Financial Performance - Revenue for the six months ended June 30, 2022, was RMB 3,222,331 thousand, a slight increase of 1.7% compared to RMB 3,167,835 thousand in the same period of 2021[9] - Gross profit decreased to RMB 275,928 thousand, down 37.0% from RMB 438,863 thousand year-on-year[9] - Operating profit for the period was RMB 139,077 thousand, a decrease of 36.5% compared to RMB 219,137 thousand in the previous year[9] - Net profit attributable to equity shareholders was RMB 119,447 thousand, down 26.2% from RMB 162,138 thousand in the same period last year[9] - Basic earnings per share decreased to RMB 13.36, compared to RMB 19.94 in the previous year, reflecting a decline of 32.9%[9] - The company reported a total comprehensive income of RMB 121,736 thousand for the period, down from RMB 162,118 thousand in the previous year[12] - The company’s net profit attributable to shareholders decreased to RMB 119.4 million, down RMB 42.7 million from RMB 162.1 million in the same period last year[128] Assets and Liabilities - Total assets as of June 30, 2022, amounted to RMB 3,075,149 thousand, an increase from RMB 2,605,024 thousand as of December 31, 2021[15] - Current assets increased to RMB 996,471 thousand from RMB 967,917 thousand year-on-year[15] - Total liabilities increased to RMB 2,240,444 thousand, compared to RMB 1,918,608 thousand at the end of 2021[15] - The company’s total equity attributable to shareholders was RMB 1,390,779 thousand as of June 30, 2022, compared to RMB 1,393,175 thousand at the same time in 2021, showing a slight decrease of about 0.2%[22] Cash Flow and Investments - Operating cash flow for the six months ended June 30, 2022, was RMB 212,108 thousand, a significant improvement compared to a cash outflow of RMB 120,413 thousand in the same period of 2021[26] - The company reported a net increase in cash and cash equivalents of RMB 419,982 thousand for the six months ended June 30, 2022, compared to an increase of RMB 124,768 thousand in the prior year[26] - The company invested RMB 52,804 thousand in the purchase of property, plant, and equipment during the six months ended June 30, 2022, down from RMB 67,608 thousand in the same period of 2021, reflecting a reduction of approximately 22%[26] - The company’s financing activities generated a net cash inflow of RMB 252,845 thousand for the six months ended June 30, 2022, compared to RMB 316,182 thousand in the previous year, indicating a decrease of about 20%[26] Revenue Breakdown - Revenue from copper-related products reached RMB 3,037,965,000, an increase from RMB 2,978,349,000 in the previous year, representing a growth of 2.0%[38] - Revenue from online gaming was RMB 3,218,025,000, down from RMB 5,956,000,000, indicating a decline of 46.0%[38] - The company’s total revenue for the six months ended June 30, 2022, was RMB 354,133 thousand, a decrease from RMB 697,943 thousand in the previous year, indicating a decline of about 49%[26] Inventory and Receivables - The cost of inventory for the period was RMB 2,945,004,000, compared to RMB 2,727,108,000, representing an increase of 8.0%[47] - As of June 30, 2022, the total inventory amounted to RMB 2,119,300,000, a decrease from RMB 2,217,505,000 as of December 31, 2021, representing a reduction of approximately 4.4%[58] - The net trade receivables and notes receivable as of June 30, 2022, were RMB 359,491,000, down from RMB 402,205,000 as of December 31, 2021, indicating a decline of about 10.6%[60] Shareholder Information - The company did not declare or distribute any dividends for the period ending June 30, 2022, as per the board's decision[79] - As of June 30, 2022, the total number of issued ordinary shares was 5,000,000,000, with a corresponding amount of HKD 500,000,000[80] - The group held 22,522,000 shares under the share incentive plan as of June 30, 2022, with a total cost of HKD 21,882,000 (approximately RMB 18,419,000)[93] Research and Development - Research and development expenses amounted to RMB 105,836,000, up from RMB 86,451,000, marking an increase of 22.4%[47] - The effective tax rate for the group decreased to 11% from 22% in the previous year, primarily due to tax benefits from qualified R&D expenses[51] Market and Business Strategy - The company continues to explore market expansion opportunities and new product development strategies to enhance future growth prospects[12] - The company continues to focus on the manufacturing and sales of high-precision copper strips and the development and operation of online games, indicating ongoing commitment to its core business areas[29] Employee and Governance - The group employed a total of 1,464 employees as of June 30, 2022, an increase from 1,449 employees on December 31, 2021[141] - The board confirmed compliance with the corporate governance code during the review period[170]

Financial Performance - The total revenue for the year 2021 reached RMB 6,949.9 million, an increase of 53.3% compared to RMB 4,534.9 million in 2020[14]. - The profit attributable to shareholders was RMB 277.0 million, representing an 83.7% year-on-year growth from RMB 150.8 million in 2020[14]. - The group reported a gross profit of RMB 790.5 million for 2021, up 47.2% from the previous year, primarily due to increased copper product sales[33]. - Other income decreased to RMB 15.4 million, down RMB 9.6 million from the previous year, mainly due to reduced government subsidies[34]. - Administrative expenses rose to RMB 314.0 million, an increase of RMB 71.8 million from RMB 242.2 million in 2020, attributed to higher R&D and employee costs[37]. - The company reported a significant increase in high-precision copper strip revenue to RMB 6,447.0 million, a 52.4% increase from RMB 4,229.3 million in the previous year[21]. - The copper business generated revenue of RMB 6,939.5 million, driven by an 18.8% increase in copper product sales, totaling 162,158 tons sold[33]. Production and Sales - The group achieved a production and sales volume of 156,000 tons, marking a significant milestone in its development history[10]. - In 2021, the company's copper processing business achieved revenue of RMB 6,939.5 million, an increase of 53.5% year-on-year, with sales volume reaching 162,158 tons, up 18.8% from the previous year[21]. - The company plans to achieve a production and sales target of 200,000 tons in 2022, building on the momentum from 2021[27]. - The company expanded its customer base by acquiring 30 new clients in 2021, with 4 to 5 of these clients identified as having significant potential[22]. - The company’s copper strip consumption in China reached 2.7 million tons in 2021, reflecting a year-on-year growth of 17.0%[17]. - The company’s capacity utilization rate for copper strip processing was 74% in 2021, an increase of 7.6% year-on-year[17]. Market Conditions - The average LME copper price fluctuated between USD 7,700 and USD 10,750 per ton during 2021, with a closing price of USD 9,755 per ton at the end of the year, up 25.81% from the previous year[15]. - The SHFE three-month copper price reached a peak of RMB 78,270 per ton on May 10, 2021, the highest since 2006, and closed at RMB 70,380 per ton at the end of the year, an increase of 21.87% year-on-year[15]. - The group benefited from increased domestic orders due to reduced production in international peers, maintaining a supply-demand imbalance in the copper processing industry[10]. Strategic Initiatives - The company emphasized innovation and cost reduction as key strategies for development in 2021[9]. - The company plans to face external challenges in 2022, including geopolitical tensions and trade frictions, while continuing to pursue its vision of becoming a century-old enterprise and a world-class company[11]. - The company is actively pursuing the construction of new facilities and the introduction of advanced equipment to enhance production capacity[23]. Corporate Governance - The board of directors held a total of five meetings during the year, with all directors attending all meetings, ensuring high levels of accountability and governance[68]. - The company emphasizes strict compliance with environmental regulations and has established a recycling workshop to minimize environmental impact[58]. - The board is committed to maintaining high standards of corporate governance, which is considered key to the company's success[61]. - The company has adopted the Corporate Governance Code and has complied with its provisions throughout the year[62]. - The board's main responsibilities include formulating long-term strategies, approving business plans, and monitoring risk management[67]. - The company has a clear written authority framework for management to report to the board on daily operations[67]. - The company ensures that shareholder interests are prioritized, especially in cases of conflict with other interests[70]. Environmental, Social, and Governance (ESG) Initiatives - The company has established an ESG management strategy that includes compliance, environmental sustainability, employee welfare, customer satisfaction, and social responsibility[144]. - The company is committed to enhancing communication with stakeholders and ensuring effective ESG risk management systems[141]. - The board of directors is responsible for overseeing and evaluating the effectiveness of the ESG governance framework[140]. - The company aims to reduce unit water consumption by 40% by 2025 compared to 2018 levels[155]. - The company targets a 50% reduction in unit greenhouse gas emissions by 2025 compared to 2018 levels[155]. - The company plans to decrease the generation of non-hazardous waste per unit product by 30% by 2025 compared to 2019 levels[155]. - The company aims for a 15% reduction in hazardous waste generation per unit product by 2025 compared to 2018 levels[155]. - The company targets a 20% reduction in comprehensive energy consumption per unit product by 2025 compared to 2015 levels[155]. Employee and Talent Management - The company had 1,449 employees as of December 31, 2021, with 1,391 in the copper business and 58 in the online gaming business[53]. - The company is committed to recruiting, retaining, and motivating talented employees to enhance achievements and create value for shareholders[94]. - The company actively collaborates with Central South University to enhance talent development in materials science[159]. Product Development and Innovation - In 2021, the company successfully developed new copper products K24 and K40, contributing to industry advancement and providing higher quality material options[164]. - The K24 copper product achieved a conductivity rate of over 90% and demonstrated excellent high-temperature resistance, enhancing efficiency for 5G applications[165]. - The sales volume of new products K36 and K40 reached 1,000 tons in 2021, generating significant economic benefits for the company[165]. - The company participated in the completion of the national standard for copper and copper alloy foil materials, contributing to industry progress[168]. - The company has made significant breakthroughs in copper-iron alloy CFA95, filling a domestic gap and receiving preliminary recognition from Japan[165]. Risk Management - The company’s risk management and internal control systems are designed to provide reasonable assurance against material misstatements or losses[105]. - The company has established a department responsible for risk monitoring and internal auditing, with quarterly audits conducted to ensure effective risk management[110]. - The board reviewed the effectiveness of the risk management and internal control systems and deemed them effective and complete[111].

Company Information This section provides an overview of the company's governance structure, key personnel, and operational contact details [Board of Directors and Company Secretary](index=3&type=section&id=Board%20of%20Directors%20and%20Company%20Secretary) This section discloses the composition of the company's Board of Directors (executive directors, independent non-executive directors), company secretary, authorized representatives, principal legal advisors, audit committee, remuneration committee, and nomination committee - Board members include Mr. Hu Changyuan (Chairman), Mr. Hu Minglie (Chief Executive Officer), Mr. Zhu Wenjun (Executive Director), and Mr. Chai Chaoming, Dr. Lou Dong, Ms. Lu Hong (Independent Non-Executive Directors)[9](index=9&type=chunk) - The Company Secretary is Ms. Mui Nga Mei, and the authorized representatives are Mr. Zhu Wenjun and Ms. Mui Nga Mei[9](index=9&type=chunk) - The Audit Committee Chairman is Mr. Chai Chaoming, the Remuneration Committee Chairman is Dr. Lou Dong, and the Nomination Committee Chairman is Mr. Chai Chaoming[9](index=9&type=chunk) [Principal Places of Business and Other Information](index=4&type=section&id=Principal%20Places%20of%20Business%20and%20Other%20Information) This section provides information on the company's principal places of business in Hong Kong, China (copper business and online game business), as well as share registrars, principal bankers, and company website - The company has principal places of business in Hong Kong, Ningbo City, Zhejiang Province, China (copper business), and Shenzhen City, Guangdong Province, China (online game business)[12](index=12&type=chunk) - The Hong Kong share registrar is Tricor Investor Services Limited, and the Cayman Islands principal share registrar is Royal Bank of Canada Trust Company (Cayman) Limited[12](index=12&type=chunk)[13](index=13&type=chunk) - Principal bankers include Agricultural Bank of China, China Construction Bank, and Bank of China, with the company website at www.xingyealloy.com and stock code 505[12](index=12&type=chunk) Consolidated Statement of Profit or Loss For the six months ended June 30, 2021, the company's revenue significantly increased by **62.4% to RMB 3,167.8 million**, with profit for the period growing by **278.6% to RMB 162.4 million**, primarily driven by strong performance in the copper business Consolidated Statement of Profit or Loss Key Financial Data (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | Year-on-year Growth Rate | | :--- | :--- | :--- | :--- | | Revenue | 3,167,835 | 1,950,969 | 62.4% | | Cost of sales | (2,728,972) | (1,748,521) | 56.1% | | Gross profit | 438,863 | 202,448 | 116.8% | | Operating profit | 219,137 | 53,745 | 307.7% | | Net finance costs | (11,888) | (3,214) | 269.9% | | Profit before tax | 207,249 | 50,531 | 310.1% | | Income tax | (44,875) | (7,650) | 486.6% | | Profit for the period | 162,374 | 42,881 | 278.6% | | Attributable to equity holders of the Company | 162,138 | 42,797 | 278.9% | | Basic earnings per share (RMB cents) | 19.94 | 5.10 | 291.0% | | Diluted earnings per share (RMB cents) | 19.88 | 5.10 | 289.8% | Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2021, the company's total comprehensive income for the period was **RMB 162.1 million**, a significant increase from RMB 43.9 million in the prior year, primarily driven by a substantial rise in profit for the period Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Profit for the period | 162,374 | 42,881 | 278.6% increase | | Exchange differences on translation of financial statements of overseas operations | (256) | 1,048 | Decrease | | Total comprehensive income for the period | 162,118 | 43,929 | 269.0% increase | | Attributable to equity holders of the Company | 161,882 | 43,845 | 269.2% increase | | Attributable to non-controlling interests | 236 | 84 | 181.0% increase | Consolidated Statement of Financial Position As of June 30, 2021, the company's total assets and net assets both increased, with net current assets rising to **RMB 596.4 million**, indicating a robust financial position Consolidated Statement of Financial Position Key Data | Indicator | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | Change Rate | | :--- | :--- | :--- | :--- | | **Non-current assets** | | | | | Property, plant and equipment | 837,343 | 817,625 | 2.4% | | Deferred tax assets | 16,834 | 26,290 | -36.0% | | Total non-current assets | 937,933 | 924,590 | 1.4% | | **Current assets** | | | | | Inventories | 1,222,914 | 943,668 | 29.6% | | Trade and other receivables | 492,048 | 441,184 | 11.5% | | Derivative financial instruments | 17,213 | – | N/A | | Cash and cash equivalents | 348,357 | 223,300 | 56.0% | | Total current assets | 2,647,053 | 2,030,622 | 30.3% | | **Current liabilities** | | | | | Trade and other payables | 935,638 | 725,619 | 28.9% | | Interest-bearing borrowings | 1,089,751 | 828,385 | 31.6% | | Total current liabilities | 2,050,657 | 1,592,120 | 28.8% | | Net current assets | 596,396 | 438,502 | 36.0% | | **Non-current liabilities** | | | | | Interest-bearing borrowings | 99,000 | 88,790 | 11.5% | | Total non-current liabilities | 141,154 | 132,035 | 6.9% | | **Equity** | | | | | Total equity | 1,393,175 | 1,231,057 | 13.2% | Consolidated Statement of Changes in Equity For the six months ended June 30, 2021, the company's total equity increased to **RMB 1,393.2 million**, primarily due to a significant increase in profit for the period Consolidated Statement of Changes in Equity Key Data (For the six months ended June 30) | Indicator | January 1, 2021 (RMB thousands) | Profit for the period (RMB thousands) | Other comprehensive income (RMB thousands) | June 30, 2021 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Total equity attributable to equity holders of the Company | 1,228,897 | 162,138 | (256) | 1,390,779 | | Non-controlling interests | 2,160 | 236 | – | 2,396 | | Total equity | 1,231,057 | 162,374 | (256) | 1,393,175 | Consolidated Statement of Changes in Equity Key Data (For the six months ended June 30) | Indicator | January 1, 2020 (RMB thousands) | Profit for the period (RMB thousands) | Other comprehensive income (RMB thousands) | Repurchase and cancellation of contingent consideration shares (RMB thousands) | June 30, 2020 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total equity attributable to equity holders of the Company | 1,110,928 | 42,797 | 1,048 | (31,794) | 1,122,979 | | Non-controlling interests | 1,917 | 84 | – | – | 2,001 | | Total equity | 1,112,845 | 42,881 | 1,048 | (31,794) | 1,124,980 | Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2021, net cash from operating activities turned from positive to a **net outflow of RMB 120.4 million**, but net cash from financing activities significantly reversed to an inflow, resulting in a **net increase in cash and cash equivalents of RMB 124.8 million** Condensed Consolidated Statement of Cash Flows Key Data (For the six months ended June 30) | Activity | 2021 (RMB thousands) | 2020 (RMB thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Net cash (used in) / generated from operating activities | (120,413) | 268,128 | Turned from inflow to outflow | | Net cash used in investing activities | (71,001) | (182,514) | Decrease in outflow | | Net cash generated from / (used in) financing activities | 316,182 | (41,861) | Turned from outflow to inflow | | Net increase in cash and cash equivalents | 124,768 | 43,753 | 185.2% increase | | Cash and cash equivalents at June 30 | 348,357 | 207,927 | 67.5% increase | Notes to the Unaudited Interim Financial Report This chapter elaborates on the basis of preparation, changes in accounting policies, revenue and segment reporting, various expenses, taxation, earnings per share, statement of financial position items, and capital management, providing supplementary information for understanding the Group's financial performance [1 Reporting Entity and Background Information](index=12&type=section&id=1%20Reporting%20Entity%20and%20Background%20Information) Xingye Alloy Materials Group Limited (formerly Joyful Alliance Entertainment Holdings Limited) was incorporated in the Cayman Islands and listed in 2007, primarily engaged in manufacturing and selling high-precision copper strips, trading raw materials, and providing processing services, with online game operations added since 2016 - The company was incorporated in the Cayman Islands on July 19, 2007, and listed on the Main Board of the Hong Kong Stock Exchange on December 27, 2007[49](index=49&type=chunk) - The Group's principal businesses include the manufacture and sale of high-precision copper strips, trading of raw materials, and provision of processing services[49](index=49&type=chunk) - Following the acquisition of the online game business in August 2016, business activities also include the development, publishing, and operation of online games and related services[49](index=49&type=chunk) [2 Basis of Preparation](index=12&type=section&id=2%20Basis%20of%20Preparation) The interim financial report is prepared in accordance with International Accounting Standard 34, adopting the same accounting policies as the 2020 annual financial statements, and includes explanatory notes for significant events and transactions - The interim financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting"[50](index=50&type=chunk) - The basis of preparation is consistent with the accounting policies adopted in the 2020 annual financial statements, except for changes in accounting policies expected to be reflected in the 2021 annual financial statements[50](index=50&type=chunk) - This interim financial report contains unaudited condensed consolidated financial statements and selected explanatory notes, aiming to illustrate changes in financial position and performance since the 2020 annual financial statements[50](index=50&type=chunk) [3 Changes in Accounting Policies](index=12&type=section&id=3%20Changes%20in%20Accounting%20Policies) Revisions to International Financial Reporting Standards (IFRS 16 amendments and Interest Rate Benchmark Reform – Phase 2) effective for the first time in this period had no significant impact on the Group's financial results and position - The IFRS amendments effective for the first time in the current accounting period include IFRS 16 (Amendments) and IFRS 9, IAS 39, etc (Amendments)[51](index=51&type=chunk) - These changes had no significant impact on the way the Group's results and financial position for the current or prior periods were prepared or presented in the interim financial report for the six months ended June 30, 2021[51](index=51&type=chunk) - The Group has not applied any new standards or interpretations that are not yet effective for the current accounting period[52](index=52&type=chunk) [4 Revenue and Segment Reporting](index=13&type=section&id=4%20Revenue%20and%20Segment%20Reporting) The Group's revenue primarily derives from the copper products business (**99.8%**), with a smaller contribution from the online game business; copper product revenue significantly increased by **62.7%**, while online game revenue decreased; the Group is managed and reported under two main segments: copper products and online games [4 (a) Disaggregation of Revenue](index=13&type=section&id=4%20(a)%20Disaggregation%20of%20Revenue) This section details revenue disaggregated by major product or service lines and customer geographical locations, showing significant growth in copper product revenue and a decrease in online game revenue Revenue from Contracts with Customers by Major Product or Service Line (RMB thousands) | Product/Service Line | 2021 (Unaudited) | 2020 (Unaudited) | Year-on-year Change | | :--- | :--- | :--- | :--- | | **Related to copper products** | | | | | - Sales of high-precision copper strips | 2,978,349 | 1,851,168 | 60.9% increase | | - Processing service fees | 129,035 | 72,403 | 78.2% increase | | - Trading of raw materials | 53,743 | 18,956 | 183.5% increase | | **Subtotal (Copper products)** | 3,161,127 | 1,942,527 | 62.7% increase | | **Related to online games** | | | | | - Publishing and operating online games | 5,956 | 7,392 | 19.4% decrease | | - Others | 752 | 1,050 | 28.4% decrease | | **Subtotal (Online games)** | 6,708 | 8,442 | 20.5% decrease | | **Total revenue** | 3,167,835 | 1,950,969 | 62.4% increase | Revenue by Geographical Location of Customers (RMB thousands) | Geographical Location | 2021 (Unaudited) | 2020 (Unaudited) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Mainland China | 2,860,960 | 1,771,832 | 61.5% increase | | Hong Kong, China | 56,154 | 26,863 | 109.0% increase | | Taiwan, China | 51,428 | 48,050 | 7.0% increase | | Bangladesh | 32,713 | 19,203 | 70.4% increase | | India | 25,933 | 17,830 | 45.4% increase | | Thailand | 24,667 | 16,101 | 53.2% increase | | Vietnam | 19,753 | 3,788 | 421.5% increase | | Other regions | 96,227 | 47,302 | 103.4% increase | | **Total revenue** | 3,167,835 | 1,950,969 | 62.4% increase | - The Group has a diversified customer