Financials

Condensed Interim Financial Statements For The Six Months Ended 30 June 2024

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Condensed Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income

Condensed Interim Statements of Financial Position

Review of Performance

Review of performance of the Group

Condensed consolidated statement of profit or loss and other comprehensive income

For six months ended 30 June 2024 ("FY2024 1H") vs six months ended 30 June 2023 ("FY2023 1H").

Revenue

Revenue from LPG sector decreased by approximately 21.2% or RMB 367.1 million from RMB 1,729.2 million in FY2023 1H to RMB 1,362.1 million in FY2024 1H due to fierce competition in FY2024 1H in the liquefied petroleum gas ("LPG") market. Sales volume of LPG fell from 384,030 tons in FY2023 1H to 291,553 tons in FY2024 1H. Solar power generation recorded RMB 2.3 million revenue in FY2024 1H and it was nil in FY2023 1H since this sector started operation in FY2023 2H.

Gross Profit

Gross profit increased by RMB 6.1 million or 25.8% from RMB 23.8 million in FY2023 1H to RMB 29.9 million in FY2024 1H due to the price fluctuation of LPG and increase of electricity revenue percentage, which had an average GP ratio of 58%. Meanwhile, the price fluctuation of LPG also impacted on our cost of sales, which helped our gross profit margin improve from 1.37% in FY2023 1H to 2.19% in FY2024 1H.

Other operating income

Other operating income increased from RMB 4.2 million in FY2023 1H to RMB 4.5 million in FY2024 1H. The increase of RMB 0.3 million or 6.6% was mainly attributed to the increase in foreign exchange gain of RMB 1.3 million.

Selling and distribution expenses

Selling and distribution expenses decreased by RMB 3.5 million or 11.3% from RMB 30.8 million in FY2023 1H to RMB 27.3 million in FY2024 1H due to decrease in marine freight and land freight.

Administrative expenses

Administrative expenses increased by RMB 0.3 million or 4.1% from RMB 8.6 million in FY2023 1H to RMB 8.9 million in FY2024 1H mainly due to an increase on depreciation and amortization.

Other operating expenses

Other operating expenses increased by RMB 3.8 million or 51.5% to RMB 11.3 million in FY2024 1H from RMB 7.5 million in FY2023 1H is mainly due to bank charge of RMB 5.8 million.

Finance costs

Finance costs increased by approximately RMB 0.7 million or 7.8% from RMB 9.3 million in FY2023 1H to RMB 10.0 million in FY2024 1H mainly due to the interest on lease.

Profit attributable to equity holders

As a result of the above, the Group recorded net loss attributable to equity holders of RMB 25.9 million in FY2024 1H, compared with net loss of RMB 28.2 million in FY2023 1H.

Condensed statements of financial position

Non-current assets

Non-current assets decreased by RMB 2.3 million or 1.0% from RMB 228.1 million as at 31 December 2023 to RMB 225.8 million as at 30 June 2024 mainly due to the depreciation of fixed assets and amortization of right-of-use assets.

Current assets

Current assets decreased by RMB 41.5 million or 5.08% from RMB 817.2 million as at 31 December 2023 to RMB 775.7 million as at 30 June 2024. This is mainly due to the decrease on cash and cash equivalent of RMB 105.5 million and inventory of RMB 107.0 million, partially offset by the increase on trade and other account receivables of RMB 176.0 million.

Current liabilities

Current liabilities decreased by approximately RMB 17.5 million or 2.57% from RMB 681.9 million at 31 December 2023 to RMB 664.4 million at 30 June 2024. This is mainly due to the decrease in trade and other payable of RMB 116.3 million, partially offset by the increase in bank borrowings by RMB 101.1 million.

Non-current liabilities

Non-current liabilities increased by RMB 2.1 million was mainly due to the increase in deferred tax liabilities and long-term loans, partially offset by the decrease on lease liabilities.

Condensed consolidated statement of cash flows

The Group recorded cash and cash equivalents of RMB 55.6 million as at FY2023. The net decrease of RMB 105.5 million from cash and cash equivalents at 31 December 2023 mainly arose from the settlement of trade and other payable.

Net cash used in operating activities amounted to RMB 182.5 million mainly due to cash utilized in working capital contributed by loss before tax amounting to RMB 23.2 million, an increase on trade and other receivables of RMB 176.0 million and an decrease on trade and other payable of RMB 116.3 million, offset by a decrease on inventory of RMB 107.0 million and an increase in amount due from related parties of RMB 5.0 million.

Net cash used in investing activities amounted to RMB 12.4 million was due mainly to acquisition of property, plant and equipment.

Net cash generated from financing activities amounted to RMB 90.6 million mainly due to proceeds from bank borrowing of RMB 583.4 million, partially offset by repayment of bank borrowings of RMB486.0 million.

Commentary

According to the latest release from National Statistics Bureau, the GDP growth in the People's Republic of China (PRC) reached 5.0% year-on-year in the first half of FY2024. This sustained economic growth underscores the strong demand for clean energy in our market. Despite ongoing uncertainties in the international energy market due to geopolitical factors, Ouhua has been actively working to seize opportunities arising from these challenges.

Enchancing the efficiency of our supply chain is crucial for Ouhua to contribute effectively to China's sustainability goals. Our management team remains focused on upgrading our infrastructure and investing in clean energy technologies to better serve our customer. Additionally, we are expanding our customer network across more industries and regions to diversify our market presences.

Since entering the solar power generation market in 2023, electricity has steadily become significant and stable contributor to our revenue. We will continue to proactively engage in the green energy market, with a commitment to growth that aligns with sustainability. With the ongoing support of our customers, bank, shareholders, and other stakeholders, Ouhua remains dedicated to achieving sustainable growth.