Financial Performance - The company's operating revenue for the year ended December 31, 2023, was RMB 18,116,387 thousand, a decrease of 15.5% compared to RMB 21,488,959 thousand in 2022[5]. - Gross profit for the year was RMB 1,912,607 thousand, down 51.0% from RMB 3,899,098 thousand in the previous year[5]. - The company reported a net loss of RMB 1,050,106 thousand for the year, compared to a profit of RMB 763,840 thousand in 2022, indicating a significant decline in profitability[5]. - Basic and diluted loss per share for the year was RMB 0.20, compared to earnings of RMB 0.17 per share in the previous year[5]. - The company's total comprehensive expenditure and income for the year amounted to a net loss of RMB 998,149 thousand against an income of RMB 712,745 thousand[15]. - The company's net assets as of December 31, 2023, were RMB 18,403,364 thousand, down from RMB 19,432,600 thousand in 2022[30]. - The company reported a total equity attributable to shareholders of RMB 18,329,334 thousand, compared to RMB 19,161,336 thousand in the previous year[30]. - The net loss attributable to shareholders for 2023 was RMB (883,959) thousand, compared to a profit of RMB 755,411 thousand in 2022[157]. Assets and Liabilities - Total assets less current liabilities amounted to RMB 20,037,834 thousand, a decrease from RMB 21,019,193 thousand in 2022[12]. - The total current liabilities increased to RMB 10,735,580 thousand from RMB 9,409,619 thousand in the previous year, indicating a rise in financial obligations[12]. - As of December 31, 2023, the company's non-current liabilities included bank loans due after one year totaling RMB 800,310 thousand, a decrease from RMB 835,000 thousand in 2022[30]. - The total assets reported for 2023 were RMB 29,663,023 thousand, a decrease from RMB 30,452,079 thousand in 2022[113]. - The company's cash and cash equivalents decreased to RMB 1,743,148 thousand in 2023 from RMB 1,763,731 thousand in 2022[133]. - Total liabilities increased to RMB 12,370,050 thousand in 2023 from RMB 12,097,593 thousand in 2022[114]. Operational Strategies - The company aims to enhance financial control and reduce costs through stricter budget constraints and process controls[6]. - There is a focus on improving the management of accounts receivable to enhance asset liquidity and recovery rates[6]. - The company plans to prioritize resource allocation towards key projects, particularly in environmental protection and efficiency improvements[6]. - The company is actively working on measures to address operational losses and improve profitability through targeted restructuring efforts[7]. - The company plans to adopt a strategy of staggered production to reduce losses, rather than a blanket low-price strategy due to stable market demand[14]. - Key strategies for 2024 include strengthening standardized management, precise investment, and enhancing sustainable development capabilities[33]. - Cost reduction and efficiency enhancement will be prioritized, with a focus on risk prevention and sustainable survival capabilities[35]. - The company will implement a "Management Improvement Year" initiative to enhance operational management and efficiency across various dimensions[38]. - The company plans to optimize production organization and data management to achieve cost reduction and efficiency[39]. - Procurement strategies will focus on reducing costs through benchmarking and enhancing supplier evaluation mechanisms[40]. Market Outlook - The cement market is expected to face significant challenges in 2024, with insufficient demand and high production capacity, making substantial improvement in supply-demand relationships unlikely[14]. - The company anticipates a challenging outlook for the cement industry in 2024, focusing on stability and quality improvement to enhance competitiveness[32]. - The company plans to maintain its focus on market expansion and new product development to drive future growth[110]. - The company faced a decline in cement production growth, with cumulative production growth turning negative in the first half of 2023 due to weak market demand and adverse weather conditions[176]. - The company acknowledged that the cement market recovery was weaker than expected in 2023, with production growth continuing to decline in the latter half of the year[176]. Corporate Governance - The company has maintained high standards of corporate governance and has complied with the corporate governance code throughout the reporting period[19]. - The independent non-executive directors have sufficient channels to communicate with the chairman regarding company affairs, ensuring effective governance[22]. - The audit committee has discussed and reviewed the preliminary announcement of the company's performance with the current management[24]. - The company has not appointed a CEO; the responsibilities are currently held by the chairman, which is seen as a necessary arrangement given the complexity of the business[20]. Legal Matters - The company is currently involved in a significant legal case regarding a winding-up petition filed by a shareholder, which is pending court resolution[193]. - The company is awaiting further court decisions regarding the ongoing litigation and evidence disclosure related to the winding-up petition[171]. - The company received a court order on May 27, 2019, regarding the cancellation of certain convertible bonds issued in August and September 2018, and subsequent conversions and share allocations[194]. - The appeal by Tianrui against the court's decision is still pending and has not yet been heard[195]. - The High Court included China National Materials and Asia Cement as respondents in a petition on January 27, 2021[196]. - A hearing took place on May 23, 2022, with further submissions made on February 3, 2023, regarding document disclosure issues[198]. - Tianrui Group claims to have provided loans to the company and others, with the alleged outstanding amount detailed in a July 18, 2023 announcement[199]. - China National Water Group denies Tianrui's claim for loan repayment and countersues for damages caused by alleged collusion from 2015 to 2018[200]. - The counterclaim is based on a previous lawsuit filed in 2019 against Tianrui and others[200]. - China National Water Group intends to apply for the consolidation of this lawsuit with a previous High Court case[200].