base, with no single customer contributing more than **10%** of total revenue during the reporting period[60](index=60&type=chunk) [4 (b) Segment Reporting](index=14&type=section&id=4%20(b)%20Segment%20Reporting) The Group is divided into two reportable segments, copper products and online games, with disclosure of each segment's performance, assets, and liabilities; the copper products segment contributed the vast majority of revenue and profit before tax - The Group manages its businesses by service line, divided into two reportable segments: copper products and online games[61](index=61&type=chunk)[62](index=62&type=chunk) Reportable Segment Revenue and Profit Before Tax (RMB thousands) | Indicator | Copper Products 2021 | Copper Products 2020 | Online Games 2021 | Online Games 2020 | Total 2021 | Total 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue from external customers | 3,161,127 | 1,942,527 | 6,708 | 8,442 | 3,167,835 | 1,950,969 | | Reportable segment revenue | 3,161,127 | 1,942,754 | 6,708 | 8,442 | 3,167,835 | 1,951,196 | | Reportable segment profit / (loss) before tax | 207,596 | 44,242 | (347) | (1,940) | 207,249 | 42,302 | Reportable Segment Assets and Liabilities (RMB thousands) | Indicator | Copper Products June 30, 2021 | Copper Products December 31, 2020 | Online Games June 30, 2021 | Online Games December 31, 2020 | Total June 30, 2021 | Total December 31, 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Reportable segment assets | 3,522,242 | 2,898,925 | 65,073 | 57,771 | 3,587,315 | 2,956,696 | | Reportable segment liabilities | 2,170,168 | 1,709,413 | 23,972 | 16,226 | 2,194,140 | 1,725,639 | [5 Other Expenses](index=17&type=section&id=5%20Other%20Expenses) For the six months ended June 30, 2021, total other expenses increased to **RMB 59.6 million**, primarily due to an increase in net loss from derivative financial instruments Other Expenses (RMB thousands) | Item | 2021 (Unaudited) | 2020 (Unaudited) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Credit loss allowance for trade and other receivables | 1,620 | 2,379 | 31.9% decrease | | Impairment loss on property, plant and equipment | – | 1,248 | N/A | | Loss on disposal of property, plant and equipment | – | 223 | N/A | | Net loss on derivative financial instruments | 57,953 | 33,935 | 70.8% increase | | Others | 4 | 167 | 97.6% decrease | | **Total** | 59,577 | 37,952 | 57.0% increase | - The increase in other expenses was mainly due to the Group recording more **net losses from derivative financial instruments of RMB 58.0 million** in 2021[74](index=74&type=chunk) [6 Profit Before Tax](index=18&type=section&id=6%20Profit%20Before%20Tax) Profit before tax significantly increased, but net finance costs rose due to fair value changes in contingent consideration receivables and payables, with other items like inventory costs, R&D expenses, and depreciation also disclosed [6 (a) Net Finance Costs](index=18&type=section&id=6%20(a)%20Net%20Finance%20Costs) Net finance costs increased from **RMB 3.2 million** in 2020 to **RMB 11.9 million** in 2021, primarily impacted by fair value changes in contingent consideration receivables and payables Net Finance Costs (RMB thousands) | Item | 2021 (Unaudited) | 2020 (Unaudited) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Interest income from bank deposits | 8,027 | 6,142 | 30.7% increase | | Fair value changes of contingent consideration receivables and payables | – | 8,229 | N/A | | Structured bank deposit income | 157 | 653 | 75.9% decrease | | Net foreign exchange gain | 1,757 | – | N/A | | Finance income | 9,941 | 15,024 | 33.9% decrease | | Interest expense on interest-bearing borrowings | (22,263) | (15,611) | 42.6% increase | | Interest on lease liabilities | (93) | (35) | 165.7% increase | | Less: Capitalized interest expense | 527 | – | N/A | | Net finance costs | (11,888) | (3,214) | 269.9% increase | - For the six months ended June 30, 2021, borrowing costs were capitalized at an annual rate of **4.30%**[77](index=77&type=chunk) [6 (b) Other Items](index=19&type=section&id=6%20(b)%20Other%20Items) This section discloses major expense items including inventory costs, research and development expenses, depreciation, impairment losses, and government grants Other Items (RMB thousands) | Item | 2021 (Unaudited) | 2020 (Unaudited) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Cost of inventories | 2,727,108 | 1,746,069 | 56.2% increase | | Research and development expenses (included in administrative expenses) | 86,451 | 59,395 | 45.6% increase | | Depreciation – property, plant and equipment | 52,494 | 49,850 | 5.3% increase | | Depreciation – right-of-use assets | 1,301 | 1,307 | 0.5% decrease | | Impairment loss – trade and other receivables | 1,620 | 2,379 | 31.9% decrease | | Impairment loss – property, plant and equipment | – | 1,248 | N/A | | Amortization – intangible assets | – | 199 | N/A | | Government grants | 6,075 | 8,500 | 28.5% decrease | - Cost of inventories includes depreciation of **RMB 29,925,000** (2020: RMB 32,122,000)[80](index=80&type=chunk) [7 Income Tax](index=20&type=section&id=7%20Income%20Tax) Income tax expense increased to **RMB 44.9 million**, with the consolidated effective tax rate rising from **15% to 22%**, primarily due to increased taxable profits from subsidiaries taxed at higher rates Income Tax (RMB thousands) | Item | 2021 (Unaudited) | 2020 (Unaudited) | Year-on-year Change | | :--- | :--- | :--- | :--- | | **Current tax** | | | | | Provision for the period | 33,962 | 8,212 | 313.6% increase | | Under / (over) provision in prior years | 1,457 | (8,473) | N/A | | **Deferred tax** | | | | | Origination and reversal of temporary differences | 9,456 | 7,911 | 19.5% increase | | **Total income tax** | 44,875 | 7,650 | 486.6% increase | - The Group's consolidated effective tax rate for the six months ended June 30, 2021, was **22%** (2020: 15%)[84](index=84&type=chunk) - The increase in effective tax rate was mainly due to an increase in taxable profits from subsidiaries taxed at a higher applicable income tax rate of **25%**[84](index=84&type=chunk) [8 Earnings Per Share](index=20&type=section&id=8%20Earnings%20Per%20Share) Both basic and diluted earnings per share significantly increased, reflecting a substantial improvement in the company's profitability Earnings Per Share (RMB cents) | Indicator | 2021 (RMB cents) | 2020 (RMB cents) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Basic earnings per share | 19.94 | 5.10 | 291.0% increase | | Diluted earnings per share | 19.88 | 5.10 | 289.8% increase | - Basic earnings per share is calculated based on profit attributable to equity holders of the Company of **RMB 162,138,000** (2020: RMB 42,797,000) and the weighted average number of ordinary shares outstanding of **813,263,173** shares[85](index=85&type=chunk) - Diluted earnings per share is calculated based on profit attributable to equity holders of the Company of **RMB 162,138,000** (2020: RMB 42,797,000) and the weighted average number of ordinary shares outstanding after adjusting for all potentially dilutive ordinary shares of **815,397,352** shares[86](index=86&type=chunk) [9 Property, Plant and Equipment](index=21&type=section&id=9%20Property%2C%20Plant%20and%20Equipment) During the reporting period, the Group's cost of acquiring property, plant and equipment significantly increased to **RMB 72.2 million**, indicating a substantial rise in capital expenditure - For the six months ended June 30, 2021, the Group's cost of acquiring property, plant and equipment was **RMB 72,212,000** (2020: RMB 21,823,000), an increase of **230.9%**[88](index=88&type=chunk) - For the six months ended June 30, 2021, items of property, plant and equipment with a net book value of zero were disposed of[88](index=88&type=chunk) [10 Inventories](index=21&type=section&id=10%20Inventories) As of June 30, 2021, total inventories increased to **RMB 1,222.9 million**, with an inventory write-down allowance of **RMB 6.4 million** recognized Inventory Composition (RMB thousands) | Item | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | Change Rate | | :--- | :--- | :--- | :--- | | Raw materials | 379,795 | 191,813 | 97.9% | | Work in progress | 682,531 | 622,302 | 9.7% | | Finished goods | 160,496 | 129,468 | 23.9% | | Others | 92 | 85 | 8.2% | | **Total** | 1,222,914 | 943,668 | 29.6% | - As of June 30, 2021, an allowance of **RMB 6,378,000** (December 31, 2020: RMB 7,386,000) was made for inventories where the net realizable value was lower than the carrying amount[90](index=90&type=chunk) [11 Trade and Other Receivables](index=22&type=section&id=11%20Trade%20and%20Other%20Receivables) Net trade and other receivables increased to **RMB 492.0 million**, with net trade receivables and bills receivable amounting to **RMB 424.0 million**; the Group pledged some bills receivable to obtain financing Trade and Other Receivables (RMB thousands) | Item | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | Change Rate | | :--- | :--- | :--- | :--- | | Net trade receivables and bills receivable after loss allowance | 423,951 | 378,355 | 12.0% | | Deposits for metal futures contracts | 21,140 | 28,993 | -27.1% | | Net other receivables after loss allowance | 1,476 | 660 | 123.6% | | Recoverable value-added tax | 27,529 | 5,170 | 432.5% | | Prepayments | 17,952 | 28,006 | -35.9% | | **Total** | 492,048 | 441,184 | 11.5% | - As of June 30, 2021, the Group discounted certain bank acceptance bills for cash and endorsed certain bank acceptance bills to suppliers, involving an amount of **RMB 31,241,000**[93](index=93&type=chunk) - As of June 30, 2021, bills receivable with a total carrying amount of **RMB 69,409,000** were pledged to banks as collateral for issued bank acceptance bills and loan financing[97](index=97&type=chunk) [12 Restricted Bank Deposits](index=23&type=section&id=12%20Restricted%20Bank%20Deposits) Restricted bank deposits increased to **RMB 422.4 million**, primarily used as guarantee deposits for issuing commercial bills Restricted Bank Deposits (RMB thousands) | Item | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | Change Rate | | :--- | :--- | :--- | :--- | | Guarantee deposits for issuing commercial bills | 420,150 | 277,320 | 51.5% | | Others | 2,262 | 2,000 | 13.1% | | **Total** | 422,412 | 279,320 | 51.2% | [13 Trade and Other Payables](index=24&type=section&id=13%20Trade%20and%20Other%20Payables) Total trade and other payables increased to **RMB 935.6 million**, with trade payables and bills payable amounting to **RMB 790.6 million** Trade and Other Payables (RMB thousands) | Item | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | Change Rate | | :--- | :--- | :--- | :--- | | Trade payables and bills payable | 790,560 | 604,109 | 30.8% | | Employee benefits payable | 42,974 | 43,573 | -1.4% | | Payables for purchase of property, plant and equipment | 31,125 | 27,214 | 14.4% | | Accrued expenses and others | 17,170 | 24,616 | -30.3% | | Contract liabilities | 53,809 | 26,107 | 106.1% | | **Total** | 935,638 | 725,619 | 28.9% | [14 Interest-Bearing Borrowings](index=25&type=section&id=14%20Interest-Bearing%20Borrowings) Total interest-bearing borrowings increased to **RMB 1,188.8 million**, with short-term borrowings accounting for **91.7%**; the Group's borrowings are partially secured by assets such as inventories, property, and equipment Repayment Schedule of Interest-Bearing Borrowings (RMB thousands) | Repayment Period | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | Change Rate | | :--- | :--- | :--- | :--- | | Within one year | 1,089,751 | 828,385 | 31.6% | | More than one year but less than two years | 68,000 | 88,000 | -22.7% | | More than five years | 31,000 | 790 | 3824.1% | | **Total** | 1,188,751 | 917,175 | 29.6% | - As of June 30, 2021, interest-bearing borrowings of **RMB 381,100,000** were subject to financial covenants related to certain balance sheet ratios of the Group[105](index=105&type=chunk) - Secured bank loans bear interest at annual rates ranging from **0.32% to 4.79%**, while unsecured bank loans bear interest at annual rates ranging from **4.13% to 4.35%**[106](index=106&type=chunk) [15 Capital, Reserves and Dividends](index=27&type=section&id=15%20Capital%2C%20Reserves%20and%20Dividends) No dividends were declared during the reporting period; the company's share capital remained unchanged, and the capital gearing ratio slightly increased to **37.77%** [15 (a) Dividends](index=27&type=section&id=15%20(a)%20Dividends) No dividends were declared or paid for the period ended June 30, 2021 - No dividends were declared or paid for the period ended June 30, 2021, and the Board of Directors has decided not to pay any interim dividend[109](index=109&type=chunk) [15 (b) Share Capital](index=27&type=section&id=15%20(b)%20Share%20Capital) As of June 30, 2021, the number and amount of issued and fully paid ordinary shares remained unchanged Issued and Fully Paid Ordinary Shares (thousands of shares/HKD thousands/RMB thousands) | Indicator | June 30, 2021 Number of Shares (thousands of shares) | June 30, 2021 Amount (HKD thousands) | June 30, 2021 Equivalent (RMB thousands) | | :--- | :--- | :--- | :--- | | At January 1 | 814,559 | 81,459 | 73,676 | | Repurchase and cancellation of contingent consideration shares | – | – | – | | At June 30 / December 31 | 814,559 | 81,459 | 73,676 | [15 (c) Capital Management](index=28&type=section&id=15%20(c)%20Capital%20Management) The Group manages its capital structure by monitoring the capital gearing ratio, which was **37.77%** at the end of the reporting period, slightly higher than the previous year-end - The primary objectives of the Group's capital management are to safeguard the Group's ability to continue as a going concern and to maximize returns for shareholders and benefits for other stakeholders[113](index=113&type=chunk) - The Group monitors its capital structure using the capital gearing ratio, calculated as net debt divided by total capital[113](index=113&type=chunk) Capital Gearing Ratio | Indicator | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Capital gearing ratio | 37.77% | 36.23% | [16 Fair Value Measurement of Financial Instruments](index=29&type=section&id=16%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) This section discloses financial assets and liabilities measured at fair value, primarily derivative financial instruments (futures contracts), classified by fair value hierarchy levels Financial Assets and Liabilities Measured at Fair Value (RMB thousands) | Item | June 30, 2021 Fair Value | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | **Assets** | | | | | | Derivative financial instruments: futures contracts | 17,213 | 17,213 | – | – | | **Liabilities** | | | | | | Derivative financial instruments: futures contracts | (125) | (125) | – | – | Financial Assets and Liabilities Measured at Fair Value (RMB thousands) | Item | December 31, 2020 Fair Value | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | **Assets** | | | | | | Structured bank deposits | 5,000 | – | 5,000 | – | | **Liabilities** | | | | | | Derivative financial instruments: futures contracts | (21,672) | (21,672) | – | – | - For the six months ended June 30, 2021, there were no transfers between Level 1 and Level 2, nor any transfers into or out of Level 3[123](index=123&type=chunk) [17 Share Award Scheme](index=31&type=section&id=17%20Share%20Award%20Scheme) The share award scheme aims to incentivize employees, with the trustee holding company shares; the vesting dates for some awarded shares have been repeatedly postponed to encourage long-term employee service - The company adopted a share award scheme on April 18, 2016, to recognize and reward eligible employees for their contributions to the Group's business growth and development by granting company shares[126](index=126&type=chunk) - The trustee has purchased **9,477,000** shares of the company at a total cost of **HKD 7,967,000** (equivalent to RMB 6,884,000)[126](index=126&type=chunk) - The vesting dates for some awarded shares have been repeatedly postponed, most recently to December 13, 2020, and December 13, 2021, to incentivize grantees to maintain their employment relationship with the Group[128](index=128&type=chunk) [18 Commitments](index=32&type=section&id=18%20Commitments) As of the end of the reporting period, the Group's contracted but unprovided capital commitments amounted to **RMB 524.6 million**, primarily for plant construction and capacity expansion in the copper processing business Capital Commitments (RMB thousands) | Item | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | Change Rate | | :--- | :--- | :--- | :--- | | Contracted | 524,552 | 570,095 | -8.0% | | **Total** | 524,552 | 570,095 | -8.0% | - Capital commitments are primarily for the acquisition of property, plant and equipment[132](index=132&type=chunk) [19 Key Management Personnel Remuneration](index=33&type=section&id=19%20Key%20Management%20Personnel%20Remuneration) This section discloses the remuneration of key management personnel, including short-term employee benefits and post-employment benefits Key Management Personnel Remuneration (RMB thousands) | Item | 2021 (Unaudited) | 2020 (Unaudited) | | :--- | :--- | :--- | | Short-term employee benefits | 1,886 | 1,890 | | Post-employment benefits | 4 | – | | **Total** | 1,890 | 1,890 | [20. Non-Adjusting Events After the Reporting Period](index=33&type=section&id=20.%20Non-Adjusting%20Events%20After%20the%20Reporting%20Period) After the reporting period, the company successfully completed the placement of **85,000,000** new shares, raising net proceeds of approximately **HKD 79.97 million**, which will be used for new plant construction and general working capital - On July 29, 2021, the company successfully completed the placement of **85,000,000** new shares to no less than six independent placees[135](index=135&type=chunk) - The gross and net proceeds from the placement were approximately **HKD 81,600,000** and **HKD 79,968,000**, respectively[135](index=135&type=chunk) - The company intends to use the net proceeds from the placement for the construction of new plant facilities on the Yongxin G-203 plot in Ningbo Hangzhou Bay New Zone, China, acquired by the Group in 2019, and for its general working capital[135](index=135&type=chunk) Management Discussion and Analysis This chapter provides a detailed review of the Group's copper processing and online game businesses, including market environment, operational performance, development strategies, and future outlook, along with an in-depth analysis of financial position, liquidity, capital structure, and market risks [Copper Processing Business](index=34&type=section&id=Copper%20Processing%20Business) The copper processing business benefited from global economic recovery and rising copper prices, leading to significant increases in production, sales volume, and revenue, as well as a substantial improvement in net profit; the company actively expanded markets, innovated products, and reduced costs [Market and Industry Review](index=34&type=section&id=Market%20and%20Industry%20Review) In the first half of 2021, global economic recovery, copper mine supply shortages, and favorable macroeconomic liquidity drove copper prices to new historical highs; the domestic copper strip processing industry performed well with full orders - Global copper mine supply was in a shortage, while global monetary liquidity remained strong, crude oil prices continued to rise, rapid vaccination progress, a large-scale infrastructure plan in the US, and a significant decline in the US dollar pushed copper prices to new historical highs[137](index=137&type=chunk) - In the first half of 2021, the average prices of LME spot copper and three-month copper increased by **65.67%** and **65.00%** year-on-year, respectively; SHFE spot copper and three-month copper average prices increased by **49.96%** and **50.51%** year-on-year, respectively[138](index=138&type=chunk) - In the first half of 2021, China's copper strip processing industry generally performed well, with companies having full orders, higher operating rates than in previous years, and significantly increased production output and capacity utilization compared to the same period last year[138](index=138&type=chunk) [Business Review](index=35&type=section&id=Business%20Review) Total production and sales volume of copper strips reached **77,171 tons** and **76,696 tons**, respectively, with sales revenue increasing by **62.7% to RMB 3,161.1 million**, and net profit growing substantially by **314.2%** - In the first half of 2021, the Group's total production and sales volume of copper strips reached **77,171 tons** and **76,696 tons**, respectively[141](index=141&type=chunk) - The copper strip business achieved sales revenue of **RMB 3,161.1 million**, an increase of **62.7%** compared to the same period in 2020[141](index=141&type=chunk) - The copper business achieved a net profit of **RMB 162.8 million**, an increase of **314.2%** compared to the net profit of RMB 39.3 million (excluding fair value changes of contingent consideration receivables and payables) in the same period last year[141](index=141&type=chunk) [Business Development](index=35&type=section&id=Business%20Development) The Group drove business development through various measures including market expansion (increasing sales to domestic high-end downstream industries), product innovation (deepening high-value-added product technology and breaking through trial certifications), and cost reduction (improving total volume and yield, expanding scrap copper procurement channels) - In terms of market expansion, the Group intensified its continuous sales efforts in domestic high-end downstream industries (electronics, connectors, integrated circuits, automotive electrical appliances, and related industries) for products originally introduced from advanced foreign counterparts[142](index=142&type=chunk) - In terms of product innovation, the Group deepened the stability of yield and process solidification technology for high-value-added, high-tech products, broke through trial certifications for multiple target customers, and significantly reduced product return rates[142](index=142&type=chunk) - In terms of cost reduction, production costs were lowered through significant increases in total volume and yield, as well as rational allocation of production plans; the Group actively expanded scrap copper procurement channels and varieties, and explored overseas scrap copper markets[142](index=142&type=chunk) [Outlook](index=36&type=section&id=Outlook) Demand for copper strips is expected to continue growing in the second half of the year, especially in national key areas such as power, electronic information, and high-end equipment; the Group will strengthen risk management to achieve stable profit growth while ensuring production and sales volume - It is expected that the development of industries related to copper strip consumption, such as power, electronic information, high-end equipment, integrated circuits, and automotive manufacturing, will continue to increase the demand for copper strips, especially for high-precision copper strips in high-end fields[145](index=145&type=chunk) - The Group will continue to ensure production and sales volume, strengthen risk management, and achieve stable profit growth to cope with adverse factors such as the recurring global pandemic, high uncertainty in economic growth, and large fluctuations in commodity prices[145](index=145&type=chunk) [Online Game Business](index=36&type=section&id=Online%20Game%20Business) The online game business saw total revenue decline to **RMB 6.7 million** and recorded a net loss, primarily due to shrinking revenue from existing games and new products still in testing; the Group continues to increase R&D investment and plans to launch new mobile and H5 games [Online Game Business - Business Review](index=36&type=section&id=Online%20Game%20Business%20-%20Business%20Review) Funnytime's total revenue was **RMB 6.7 million**, with a net loss of **RMB 0.4 million**, primarily due to shrinking revenue from existing games and new products being in testing - For the six months ended June 30, 2021, Funnytime achieved total revenue of **RMB 6.7 million** (2020: RMB 8.4 million) and a net loss of **RMB 0.4 million** (2020: net loss of RMB 4.6 million)[146](index=146&type=chunk) - The decrease in revenue and net loss were due to shrinking revenue from existing games and new products still being in the testing phase[146](index=146&type=chunk) [Market and Industry Review](index=36&type=section&id=Market%20and%20Industry%20Review) The