[Company Information](index=3&type=section&id=Company%20Information) The report provides detailed basic information about Xingfa Aluminium Holdings Limited, including board members, committee structures, company secretary, registered office, principal place of business, principal bankers, legal advisors, auditor (KPMG), and share registrar - The report provides detailed basic information about Xingfa Aluminium Holdings Limited, including board members, committee structures, company secretary, registered office, principal place of business, principal bankers, legal advisors, auditor (KPMG), and share registrar[5](index=5&type=chunk)[6](index=6&type=chunk)[7](index=7&type=chunk) [Unaudited Consolidated Financial Statements](index=6&type=section&id=Unaudited%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including the income statement, statement of financial position, and cash flow statement, along with detailed notes on accounting policies and segment information [Consolidated Income Statement](index=6&type=section&id=Consolidated%20Income%20Statement) For the six months ended June 30, 2019, turnover increased by **22.5%** to **RMB 4.95 billion**, gross profit rose by **22.9%** to **RMB 629 million**, and profit for the period grew by **31.6%** to **RMB 234 million** Consolidated Income Statement Summary (For the six months ended June 30) | Indicator | H1 2019 (RMB thousand) | H1 2018 (RMB thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Turnover | 4,954,876 | 4,043,760 | +22.5% | | Gross Profit | 628,624 | 511,442 | +22.9% | | Operating Profit | 342,851 | 286,614 | +19.6% | | Profit Before Tax | 273,600 | 206,110 | +32.7% | | Profit for the Period | 234,468 | 178,112 | +31.6% | | Profit Attributable to Equity Holders of the Company | 236,686 | 178,112 | +32.9% | | Basic Earnings Per Share (RMB) | 0.57 | 0.43 | +32.6% | [Consolidated Statement of Financial Position](index=8&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2019, total assets reached **RMB 7.52 billion**, total liabilities were **RMB 4.85 billion**, and net assets increased by **6.6%** to **RMB 2.67 billion** Consolidated Statement of Financial Position Summary | Indicator | June 30, 2019 (RMB thousand) | December 31, 2018 (RMB thousand) | Period Change | | :--- | :--- | :--- | :--- | | Non-current Assets | 2,482,102 | 2,376,862 | +4.4% | | Current Assets | 5,036,206 | 4,731,621 | +6.4% | | **Total Assets** | **7,518,308** | **7,108,483** | **+5.8%** | | Current Liabilities | 4,304,523 | 4,190,051 | +2.7% | | Non-current Liabilities | 545,676 | 414,574 | +31.6% | | **Total Liabilities** | **4,850,199** | **4,604,625** | **+5.3%** | | **Net Assets** | **2,668,109** | **2,503,858** | **+6.6%** | - The company first adopted IFRS 16 Leases on January 1, 2019, leading to the recognition of right-of-use assets (**RMB 369 million**) and lease liabilities (totaling **RMB 8.76 million** for current and non-current portions), and derecognition of prepaid lease payments, with comparative figures not restated[12](index=12&type=chunk)[13](index=13&type=chunk)[15](index=15&type=chunk) [Condensed Consolidated Cash Flow Statement](index=11&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Statement) Net cash inflow from operating activities significantly increased by **75.7%** to **RMB 375 million**, while net cash outflow from investing activities rose to **RMB 262 million** Condensed Consolidated Cash Flow Statement Summary (For the six months ended June 30) | Indicator | H1 2019 (RMB thousand) | H1 2018 (RMB thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | 374,733 | 213,285 | +75.7% | | Net Cash Used in Investing Activities | (262,384) | (202,086) | +29.8% | | Net Cash (Used in)/from Financing Activities | (17,003) | 26,689 | N/A | | Net Increase in Cash and Cash Equivalents | 95,346 | 37,888 | +151.7% | | Cash and Cash Equivalents at End of Period | 544,240 | 617,994 | -12.0% | [Notes to the Unaudited Interim Financial Report](index=12&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) These notes detail changes in accounting policies, revenue composition, taxation, asset and liability breakdowns, and related party transactions, with a significant focus on the adoption of IFRS 16 - Effective January 1, 2019, the Group adopted IFRS 16 Leases using a modified retrospective approach without restating comparative figures, resulting in the recognition of right-of-use assets and lease liabilities on the statement of financial position and a change in the recognition of lease expenses in the income statement (from rental expenses to depreciation and interest expenses)[22](index=22&type=chunk)[24](index=24&type=chunk)[32](index=32&type=chunk) H1 2019 Segment Revenue (RMB thousand) | Segment | H1 2019 | H1 2018 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Industrial Aluminium Profiles | 1,070,592 | 1,072,838 | -0.2% | | Architectural Aluminium Profiles | 3,781,875 | 2,905,557 | +30.2% | | Property Development | 16,778 | – | N/A | | Other Products and Services | 85,631 | 65,365 | +31.0% | | **Total** | **4,954,876** | **4,043,760** | **+22.5%** | - The Board did not recommend the payment of an interim dividend for the six months ended June 30, 2019, though a final dividend of **HKD 0.2** per share, totaling **RMB 73.465 million**, for the previous financial year was approved and paid during the period[67](index=67&type=chunk)[68](index=68&type=chunk) [Independent Review Report](index=41&type=section&id=Independent%20Review%20Report) KPMG conducted an independent review of the interim financial report, concluding it was prepared in all material respects according to IAS 34 [Conclusion of Independent Review Report](index=42&type=section&id=Conclusion%20of%20Independent%20Review%20Report) KPMG, the