Financial Performance - Total sales cost for the reporting period was RMB 7,638,321,000, accounting for 86.3% of revenue, an increase of 7.4 percentage points year-on-year [2]. - Gross profit for the six months ended June 30, 2023, was RMB 1,212,786,000, with a gross margin of 13.7%, down from 21.1% in 2022 [5]. - Net loss for the group was RMB 307,916,000, a decrease of RMB 779,987,000 compared to a net profit of RMB 472,071,000 in the same period last year [13]. - Operating revenue for the six months ended June 30, 2023, was RMB 8,851,107 thousand, a decrease of 12.6% from RMB 10,131,698 thousand in the same period of 2022 [141]. - Gross profit for the same period was RMB 1,212,786 thousand, down 43.1% from RMB 2,135,955 thousand year-on-year [141]. - Basic and diluted loss per share was RMB 0.05, compared to earnings of RMB 0.11 per share in the same period of 2022 [141]. - The company reported a net loss of RMB 236,847,000 for the current period, with total expenses amounting to RMB 243,438,000 [153]. - The company experienced an operating loss of RMB 42,692 thousand, compared to an operating profit of RMB 822,768 thousand in the first half of 2022, reflecting a significant decline in operating performance [181]. Assets and Liabilities - Total assets increased by approximately 3.6% to RMB 32,582,419,000 as of June 30, 2023 [15]. - Total liabilities rose to RMB 13,404,489 thousand, up from RMB 12,024,674 thousand at the end of 2022 [183]. - The net capital debt ratio increased to 9.9% as of June 30, 2023, from 7.1% at the end of 2022, mainly due to increased bank borrowings [15]. - Non-current liabilities decreased to RMB 1,379,830 thousand from RMB 1,586,593 thousand at the end of 2022, showing a reduction in long-term debt [149]. - The company’s net assets as of June 30, 2023, were RMB 19,177,930 thousand, down from RMB 19,432,600 thousand at the end of 2022 [149]. Cash Flow - The net cash generated from operating activities for the first half of 2023 was RMB 505,994,000, a year-on-year decrease of RMB 756,401,000, primarily due to a decline in cement prices leading to reduced revenue [30]. - The net cash used in investing activities was RMB 1,118,760,000, a decrease of RMB 232,137,000 year-on-year, mainly due to reduced capital expenditures for new cement and clinker production lines and technological upgrades [31]. - The net cash generated from financing activities increased to RMB 1,650,068,000, up RMB 1,179,932,000 year-on-year, primarily due to an increase in short-term borrowings [32]. - The overall cash flow from operations, investments, and financing activities resulted in a net change in cash and cash equivalents of RMB 1,037,302,000 for the period [30]. - The total cash and cash equivalents as of June 30, 2023, stood at RMB 3,183,403,000, compared to RMB 1,794,124,000 at the same time last year [30]. Market and Industry Outlook - The outlook for the second half of 2023 anticipates a potential recovery in the real estate market due to favorable policies, which may support cement demand [49]. - The cement industry is expected to accelerate supply-side reforms under the "dual carbon" and "dual control" policies, leading to a healthier and more stable industry ecosystem [49]. - The overall cement market in China showed weak demand, with a significant decline in real estate investment by 7.9% year-on-year [186]. Strategic Initiatives - The company aims to maintain price stability and reduce inventory through production adjustments in response to the challenging market conditions [49]. - The company plans to focus on market expansion by implementing differentiated marketing strategies tailored to local and timely demands, aiming to develop low-carbon and low-magnetic building materials to penetrate both traditional and emerging markets [50]. - The company aims to enhance cost reduction through refined management practices, focusing on production management, procurement strategies, and expense management to improve operational efficiency and reduce unnecessary expenditures [50]. - The company is focusing on cost management strategies to improve profitability in the upcoming quarters [154]. - The company has plans for market expansion and new product development to enhance revenue streams [154]. Shareholder Information - As of June 30, 2023, the company's total