89] Disclosure of Information The Company will dispatch the interim report to shareholders and publish it on the Company's website and the Stock Exchange's website at the appropriate time - The interim report will be dispatched to shareholders and published on the Company's website www.renheng.com and the Stock Exchange's website www.hkexnews.hk[90](index=90&type=chunk)