Sichuan Development Longmang's production resumption at Baimu Phosphate Mine delayed; net profit expected to decrease by 45 million yuan

Steady Revenue development and Continuous Recovery in Main Business Profitability

In the first half of 2026, Chuafa Longmiao achieved operating revenue of 5.397 billion yuan, a year-on-year increase of 14.82%; and realized net profit attributable to shareholders of 226 million yuan, a slight year-on-year decrease of 5.39%. After excluding the impact of non-recurring gains and losses, the company's **net profit excluding non-recurring items was 256 million yuan, a year-on-year increase of 7.36%**, indicating a steady recovery in the profitability of its core business.

The improvement in cash flow was particularly notable. The net cash flow from operating activities during the reporting period was 71.011 million yuan, a significant increase of 85.61% compared to the same period last year, reflecting the continuous improvement in the condition of the company's operations. As of the end of the period, the company's total assets stood at 22.953 billion yuan, an increase of 14.05% from the end of the previous year. The asset scale expanded steadily, and the overall asset-liability ratio remained stable and controllable.

All Chemical Segments enhance; New Energy Materials Business Doubles

In terms of business structure, the company's core phosphorus chemical business continued to exert its strength, and the advantages of integrated manufacturing chains became increasingly prominent. During the reporting period, the phosphorus chemical business achieved revenue of 4.801 billion yuan, a significant year-on-year increase of 25.28%, accounting to as much as 88.97% of the company's total revenue, serving as the foundation of the company's performance.

Performance in emerging sectors was impressive, with the new energy materials business experiencing a high-speed explosion, achieving revenue of 432 million yuan, a year-on-year increase of as much as 153.64%, demonstrating strong development momentum. Regarding core items, benefiting from the consolidation of Tianbao Company and the recovery in market demand, revenue from feed-grade dicalcium phosphate reached 1.218 billion yuan, a significant year-on-year increase of 105.31%, with the product's market competitiveness continuously improving.

Overall, the company continues to deeply cultivate the entire phosphorus chemical sector chain, steadily advances the capacity ramp-up of new energy materials, strengthens resource support and technical breakthroughs, and continuously implements cost reduction and efficiency enhancement, thereby continuously rising the resilience of its main business operations.

Sudden security Accident at Phosphate Mine; Mine Resumption Delayed by Two Months

While operations were improving, the company encountered phased production disruptions. A general roof-fall security accident occurred at the Baizhu Phosphate Mine under Hubei Longmiao Phosphorus Chemical sector, a wholly-owned subsidiary of the company. The accident resulted in one minor injury and one fatality. The company expresses its deep condolences to the deceased and has actively carried out rescue, aftermath, and reporting work.

Affected by the accident, the Baizhu Phosphate Mine has fully suspended production to rectification. Originally scheduled to resume production on August 15, 2026, the resumption time has been postponed because adjustments to mine regulation personnel and the identification and rectification of hazards have not yet been completed. Production resumption is delayed until October 15, 2026, with a total delay of approximately two months.

Quantified Impact of Accident; Net Profit Expected to Decrease by 45 Million Yuan

According to the company's preliminary calculations, the suspension and delayed resumption of production at the phosphate mine will significantly drag down the company's current performance. It is estimated to decrease current revenue by 136 million yuan, accounting to 1.4% of the company's 2025 revenue; and is expected to decrease current net profit by 45 million yuan, accounting to 10.9% of the 2025 net profit attributable to shareholders.

The company stated that this accident did not result in substantial harm to the mineral resources of the mine and will not have a major impact on the company's overall sustainable operations, manufacturing chain layout, or prolonged research. The final financial impact will be subject to the annual audit results.

Compacting security Production Responsibilities and Fully Promoting Resumption of Work and Production

In response to this security accident, Chuafa Longmiao stated that it will deeply learn from the lessons of the accident, comprehensively carry out the screening and rectification of security hazards, strictly implement security production regulation systems, compact security responsibilities at every level, and continuously enhance the full-process risk manage of mines and chemical facilities.

Subsequently, the company will fully urge its subsidiary to accelerate the completion of rectification and acceptance work, striving to an early resumption of safe production at the mine, stabilizing the supply of phosphate rock resources, and ensuring the stable operation of the company's entire phosphorus chemical and new energy materials sector chain.