issued shares amount to 4,353,966,228 [67]. - Major shareholders include Li Liufa and Li Fenglan, each holding 951,462,000 shares, representing 21.85% of the total shares [61]. - China Shanshui Investment Company Limited holds 847,908,316 shares, accounting for 19.47% of the total shares [61]. - Asia Cement Corporation and its subsidiaries collectively hold 428,393,000 shares, representing 9.84% of the total shares [61]. - The company has pledged a total of 951,462,000 shares to Bohai Bank as collateral for loans [64]. Legal and Compliance Issues - The company is facing a winding-up petition in the Cayman Islands, initiated by a shareholder, Tianrui, with ongoing legal proceedings [93]. - The company has been denied the approval to pay the final dividend for the year ended December 31, 2021, as per the court's ruling on March 31, 2023 [97]. - The company is involved in significant litigation against former directors regarding alleged misconduct and damages claims [99]. - The company has received a court summons from Tianrui Group regarding loan repayment, which may impact financial obligations [122]. Employee and Training Initiatives - The company has a workforce of 16,592 employees as of June 30, 2023, and emphasizes the importance of technical training to enhance employee skills and performance [53].

Financial Performance - For the six months ended June 30, 2023, the company's revenue was RMB 8,851,107,000, a decrease of RMB 1,280,591,000 or approximately 12.6% compared to RMB 10,131,698,000 in the same period of 2022[17]. - The company's net loss for the reporting period was RMB 307,916,000, compared to a net profit of RMB 472,071,000 in the same period of 2022[21]. - The gross profit for the six months ended June 30, 2023, was RMB 1,212,786,000, with a gross margin of 13.7%, down from 21.1% in 2022[18]. - The operating loss for the period was RMB 42,692,000, compared to an operating profit of RMB 822,768,000 in the same period of 2022[58]. - The net loss attributable to shareholders for the first half of 2023 was approximately RMB 236,847,000, compared to a profit of RMB 480,364,000 in the same period last year[73]. - The basic loss per share for the first half of 2023 was RMB 0.05[74]. - The company reported a total revenue of RMB 9,306,450,000 for the first half of 2023, compared to RMB 10,792,029,000 for the same period in 2022, indicating a decrease of about 13.7%[146]. - The gross profit for the first half of 2023 was RMB 107,264,000, a significant drop from RMB 1,164,661,000 in the first half of 2022, reflecting a decline of approximately 90.8%[146]. Market Conditions - The average price of cement in the national market for the first half of 2023 was RMB 421 per ton, a decrease of RMB 78 per ton or about 16% year-on-year[13]. - The company faced a significant decline in cement prices, with some regions seeing prices drop below cost levels due to high inventory and weak demand[11]. - The average monthly cement market price in June 2023 fell to RMB 393 per ton, the lowest monthly price since 2018[13]. - Cement prices have reached new lows, reflecting a weak market demand[175]. - The real estate market continued to experience a downturn, with a 7.9% year-on-year decline in investment by real estate development enterprises[174]. - The overall cement market demand is expected to be better in the second half of 2023, with a potential recovery in profitability, although total annual profit is projected to be lower than last year[176]. Assets and Liabilities - As of June 30, 2023, the total assets increased by approximately 3.6% to about RMB 32,582,419,000, compared to RMB 31,457,274,000 as of December 31, 2022[22]. - The company's total liabilities as of June 30, 2023, were RMB 12,641,998,000, an increase from RMB 8,397,613,000 as of December 31, 2022[146]. - Current liabilities increased to RMB 12,024,659,000 from RMB 10,438,081,000 year-over-year[64]. - The total equity as of June 30, 2023, was RMB 19,177,930,000, down from RMB 19,432,600,000 as of December 31, 2022[82]. - The total equity attributable to shareholders of the company was RMB 18,988,967,000 as of June 30, 2023, slightly down from RMB 19,161,336,000 at the end of 2022[105]. Cash Flow and Financing - The company's investment activities resulted in a net cash outflow of RMB 1,118,760,000, a decrease of