growth rate of actual sales revenue and user scale in China's game market slowed down, with mobile games still dominating the market and web games continuing to decline - From January to June 2021, China's game market achieved actual sales revenue of **RMB 150.493 billion**, a year-on-year increase of **7.89%**, with a user scale of **667 million**, a year-on-year increase of **1.38%**, indicating a slowdown in growth[147](index=147&type=chunk) - The actual sales revenue of self-developed online games in China's domestic market was **RMB 130.1 billion**, a year-on-year increase of **8.3%**, continuing to maintain over **80%** of the domestic market share[147](index=147&type=chunk) - The mobile game market achieved actual sales revenue of **RMB 114.8 billion**, a year-on-year increase of **9.6%**; the web game market achieved actual sales revenue of **RMB 3.0 billion**, a year-on-year decrease of **24.5%**[147](index=147&type=chunk) [Business Development](index=37&type=section&id=Business%20Development) The operations team stabilized existing game revenue through refined operations and collaborated with the R&D team to polish self-developed products; the R&D center has completed the development and first round of testing for the mobile game "Let's Cultivate Immortals Together" and a new H5 product - The operations center, through refined operations, enhanced user stickiness, stabilized product lifecycle and revenue, with several mature games still generating average monthly revenue of approximately **RMB 1.0 million to RMB 1.2 million** each[150](index=150&type=chunk) - The R&D center has completed the development and first round of testing for the new mobile game "Let's Cultivate Immortals Together," showing good data performance, and is expected to undergo a second round of testing and subsequent official open beta in the third quarter of 2021[151](index=151&type=chunk) - The first version of the new H5 product has been completed and is planned for online testing in the third quarter of 2021[151](index=151&type=chunk) [Outlook](index=37&type=section&id=Outlook) The Group's online game business will continue to adhere to a premium game strategy, enhance product innovation, and leverage promotional resources to create multiple high-quality games - The Group's online game business will continue to adhere to premium games as its strategic high ground, enhancing product innovation[152](index=152&type=chunk) - It will uphold the core development strategy of "integrated research and operation," fully utilize promotional resources, and focus on long-term goals to create multiple high-quality games[152](index=152&type=chunk) [Financial Review](index=38&type=section&id=Financial%20Review) This section provides a detailed analysis of changes in revenue, gross profit, various expenses, net finance costs, income tax, and profit attributable to company shareholders during the reporting period, along with their main driving factors [Revenue and Gross Profit](index=38&type=section&id=Revenue%20and%20Gross%20Profit) Total revenue grew by **62.4% to RMB 3,167.8 million**, with copper business revenue increasing by **62.7%** and online game revenue decreasing; the copper business gross profit margin increased from **10.1% to 13.7%** - During the reporting period, the Group recorded total sales revenue of **RMB 3,167.8 million**, an increase of **62.4%** compared to the same period last year[155](index=155&type=chunk) - The Group's copper business recorded total revenue of **RMB 3,161.1 million**, an increase of **62.7%** compared to RMB 1,942.5 million in the same period of 2020[155](index=155&type=chunk) - The overall gross profit margin of the Group's copper business increased from **10.1%** in the same period of 2020 to **13.7%** in the reporting period, mainly due to rising copper prices[157](index=157&type=chunk) [Other Income](index=38&type=section&id=Other%20Income) Total other income decreased by **26.9% to RMB 7.9 million**, primarily due to a reduction in government grants - For the six months ended June 30, 2021, the Group's total other income was **RMB 7.9 million**, a decrease of **26.9%** compared to RMB 10.8 million in the same period last year[158](index=158&type=chunk) - The decrease in other income was mainly due to a reduction in government grants[158](index=158&type=chunk) [Other Expenses](index=38&type=section&id=Other%20Expenses) Other expenses increased to **RMB 59.6 million**, mainly due to an increase in net loss from derivative financial instruments to **RMB 58.0 million** - For the six months ended June 30, 2021, the Group recorded other expenses of **RMB 59.6 million**, compared to RMB 38.0 million in the same period last year[159](index=159&type=chunk) - This increase was mainly due to the Group recording more **net losses from derivative financial instruments of RMB 58.0 million** in 2021, compared to RMB 33.9 million in 2020[159](index=159&type=chunk) [Distribution Expenses](index=38&type=section&id=Distribution%20Expenses) The ratio of distribution expenses to revenue decreased to **0.9%**, primarily due to increased revenue - For the six months ended June 30, 2021, the ratio of distribution expenses to revenue decreased to **0.9%**, compared to **1.0%** in the same period last year[160](index=160&type=chunk) - This was mainly due to the increase in revenue[160](index=160&type=chunk) [Administrative Expenses](index=39&type=section&id=Administrative%20Expenses) Administrative expenses increased by **35.4% to RMB 138.8 million**, primarily due to increased staff costs and research and development expenses - For the six months ended June 30, 2021, the Group's administrative expenses increased by **35.4%** to **RMB 138.8 million** from RMB 102.5 million in the same period last year[162](index=162&type=chunk) - The increase in administrative expenses was due to increased staff costs and research and development expenses[162](index=162&type=chunk) [Net Finance Costs](index=39&type=section&id=Net%20Finance%20Costs) Net finance costs increased to **RMB 11.9 million**, mainly due to the fair value changes of contingent consideration receivables and payables recorded in the same period of 2020 - For the six months ended June 30, 2021, the Group's net finance costs amounted to **RMB 11.9 million**, an increase of **RMB 8.7 million** compared to RMB 3.2 million in the same period last year[163](index=163&type=chunk) - The increase in net finance costs was mainly due to the Group recording fair value changes of contingent consideration receivables and payables of **RMB 8.2 million** in 2020[163](index=163&type=chunk) [Income Tax](index=39&type=section&id=Income%20Tax) Income tax expense increased to **RMB 44.9 million**, with the effective tax rate rising from **15% to 22%**, due to increased taxable profits from subsidiaries taxed at higher rates - For the six months ended June 30, 2021, the Group's income tax expense was **RMB 44.9 million** (2020: RMB 7.7 million)[164](index=164&type=chunk) - The Group's consolidated effective tax rate for the six months ended June 30, 2021, was **22%** (2020: 15%)[164](index=164&type=chunk) - The increase in effective tax rate was mainly due to an increase in taxable profits from subsidiaries taxed at a higher applicable income tax rate of **25%**[164](index=164&type=chunk) [Profit Attributable to Equity Holders of the Company](index=39&type=section&id=Profit%20Attributable%20to%20Equity%20Holders%20of%20the%20Company) Profit attributable to equity holders of the company significantly increased to **RMB 162.1 million**, a year-on-year increase of **RMB 119.3 million** - For the six months ended June 30, 2021, profit attributable to equity holders of the Company was **RMB 162.1 million**, an increase of **RMB 119.3 million** compared to RMB 42.8 million in the same period last year[165](index=165&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=39&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Capital%20Structure) The Group's net current assets increased, with a high proportion of short-term interest-bearing borrowings, but it possesses sufficient bank credit and cash reserves, and the Board believes it has adequate financial resources to meet operational and debt requirements; the capital gearing ratio slightly increased - As of June 30, 2021, the Group recorded net current assets of **RMB 596.4 million**, mainly due to an increase in the Group's inventories[166](index=166&type=chunk) - As of June 30, 2021, short-term interest-bearing borrowings accounted for **91.7%** of total interest-bearing borrowings[166](index=166&type=chunk) - The Group has available and undrawn bank credit facilities of **RMB 1,319.3 million** (including a long-term loan facility of RMB 655.0 million valid until 2026) and bank cash of **RMB 914.9 million**[166](index=166&type=chunk) - As of June 30, 2021, the Group had outstanding bank loans and other borrowings of approximately **RMB 1,089.8 million** that are repayable within one year[169](index=169&type=chunk) - As of June 30, 2021, **64.1%** of the Group's debt was secured[169](index=169&type=chunk) - As of June 30, 2021, the gearing ratio (calculated as net debt divided by total capital) was **37.8%** (December 31, 2020: 36.2%)[169](index=169&type=chunk) [Pledged Assets](index=40&type=section&id=Pledged%20Assets) The Group pledged assets with a total carrying amount of **RMB 652.2 million** to secure bank loans and credit facilities - As of June 30, 2021, the Group pledged assets with a total carrying amount of **RMB 652.2 million** (December 31, 2020: RMB 618.7 million) to secure the Group's bank loans and credit facilities[170](index=170&type=chunk) [Capital Expenditure](index=40&type=section&id=Capital%20Expenditure) During the reporting period, the Group invested approximately **RMB 67.6 million** in the acquisition of property, plant and equipment, primarily funded by internal resources and bank borrowings - For the six months ended June 30, 2021, the Group invested approximately **RMB 67.6 million** in the acquisition of property, plant and equipment[171](index=171&type=chunk) - These capital expenditures were primarily funded by internal resources and bank borrowings[171](index=171&type=chunk) [Capital Commitments](index=40&type=section&id=Capital%20Commitments) As of the end of the reporting period, contracted but unprovided future capital expenditures amounted to **RMB 524.6 million**, primarily for plant construction and capacity expansion in the copper processing business - As of June 30, 2021, the Group had contracted but unprovided future capital expenditures of **RMB 524.6 million**[172](index=172&type=chunk) - These were mainly for plant construction and capacity expansion in the Group's copper processing business[172](index=172&type=chunk) [Contingent Liabilities](index=40&type=section&id=Contingent%20Liabilities) As of June 30, 2021, the Group had no significant contingent liabilities - As of June 30, 2021, the Group had no significant contingent liabilities[173](index=173&type=chunk) [Market Risks](index=40&type=section&id=Market%20Risks) The Group faces price risk (raw material and product price fluctuations), interest rate risk (bank borrowing interest rate fluctuations), and foreign exchange risk (export sales and raw material purchases denominated in foreign currencies); the Group uses futures contracts to hedge copper price risk but has not hedged interest rate and foreign exchange risks [Price Risk](index=40&type=section&id=Price%20Risk) The Group faces price fluctuation risks for raw materials (cathode copper, alloy scrap, etc.) and products, using SHFE and LME copper futures contracts to hedge copper price fluctuations, but recorded losses from futures contracts during the reporting period - The Group is exposed to price fluctuation risks for raw materials, primarily including cathode copper, alloy scrap, zinc, tin, nickel, and other metals[175](index=175&type=chunk) - The Group uses its copper futures contracts on SHFE and LME to hedge against copper price fluctuations[175](index=175&type=chunk) - For the six months ended June 30, 2021, the Group recorded losses from futures contracts of approximately **RMB 58.0 million**, compared to approximately RMB 33.9 million in the same period last year[175](index=175&type=chunk) [Interest Rate Risk](index=41&type=section&id=Interest%20Rate%20Risk) The Group's primary market risk related to interest rate changes is associated with fluctuations in bank borrowing interest rates, and it has not entered into any interest rate swaps to hedge this risk - The market risk of interest rate changes faced by the Group is primarily related to fluctuations in interest rates on bank borrowings[178](index=178&type=chunk) - The Group has not entered into any interest rate swaps to hedge interest rate risk[178](index=178&type=chunk) [Foreign Exchange Risk](index=41&type=section&id=Foreign%20Exchange%20Risk) The Group's export sales and certain raw material purchases are denominated in foreign currencies (primarily USD), exposing it to exchange rate fluctuation risk; a net foreign exchange gain was recorded during the reporting period, but no foreign exchange contracts were entered into for hedging - The Group's export sales and certain raw material purchases are denominated in foreign currencies (primarily US dollars), thus exchange rate fluctuations may impact the Group's operating results[179](index=179&type=chunk) - During the reporting period, the Group recorded a net foreign exchange gain of **RMB 1.8 million**, compared to a net loss of RMB 2.6 million in the same period of 2020[179](index=179&type=chunk) - As of June 30, 2021, the Group had not entered into any foreign exchange contracts to hedge foreign currency exchange rate risk[179](index=179&type=chunk) [Employees](index=41&type=section&id=Employees) As of June 30, 2021, the Group's total number of employees increased to **1,452**; the company offers competitive compensation and benefits, and invests in employee training and share award schemes to attract and retain talent - As of June 30, 2021, the Group employed a total of **1,452** employees (December 31, 2020: 1,336 employees)[180](index=180&type=chunk) - Remuneration policies are regularly reviewed to ensure the Group provides competitive employment terms for employees, with benefits including salaries, pensions, medical insurance plans, and other applicable social insurance[180](index=180&type=chunk) - The Group has established annual training programs for employees and may grant share options and awarded shares to eligible employees[180](index=180&type=chunk) Other Information This chapter discloses non-financial information such as the interests of directors and chief executives, major shareholders in the company's shares, as well as compliance with share option schemes, share award schemes, corporate governance, and the Model Code for Securities Transactions [Directors' and Chief Executive's Interests in Shares, Underlying Shares and Debentures](index=42&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) This section discloses the long positions of directors and chief executives in the company's shares and underlying shares, including the number of shares and approximate percentage of shareholding held through trusts, controlled corporations, and personally Directors' and Chief Executive's Long Positions in the Company's Shares and Underlying Shares (As of June 30, 2021) | Director Name | Capacity / Nature of Interest | Number of Shares Held | Number of Underlying Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Hu Changyuan | Founder of discretionary trust / Other interest | 265,200,000 | – | 32.56% | | | Interest in controlled corporation / Corporate interest | 13,213,000 | – | 1.62% | | | Beneficial owner / Personal interest | – | 400,000 | 0.06% | | Hu Minglie | Beneficial owner / Personal interest | – | 3,103,000 | 0.44% | | Chai Chaoming | Beneficial owner / Personal interest | 284,000 | 50,000 | 0.04% | | Lu Hong | Beneficial owner / Personal interest | 350,000 | 50,000 | 0.05% | | Zhu Wenjun | Beneficial owner / Personal interest | – | 400,000 | 0.06% | | Lou Dong | Beneficial owner / Personal interest | 150,000 | 50,000 | 0.02% | - Underlying shares (unlisted and physically settled) are awarded shares granted to directors under the share award scheme on December 13, 2017, with some shares vesting on December 13, 2021[187](index=187&type=chunk) [Arrangements to Purchase Shares or Debentures](index=43&type=section&id=Arrangements%20to%20Purchase%20Shares%20or%20Debentures) Except for the share option scheme and share award scheme, neither the company nor its subsidiaries participated in any arrangements during the review period that would enable directors to benefit from purchasing shares or debentures of the company - Save for the share option scheme and the share award scheme, neither the company nor any of its subsidiaries was a party to any arrangements during the review period that would enable the directors to acquire benefits by means of the acquisition of shares or debentures of the company or any other body corporate[188](index=188&type=chunk) [Share Option Scheme](index=43&type=section&id=Share%20Option%20Scheme) The 2016 Share Option Scheme was adopted by shareholders, but no share options were granted, exercised, lapsed, cancelled, or outstanding under the scheme during the review period - The shareholders adopted a share option scheme (the "2016 Share Option Scheme") at the extraordinary general meeting of the company held on May 27, 2016[189](index=189&type=chunk) - During the review period, no share options were granted, exercised, lapsed, cancelled, or outstanding under the 2016 Share Option Scheme[191](index=191&type=chunk) [Share Award Scheme](index=44&type=section&id=Share%20Award%20Scheme) The share award scheme aims to incentivize employees, with the trustee holding shares; no new shares were subscribed or granted during the reporting period, and the vesting dates for some awarded shares have been repeatedly postponed - The share award scheme aims to allow the company to grant awards to selected employees as an encouragement for their contributions to the Group and to attract suitable talent for the Group's further development[193](index=193&type=chunk) - For the period ended June 30, 2021, no new shares were subscribed by the trustee, no shares of the company were acquired by the trustee under the rules of the share award scheme and the trust deed, no shares were granted to selected employees, and no shares were vested under the share award scheme[194](index=194&type=chunk) - The vesting dates for some awarded shares have been repeatedly postponed, most recently to December 13, 2020, and December 13, 2021[195](index=195&type=chunk) [Major Shareholders](index=45&type=section&id=Major%20Shareholders) This section discloses the interests of major shareholders (other than directors) in the company's shares and underlying shares as of June 30, 2021, including Luckie Strike Limited, Come Fortune International Limited, Dynamic Empire Holdings Limited, Nomura Holdings Inc., Zedra Trust Company (Singapore) Limited, Zedra Malta Limited, Zedra Holding SA, Zedra SA, Yu Yuesu, Bostone Group Limited, Xie Shicai, and Ma Jiafeng Major Shareholders' Interests in the Company's Shares and Underlying Shares (As of June 30, 2021) | Shareholder Name / Name | Capacity / Nature of Interest | Number of Shares (L) | Number of Underlying Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Luckie Strike Limited | Beneficial owner / Beneficial interest | 110,000,000 | – | 13.50% | | Come Fortune International Limited | Beneficial owner / Beneficial interest | 155,200,000 | – | 19.05% | | Dynamic Empire Holdings Limited | Interest in controlled corporation / Corporate interest | 265,200,000 | – | 32.56% | | Nomura Holdings Inc. | Custodian (other than exempt custodian interest) / Other interest | 239,400,000 | – | 29.39% | | Zedra Trust Company (Singapore) Limited | Trustee (other than passive trustee) / Other interest | 265,200,000 | – | 32.56% | | Zedra Malta Limited | Interest in controlled corporation / Corporate interest | 265,200,000 | – | 32.56% | | Zedra Holding SA | Interest in controlled corporation / Corporate interest | 265,200,000 | – | 32.56% | | Zedra SA | Interest in controlled corporation / Corporate interest | 265,200,000 | – | 32.56% | | Yu Yuesu | Spouse's interest / Family interest | 278,813,000 | 100,000 | 34.24% | | Bostone Group Limited | Beneficial owner / Beneficial interest | 164,812,000 | – | 20.23% | | Xie Shicai | Interest in controlled corporation / Corporate interest | 187,720,000 | – | 23.05% | | Ma Jiafeng | Interest in controlled corporation / Corporate interest | 187,720,000 | – | 23.05% | - Mr. Hu Changyuan indirectly holds shares through Luckie Strike Limited and Come Fortune International Limited, and his spouse, Ms. Yu Yuesu, is deemed to have an interest by virtue of their spousal relationship[186](index=186&type=chunk)[206](index=206&type=chunk) - Mr. Xie Shicai and Ms. Ma Jiafeng indirectly hold shares through Bostone Group Limited and Hong Kong Nice International New Energy Co, Limited; Ms. Ma is Mr. Xie's spouse, and Mr. Xie is the ultimate controlling shareholder of Ningbo Boway Alloy Material Co, Ltd[202](index=202&type=chunk) [Audit Committee](index=47&type=section&id=Audit%20Committee) The Audit Committee has reviewed accounting principles and practices with management and has reviewed the interim results and report - The Audit Committee of the Board of Directors has reviewed the accounting principles and practices adopted by the Group with management and discussed financial reporting matters, including the review of the interim results and interim report prepared in accordance with relevant accounting standards for the review period[208](index=208&type=chunk) [Compliance with Corporate Governance Code](index=47&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The company has complied with the Corporate Governance Code set out in Appendix 14 of the Listing Rules throughout the review period - During the review period, the company has complied with the Corporate Governance Code set out in Appendix 14 of the Listing Rules[209](index=209&type=chunk) [Compliance with the Model Code for Securities Transactions](index=47&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions) All directors confirmed that they have complied with the standard requirements set out in the Model Code for Securities Transactions throughout the reporting period - Following specific enquiries made to all directors, all directors confirmed that they have complied with the standard requirements set out in the Model Code for Securities Transactions for the six months ended June 30, 2021[210](index=210&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=47&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any listed shares; after the reporting period, the company completed the placement of **85,000,000** new shares - For the six months ended June 30, 2021, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed shares[211](index=211&type=chunk) - The company completed the placement of **85,000,000** new shares under general mandate on July 29, 2021[211](index=211&type=chunk) [Interim Dividend](index=47&type=section&id=Interim%20Dividend) The Board of Directors will not declare an interim dividend for the six months ended June 30, 2021 - The Board of Directors will not declare an interim dividend for the six months ended June 30, 2021 (2020: nil)[212](index=212&type=chunk) [Disclosure of Changes in Directors' Information under Listing Rule 13.51B(1)](index=47&type=section&id=Disclosure%20of%20Changes%20in%20Directors'%20Information%20under%20Listing%20Rule%2013.51B(1)) Since the disclosure in the company's 2020 annual report, there have been no changes in directors' information requiring disclosure under Listing Rule 13.51B(1) - From the disclosure in the company's annual report for the year ended December 31, 2020, up to the date of this interim report, there have been no changes in directors' information requiring disclosure under Listing Rule 13.51B(1)[213](index=213&type=chunk)

年度報告 ANNUAL REPORT 2020 2020 (incorporated in the Cayman Islands with limited liability) Stock Code : 00505 Xingye Alloy Materials Group Limited 興業合金材料集團有限公司 (formerly known as Huan Yue Interactive Holdings Limited) Xingye Alloy Materials Group Limited 興業合金材料集團有限公司 年度報告 Annual Report 2020 興業合金材料集團有限公司 Xingye Alloy Materials Group Limited 目錄 | --- | --- | |-------|--------------------------| | | | | | 公司資料 | | | 主席報告書 | | | 管理層討論與分析 | | 15 | 企業管治報告 | | 28 | 環境、社會及管治報告 | | 97 | 董事會報告 | | 113 | 董事簡歷詳情 | | 115 ...

