The increase in gross margin helped 1H10's performance rebound. 1H10 achieved operating income of 974 million yuan, an increase of 45.54% over the previous year; the gross profit margin was 18.38%, up 6.44 percentage points from the first half of 2009; the price recovery of nitric acid and hydrogen peroxide products led to an increase in gross margin; net profit attributable to owners of the parent company was 46.5 million yuan, and net profit attributable to owners of the parent company for the same period in 2009 was -9.43 million yuan. The main reason was that the product price was lower than expected. The net cash flow from the company's operating activities was -68.92 million yuan, a year-on-year decrease of 152.27%. The decline in urea prices caused the 2Q10 gross margin to decline, and the company's 2Q10 achieved operating income of 542 million yuan, an increase of 25.46% over the previous month; the gross profit margin was 16.62%, down 3.96 percentage points from 20.58% in 1Q10; and the net profit attributable to the owners of the parent company was 1983 million yuan, a decrease of 25.64% over the previous month. The main reason for the month-on-month decline in performance in the second quarter was the decline in product prices, especially urea products, and the rise in the price level of raw coal, which led to a decline in gross margin. The increase in the scale of operating income reduced the level of expenses during the period. The total cost rate of the 1H10 company's three expenses was 12.39%, a decrease of 2.82 percentage points over the previous year. The sharp increase in the size of the operating income during the reporting period was the main reason for the reduction in the level of the expense ratio, while the total amount of the three expenses increased by 18.55% year on year. Among them, sales expenses were 32.25 million yuan, up 70.73% year on year, and the cost rate increased from 2.82% to 3.31%; management expenses were 36.22 million yuan, down 5.02% year on year, and the cost rate fell from 5.70% to 3.72%; financial expenses were 52.12 million yuan, up 16.59% year on year, and the cost rate fell from 6.68% to 5.35%. The profit contribution of the acquired hydrogen peroxide assets is obvious. In 2009, it acquired 39% of Liuzhou Shengqiang Chemical Co., Ltd.'s shares, with a shareholding ratio of 99%. The hydrogen peroxide market picked up in 10 years. The company's hydrogen peroxide production increased 70% year on year, achieving revenue of 180 million yuan, accounting for 18.48% of consolidated revenue, and contributing 24.99 million yuan to net profit, accounting for 53.35% of consolidated net profit.