RMB 232,137,000 year-on-year, primarily due to reduced capital expenditures for new cement and clinker production lines[24]. - The net cash generated from financing activities was RMB 1,650,068,000, an increase of 250.5% compared to RMB 470,136,000 in the previous period, primarily due to increased short-term borrowings[40]. - Operating cash flow generated a net amount of RMB 505,994,000, a decrease of RMB 756,401,000 compared to the previous year, mainly due to falling cement prices leading to reduced revenue[186]. - The company’s liquidity position showed no bank loan repayment defaults as of June 30, 2023[162]. Operational Efficiency - The company plans to enhance cost management by focusing on production management, procurement management, and expense management to improve operational efficiency[29]. - The group aims to enhance internal management to improve operational quality and sustainable profitability[177]. - The group reported a sales cost for the reporting period of RMB 7,638,321,000, a decrease from RMB 7,995,743,000 in 2022, primarily due to lower raw material, coal, and electricity costs[181]. - Selling expenses decreased by 10.3% from RMB 158,356,000 to RMB 142,057,000, mainly due to reduced employee compensation and business entertainment expenses[183]. Future Outlook - The outlook for the second half of the year suggests potential recovery in the real estate market due to favorable policies, which may support cement demand[28]. - The company expects higher demand for cement products in the second half of the year due to the construction season starting in the second quarter[147]. - The national infrastructure investment maintained a high growth level, which provided important support for cement demand[174]. Employee and Corporate Governance - The company had 16,592 employees as of June 30, 2023, providing various insurance and retirement benefits in accordance with applicable laws[26]. - The company did not recommend any interim dividend for the six months ended June 30, 2023, following the rejection of the 2021 final dividend proposal by the High Court[130]. - The company has not engaged in any significant acquisitions or disposals during the reporting period[43]. - The company continues to engage in negotiations with suppliers regarding the settlement of certain claims, with outcomes currently uncertain[165]. - The company has not identified any other significant unresolved litigation or claims that could threaten its financial position as of June 30, 2023[173].

Financial Performance - The company's operating revenue for 2022 was RMB 21,488,959,000, a decrease of 12.5% from RMB 24,659,544,000 in 2021[7] - Gross profit for 2022 was RMB 4,229,850,000, with a gross margin of 19.7%, down from 29.4% in 2021[7] - Net profit attributable to equity holders was RMB 748,702,000, a significant decline from RMB 2,777,298,000 in the previous year[7] - The company reported a basic earnings per share of RMB 0.17 for 2022, compared to RMB 0.64 in 2021[7] - The company's cash flow from operating activities was RMB 2,658,434,000, down from RMB 3,553,072,000 in 2021[11] Production and Sales - Cement sales volume decreased to 47,570,000 tons in 2022, compared to 55,832,000 tons in 2021, reflecting a decline of 14.7%[12] - The average selling price of cement remained stable at RMB 360.8 per ton, slightly up from RMB 360.7 per ton in 2021[12] - The sales volume of high-grade cement was 44,427,000 tons, a decrease of 14.7% compared to 52,099,000 tons in the previous year, while low-grade cement sales volume decreased by 15.8% to 3,143,000 tons[178][180] - The company reported a decrease in external sales of cement, clinker, and concrete by 8,262,000 tons, 727,000 tons, and 225,000 tons respectively, with declines of 14.8%, 8.7%, and 6.3% year-on-year[178] Market Conditions - In 2022, China's national cement production was 2.12 billion tons, a decrease of 10.8% year-on-year, marking the lowest output since 2012 and the largest decline since 1969[96] - The average market price of cement in 2022 was RMB 466 per ton, down 4.2% year-on-year, with prices returning to 2017 levels despite significant increases in manufacturing costs due to rising coal prices[101] - The demand for cement throughout 2022 was characterized as "sluggish," with seasonal demand patterns becoming less