[Company Information](index=3&type=section&id=Company%20Information) This section provides essential corporate details, including board members, legal advisors, auditors, and key operational locations [Company Basic Information](index=3&type=section&id=Company%20Basic%20Information) This section provides essential corporate details, including board members, legal advisors, auditors, and key operational locations - The company officially changed its name to "Xingye Alloy Materials Group Limited" on **June 19, 2020**, to better reflect its business development[33](index=33&type=chunk)[121](index=121&type=chunk) - The company's principal places of business include Hong Kong, Ningbo City, Zhejiang Province, China (copper business), and Shenzhen City, Guangdong Province, China (online game business)[9](index=9&type=chunk) - The company's stock code is **00505**[9](index=9&type=chunk) [Consolidated Statement of Profit or Loss](index=5&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) [Profit or Loss Overview](index=5&type=section&id=Profit%20or%20Loss%20Overview) For the six months ended June 30, 2020, total revenue slightly increased, but operating profit and profit for the period decreased due to higher other expenses Consolidated Statement of Profit or Loss Key Data (For the six months ended June 30) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | Change (%) | | :----------- | :------------------ | :------------------ | :------- | | Revenue | 1,950,969 | 1,948,913 | +0.1% | | Gross profit | 202,448 | 186,461 | +8.6% | | Other income | 10,826 | 20,930 | -48.3% | | Distribution expenses | (19,104) | (22,813) | -16.3% | | Administrative expenses | (102,473) | (107,667) | -4.8% | | Other expenses | (37,952) | (2,798) | +1256.4% | | Operating profit | 53,745 | 74,113 | -27.5% | | Net finance costs | (3,214) | (11,426) | -71.9% | | Profit before tax | 50,531 | 62,687 | -19.4% | | Profit for the period | 42,881 | 54,933 | -22.0% | | Basic earnings per share | 5.10 (RMB cents) | 6.39 (RMB cents) | -20.2% | - Profit for the period attributable to equity holders of the Company was **RMB 42,797 thousand**, and to non-controlling interests was **RMB 84 thousand**[12](index=12&type=chunk) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=6&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) [Comprehensive Income Overview](index=6&type=section&id=Comprehensive%20Income%20Overview) For the six months ended June 30, 2020, total comprehensive income decreased, primarily due to a reduction in profit for the period Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data (For the six months ended June 30) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Profit for the period | 42,881 | 54,933 | | Exchange differences | 1,048 | 46 | | Total comprehensive income for the period | 43,929 | 54,979 | - Exchange differences on translation of financial statements of overseas operations significantly increased from **RMB 46 thousand** in 2019 to **RMB 1,048 thousand** in 2020[14](index=14&type=chunk) [Consolidated Statement of Financial Position](index=7&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) [Assets and Liabilities Overview](index=7&type=section&id=Assets%20and%20Liabilities%20Overview) As of June 30, 2020, non-current assets decreased, while current assets and liabilities increased, leading to growth in net current assets and total equity Consolidated Statement of Financial Position Key Data (As of June 30) | Indicator | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :------------------ | :-------------------------- | | Total non-current assets | 941,160 | 1,003,367 | | Total current assets | 1,690,881 | 1,549,482 | | Total current liabilities | 1,391,280 | 1,318,640 | | Net current assets | 299,601 | 230,842 | | Total assets less current liabilities | 1,240,761 | 1,234,209 | | Total non-current liabilities | 115,781 | 121,364 | | Net assets | 1,124,980 | 1,112,845 | | Total equity | 1,124,980 | 1,112,845 | - Assets held for sale increased from **zero** at the end of 2019 to **RMB 30,411 thousand** in mid-2020, with new liabilities directly associated with assets held for sale of **RMB 161 thousand**[17](index=17&type=chunk) [Consolidated Statement of Changes in Equity](index=9&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) [Equity Changes Overview](index=9&type=section&id=Equity%20Changes%20Overview) For the six months ended June 30, 2020, total equity increased due to profit and exchange reserves, despite share repurchases and cancellations Consolidated Statement of Changes in Equity Key Data (For the six months ended June 30) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Total equity at January 1 | 1,112,845 | 1,074,364 | | Profit for the period | 42,881 | 54,933 | | Other comprehensive income | 1,048 | 46 | | Share repurchase and cancellation | (31,794) | - | | Total equity at June 30 | 1,124,980 | 1,127,662 | - Repurchase and cancellation of contingent consideration shares resulted in a **RMB 31,794 thousand** reduction in equity during the period[22](index=22&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) [Cash Flow Overview](index=11&type=section&id=Cash%20Flow%20Overview) For the six months ended June 30, 2020, net cash from operating activities significantly increased, while investing and financing outflows also rose Condensed Consolidated Statement of Cash Flows Key Data (For the six months ended June 30) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Net cash from operating activities | 268,128 | 22,077 | | Net cash used in investing activities | (182,514) | (87,511) | | Net cash (used in) / from financing activities | (41,861) | 77,434 | | Net increase in cash and cash equivalents | 43,753 | 12,000 | | Cash and cash equivalents at June 30 | 207,927 | 185,353 | - Net cash from operating activities significantly increased from **RMB 22,077 thousand** in 2019 to **RMB 268,128 thousand** in 2020[30](index=30&type=chunk) - Financing activities shifted from a net cash inflow of **RMB 77,434 thousand** in 2019 to a net cash outflow of **RMB 41,861 thousand** in 2020, primarily due to increased repayment of interest-bearing borrowings[30](index=30&type=chunk) [Notes to the Unaudited Interim Financial Report](index=12&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) [1 Reporting Entity and Background Information](index=12&type=section&id=1%20Reporting%20Entity%20and%20Background%20Information) This note details the company's registration, listing, business scope, and recent name change to Xingye Alloy Materials Group Limited - The company was incorporated in the Cayman Islands on **July 19, 2007**, and listed on the Main Board of the Hong Kong Stock Exchange on **December 27, 2007**[32](index=32&type=chunk) - The Group's principal businesses include copper products (manufacturing and sales of high-precision copper strips, trading of raw materials, and providing processing services) and online games (developing, publishing, and operating online games and providing related services)[32](index=32&type=chunk) - The company's English name has changed from "Huan Yue Interactive Holdings Limited" to "Xingye Alloy Materials Group Limited," and its Chinese name from "歡悅互娛控股有限公司" to "興業合金材料集團有限公司"[33](index=33&type=chunk) [2 Basis of Preparation](index=12&type=section&id=2%20Basis%20of%20Preparation) This interim financial report adheres to IAS 34, maintaining consistent accounting policies with the 2019 annual statements, except for assets held for sale - The interim financial report is prepared in accordance with IAS 34 and adopts the same accounting policies as the 2019 annual financial statements, except for the accounting policy for assets held for sale and expected changes to be reflected in the 2020 annual financial statements[34](index=34&type=chunk) [3 Significant Accounting Policies](index=13&type=section&id=3%20Significant%20Accounting%20Policies) This note outlines new IFRS amendments and details the accounting treatment for non-current assets classified as held for sale - Changes to IFRS 3 (Revised) "Definition of a Business" and IFRS 16 (Revised) "COVID-19-Related Rent Concessions" had **no significant impact** on this period's financial report[36](index=36&type=chunk) - Non-current assets held for sale are stated at the lower of their carrying amount and fair value less costs to sell, and are **not depreciated or amortized**[38](index=38&type=chunk)[39](index=39&type=chunk) [4 Revenue and Segment Reporting](index=14&type=section&id=4%20Revenue%20and%20Segment%20Reporting) Revenue is primarily from copper products, with the online game segment showing a loss, while Mainland China remains the main market Revenue from Contracts with Customers by Major Product or Service Line (For the six months ended June 30) | Product/Service Line | 2020 (RMB thousand) | 2019 (RMB thousand) | Change (%) | | :---------- | :------------------ | :------------------ | :------- | | Total copper products | 1,942,527 | 1,932,975 | +0.5% | | - Sales of high-precision copper strips | 1,851,168 | 1,819,703 | +1.7% | | - Processing service fees | 72,403 | 90,827 | -20.3% | | - Trading of raw materials | 18,956 | 22,445 | -15.6% | | Total online games | 8,442 | 15,938 | -47.0% | | Total revenue | 1,950,969 | 1,948,913 | +0.1% | - By customer geographical location, Mainland China is the primary market, contributing **RMB 1,771,832 thousand** in revenue in 2020, followed by Taiwan, Thailand, and other regions[42](index=42&type=chunk) Reportable Segment Profit/(Loss) Before Tax (For the six months ended June 30) | Segment | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------- | :------------------ | :------------------ | | Copper products | 44,242 | 51,878 | | Online games | (1,940) | 8,644 | | Total | 42,302 | 60,522 | - The online game segment shifted from a profit of **RMB 8,644 thousand** in 2019 to a loss of **RMB 1,940 thousand** in 2020[49](index=49&type=chunk) [5 Other Expenses](index=18&type=section&id=5%20Other%20Expenses) For the six months ended June 30, 2020, credit loss allowance for trade and other receivables slightly decreased Other Expenses (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Credit loss allowance for trade and other receivables | 2,379 | 2,542 | [6 Profit Before Tax](index=19&type=section&id=6%20Profit%20Before%20Tax) This note details financial income, costs, and other items affecting profit before tax, highlighting reduced net finance costs but increased derivative financial instrument losses Net Finance Costs (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Finance income | 15,024 | 6,910 | | Finance costs | (18,238) | (18,336) | | Net finance costs | (3,214) | (11,426) | - Net finance costs significantly decreased from **(RMB 11,426 thousand)** in 2019 to **(RMB 3,214 thousand)** in 2020, mainly due to an increase in fair value changes of contingent consideration receivables and payables[58](index=58&type=chunk)[145](index=145&type=chunk) Other Items (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Cost of inventories | 1,746,069 | 1,758,936 | | Research and development expenses | 59,395 | 61,860 | | Depreciation | 51,157 | 54,143 | | Impairment losses | 3,627 | 2,542 | | Amortization | 199 | 420 | | Government grants | 8,500 | 9,261 | - Impairment loss on property, plant and equipment was **RMB 1,248 thousand** in 2020, compared to **zero** in the prior year[60](index=60&type=chunk) [7 Income Tax](index=21&type=section&id=7%20Income%20Tax) For the six months ended June 30, 2020, income tax expense was RMB 7,650 thousand, with the effective tax rate rising to 15% due to unrecognized deferred tax assets Income Tax (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------- | :------------------ | :------------------ | | Current tax | (261) | 6,617 | | Deferred tax | 7,911 | 1,137 | | Total income tax | 7,650 | 7,754 | - The effective consolidated tax rate increased from **12%** in 2019 to **15%** in 2020, mainly due to an increase in tax losses not recognized as deferred tax assets[63](index=63&type=chunk) [8 Earnings Per Share](index=21&type=section&id=8%20Earnings%20Per%20Share) For the six months ended June 30, 2020, both basic and diluted earnings per share decreased, reflecting reduced profit attributable to equity holders Earnings Per Share (For the six months ended June 30) | Indicator | 2020 (RMB cents) | 2019 (RMB cents) | | :----------- | :---------------- | :---------------- | | Basic earnings per share | 5.10 | 6.39 | | Diluted earnings per share | 5.10 | 6.39 | - Profit attributable to ordinary equity holders of the Company decreased from **RMB 54,496 thousand** in 2019 to **RMB 42,797 thousand** in 2020[64](index=64&type=chunk)[65](index=65&type=chunk) - The weighted average number of ordinary shares outstanding decreased from **852,653,449 shares** in 2019 to **838,887,843 shares** in 2020[64](index=64&type=chunk) [9 Property, Plant and Equipment](index=22&type=section&id=9%20Property,%20Plant%20and%20Equipment) For the six months ended June 30, 2020, additions to property, plant and equipment decreased, and disposals resulted in a net loss - The cost of additions to property, plant and equipment for the period was **RMB 21,823 thousand**, compared to **RMB 24,001 thousand** in the prior year[67](index=67&type=chunk) - Disposals of property, plant and equipment resulted in a net loss of **RMB 223 thousand** (2019: loss of **RMB 200 thousand**)[67](index=67&type=chunk) [10 Inventories](index=22&type=section&id=10%20Inventories) As of June 30, 2020, total inventories slightly decreased, and the provision for impairment of inventories significantly reduced Inventories Composition (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :----- | :------------------ | :-------------------------- | | Raw materials | 79,180 | 72,656 | | Work in progress | 446,793 | 480,754 | | Finished goods | 161,283 | 143,341 | | Others | 73 | 533 | | Total | 687,329 | 697,284 | - Provision for impairment of inventories significantly decreased from **RMB 27,627 thousand** as of December 31, 2019, to **RMB 3,033 thousand** as of June 30, 2020[68](index=68&type=chunk) [11 Trade and Other Receivables](index=23&type=section&id=11%20Trade%20and%20Other%20Receivables) As of June 30, 2020, total trade and other receivables decreased, mainly due to a decline in net trade receivables and bills receivable Trade and Other Receivables Composition (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :------------------- | :------------------ | :-------------------------- | | Net trade receivables and bills receivable | 261,006 | 326,451 | | Deposits for metal futures contracts | 14,778 | 2,839 | | Net other receivables | 7,733 | 8,414 | | Recoverable VAT | 12,302 | 11,962 | | Prepayments | 11,503 | 10,445 | | Contingent consideration receivable | – | 26,764 | | Total | 307,322 | 386,875 | - Net trade receivables and bills receivable decreased from **RMB 326,451 thousand** at the end of 2019 to **RMB 261,006 thousand** in mid-2020[70](index=70&type=chunk) - As of June 30, 2020, the total carrying amount of bills receivable pledged to banks for bank acceptance bills issued was **RMB 80,000 thousand**, a decrease from **RMB 107,070 thousand** at the end of 2019[74](index=74&type=chunk) [12 Cash and Cash Equivalents](index=24&type=section&id=12%20Cash%20and%20Cash%20Equivalents) As of June 30, 2020, total cash and cash equivalents increased, including amounts held for sale Cash and Cash Equivalents (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :------------------- | :------------------ | :-------------------------- | | Cash and cash equivalents in the consolidated statement of financial position | 207,579 | 163,150 | | Cash and cash equivalents held for sale | 348 | – | | Cash and cash equivalents in the consolidated statement of cash flows | 207,927 | 163,150 | [13 Disposal Group Held for Sale](index=25&type=section&id=13%20Disposal%20Group%20Held%20for%20Sale) In June 2020, management committed to selling a subsidiary, classifying its assets and liabilities as held for sale, with the disposal completed before July - The company committed to selling its **100% equity interest** in a subsidiary, whose assets and liabilities were classified as a disposal group held for sale[81](index=81&type=chunk) Assets and Liabilities of Disposal Group Held for Sale (As of June 30, 2020) | Item | Amount (RMB thousand) | | :--------------- | :---------------- | | Total assets | 30,411 | | Total liabilities | (161) | | Net assets | 30,250 | [14 Trade and Other Payables](index=26&type=section&id=14%20Trade%20and%20Other%20Payables) As of June 30, 2020, total trade and other payables significantly increased, primarily due to higher trade payables and bills payable Trade and Other Payables Composition (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :------------------- | :------------------ | :-------------------------- | | Trade payables and bills payable | 558,890 | 394,397 | | Employee benefits payable | 26,090 | 38,973 | | Payables for purchase of property, plant and equipment | 23,894 | 33,273 | | Accrued expenses and others | 17,501 | 24,388 | | Contract liabilities | 35,982 | 26,858 | | Contingent consideration payable | – | 3,626 | | Total | 662,357 | 521,515 | - Trade payables and bills payable increased from **RMB 394,397 thousand** at the end of 2019 to **RMB 558,890 thousand** in mid-2020[85](index=85&type=chunk) - The company completed the repurchase of **41,000,000 shares** from Mobilefun on April 16, 2020, and settled the remaining repayment of **HKD 2,195,779.80** on September 18, 2020, with a related gain of approximately **RMB 8.2 million** recognized[87](index=87&type=chunk)[88](index=88&type=chunk) [15 Interest-Bearing Borrowings](index=27&type=section&id=15%20Interest-Bearing%20Borrowings) As of June 30, 2020, total interest-bearing borrowings were RMB 787,682 thousand, mostly short-term and secured by various assets Interest-Bearing Borrowings Repayment Schedule (As of June 30) | Repayment Period | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :------------------ | :-------------------------- | | Within one year | 710,682 | 768,941 | | More than one year but less than two years | 77,000 | 77,000 | | Total | 787,682 | 845,941 | - As of June 30, 2020, secured bank loans bore interest at **0.93% to 4.75%** per annum, and unsecured bank loans bore interest at **1.27% to 1.33%** per annum[92](index=92&type=chunk)[93](index=93&type=chunk) - The total carrying amount of pledged assets was **RMB 655,209 thousand**, including inventories, property, plant and equipment, right-of-use assets, and pledged deposits for bank borrowings[92](index=92&type=chunk) [16 Capital, Reserves and Dividends](index=29&type=section&id=16%20Capital,%20Reserves%20and%20Dividends) No dividends were declared, share capital decreased due to repurchases, and the gearing ratio improved, indicating a better capital structure - For the period ended June 30, 2020, the Board of Directors decided **not to declare or pay any dividends**[95](index=95&type=chunk) Issued and Fully Paid Ordinary Shares (As of June 30) | Item | June 30, 2020 (thousand shares) | December 31, 2019 (thousand shares) | | :--------------- | :------------------- | :-------------------- | | At January 1 | 855,559 | 855,559 | | Repurchase and cancellation of contingent consideration shares | (41,000) | – | | At June 30 / December 31 | 814,559 | 855,559 | Gearing Ratio | Indicator | June 30, 2020 | December 31, 2019 | | :----------- | :------------ | :------------- | | Gearing ratio | 34.11% | 38.13% | [17 Fair Value Measurement of Financial Instruments](index=31&type=section&id=17%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) This note discloses fair value measurements for financial instruments, including derivatives and contingent consideration, with no transfers between fair value hierarchy