auditor, concluded that the interim financial report was prepared in all material respects in accordance with International Accounting Standard 34 - KPMG issued a standard, unqualified review conclusion on the interim financial report for the six months ended June 30, 2019[81](index=81&type=chunk) [Management Discussion and Analysis (MD&A)](index=43&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the industry, business performance, and financial results, along with the company's future outlook and strategic initiatives [Industry and Business Review](index=43&type=section&id=Industry%20and%20Business%20Review) The company benefited from China's urbanization, real estate market consolidation, and stricter environmental policies, driving a dual-engine development strategy for architectural and industrial aluminum profiles - The market environment is favorable to the company, benefiting from China's urbanization, the concentration of the real estate market towards leading developers, and industry consolidation driven by stricter environmental policies[83](index=83&type=chunk)[84](index=84&type=chunk) - The company's strategic core is the 'dual-engine' development of architectural and industrial aluminum profiles, with a new industrial aluminum profile manufacturing base already under construction[86](index=86&type=chunk) - The company continues to strengthen overseas sales, successfully expanding into new markets such as South Africa, Southeast Asia, and South America, building on its existing presence in Vietnam and Australia[86](index=86&type=chunk) [Financial Review](index=46&type=section&id=Financial%20Review) In H1 2019, the company achieved strong financial performance with **22.5%** revenue growth and **32.9%** increase in profit attributable to shareholders, driven by architectural aluminum profiles H1 2019 Key Performance Indicators | Indicator | H1 2019 | H1 2018 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Turnover (RMB million) | 4,954.9 | 4,043.8 | +22.5% | | Sales Volume (tonnes) | 277,654 | 219,500 | +26.5% | | Gross Profit (RMB million) | 628.6 | 511.4 | +22.9% | | Gross Profit Margin | 12.7% | 12.6% | +0.1pp | | Profit Attributable to Shareholders (RMB million) | 236.7 | 178.1 | +32.9% | | Net Profit Margin | 4.8% | 4.4% | +0.4pp | - The architectural aluminum profile business was the primary growth driver, with its turnover increasing by **30.2%** and sales volume by **35.1%** year-on-year[88](index=88&type=chunk)[92](index=92&type=chunk) - The gross profit margin for industrial aluminum profiles decreased from **12.7%** to **10.0%**, mainly due to price adjustments from intense market competition and increased production costs from outsourcing some orders[95](index=95&type=chunk) Operating Efficiency Indicators (Days) | Indicator | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Inventory Turnover Period | 51 | 71 | | Accounts Receivable Turnover Period | 96 | 96 | | Accounts Payable Turnover Period | 85 | 63 | [Outlook](index=47&type=section&id=Outlook) The company plans to enhance operational efficiency, increase R&D investment in industrial aluminum profiles, expand overseas markets, and explore M&A opportunities to boost profitability and capacity - Future strategy will continue to be driven by architectural and industrial aluminum profiles as dual engines, with a focus on increasing investment in industrial aluminum profiles due to their higher technical barriers and profit margins[90](index=90&type=chunk) - A new industrial aluminum profile manufacturing base in Guangdong, focusing on lightweight transportation and high-end electronic communication equipment, is planned to commence production next year with an estimated annual output of **100,000 tonnes**[90](index=90&type=chunk) - The company will explore the feasibility of establishing overseas production bases to better serve international clients and seek M&A opportunities within the industry to expand production capacity[90](index=90&type=chunk) [Other Information](index=57&type=section&id=Other%20Information) This section covers dividend policies, share options, major shareholders, and the company's corporate governance practices [Dividends, Share Options, and Shareholder Equity](index=57&type=section&id=Dividends%2C%20Share%20Options%2C%20and%20Shareholder%20Equity) The board recommended no interim dividend for 2019, with 4.18 million unexercised share options outstanding, and Hong Kong Guangxin Aluminium holding the largest stake - The Board decided not to declare an interim dividend for 2019[113](index=113&type=chunk) - As of June 30, 2019, there were **4,180,000** unexercised share options with an exercise price of **HKD 5.46** per share[114](index=114&type=chunk)[115](index=115&type=chunk) Major Shareholder Holdings (As of June 30, 2019) | Shareholder Name | Shareholding Percentage | | :--- | :--- | | Hong Kong Guangxin Aluminium Co., Ltd. | 30.96% | | Leading Group Holdings Limited | 26.28% | | Li Shun Limited (related to Mr. Liao Yuqing) | 11.53% | [Corporate Governance](index=62&type=section&id=Corporate%20Governance) The company generally complied with the Corporate Governance Code, with one deviation regarding board meeting frequency, and the audit committee reviewed the interim results - The company complied with the Corporate Governance Code during the reporting period, with one deviation regarding the frequency of board meetings (only one meeting held, while the code recommends at least four annually)[125](index=125&type=chunk) - The Audit Committee, comprising three independent non-executive directors and one non-executive director, reviewed the interim results report[127](index=127&type=chunk)