levels Financial Assets and Liabilities Measured at Fair Value (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :------------------ | :-------------------------- | | Derivative financial instruments (assets) | – | 565 | | Structured bank deposits | – | 20,118 | | Contingent consideration receivable | – | 26,764 | | Derivative financial instruments (liabilities) | (12,855) | (7,775) | | Contingent consideration payable | – | (3,626) | - Derivative financial instruments (liabilities) increased to **RMB 12,855 thousand** as of June 30, 2020, from **RMB 7,775 thousand** at the end of 2019[103](index=103&type=chunk) - Contingent consideration receivable and payable were both **zero** as of June 30, 2020, compared to **RMB 26,764 thousand** and **RMB 3,626 thousand** respectively at the end of 2019[105](index=105&type=chunk) [18 Share Award Scheme](index=33&type=section&id=18%20Share%20Award%20Scheme) The 2016 share award scheme aims to reward employees; as of June 30, 2020, 9,477,000 shares were purchased by the trustee, with some vesting dates postponed - As of June 30, 2020, the trustee had purchased **9,477,000 shares** of the company at a total cost of **HKD 7,967,000** (approximately **RMB 6,884,000**)[109](index=109&type=chunk) - The vesting dates for some awarded shares have been postponed to **December 13, 2020, and December 13, 2021**, to incentivize and encourage grantees to maintain employment[109](index=109&type=chunk) [19 Commitments](index=34&type=section&id=19%20Commitments) As of June 30, 2020, total capital commitments for property, plant and equipment were RMB 604,017 thousand, mainly for contracted but unprovided future capital expenditures Capital Commitments (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :----------- | :------------------ | :-------------------------- | | Contracted | 69,354 | 597,963 | | Authorized but not contracted | 534,663 | – | | Total | 604,017 | 597,963 | - Capital commitments authorized but not contracted increased from **zero** at the end of 2019 to **RMB 534,663 thousand** in mid-2020[111](index=111&type=chunk) [20 Key Management Personnel Compensation](index=35&type=section&id=20%20Key%20Management%20Personnel%20Compensation) For the six months ended June 30, 2020, key management personnel compensation decreased due to reduced short-term employee benefits and equity-settled share-based payments Key Management Personnel Compensation (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Short-term employee benefits | 1,886 | 2,131 | | Equity-settled share-based payments | – | 179 | | Post-employment benefits | 4 | 27 | | Total | 1,890 | 2,337 | [Management Discussion and Analysis](index=36&type=section&id=Management%20Discussion%20and%20Analysis) [Copper Processing Business](index=36&type=section&id=Copper%20Processing%20Business) In H1 2020, despite global economic impact, copper processing revenue slightly increased, but operating profit before tax declined due to derivative financial instrument losses - In the first half of 2020, the global economy was projected to decline significantly, while China's economic growth was estimated at **1.0%**, making it the **only major economy to grow globally**[115](index=115&type=chunk) - LME copper prices showed a trend of initial decline followed by an increase in the first half of 2020, with average prices decreasing by **11.0%** and **10.7%** year-on-year[116](index=116&type=chunk) - The Group's total production of copper strips reached **57,379 tons**, and total sales volume reached **56,938 tons**[120](index=120&type=chunk) Copper Processing Business Sales Revenue and Operating Profit Before Tax (For the six months ended June 30) | Indicator | 2020 (RMB million) | 2019 (RMB million) | | :--------------- | :-------------------- | :-------------------- | | Sales revenue | 1,942.5 | 1,933.0 | | Operating profit before tax | 44.2 | 51.8 | - Operating profit before tax decreased by **14.8%**, primarily due to the net effect of a **RMB 24.6 million** reversal of inventory impairment, a **RMB 34.0 million** net loss on derivative financial instruments, and a **RMB 11.5 million** reduction in distribution and administrative expenses[120](index=120&type=chunk) - The company actively expanded into markets such as electronics, integrated circuits, automotive electronics, rail transit, and military industries, while promoting new product R&D, technological transformation, and process innovation[122](index=122&type=chunk) [Online Game Business](index=38&type=section&id=Online%20Game%20Business) In H1 2020, the online game business recorded a significant decline in revenue and turned to a loss, driven by shrinking existing game revenue and reduced government subsidies Online Game Business Financial Performance (For the six months ended June 30) | Indicator | 2020 (RMB million) | 2019 (RMB million) | | :------- | :-------------------- | :-------------------- | | Total revenue | 8.4 | 15.9 | | Net loss | (4.6) | 10.0 (Net profit) | - The decrease in revenue and net loss were attributed to shrinking revenue from existing games and reduced government subsidies for domestic game companies[127](index=127&type=chunk) - China's game market achieved actual sales revenue of **RMB 139.5 billion** in the first half of 2020, a year-on-year increase of **22.3%**, with mobile game market growing by **35.8%** while the web game market declined by **21.4%**[132](index=132&type=chunk) - The operations center leveraged the competitive advantages of traditional web games and H5 mobile mini-games, and expanded multi-channel operations and overseas market投放 for its self-developed product "This is Cultivation"[133](index=133&type=chunk) - The R&D center initiated an H5 web game project, expected to be completed by the end of 2020, with gameplay leaning towards traditional RPGs and incorporating innovative activities and core cultivation systems[135](index=135&type=chunk) [Financial Review](index=40&type=section&id=Financial%20Review) This section reviews H1 2020 financial performance, noting slight revenue growth, improved copper business gross margin, increased other expenses from derivative losses, and reduced profit attributable to shareholders - The Group's total revenue was **RMB 1,950.9 million**, a **0.1% increase** compared to the prior year[136](index=136&type=chunk) - The overall gross margin of the copper business increased from **9.0%** in the prior year to **10.1%** during the period, mainly due to the reversal of inventory impairment of **RMB 24.6 million**[138](index=138&type=chunk) - Total other income was **RMB 10.8 million**, a **48.3% decrease** from the prior year, mainly due to a net gain on derivative financial instruments of **RMB 11.2 million** recorded in 2019[139](index=139&type=chunk) - Other expenses were **RMB 38.0 million**, compared to **RMB 2.8 million** in the prior year, primarily due to a net loss on derivative financial instruments of **RMB 33.9 million** recorded in 2020[140](index=140&type=chunk) - Administrative expenses decreased by **4.8%** to **RMB 102.5 million**, and the ratio of distribution expenses to revenue decreased to **1.0%**, mainly due to reductions in staff costs, R&D expenses, insurance premiums, and service fees[141](index=141&type=chunk)[144](index=144&type=chunk) - Net finance costs were **RMB 3.2 million**, a decrease of **RMB 8.2 million** from the prior year, mainly due to an increase in fair value changes of contingent consideration receivables and payables of **RMB 6.1 million**[145](index=145&type=chunk) - Profit attributable to shareholders of the Company was **RMB 42.8 million**, a decrease of **RMB 11.7 million** from the prior year[147](index=147&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=41&type=section&id=Liquidity,%20Financial%20Resources%20and%20Capital%20Structure) As of June 30, 2020, net current assets were RMB 299.6 million, with strong liquidity and a reduced gearing ratio of 34.1% - The Group recorded net current assets of **RMB 299.6 million**, mainly due to an increase in bank deposits with maturities exceeding three months[148](index=148&type=chunk) - Short-term interest-bearing borrowings accounted for **90.2%** of total interest-bearing borrowings[149](index=149&type=chunk) - The Group had available unutilized bank facilities of **RMB 799.0 million** and bank cash of **RMB 665.8 million**[149](index=149&type=chunk) - The gearing ratio (calculated as net debt divided by total capital) was **34.1%**, a decrease from **38.1%** at the end of 2019[151](index=151&type=chunk) [Pledged Assets](index=42&type=section&id=Pledged%20Assets) As of June 30, 2020, the Group pledged assets with a total carrying amount of RMB 655.2 million as security for bank loans and credit facilities - The Group pledged assets with a total carrying amount of **RMB 655.2 million** as security for bank loans and credit facilities, compared to **RMB 733.6 million** at the end of 2019[152](index=152&type=chunk) [Capital Expenditure](index=42&type=section&id=Capital%20Expenditure) For the six months ended June 30, 2020, the Group invested approximately RMB 31.1 million in property, plant and equipment, funded by internal resources and bank borrowings - The Group invested approximately **RMB 31.1 million** in the acquisition of property, plant and equipment, primarily funded by internal resources and bank borrowings[153](index=153&type=chunk) [Capital Commitments](index=42&type=section&id=Capital%20Commitments) As of June 30, 2020, contracted but unprovided future capital expenditures amounted to RMB 604.0 million, primarily for copper processing business expansion - The Group's contracted but unprovided future capital expenditures amounted to **RMB 604.0 million**, mainly for plant construction and capacity expansion in the copper processing business[154](index=154&type=chunk) [Contingent Liabilities](index=42&type=section&id=Contingent%20Liabilities) As of June 30, 2020, the Group had no significant contingent liabilities - As of June 30, 2020, the Group had **no significant contingent liabilities**[155](index=155&type=chunk) [Market Risks](index=42&type=section&id=Market%20Risks) The Group faces price, interest rate, and foreign exchange risks, recording losses on futures contracts and net foreign exchange losses during the period - The Group is exposed to raw material price fluctuation risk and uses copper futures contracts to hedge against copper price volatility, but recorded a futures contract loss of approximately **RMB 33.9 million** during the period[157](index=157&type=chunk)[160](index=160&type=chunk) - The Group faces interest rate fluctuation risk on bank borrowings but has **not entered into any interest rate swaps** to hedge this risk[161](index=161&type=chunk) - The Group is exposed to foreign currency exchange rate risk, recording a net foreign exchange loss of **RMB 2.6 million** during the period, and has **not entered into any foreign exchange contracts** for hedging[162](index=162&type=chunk) [Employees](index=43&type=section&id=Employees) As of June 30, 2020, the Group employed 1,358 employees, with total salaries and related costs of approximately RMB 67.8 million - As of June 30, 2020, the Group employed a total of **1,358 employees** (December 31, 2019: 1,334 employees)[163](index=163&type=chunk) - Total salaries and related costs paid to employees were approximately **RMB 67.8 million** (June 30, 2019: RMB 68.5 million)[163](index=163&type=chunk) - The Group has a share award scheme and a share option scheme, and provides annual training programs for employees[163](index=163&type=chunk) [Other Information](index=44&type=section&id=Other%20Information) [Directors' and Chief Executive's Interests in Shares, Underlying Shares and Debentures](index=44&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20in%20Shares,%20Underlying%20Shares%20and%20Debentures) This section discloses directors' and chief executive's long positions in company shares and underlying shares as of June 30, 2020 Directors' Long Positions in Shares and Underlying Shares of the Company (As of June 30, 2020) | Director's Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding | | :------- | :----------------------- | :----------- | :------------- | | Hu Changyuan | Founder of discretionary trust/Other interests | 265,200,000 | 32.56% | | | Interest in controlled corporation/Corporate interest | 13,213,000 | 1.62% | | | Beneficial owner/Personal interest | 500,000 | 0.06% | | Hu Minglie | Beneficial owner/Personal interest | 3,603,000 | 0.44% | | Chai Chaoming | Beneficial owner/Personal interest | 334,000 | 0.04% | | Lu Hong | Beneficial owner/Personal interest | 400,000 | 0.05% | | Zhu Wenjun | Beneficial owner/Personal interest | 500,000 | 0.06% | | Lou Dong | Beneficial owner/Personal interest | 200,000 | 0.02% | - Mr. Hu Changyuan holds company shares through a family trust and controlled corporations, totaling **34.18%** of the total issued shares[165](index=165&type=chunk)[167](index=167&type=chunk) - The underlying shares held by directors are awarded shares under the share award scheme, with the vesting dates for some shares postponed[168](index=168&type=chunk) [Arrangements to Purchase Shares or Debentures](index=45&type=section&id=Arrangements%20to%20Purchase%20Shares%20or%20Debentures) Excluding share option and award schemes, no arrangements enabled directors to benefit from acquiring company shares or debentures during the review period - Save for the share option scheme and share award scheme, neither the company nor its subsidiaries participated in any arrangements that would enable directors to benefit from acquiring shares or debentures of the company or any other body corporate[169](index=169&type=chunk) [Share Option Scheme](index=45&type=section&id=Share%20Option%20Scheme) The 2007 share option scheme was terminated in 2016, and no options were granted, exercised, or outstanding under the 2016 scheme during the period - The 2007 Share Option Scheme was terminated on **May 27, 2016**, and no further share options will be granted thereunder[170](index=170&type=chunk) - Shareholders adopted a new share option scheme (the "2016 Share Option Scheme") on **May 27, 2016**[171](index=171&type=chunk) - During the review period, **no share options** were granted, exercised, lapsed, cancelled, or remained outstanding under the 2016 Share Option Scheme[173](index=173&type=chunk) [Share Award Scheme](index=46&type=section&id=Share%20Award%20Scheme) The 2016 share award scheme aims to reward employees; as of June 30, 2020, 3,497,000 shares were held in trust, with some vesting dates postponed - The Share Award Scheme aims to grant awards to selected employees to encourage their contributions and attract talent[175](index=175&type=chunk) - As of June 30, 2020, **3,497,000 shares** were held in trust under the Share Award Scheme[177](index=177&type=chunk) - The vesting dates for some awarded shares have been postponed to **December 13, 2020, and December 13, 2021**[177](index=177&type=chunk) [Major Shareholders](index=47&type=section&id=Major%20Shareholders) This section discloses major shareholders with significant interests in the company's shares and underlying shares as of June 30, 2020 Major Shareholders' Long Positions in Shares of the Company (As of June 30, 2020) | Shareholder Name | Capacity/Nature of Interest | Number of Shares (L) | Approximate Percentage of Shareholding | | :------------------------- | :----------------------- | :----------- | :------------- | | Luckie Strike Limited | Beneficial owner/Beneficial interest | 110,000,000 | 13.50% | | Come Fortune International Limited | Beneficial owner/Beneficial interest | 155,200,000 | 19.05% | | Dynamic Empire Holdings Limited | Interest in controlled corporation/Corporate interest | 265,200,000 | 32.56% | | Nomura Holdings Inc. | Custodian (other than exempt custodian interest)/Other interests | 239,400,000 | 29.39% | | Zedra Trust Company (Singapore) Limited | Trustee (other than passive trustee)/Other interests | 265,200,000 | 32.56% | | Yu Yuesu | Spouse's interest/Family interest | 278,713,000 | 34.24% | | bostone Group Limited | Beneficial owner/Beneficial interest | 147,046,000 | 18.05% | | Xie Shicai | Interest in controlled corporation/Corporate interest | 147,046,000 | 18.05% | | Ma Jiafeng | Interest in controlled corporation/Corporate interest | 147,046,000 | 18.05% | - Ms. Yu Yuesu, spouse of Mr. Hu Changyuan, is deemed to have an interest in **278,713,000 shares** and **200,000 underlying shares**, representing **34.24%**[181](index=181&type=chunk)[187](index=187&type=chunk) - Bostone Group Limited is beneficially owned by Ms. Ma Jiafeng and Mr. Xie Shicai, holding **147,046,000 shares**, representing **18.05%**; Mr. Xie Shicai is the ultimate controlling shareholder of Ningbo Boway Alloy Material Co., Ltd., a direct competitor of the Group's copper processing business[181](index=181&type=chunk)[187](index=187&type=chunk) [Audit Committee](index=49&type=section&id=Audit%20Committee) The Audit Committee reviewed the Group's accounting principles and practices, and discussed financial reporting matters, including interim results and reports - The Audit Committee has reviewed the Group's accounting principles and practices and reviewed the interim results and interim report[190](index=190&type=chunk) [Compliance with Corporate Governance Code](index=49&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) During the review period, the company complied with the Corporate Governance Code set out in Appendix 14 to the Listing Rules - The company has complied with the Corporate Governance Code set out in Appendix 14 to the Listing Rules during the review period[191](index=191&type=chunk) [Compliance with the Model Code for Securities Transactions](index=49&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions) All directors confirmed compliance with the Model Code for Securities Transactions for the six months ended June 30, 2020 - All directors confirmed compliance with the Model Code for Securities Transactions during the review period[192](index=192&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=49&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) The company completed an off-market share repurchase and cancellation of 41,000,000 shares for HKD 32.8 million on April 16, 2020 - The company completed an off-market share repurchase on **April 16, 2020**, and cancelled **41,000,000 shares** on April 17, with a total consideration of **HKD 32.8 million**[193](index=193&type=chunk) [Interim Dividend](index=49&type=section&id=Interim%20Dividend) The Board of Directors did not declare an interim dividend for the six months ended June 30, 2020 - The Board of Directors **did not declare an interim dividend** for the six months ended June 30, 2020[194](index=194&type=chunk) [Disclosure of Changes in Directors' Information under Rule 13.51B(1) of the Listing Rules](index=49&type=section&id=Disclosure%20of%20Changes%20in%20Directors'%20Information%20under%20Rule%2013.51B(1)%20of%20the%20Listing%20Rules) No changes in directors' information requiring disclosure under Listing Rule 13.51B(1) occurred since the 2019 annual report - No changes in directors' information requiring disclosure under Rule 13.51B(1) of the Listing Rules since the 2019 annual report disclosure[195](index=195&type=chunk)

歡 Annual Report Huan Yue Interactive Holdings Limited Huan Yue Interactive Holdings Limited 歡 互娛控股有限 公 司 互娛控股有限 公 司 (incorporated in the Cayman Islands with limited liability) Stock Code : 00505 2019 年度報告 Huan Yue Interactive Holdings Limited 歡 互娛控股有限 公 司 （於開曼群島註冊成立之有限公司） 股份代號： 00505 目錄 2 公司資料 4 主席報告書 6 管理層討論與分析 16 企業管治報告 29 環境、社會及管治報告 73 董事會報告 89 董事簡歷詳情 91 獨立核數師報告書 97 綜合損益表 98 綜合損益及其他全面收益表 99 綜合財務狀況表 101 綜合權益變動表 103 綜合現金流量表 105 財務報表附註 199 五年財務資料概要 公司資料 | --- | --- | |--------------------------------------- ...

[Company Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This section details the company's board, key advisors, auditors, registered offices, and principal business locations [Board of Directors and Company Secretary](index=3&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%8F%8A%E5%85%AC%E5%8F%B8%E7%A7%98%E6%9B%B8) This chapter details the company's board members, including executive, non-executive, and independent non-executive directors, and company secretary - The Board of Directors includes Mr. Hu Changyuan (Chairman), Mr. Hu Minglie (CEO) as executive directors, Mr. Dai Jianchun as a non-executive director, and Mr. Chai Chaoming, Ms. Lu Hong, and Dr. Lou Dong as independent non-executive directors[5](index=5&type=chunk) - Ms. Mei Yamei serves as the company secretary and one of the authorized representatives, with Mr. Zhu Wenjun as the other authorized representative[5](index=5&type=chunk) [Principal Legal Advisors, Auditors, and Registered Office](index=3&type=section&id=%E4%B8%BB%E8%A6%81%E6%B3%95%E5%BE%8B%E9%A1%A7%E5%95%8F%E3%80%81%E6%A0%B8%E6%95%B8%E5%B8%AB%E5%8F%8A%E8%A8%BB%E5%86%8A%E8%90%A6%E4%BA%8B%E8%99%95) This chapter lists the company's principal legal advisors, auditors, and registered office addresses - The principal legal advisor in Hong Kong is Zhong Lun Law Firm[5](index=5&type=chunk) - The Cayman Islands legal advisor is Conyers Dill & Pearman, Cayman[5](index=5&type=chunk) - The auditor is KPMG[5](index=5&type=chunk) [Principal Places of Business, Share Registrars, and Principal Bankers](index=4&type=section&id=%E4%B8%BB%E8%A6%81%E7%87%9F%E6%A5%AD%E5%9C%B0%E9%BB%9E%E3%80%81%E8%82%A1%E4%BB%BD%E9%81%8E%E6%88%B6%E7%99%BB%E8%A8%98%E5%88%86%E8%99%95%E5%8F%8A%E4%B8%BB%E8%A6%81%E5%BE%80%E4%BE%86%E9%8A%80%E8%A1%8C) This chapter provides the company's principal places of business, share registrars, and principal bankers - The principal place of business in Hong Kong is Unit 11, 11/F, Hung Tai Industrial Building, 37-39 Hung To Road, Kwun Tong, Kowloon[7](index=7&type=chunk) - The principal place of business in China (copper business) is No. 68 Jinxi Road, Hangzhou Bay New Area, Ningbo, Zhejiang Province[7](index=7&type=chunk) - The principal place of business in China (online game business) is No. 8 Yuehai Road, Shenzhen, Guangdong Province[7](index=7&type=chunk) - Principal bankers include Agricultural Bank of China, China Construction Bank, and Bank of China[7](index=7&type=chunk) - The company's stock code is **00505**[7](index=7&type=chunk) [Consolidated Statement of Profit or Loss](index=5&type=section&id=%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8) This section presents the company's financial performance, including revenue, gross profit, operating profit, and profit [For the Six Months Ended June 30, 2019 (Unaudited)](index=5&type=section&id=%E6%88%AA%E8%87%B3%E4%BA%8C%E9%9B%B6%E4%B8%80%E4%B9%9D%E5%B9%B4%E5%85%AD%E6%9C%88%E4%B8%89%E5%8D%81%E6%97%A5%E6%AD%A2%E5%85%AD%E5%80%8B%E6%9C%88%EF%BC%88%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%EF%BC%89) Revenue decreased by 23.8% to RMB 1,948.9 million, yet operating profit and profit for the period increased, with basic EPS rising to RMB 6.39 cents Consolidated Statement of Profit or Loss Key Financial Data (For the Six Months Ended June 30) | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,948,913 | 2,557,297 | -23.8% | | Cost of sales | (1,762,452) | (2,363,505) | -25.4% | | Gross profit | 186,461 | 193,792 | -3.8% | | Other income | 20,930 | 16,247 | +28.8% | | Distribution expenses | (22,813) | (23,685) | -3.7% | | Administrative expenses | (107,667) | (93,306) | +15.4% | | Other expenses | (2,798) | (23,423) | -88.0% | | Operating profit | 74,113 | 69,625 | +6.4% | | Net finance costs | (11,426) | (13,371) | -14.5% | | Profit before tax | 62,687 | 56,254 | +11.4% | | Income tax | (7,754) | (7,616) | +1.8% | | Profit for the period | 54,933 | 48,638 | +12.9% | | Attributable to equity holders of the Company | 54,496 | 47,730 | +14.2% | | Basic earnings per share (RMB cents) | 6.39 | 5.60 | +14.1% | | Diluted earnings per share (RMB cents) | 6.39 | 5.58 | +14.5% | - Operating profit increased by **6.4%** year-on-year to **RMB 74.1 million**, primarily due to an **88.0% significant reduction in other expenses**[10](index=10&type=chunk) - Profit for the period increased by **12.9%** year-on-year to **RMB 54.9 million**[10](index=10&type=chunk) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=6&type=section&id=%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) This section details the company's total comprehensive income, reflecting profit for the period and other comprehensive income [For the Six Months Ended June 30, 2019 (Unaudited)](index=6&type=section&id=%E6%88%AA%E8%87%B3%E4%BA%8C%E9%9B%B6%E4%B8%80%E4%B9%9D%E5%B9%B4%E5%85%AD%E6%9C%88%E4%B8%89%E5%8D%81%E6%97%A5%E6%AD%A2%E5%85%AD%E5%80%8B%E6%9C%88%EF%BC%88%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%EF%BC%89) Total comprehensive income significantly increased, driven by higher profit for the period and positive exchange differences from overseas operations Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data (For the Six Months Ended June 30) | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Profit for the period | 54,933 | 48,638 | +12.9% | | Exchange differences on translating financial statements of overseas operations | 46 | (3,876) | N/A | | Total comprehensive income for the period | 54,979 | 44,762 | +22.8% | | Attributable to equity holders of the Company | 54,542 | 43,854 | +24.4% | - Exchange differences on translating financial statements of overseas operations turned from a **loss of RMB 3,876 thousand** in the same period of 2018 to a **gain of RMB 46 thousand** in the same period of 2019[12](index=12&type=chunk) [Consolidated Statement of Financial Position](index=7&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) This section provides a snapshot of the company's assets, liabilities, and equity, highlighting changes in key financial positions [As at June 30, 2019 (Unaudited)](index=7&type=section&id=%E6%96%BC%E4%BA%8C%E9%9B%B6%E4%B8%80%E4%B9%9D%E5%B9%B4%E5%85%AD%E6%9C%88%E4%B8%89%E5%8D%81%E6%97%A5%EF%BC%88%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%EF%BC%89) Total assets and net assets increased, with non-current assets rising due to initial recognition of right-of-use assets and increased current interest-bearing borrowings Consolidated Statement of Financial Position Key Data | Indicator | June 30, 2019 (RMB thousands) | December 31, 2018 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | **Non-current assets** | | | | | Property, plant and equipment | 887,798 | 917,315 | -3.2% | | Right-of-use assets | 75,748 | – | N/A | | Prepaid lease payments | – | 11,991 | -100.0% | | Intangible assets | 1,574 | 1,994 | -21.1% | | Goodwill | 28,289 | 28,289 | 0.0% | | Deferred tax assets | 26,774 | 28,016 | -4.4% | | Other non-current assets | 7,490 | – | N/A | | **Total non-current assets** | **1,036,281** | **997,383** | **+3.9%** | | **Current assets** | | | | | Inventories | 640,857 | 670,327 | -4.4% | | Trade and other receivables | 377,931 | 392,167 | -3.7% | | Restricted bank deposits | 174,876 | 140,162 | +24.8% | | Cash and cash equivalents | 185,353 | 175,950 | +5.4% | | **Total current assets** | **1,421,097** | **1,389,645** | **+2.3%** | | **Current liabilities** | | | | | Trade and other payables | 419,823 | 467,301 | -10.2% | | Interest-bearing borrowings | 803,030 | 728,523 | +10.2% | | Lease liabilities | 1,069 | – | N/A | | Income tax payable | 17,003 | 21,926 | -22.5% | | **Total current liabilities** | **1,240,925** | **1,217,972** | **+1.9%** | | **Net current assets** | **180,172** | **171,673** | **+5.0%** | | **Non-current liabilities** | | | | | Interest-bearing borrowings | 45,500 | 45,500 | 0.0% | | Lease liabilities | 1,166 | – | N/A | | Deferred income | 40,680 | 43,693 | -6.9% | | Deferred tax liabilities | 1,445 | 5,499 | -73.7% | | **Total non-current liabilities** | **88,791** | **94,692** | **-6.3%** | | **Net assets** | **1,127,662** | **1,074,364** | **+4.9%** | | **Total equity** | **1,127,662** | **1,074,364** | **+4.9%** | - The initial application of IFRS 16 led to the recognition of **right-of-use assets of RMB 75,748 thousand** and **lease liabilities of RMB 2,235 thousand** (current RMB 1,069 thousand, non-current RMB 1,166 thousand)[15](index=15&type=chunk)[17](index=17&type=chunk) - Net current assets increased to **RMB 180.2 million**, primarily due to a decrease in short-term bank borrowings[15](index=15&type=chunk)[173](index=173&type=chunk) [Consolidated Statement of Changes in Equity](index=9&type=section&id=%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) This section outlines changes in the company's equity components over the reporting period, including profit and other comprehensive income [For the Six Months Ended June 30, 2019 (Unaudited)](index=9&type=section&id=%E6%88%AA%E8%87%B3%E4%BA%8C%E9%9B%B6%E4%B8%80%E4%B9%9D%E5%B9%B4%E5%85%AD%E6%9C%88%E4%B8%89%E5%8D%81%E6%97%A5%E6%AD%A2%E5%85%AD%E5%80%8B%E6%9C%88%EF%BC%88%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%EF%BC%89) Total equity increased from RMB 1,074,364 thousand to RMB 1,127,662 thousand, driven by growth in profit for the period and total comprehensive income Consolidated Statement of Changes in Equity Key Data | Indicator | January 1, 2019 (RMB thousands) | June 30, 2019 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Total equity (beginning of period) | 1,074,364 | N/A | N/A | | Profit for the period | N/A | 54,933 | +54,933 | | Other comprehensive income | N/A | 46 | +46 | | Total comprehensive income for the period | N/A | 54,979 | +54,979 | | Share award scheme related changes | N/A | 97 | +97 | | Total equity (end of period) | N/A | 1,127,662 | +53,298 | - Retained earnings attributable to equity holders of the Company increased from **RMB 336,941 thousand** at the beginning of the period to **RMB 381,937 thousand**[20](index=20&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=11&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%91%E8%A1%A8) This section summarizes cash inflows and outflows from operating, investing, and financing activities, and their impact on cash equivalents [For the Six Months Ended June 30, 2019 (Unaudited)](index=11&type=section&id=%E6%88%AA%E8%87%B3%E4%BA%8C%E9%9B%B6%E4%B8%80%E4%B9%9D%E5%B9%B4%E5%85%AD%E6%9C%88%E4%B8%89%E5%8D%81%E6%97%A5%E6%AD%A2%E5%85%AD%E5%80%8B%E6%9C%88%EF%BC%88%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%EF%BC%89) Net cash from operating activities decreased, investing cash outflow increased, but financing cash turned positive, leading to a notable increase in cash equivalents Condensed Consolidated Statement of Cash Flows Key Data (For the Six Months Ended June 30) | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Net cash generated from operating activities | 22,077 | 126,827 | -104,750 | | Net cash used in investing activities | (87,511) | (46,367) | -41,144 | | Net cash generated from/(used in) financing activities | 77,434 | (77,800) | +155,234 | | Net increase in cash and cash equivalents | 12,000 | 2,660 | +9,340 | | Cash and cash equivalents at June 30 | 185,353 | 171,746 | +13,607 | - Net cash generated from operating activities significantly decreased by **82.6%** year-on-year to **RMB 22.1 million**, primarily due to a reduction in cash generated from operations[27](index=27&type=chunk) - Net cash generated from financing activities turned from an **outflow of RMB 77.8 million** in the same period of 2018 to an **inflow of RMB 77.4 million** in the same period of 2019, mainly due to increased proceeds from interest-bearing borrowings[27](index=27&type=chunk) [Notes to the Unaudited Interim Financial Report](index=12&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E9%99%84%E8%A8%BB) This section provides detailed explanations and disclosures supporting the condensed consolidated interim financial statements [1. Reporting Entity and Background Information](index=12&type=section&id=1.%20%E5%A0%B1%E5%91%8A%E5%AF%A6%E9%AB%94%E5%8F%8A%E8%83%8C%E6%99%AF%E8%B3%87%E6%96%99) Huan Yue Interactive Holdings Limited, incorporated in the Cayman Islands and listed on the HKEX, primarily manufactures and sells high-precision copper strips, trades raw materials, provides processing services, and since August 2016, develops, publishes, and operates online games - The company was incorporated in the Cayman Islands on **July 19, 2007**, and listed on the Main Board of the Stock Exchange of Hong Kong on **December 27, 2007**[29](index=29&type=chunk) - Principal businesses include manufacturing and selling high-precision copper strips, trading raw materials, and providing processing services[29](index=29&type=chunk) - Since the acquisition of the online game business in **August 2016**, business activities also include developing, publishing, and operating online games[29](index=29&type=chunk) [2. Basis of Preparation](index=12&type=section&id=2.%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) The interim financial report is prepared in accordance with International Accounting Standard 34 and adopts the same accounting policies as the 2018 annual financial statements, except for changes due to the initial application of IFRS 16 - The interim financial report has been prepared in accordance with **International Accounting Standard 34 "Interim Financial Reporting"**[30](index=30&type=chunk) - The report was authorized for issue on **August 30, 2019**[30](index=30&type=chunk) [3. Significant Accounting Policies Changes](index=13&type=section&id=3.%20%E9%87%8D%E5%A4%A7%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E8%AE%8A%E5%8B%95) The Group first applied IFRS 16 "Leases" on January 1, 2019, using a modified retrospective approach, leading to the recognition of right-of-use assets and lease liabilities, impacting the statement of financial position and cash flow statement presentation - The initial application of **International Financial Reporting Standard 16 "Leases"** adopted a modified retrospective approach, effective from **January 1, 2019**[33](index=33&type=chunk)[34](index=34&type=chunk) - A single accounting model was introduced, requiring lessees to recognize right-of-use assets and lease liabilities for all leases, except for short-term leases and leases of low-value assets[34](index=34&type=chunk) - The transition to IFRS 16 resulted in the recognition of **lease liabilities of RMB 2,454 thousand** and **right-of-use assets of RMB 14,445 thousand** as of January 1, 2019[46](index=46&type=chunk)[50](index=50&type=chunk) - The adoption of IFRS 16 led to a decrease in net cash from operating activities and an increase in net cash from financing activities, but the total cash flow remained unaffected[56](index=56&type=chunk)[60](index=60&type=chunk) [3. (a) Changes in Accounting Policies](index=13&type=section&id=3.%20(a)%20%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E7%9A%84%E8%AE%8A%E5%8B%95) This section details the new definition of a lease and changes in lessee accounting introduced by IFRS 16, including the recognition and measurement of right-of-use assets and lease liabilities - The definition of a lease shifted to whether a customer controls the use of an identified asset for a period of time[35](index=35&type=chunk) - Lessee accounting eliminated the classification of operating and finance leases, capitalizing all leases (except short-term and low-value assets) as right-of-use assets and lease liabilities[36](index=36&type=chunk) - Right-of-use assets are initially measured at cost, including the initial amount of lease liabilities, lease payments, and initial direct costs; lease liabilities are recognized at the present value of lease payments[38](index=38&type=chunk) [3. (b) Key Accounting Judgments and Sources of Estimation Uncertainty in Applying the Above Accounting Policies](index=15&type=section&id=3.%20(b)%20%E6%87%89%E7%94%A8%E4%B8%8A%E8%BF%B0%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E4%B8%AD%E7%9A%84%E9%97%9C%E9%8D%B5%E6%9C%83%E8%A8%88%E5%88%A4%E6%96%B7%E5%8F%8A%E4%BC%B0%E8%A8%88%E4%B8%8D%E7%A2%BA%E5%AE%9A%E6%80%A7%E4%BE%86%E6%BA%90) This section highlights that determining the lease term is a key accounting judgment when applying IFRS 16, requiring an assessment of the likelihood of exercising renewal options and their impact on lease liabilities and right-of-use assets - Determining the lease term is a key judgment, requiring assessment of the likelihood of exercising renewal options, considering economic incentives and asset importance[43](index=43&type=chunk) [3. (c) Impact of Transition](index=15&type=section&id=3.%20(c)%20%E9%81%8E%E6%B8%A1%E7%9A%84%E5%BD%B1%E9%9F%BF) This section explains the specific impacts of transitioning to IFRS 16, including the measurement of lease liabilities, application of practical expedients, and reclassification and recognition of related assets and liabilities in the consolidated statement of financial position - Adopting the modified retrospective approach, the cumulative effect of initial application was recognized as an adjustment to the opening equity balance on **January 1, 2019**, with comparative information not restated[34](index=34&type=chunk) - On **January 1, 2019**, the opening balance of lease liabilities was **RMB 2,454 thousand**, and the opening carrying amount of right-of-use assets was **RMB 14,445 thousand**[46](index=46&type=chunk)[50](index=50&type=chunk) - The net carrying amount of prepaid lease payments has been reclassified as right-of-use assets[46](index=46&type=chunk) [3. (d) Lease Liabilities](index=18&type=section&id=3.%20(d)%20%E7%A7%9F%E8%B3%83%E8%B2%A0%E5%82%B5) This section discloses the remaining contractual maturity analysis of lease liabilities as of the reporting period end and transition date, indicating that most lease liabilities are due within one year Lease Liabilities Remaining Contractual Maturity Analysis | Maturity Date | June 30, 2019 Present Value of Minimum Lease Payments (RMB thousands) | June 30, 2019 Total Minimum Lease Payments (RMB thousands) | January 1, 2019 Present Value of Minimum Lease Payments (RMB thousands) | January 1, 2019 Total Minimum Lease Payments (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Within one year | 1,069 | 1,096 | 892 | 915 | | More than one year but less than two years | 941 | 1,010 | 894 | 960 | | More than two years | 225 | 249 | 668 | 747 | | **Total** | **2,235** | **2,355** | **2,454** | **2,622** | [3. (e) Impact on the Group's Financial Performance, Segment Results, and Cash Flows](index=19&type=section&id=3.%20(e)%20%E5%B0%8D%E6%9C%AC%E9%9B%86%E5%9C%98%E8%B2%A1%E5%8B%99%E6%A5%AD%E7%B8%BE%E3%80%81%E5%88%86%E9%83%A8%E6%A5%AD%E7%B8%BE%E5%8F%8A%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E7%9A%84%E5%BD%B1%E9%9F%BF) This section assesses the estimated impact of adopting IFRS 16 on financial performance, segment results, and cash flows, primarily noting minor adjustments to operating profit and profit before tax, and significant changes in the classification of operating and financing activities in the cash flow statement Impact of Adopting IFRS 16 on Financial Performance (For the Six Months Ended June 30) | Indicator | 2019 (IFRS 16 Reported) (RMB thousands) | 2019 (IFRS 17 Assumed) (RMB thousands) | 2018 (IFRS 17 Reported) (RMB thousands) | | :--- | :--- | :--- | :--- | | Operating profit | 74,113 | 74,104 | 69,625 | | Finance costs | (18,336) | (18,278) | (29,450) | | Profit before tax | 62,687 | 62,736 | 56,254 | | Profit for the period | 54,933 | 54,982 | 48,638 | Impact of Adopting IFRS 16 on Cash Flows (For the Six Months Ended June 30) | Indicator | 2019 (IFRS 16 Reported) (RMB thousands) | 2019 (IFRS 17 Assumed) (RMB thousands) | 2018 (IFRS 17 Reported) (RMB thousands) | | :--- | :--- | :--- | :--- | | Cash generated from operations | 37,566 | 37,036 | 161,419 | | Net cash generated from operating activities | 22,077 | 21,547 | 126,827 | | Net cash generated from/(used in) financing activities | 77,434 | 77,964 | (77,800) | - Total cash flow is unaffected, but the presentation of the cash flow statement shows significant changes, with the capital and interest portions of lease payments reclassified as financing cash outflows[56](index=56&type=chunk) [4. Revenue and Segment Reporting](index=21&type=section&id=4.%20%E6%94%B6%E7%9B%8A%E5%8F%8A%E5%88%86%E9%83%A8%E5%91%88%E5%A0%B1) The Group's main businesses are divided into two segments: copper products and online games; total revenue decreased by 23.8%, primarily due to reduced copper products revenue, while online game revenue remained relatively stable - The Group's principal businesses include manufacturing and selling high-precision copper strips, trading raw materials, providing processing services, and developing, publishing, and operating online games[65](index=65&type=chunk) By Major Product or Service Line (For the Six Months Ended June 30) | Product/Service Line | 2019 (RMB thousands) | 2018 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | **Related to Copper Products** | | | | | Sales of high-precision copper strips | 1,819,703 | 2,240,406 | -18.8% | | Processing service fees | 90,827 | 89,904 | +1.0% | | Trading of raw materials | 22,445 | 210,611 | -89.3% | | **Total Copper Products** | **1,932,975** | **2,540,921** | **-23.9%** | | **Related to Online Games** | | | | | Technical service income | – | 149 | -100.0% | | Publishing and operating online games | 15,476 | 15,879 | -2.5% | | Others | 462 | 348 | +32.8% | | **Total Online Games** | **15,938** | **16,376** | **-2.7%** | | **Total Revenue** | **1,948,913** | **2,557,297** | **-23.8%** | [4. (a) Disaggregation of Revenue](index=21&type=section&id=4.%20(a)%20%E5%88%86%E5%88%97%E6%94%B6%E7%9B%8A) This section details customer contract revenue disaggregated by major product or service line and customer geographical location, showing a significant decrease in copper product sales and raw material trading income, while online game revenue slightly decreased Customer Contract Revenue by Geographical Location (For the Six Months Ended June 30) | Geographical Location | 2019 (RMB thousands) | 2018 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Mainland China | 1,694,241 | 2,044,930 | -17.2% | | Taiwan | 51,890 | 56,719 | -8.5% | | Thailand | 50,211 | 39,291 | +27.8% | | Other regions | 152,571 | 416,357 | -63.3% | | **Total Revenue** | **1,948,913** | **2,557,297** | **-23.8%** | [4. (b) Segment Reporting](index=22&type=section&id=4.%20(b)%20%E5%88%86%E9%83%A8%E5%91%88%E5%A0%B1) This section reports the performance, assets, and liabilities of the two reportable segments: copper products and online games, noting a decrease in revenue and profit for the copper products segment, while the online game segment turned profitable - The copper products segment is engaged in the manufacturing and sale of high-precision copper strip products, provision of processing services, and trading of raw materials[68](index=68&type=chunk) - The online game segment is engaged in the publishing and operation of online games and provision of technical support services[69](index=69&type=chunk) Reportable Segment Results (For the Six Months Ended June 30) | Indicator | Copper Products 2019 (RMB thousands) | Copper Products 2018 (RMB thousands) | Online Games 2019 (RMB thousands) | Online Games 2018 (RMB thousands) | Total 2019 (RMB thousands) | Total 2018 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue from external customers | 1,932,975 | 2,540,921 | 15,938 | 16,376 | 1,948,913 | 2,557,297 | | Reportable segment profit/(loss) | 51,878 | 64,371 | 8,644 | (15,639) | 60,522 | 48,732 | | Interest income from bank deposits | 3,272 | 1,600 | 356 | 196 | 3,628 | 1,796 | | Net interest expense | (17,577) | (17,934) | (53) | – | (17,630) | (17,934) | | Depreciation and amortization | (53,646) | (48,211) | (917) | (1,594) | (54,563) | (49,805) | | Impairment loss on goodwill | – | – | – | (18,503) | – | (18,503) | Reportable Segment Assets and Liabilities (As at June 30/December 31) | Indicator | Copper Products June 30, 2019 (RMB thousands) | Copper Products December 31, 2018 (RMB thousands) | Online Games June 30, 2019 (RMB thousands) | Online Games December 31, 2018 (RMB thousands) | Total June 30, 2019 (RMB thousands) | Total December 31, 2018 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Reportable segment assets | 2,320,903 | 2,258,114 | 106,205 | 99,555 | 2,427,108 | 2,357,669 | | Reportable segment liabilities | (1,304,696) | (1,284,391) | (22,775) | (24,634) | (1,327,471) | (1,309,025) | [5. Profit Before Tax](index=26&type=section&id=5.%20%E9%99%A4%E7%A8%85%E5%89%8D%E6%BA%A2%E5%88%A9) Profit before tax was positively impacted by a decrease in net finance costs and a significant reduction in other expenses, despite a decline in revenue - Profit before tax increased by **11.4%** year-on-year to **RMB 62.7 million**[10](index=10&type=chunk) [5. (a) Net Finance Costs](index=26&type=section&id=5.%20(a)%20%E8%B2%A1%E5%8B%99%E6%88%90%E6%9C%AC%E6%B7%A8%E9%A1%8D) Net finance costs decreased by 14.5% year-on-year, primarily due to increased interest income from bank deposits and an improvement in net foreign exchange losses Net Finance Costs (For the Six Months Ended June 30) | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Finance income | 6,910 | 16,079 | -9,169 | | Finance costs | (18,336) | (29,450) | +11,114 | | **Net finance costs** | **(11,426)** | **(13,371)** | **+1,945** | - Interest income from bank deposits increased from **RMB 1,796 thousand** in 2018 to **RMB 3,628 thousand** in 2019[80](index=80&type=chunk) - A **net foreign exchange gain of RMB 1,117 thousand** was recorded in 2019, compared to a net foreign exchange loss of **RMB 11,516 thousand** in 2018[80](index=80&type=chunk) [5. (b) Other Items](index=27&type=section&id=5.%20(b)%20%E5%85%B6%E4%BB%96%E9%A0%85%E7%9B%AE) This section discloses other major items deducted from/credited to profit before tax, including cost of inventories, research and development expenses, depreciation, impairment losses, amortization, and government grants Other Items (For the Six Months Ended June 30) | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Cost of inventories | 1,758,936 | 2,359,025 | -600,089 | | Research and development expenses | 61,860 | 46,097 | +15,763 | | Depreciation (property, plant and equipment) | 53,249 | 48,078 | +5,171 | | Depreciation (right-of-use assets) | 894 | – | +894 | | Impairment loss on trade and other receivables | 2,542 | 4,850 | -2,308 | | Impairment loss on goodwill | – | 18,503 | -18,503 | | Amortization of intangible assets | 420 | 1,553 | -1,133 | | Government grants | 9,261 | 4,245 | +5,016 | - Research and development expenses increased by **34.2%** year-on-year to **RMB 61.9 million**[84](index=84&type=chunk) - Impairment loss on goodwill decreased from **RMB 18.5 million** in 2018 to zero in 2019, which was the main reason for the significant reduction in other expenses[84](index=84&type=chunk)[165](index=165&type=chunk) [6. Income Tax](index=28&type=section&id=6.%20%E6%89%80%E5%BE%97%E7%A8%85) Income tax expense slightly increased during the reporting period, but the consolidated effective tax rate decreased to 12%, mainly due to tax refunds received by two major subsidiaries for additional deductions on R&D expenses Income Tax Expense (For the Six Months Ended June 30) | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Current tax | 6,617 | 1,606 | +5,011 | | Deferred tax | 1,137 | 6,010 | -4,873 | | **Total income tax** | **7,754** | **7,616** | **+138** | - The consolidated effective tax rate decreased from **14%** in the same period of 2018 to **12%** in the same period of 2019[88](index=88&type=chunk) - The lower effective tax rate was mainly due to two major subsidiaries receiving a tax refund of **RMB 8.4 million** in May 2019 for an additional 75% deduction on eligible R&D expenses[88](index=88&type=chunk) [7. Earnings Per Share](index=28&type=section&id=7.%20%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) Both basic and diluted earnings per share increased, reflecting an improvement in the company's profitability Earnings Per Share (For the Six Months Ended June 30) | Indicator | 2019 (RMB cents) | 2018 (RMB cents) | Change (%) | | :--- | :--- | :--- | :--- | | Basic earnings per share | 6.39 | 5.60 | +14.1% | | Diluted earnings per share | 6.39 | 5.58 | +14.5% | - Basic earnings per share are calculated based on profit attributable to equity holders of the Company of **RMB 54,496 thousand** and the weighted average of **852,653,449 ordinary shares** outstanding[89](index=89&type=chunk) - As of June 30, 2019, potentially dilutive ordinary shares were not included in the diluted weighted average number as they had an anti-dilutive effect[90](index=90&type=chunk) [8. Property, Plant and Equipment](index=29&type=section&id=8.%20%E7%89%A9%E6%A5%AD%E3%80%81%E5%BB%A0%E6%88%BF%E5%92%8C%E8%A8%AD%E5%82%99) During the reporting period, the Group continued to invest in property, plant and equipment, with an increase in acquisition costs, while the disposal of some assets resulted in a small loss - For the six months ended June 30, 2019, the cost of acquiring property, plant and equipment items totaled **RMB 24,001 thousand**, a **23.9%** year-on-year increase[93](index=93&type=chunk) - The disposal of property, plant and equipment items resulted in a **loss of RMB 200 thousand**[93](index=93&type=chunk) [9. Right-of-Use Assets](index=29&type=section&id=9.%20%E4%BD%BF%E7%94%A8%E6%AC%8A%E8%B3%87%E7%94%A2) The initial application of IFRS 16 led the Group to recognize right-of-use assets related to leased land and office buildings, adding a significant amount of new right-of-use assets - The initial application of IFRS 16 adjusted the opening balance on **January 1, 2019**, to recognize right-of-use assets previously classified as operating leases[94](index=94&type=chunk) - For the six months ended June 30, 2019, additions to right-of-use assets of **RMB 62,197 thousand** were recognized[94](index=94&type=chunk) [10. Inventories](index=29&type=section&id=10.%20%E5%AD%98%E8%B2%A8) As of June 30, 2019, total inventories slightly decreased, and inventory provisions were reduced accordingly Inventories Composition (As at June 30/December 31) | Inventory Category | June 30, 2019 (RMB thousands) | December 31, 2018 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Raw materials | 68,190 | 117,894 | -42.2% | | Work in progress | 415,489 | 412,895 | +0.6% | | Finished goods | 156,655 | 139,016 | +12.7% | | Others | 523 | 522 | +0.2% | | **Total Inventories** | **640,857** | **670,327** | **-4.4%** | - Inventory provisions decreased from **RMB 8,157 thousand** as of December 31, 2018, to **RMB 4,768 thousand** as of June 30, 2019[95](index=95&type=chunk) [11. Trade and Other Receivables](index=30&type=section&id=11.%20%E8%B2%B7%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) Total trade and other receivables decreased, with a reduction in net trade receivables and bills receivable, but an increase in prepayments; the company's risk from discounted bills significantly decreased Trade and Other Receivables Composition (As at June 30/December 31) | Item | June 30, 2019 (RMB thousands) | December 31, 2018 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net trade receivables and bills receivable | 280,219 | 296,387 | -5.4% | | Deposits for metal futures contracts | 4,297 | 11,080 | -61.2% | | Land deposits | 3,210 | – | N/A | | Other debtors | 6,630 | 5,748 | +15.3% | | Recoverable VAT | 12,766 | 24,386 | -47.7% | | Prepayments | 38,997 | 25,018 | +55.9% | | Contingent consideration receivable | 31,812 | 29,548 | +7.7% | | **Total** | **377,931** | **392,167** | **-3.7%** | - As of June 30, 2019, the company's maximum exposure to loss from discounted and endorsed bills was **RMB 2,998 thousand**, a significant decrease from **RMB 23,216 thousand** as of December 31, 2018[98](index=98&type=chunk) - Approximately **RMB 81,876 thousand** of bills receivable were pledged to banks for bank acceptance bills[101](index=101&type=chunk) [12. Restricted Bank Deposits](index=31&type=section&id=12.%20%E5%8F%97%E9%99%90%E5%88%B6%E9%8A%80%E8%A1%8C%E5%AD%98%E6%AC%BE) Total restricted bank deposits significantly increased, primarily used as guarantee deposits for issuing commercial bills and bank borrowings Restricted Bank Deposits Composition (As at June 30/December 31) | Item | June 30, 2019 (RMB thousands) | December 31, 2018 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Guarantee deposits for issuing commercial bills | 112,992 | 78,371 | +44.2% | | Guarantee deposits for bank borrowings | 61,872 | 61,778 | +0.2% | | Others | 12 | 13 | -7.7% | | **Total** | **174,876** | **140,162** | **+24.8%** | [13. Trade and Other Payables](index=32&type=section&id=13.%20%E8%B2%B7%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) Total trade and other payables decreased, with a reduction in trade payables and bills payable, but contract liabilities and contingent consideration payable remained stable Trade and Other Payables Composition (As at June 30/December 31) | Item | June 30, 2019 (RMB thousands) | December 31, 2018 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Trade payables and bills payable | 334,572 | 358,261 | -6.6% | | Employee benefits payable | 22,445 | 28,668 | -21.7% | | Payables for acquisition of property, plant and equipment | 28,597 | 24,500 | +16.7% | | Accrued expenses and others | 14,611 | 25,451 | -42.6% | | Contract liabilities | 15,811 | 26,593 | -40.5% | | Contingent consideration payable | 3,787 | 3,828 | -1.1% | | **Total** | **419,823** | **467,301** | **-10.2%** | - The majority of trade payables and bills payable (**RMB 326,946 thousand**) were due within three months[103](index=103&type=chunk) [14. Interest-Bearing Borrowings](index=33&type=section&id=14.%20%E8%A8%88%E6%81%AF%E5%80%9F%E6%AC%BE) Total interest-bearing borrowings increased, with short-term secured bank loans and bank advances under discounted bills being the main components; the company has some borrowings subject to financial covenants and secured by various assets Interest-Bearing Borrowings Composition (As at June 30/December 31) | Item | June 30, 2019 (RMB thousands) | December 31, 2018 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Short-term secured bank loans | 430,148 | 437,360 | -1.7% | | Unsecured bank loans | 51,917 | 48,986 | +6.0% | | Bank advances under discounted bills | 243,965 | 111,177 | +119.4% | | Current portion of non-current secured bank loans | 77,000 | 131,000 | -41.2% | | **Total Current** | **803,030** | **728,523** | **+10.2%** | | Non-current secured bank loans | 45,500 | 45,500 | 0.0% | | **Total** | **848,530** | **774,023** | **+9.6%** | - Approximately **RMB 398,000 thousand** of interest-bearing borrowings are subject to compliance with financial covenants, with no defaults during the reporting period[112](index=112&type=chunk) - Secured bank loans are pledged against inventories, property, plant and equipment, right-of-use assets, and guarantee deposits for bank borrowings, with a total carrying amount of approximately **RMB 874,823 thousand**[112](index=112&type=chunk) - Secured bank loans bear interest at rates ranging from **2.85% to 4.99%** per annum, while unsecured bank loans bear interest at rates from **3.25% to 3.43%** per annum[112](index=112&type=chunk)[113](index=113&type=chunk) [15. Capital, Reserves, and Dividends](index=35&type=section&id=15.%20%E8%B3%87%E6%9C%AC%E3%80%81%E5%84%B2%E5%82%99%E5%8F%8A%E8%82%A1%E6%81%AF) No dividends were declared or paid; share capital remained stable, and the gearing ratio slightly increased due to IFRS 16 adoption, but capital management aims for sustainable operations and shareholder returns - No dividends were declared or paid for the period ended **June 30, 2019**[116](index=116&type=chunk) Gearing Ratio | Indicator | June 30, 2019 | January 1, 2019 | December 31, 2018 | | :--- | :--- | :--- | :--- | | Gearing ratio | 37.55% | 36.34% | 36.25% | - The initial application of IFRS 16 led to an increase in total debt, with the gearing ratio rising from **36.25%** as of December 31, 2018, to **36.34%** as of January 1, 2019[121](index=121&type=chunk) [15. (a) Dividends](index=35&type=section&id=15.%20(a)%20%E8%82%A1%E6%81%AF) The Board of Directors decided not to pay any dividends for the interim period ended June 30, 2019 - No dividends were declared or paid for the period ended **June 30, 2019**[116](index=116&type=chunk) [15. (b) Share Capital](index=35&type=section&id=15.%20(b)%20%E8%82%A1%E6%9C%AC) The company's authorized, issued, and fully paid ordinary share capital remained stable during the reporting period Issued and Fully Paid Ordinary Shares | Indicator | June 30, 2019 Number of Shares (thousands) | June 30, 2019 Amount (RMB thousands) | December 31, 2018 Number of Shares (thousands) | December 31, 2018 Amount (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | As at January 1 | 855,559 | 77,417 | 831,113 | 75,458 | | As at June 30/December 31 | 855,559 | 77,417 | 855,559 | 77,417 | [15. (c) Capital Management](index=36&type=section&id=15.%20(c)%20%E8%B3%87%E6%9C%AC%E7%AE%A1%E7%90%86) The Group monitors its capital structure through the gearing ratio and actively reviews and manages it to ensure sustainable operations and returns for shareholders - The primary objective of capital management is to ensure the Group's sustainable operation and adjust its capital structure by means such as adjusting dividend payments and issuing new shares[120](index=120&type=chunk) - The gearing ratio is calculated as net debt divided by total capital, which was **37.55%** as of June 30, 2019[120](index=120&type=chunk)[122](index=122&type=chunk) [16. Fair Value Measurement of Financial Instruments](index=37&type=section&id=16.%20%E9%87%91%E8%9E%8D%E5%B7%A5%E5%85%B7%E5%85%AC%E5%B9%B3%E5%80%BC%E8%A8%88%E9%87%8F) This section discloses the fair value measurement classification of the Group's financial instruments, primarily including derivative financial instruments and contingent consideration, and explains fair value levels and estimation methods Financial Assets and Liabilities Measured at Fair Value (June 30, 2019) | Item | Fair Value (RMB thousands) | Fair Value Measurement Classification (Level 1) (RMB thousands) | Fair Value Measurement Classification (Level 2) (RMB thousands) | Fair Value Measurement Classification (Level 3) (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | **Assets** | | | | | | Derivative financial instruments: futures contracts | 2,080 | 2,080 | – | – | | Contingent consideration receivable | 31,812 | – | – | 31,812 | | **Liabilities** | | | | | | Contingent consideration payable | (3,787) | – | – | (3,787) | - The fair values of contingent consideration receivable and payable are measured using **Level 3 inputs** (unobservable significant data)[125](index=125&type=chunk) - For the six months ended June 30, 2019, there were no transfers between Level 1 and Level 2, nor any transfers into or out of Level 3[127](index=127&type=chunk) [16. (a) Financial Assets and Liabilities Measured at Fair Value](index=37&type=section&id=16.%20(a)%20%E6%8C%89%E5%85%AC%E5%B9%B3%E5%80%BC%E8%A8%88%E9%87%8F%E7%9A%84%E9%87%91%E8%9E%8D%E8%B3%87%E7%94%A2%E5%8F%8A%E8%B2%A0%E5%82%B5) This section details financial assets and liabilities classified by fair value hierarchy (Level 1, Level 2, Level 3) and explains the fair value estimation method for contingent consideration receivable - The fair value of contingent consideration receivable is estimated as the present value of future cash flows using a risk-adjusted discount rate[128](index=128&type=chunk) [16. (b) Fair Value of Financial Assets and Liabilities Not Measured at Fair Value](index=38&type=section&id=16.%20(b)%20%E4%B8%A6%E9%9D%9E%E6%8C%89%E5%85%AC%E5%B9%B3%E5%80%BC%E5%88%97%E8%B3%A0%E4%B9%8B%E9%87%91%E8%9E%8D%E8%B3%87%E7%94%A2%E5%8F%8A%E8%B2%A0%E5%82%B5%E4%B9%8B%E5%85%AC%E5%B9%B3%E5%80%BC) The carrying amounts of financial instruments accounted for at cost or amortized cost do not differ significantly from their fair values - The carrying amounts of the Group's financial instruments accounted for at cost or amortized cost do not differ significantly from their fair values[129](index=129&type=chunk) [17. Share Award Scheme](index=39&type=section&id=17.%20%E8%82%A1%E4%BB%BD%E7%8D%8E%E5%8B%B5%E8%A8%88%E5%8A%83) The Group adopted a share award scheme to incentivize employees; the trustee has purchased and holds some company shares, and while some award shares have been granted, certain vesting dates have been postponed - The share award scheme was adopted on **April 18, 2016**, to recognize and reward eligible employees who contribute to the Group's business growth[132](index=132&type=chunk) - As of June 30, 2019, the trustee had purchased **9,297,000 shares** of the Company at a total cost of **RMB 6,884 thousand**[132](index=132&type=chunk) - The second and third tranches of **10,060,000 ordinary shares** granted to 9 directors and 91 employees on December 13, 2017, have been postponed by one year to **December 13, 2019**, and **December 13, 2020**, respectively[133](index=133&type=chunk)[134](index=134&type=chunk) [18. Commitments](index=40&type=section&id=18.%20%E6%89%BF%E6%93%94) This section discloses the Group's capital commitments at the end of the reporting period, including contracted and authorized but not contracted acquisitions of property, plant and equipment, and right-of-use assets Capital Commitments (As at June 30/December 31) | Item | June 30, 2019 (RMB thousands) | December 31, 2018 (RMB thousands) | | :--- | :--- | :--- | | Contracted | 15,504 | 18,808 | | Authorized but not contracted | 601,360 | – | | **Total** | **616,864** | **18,808** | - As of December 31, 2018, the total future minimum lease payments under non-cancellable operating leases were **RMB 2,786 thousand**[141](index=141&type=chunk) [19. Key Management Personnel Remuneration](index=41&type=section&id=19.%20%E4%B8%BB%E8%A6%81%E7%AE%A1%E7%90%86%E4%BA%BA%E5%93%A1%E8%96%AA%E9%85%AC) This section provides information on key management personnel remuneration during the reporting period - Key management personnel remuneration information is not detailed with specific amounts in the report, only mentioning this section[142](index=142&type=chunk) [Management Discussion and Analysis](index=41&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) This section provides an overview of the Group's operational and financial performance, including business segment reviews, financial highlights, liquidity, and risk factors [Copper Processing Business](index=41&type=section&id=%E9%8A%85%E5%8A%A0%E5%B7%A5%E6%A5%AD%E5%8B%99) The copper processing business faced challenges in H1 2019 due to global economic slowdown and US-China trade uncertainties, leading to decreased sales revenue and operating profit before tax from falling copper prices, but the company actively responded through market expansion, cost reduction, and technological upgrades - In H1 2019, global economic growth slowed, and US-China trade relations presented uncertainties, posing risks to non-ferrous metal prices[144](index=144&type=chunk)[145](index=145&type=chunk) - In H1 2019, the average prices of LME copper spot and three-month futures decreased by **10.82%** and **11.13%** year-on-year, respectively[145](index=145&type=chunk) Copper Processing Business Key Data (For the Six Months Ended June 30) | Indicator | 2019 (RMB millions) | 2018 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Copper strip production and sales volume | 58,753 tons / 58,238 tons | N/A | N/A | | Sales revenue | 1,933.0 | 2,540.9 | -23.9% | | Copper product sales revenue | 1,819.7 | 2,240.4 | -18.8% | | Processing income | 90.8 | 89.9 | +1.0% | | Trading income | 22.5 | 210.6 | -89.3% | | Operating profit before tax | 51.9 | 64.371 | -19.4% | [3. Market and Industry Review](index=42&type=section&id=%E5%B8%82%E5%A0%B4%E5%92%8C%E8%A1%8C%E6%A5%AD%E5%9B%9E%E9%A1%A7) This section provides an overview of the market environment in H1 2019, including global economic slowdown, US-China trade uncertainties, and falling copper prices, noting limited support for copper prices due to weak demand - In H1 2019, copper prices showed a trend of rising first and then falling, with the main fluctuation range between **US$5,700-6,600 per ton**[145](index=145&type=chunk) - In the second half of the year, copper price trends will be more influenced by macroeconomic performance, the direction of US-China trade, and the US dollar's movement[145](index=145&type=chunk) [3. Business Review](index=42&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) During the reporting period, copper strip production and sales volumes remained stable, but sales revenue and operating profit before tax decreased due to falling copper prices and sales volumes, while processing income slightly increased - Copper strip production and sales volumes were **58,753 tons** and **58,238 tons**, respectively[146](index=146&type=chunk) - Copper business sales revenue decreased by **23.9%** year-on-year, and operating profit before tax decreased by **19.4%** year-on-year[146](index=146&type=chunk) [3. Business Development](index=43&type=section&id=%E6%A5%AD%E5%8B%99%E7%99%BC%E5%B1%95) The Group focused on five key strategies: market expansion, stable supply, cost reduction, quality improvement, and development, including expanding customer base, increasing recycled raw material procurement, enhancing quality, talent development, comprehensive cost reduction, efficiency management, and new product R&D - In market expansion, **over twenty new customers** were added, and recycled raw material procurement increased by **12.6%** year-on-year, reducing procurement costs[149](index=149&type=chunk) - **Over twenty product quality improvement projects** were launched, along with grassroots management training and recruitment of professional technical personnel[149](index=149&type=chunk) - Implemented the **"Cost Reduction and Efficiency Improvement Special Award Policy"** and launched multiple cost reduction and efficiency improvement projects, such as workshop energy saving and consumption reduction, and raw material procurement optimization[149](index=149&type=chunk) - Held the **first customer conference** to understand customer needs and optimized the compensation and performance system[149](index=149&type=chunk) - Proposed three "orientations" for new product R&D, developing multiple new alloy grades, with some products already in batch supply[149](index=149&type=chunk) [3. Outlook](index=44&type=section&id=%E5%B1%95%E6%9C%9B) The Group will continue to focus on innovation and excellence, structural adjustment, quality stability, management innovation, and efficiency improvement, guided by its "home" culture, to seek stable returns for shareholders - In 2019, the focus will be on innovation and excellence as the guide, structural adjustment as the foundation, quality stability as the base, management innovation as the leverage, and efficiency improvement and cost reduction as the direction[151](index=151&type=chunk) [Online Game Business](index=44&type=section&id=%E7%B6%B2%E7%B5%A1%E9%81%8A%E6%88%B2%E6%A5%AD%E5%8B%99) The online game business achieved significant net profit growth in H1 2019 despite a slight decrease in revenue; the company actively expanded mobile game publishing and overseas markets, and deepened its focus on mini-game R&D - Funnytime Limited (online game business subsidiary) recorded revenue of **RMB 15.9 million** and net profit of **RMB 10.0 million** in H1, representing a year-on-year decrease of **3.0%** and an increase of **156.4%**, respectively[152](index=152&type=chunk) - Net profit growth was mainly due to the **exemption from paying RMB 2.6 million in payables** and an **increase of RMB 1.7 million in government grants**[152](index=152&type=chunk) - Funnytime did not meet its 2018 performance targets, and the total net profit during the adjusted performance commitment period was lower than expected[153](index=153&type=chunk) [3. Market and Industry Review](index=45&type=section&id=%E5%B8%82%E5%A0%B4%E5%92%8C%E8%A1%8C%E6%A5%AD%E5%9B%9E%E9%A1%A7) In 2019, China's game market is projected to exceed RMB 230 billion in sales revenue, with mobile games being the main growth driver and web game revenue declining; 5G cloud gaming is expected to be a new growth point in the future - China's game market actual sales revenue is projected to exceed **RMB 230 billion** in 2019, with the mobile game market expected to exceed **RMB 150 billion**[157](index=157&type=chunk) - Web game market revenue will decline, and **5G cloud gaming** is expected to become a new niche market in the future[157](index=157&type=chunk) [3. Business Review](index=45&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The operations center maintained stable traditional web game business, successfully expanded into mobile game publishing, and plans to introduce more mini-game products and actively explore overseas markets in H2; the R&D center focused on mini-game development, with self-developed products performing well and cross-industry collaborations being explored - Traditional web game business remained stable, such as **"Art of War: Three Kingdoms"** and **"Three Kingdoms Zhi 2"**[158](index=158&type=chunk) - Expanded into mobile game publishing, with agency mobile game projects like **"Siege Three Kingdoms"** achieving good results[158](index=158&type=chunk) - Actively explored overseas markets, with the first product launched in Southeast Asia in **June 2019**, and four more products to be released overseas in H2[158](index=158&type=chunk) - Self-developed mini-game **"This is Cultivation"** performed far better than similar products, with other mini-game titles to be successively launched in H2[159](index=159&type=chunk) [Financial Review](index=46&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) Total revenue decreased, but gross profit margin improved, other expenses significantly declined due to reduced goodwill impairment loss, administrative expenses increased due to higher R&D investment, ultimately leading to growth in profit attributable to equity holders of the Company - Total sales revenue decreased by **23.8%** year-on-year to **RMB 1,948.9 million**, primarily due to lower copper product sales volume and copper prices[161](index=161&type=chunk) - The overall gross profit margin for the copper business increased from **7.2%** in the same period of 2018 to **9.0%**, mainly due to reduced raw material costs[163](index=163&type=chunk) - Total other income increased by **29.0%** year-on-year to **RMB 20.9 million**, primarily due to an increase of **RMB 5.0 million** in government grants[164](index=164&type=chunk) - Other expenses significantly decreased by **88.0%** to **RMB 2.8 million**, mainly due to the goodwill impairment loss of **RMB 18.5 million** incurred in the prior corresponding period[165](index=165&type=chunk) - Administrative expenses increased by **15.4%** year-on-year to **RMB 107.7 million**, primarily due to an increase of **RMB 15.8 million** in R&D expenses to **RMB 61.9 million**[167](index=167&type=chunk) - Net finance costs decreased by **RMB 2.0 million** year-on-year to **RMB 11.4 million**, mainly due to increased interest income from bank deposits[170](index=170&type=chunk) - Profit attributable to equity holders of the Company increased by **RMB 6.8 million** year-on-year to **RMB 54.5 million**[172](index=172&type=chunk) [Liquidity, Financial Resources, and Capital Structure](index=47&type=section&id=%E6%B5%81%E5%8B%95%E6%80%A7%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90%E4%BB%A5%E5%8F%8A%E8%B3%87%E6%9C%AC%E6%9E%B6%E6%A7%8B) The Group's net current assets increased, with a high proportion of short-term interest-bearing borrowings, but the company maintains a good credit standing and sufficient bank credit and cash resources, with the Board confident in its solvency - Net current assets were **RMB 180.2 million**, primarily due to a decrease in short-term bank borrowings[173](index=173&type=chunk) - Short-term interest-bearing borrowings accounted for **94.6%** of total interest-bearing borrowings[173](index=173&type=chunk) - The Group had available unutilized bank credit facilities of **RMB 998.8 million** and bank cash of **RMB 400.2 million**[173](index=173&type=chunk) - The gearing ratio was **37.6%**, an increase from **36.2%** as of December 31, 2018[174](index=174&type=chunk) [Pledged Assets](index=48&type=section&id=%E6%8A%B5%E6%8A%BC%E8%B3%87%E7%94%A2) As of June 30, 2019, the Group pledged assets with a total carrying amount of approximately RMB 874.8 million to secure bank loans and credit facilities - As of June 30, 2019, assets with a total carrying amount of approximately **RMB 874.8 million** were pledged to secure bank loans and the Group's credit facilities[176](index=176&type=chunk) [Capital Expenditure](index=48&type=section&id=%E8%B3%87%E6%9C%AC%E9%96%8B%E6%94%AF) During the reporting period, the Group incurred approximately RMB 76.8 million in capital expenditure for property, plant and equipment and right-of-use assets, funded by bank borrowings - For the six months ended June 30, 2019, the Group invested approximately **RMB 76.8 million** in the acquisition of property, plant and equipment and right-of-use assets[177](index=177&type=chunk) - As of June 30, 2019, authorized but not contracted future capital expenditure was **RMB 601.4 million**, and contracted but not provided for was **RMB 15.5 million**[177](index=177&type=chunk) [Contingent Liabilities](index=48&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) As of June 30, 2019, the Group had no significant contingent liabilities - As of June 30, 2019, the Group had no significant contingent liabilities[178](index=178&type=chunk) [Market Risks](index=48&type=section&id=%E5%B8%82%E5%A0%B4%E9%A2%A8%E9%9A%AA) The Group is exposed to price risk, interest rate risk, and foreign exchange risk, and has adopted corresponding hedging or management strategies - The Group is exposed to raw material price fluctuation risk and uses copper futures contracts to hedge against copper price volatility[179](index=179&type=chunk)[180](index=180&type=chunk) - For the six months ended June 30, 2019, a **gain of approximately RMB 11.2 million** from futures contracts was recorded[180](index=180&type=chunk) - The Group is exposed to interest rate fluctuation risk on bank borrowings but has not entered into interest rate swaps for hedging[183](index=183&type=chunk) - Export sales and some raw material purchases are denominated in foreign currencies (mainly USD), exposing the Group to exchange rate fluctuation risk; a **net foreign exchange gain of RMB 1.1 million** was recorded during the reporting period[184](index=184&type=chunk) [3. Price Risk](index=48&type=section&id=%E5%83%B9%E6%A0%BC%E9%A2%A8%E9%9A%AA) The Group is exposed to raw material price fluctuation risk and hedges it through copper futures contracts, recording gains from futures contracts during the reporting period - Cathode copper, alloy scrap, zinc, tin, and nickel are major raw materials, and price fluctuations may adversely affect operating performance[180](index=180&type=chunk) [3. Interest Rate Risk](index=49&type=section&id=%E5%88%A9%E7%8E%87%E9%A2%A8%E9%9A%AA) The Group's interest rate risk is primarily associated with fluctuations in bank borrowing interest rates, but it has not entered into interest rate swaps for hedging - Bank borrowing interest rates can be adjusted by lenders according to People's Bank of China regulations, and an increase in rates will raise finance costs[183](index=183&type=chunk) [3. Foreign Exchange Risk](index=49&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA) The Group's export sales and some raw material purchases are denominated in foreign currencies, exposing it to exchange rate fluctuation risk, and a net foreign exchange gain was recorded during the reporting period - Export sales and some raw material purchases are denominated in foreign currencies (mainly USD), and exchange rate fluctuations may affect operating performance[184](index=184&type=chunk) - A **net foreign exchange gain of RMB 1.1 million** was recorded during the reporting period, compared to a net loss of **RMB 11.5 million** in the same period of 2018[184](index=184&type=chunk) [Employees](index=49&type=section&id=%E5%83%B1%E5%93%A1) As of June 30, 2019, the Group had 1,288 employees, with an increase in staff costs; the company values talent development and incentives, offering competitive remuneration, benefits, and training programs - As of June 30, 2019, the Group employed a total of **1,288 employees**[185](index=185&type=chunk) - Staff costs (including directors' emoluments) were approximately **RMB 68.5 million**, an increase from **RMB 66.2 million** in the same period of 2018[185](index=185&type=chunk) - Remuneration policies are regularly reviewed, offering competitive terms of employment, including salaries, pensions, and medical insurance[185](index=185&type=chunk) - A share option scheme and share award scheme are in place, and an annual training program is established for new employees[185](index=185&type=chunk) [Other Information](index=49&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) This section provides additional disclosures, including directors' and major shareholders' interests, share schemes, and compliance with corporate governance [Directors' and Chief Executive's Interests in Shares, Underlying Shares, and Debentures](index=50&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E4%B8%BB%E8%A6%81%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E6%96%BC%E8%82%A1%E4%BB%BD%E3%80%81%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E5%8F%8A%E5%82%B5%E5%88%B8%E7%9A%84%E6%AC%8A%E7%9B%8A) This section discloses the long positions of the company's directors and chief executive in the company's shares and underlying shares as of June 30, 2019, including shares held through trusts, controlled corporations, and personally Directors' and Chief Executive's Long Positions in the Company's Shares and Underlying Shares (June 30, 2019) | Director Name | Capacity/Nature of Interest | Number of Shares Held | Number of Underlying Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Hu Changyuan | Founder of discretionary trust/Other interest | 265,200,000 | – | 31.00% | | | Interest in controlled corporation/Corporate interest | 13,213,000 | – | 1.54% | | | Beneficial owner/Personal interest | – | 300,000 | 0.06% | | Hu Minglie | Beneficial owner/Personal interest | – | 2,603,000 | 0.42% | | Ren Hao | Interest in controlled corporation/Corporate interest | 44,442,223 | 33,335,555 | 9.09% | | | Beneficial owner/Personal interest | – | 300,000 | 0.06% | | Chai Chaoming | Beneficial owner/Personal interest | – | 234,000 | 0.04% | | Lu Hong | Beneficial owner/Personal interest | – | 300,000 | 0.05% | | Zhu Wenjun | Beneficial owner/Personal interest | – | 300,000 | 0.06% | | Dai Jianchun | Beneficial owner/Personal interest | – | 100,000 | 0.02% | | Lou Dong | Beneficial owner/Personal interest | – | 100,000 | 0.02% | - Mr. Hu Changyuan holds a significant number of shares through a family trust and controlled corporations, making him one of the largest shareholders[187](index=187&type=chunk)[189](index=189&type=chunk) - Mr. Ren Hao holds shares and underlying shares through his control of Mobilefun Limited[187](index=187&type=chunk)[190](index=190&type=chunk) [Arrangements to Purchase Shares or Debentures](index=51&type=section&id=%E8%AA%8D%E8%B3%BC%E8%82%A1%E4%BB%BD%E6%88%96%E5%82%B5%E5%88%B8%E7%9A%84%E5%AE%89%E6%8E%92) Except for the share option scheme and share award scheme, the company or its subsidiaries did not participate in any arrangements enabling directors to benefit from purchasing shares or debentures during the review period - Except for the share option scheme and share award scheme, the Company or its subsidiaries did not participate in any arrangements enabling directors to benefit from purchasing shares or debentures[192](index=192&type=chunk) [Share Option Scheme](index=51&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The 2007 Share Option Scheme has been terminated, and a new 2016 Share Option Scheme has been adopted, but no share options were granted, exercised, lapsed, cancelled, or outstanding during the review period - The 2007 Share Option Scheme was terminated on **May 27, 2016**, and no further share options have been granted thereafter[193](index=193&type=chunk) - The new 2016 Share Option Scheme has been adopted, but no share options were granted, exercised, lapsed, cancelled, or outstanding during the review period[194](index=194&type=chunk)[196](index=196&type=chunk) [Share Award Scheme](index=52&type=section&id=%E8%82%A1%E4%BB%BD%E7%8D%8E%E5%8B%B5%E8%A8%88%E5%8A%83) The Share Award Scheme aims to incentivize employees; the trustee has purchased company shares, and while some award shares have been granted, certain vesting dates have been postponed to encourage long-term service - The Share Award Scheme was adopted on **April 18, 2016**, to encourage employees' contributions and attract talent[198](index=198&type=chunk) - As of June 30, 2019, the trustee had acquired a total of **9,297,000 shares** of the Company at a total cost of **RMB 6,884 thousand**[199](index=199&type=chunk) - Of the **1,000,000 ordinary shares** granted in 2017, the remaining **300,000 award shares** did not vest during the review period[200](index=200&type=chunk) - The second and third tranches of **10,060,000 ordinary shares** granted in 2017 have been postponed by one year to **December 13, 2019**, and **December 13, 2020**, respectively[201](index=201&type=chunk) [Substantial Shareholders](index=53&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1) This section discloses the long positions of substantial shareholders, other than directors, in the company's shares and underlying shares as of June 30, 2019, including shares held through controlled corporations and trusts Substantial Shareholders' Long Positions in the Company's Shares and Underlying Shares (June 30, 2019) | Shareholder Name/Name | Capacity/Nature of Interest | Number of Shares (L) | Number of Underlying Shares (L) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Luckie Strike Limited | Beneficial owner | 110,000,000 | – | 12.86% | | Come Fortune International Limited | Beneficial owner | 155,200,000 | – | 18.14% | | Dynamic Empire Holdings Limited | Interest in controlled corporation | 265,200,000 | – | 31.00% | | Nomura Holdings Inc. | Custodian | 239,400,000 | – | 27.98% | | Zedra Trust Company (Singapore) Limited | Trustee | 265,200,000 | – | 31.00% | | Zedra Malta Limited | Interest in controlled corporation | 265,200,000 | – | 31.00% | | Zedra Holding SA | Interest in controlled corporation | 265,200,000 | – | 31.00% | | Zedra SA | Interest in controlled corporation | 265,200,000 | – | 31.00% | | Yu Yuesu | Spouse interest | 278,713,000 | 200,000 | 32.60% | | Bostone Group Limited | Beneficial owner | 128,379,000 | – | 15.01% | | Xie Shicai | Interest in controlled corporation | 128,379,000 | – | 15.01% | | Ma Jiafeng | Interest in controlled corporation | 128,379,000 | – | 15.01% | | Mobilefun Limited | Beneficial owner | 44,442,223 | 33,335,555 | 9.09% | - Ms. Yu Yuesu, spouse of Mr. Hu Changyuan, is deemed to have an interest in **278,713,000 shares** and **200,000 underlying shares**[205](index=205&type=chun

年 度 2018 Huan Yue Interactive Holdings Limited 歡 互娛控股有限 公 司 報告 （於開曼群島註冊成立之有限公司） 股份代號： 00505 目錄 | --- | --- | |-------|--------------------------| | | | | | 公司資料 | | | 主席報告書 | | | 管理層討論與分析 | | 14 | 企業管治報告 | | 27 | 環境、社會及管治報告 | | 69 | 董事會報告 | | 83 | 董事簡歷詳情 | | 85 | 獨立核數師報告書 | | 92 | 綜合損益表 | | 93 | 綜合損益及其他全面收益表 | | 94 | 綜合財務狀況表 | | 96 | 綜合權益變動表 | | 98 | 綜合現金流量表 | | 100 | 財務報表附註 | | 187 | 五年財務資料概要 | 公司資料 柴朝明先生（主席） 戴建春先生 魯 紅女士 樓 棟博士 任 灝先生 董事會 執行董事 胡長源先生（主席） 胡明烈先生（行政總裁） 任 灝先生 朱文俊先生 非執行董事 戴建春先生 獨立非執行董事 柴朝明先生 樓 棟博士 ...