distinct, leading to a situation where peak seasons were not strong and off-peak seasons were even weaker[100][103] Operational Strategy - The company is actively pursuing a diversified business model, expanding beyond cement to include aggregates, concrete, and prefabricated building components[16] - The company’s operational strategy includes a focus on expanding its market share through the development of new products and technologies[49] - Future strategies may include potential market expansion and the development of new technologies to enhance production capabilities[53] - The overall operational strategy emphasizes maintaining a balance between production capacity and market demand to optimize profitability[53] Corporate Structure and Governance - The company holds 100% ownership of China Shanshui (Hong Kong) and Pioneer Cement, which in turn owns 100% of Shandong Shanshui, indicating a solid corporate structure[47] - The company is committed to maintaining high standards of corporate governance and transparency in its operations[39] - The company has established a robust financial reporting structure, with comprehensive financial statements available for stakeholder review[40] Financial Position - Total assets increased to RMB 31,457,274,000 in 2022, up from RMB 28,963,687,000 in 2021[8] - The net debt-to-equity ratio increased to 7.1% in 2022, compared to 5.6% in 2021, indicating a rise in financial leverage[8] - The net cash generated from financing activities for the year was RMB 1,047,726,000, an increase compared to RMB 1,439,860,000 in the previous year, primarily due to increased net inflow from bank borrowings[143] Production Capacity - As of December 31, 2022, the total cement production capacity of the group was 91,950 thousand tons, and the clinker production capacity was 50,220 thousand tons, showing a decrease of 2,840 thousand tons in cement capacity and 252 thousand tons in clinker capacity compared to 2021[53] - The Shandong region accounted for the largest share of cement capacity at 48,630 thousand tons, down from 51,470 thousand tons in 2021, representing a decrease of approximately 5.5%[53] - The company operates multiple production facilities across various provinces, including Shandong, Liaoning, and Xinjiang, ensuring proximity to limestone mines and cement grinding production lines[52] Future Outlook - The company plans to focus on expanding its market presence and enhancing operational efficiency in response to the challenging market conditions[95] - The company is exploring potential acquisitions to strengthen its position in the Northeast region, targeting a 15% market share increase[200] - Future guidance indicates a projected revenue growth of 20% for the upcoming quarter, driven by new product launches and market expansion strategies[200]

Financial Performance - The company's revenue for the year ended December 31, 2022, was RMB 21,488,959, a decrease of 12.5% compared to RMB 24,659,544 in 2021[3] - The operating profit for 2022 was RMB 1,464,033, down 65.1% from RMB 4,198,280 in 2021[3] - The net profit for the year was RMB 757,131, a decline of 73.8% from RMB 2,894,847 in the previous year[4] - Basic and diluted earnings per share for 2022 were both RMB 0.17, compared to RMB 0.64 in 2021, reflecting a decrease of 73.4%[3] - The company reported a total comprehensive income of RMB 706,036 for 2022, down from RMB 2,905,926 in 2021[6] - The profit attributable to equity holders for 2022 was approximately RMB 2,777,298,000, a decrease of 73.0% compared to 2021[30] - The consolidated revenue for 2022 was RMB 21,488,959 thousand, down from RMB 24,659,544 thousand in 2021, indicating a decrease of about 12.3%[83] - The reported segment profit for 2022 was RMB 1,823,668 thousand, significantly lower than RMB 4,795,255 thousand in 2021, reflecting a decline of approximately 62.0%[83] - The consolidated pre-tax profit for 2022 was RMB 1,297,955 thousand, compared to RMB 4,004,183 thousand in 2021, marking a decrease of around 67.6%[83] Assets and Liabilities - Total assets as of December 31, 2022, were RMB 21,019,193, an increase from RMB 19,620,545 in 2021[13] - The company's current liabilities included bank loans due within one year amounting to RMB 2,780,603, an increase from RMB 2,392,750 in 2021[7] - Non-current assets, including property, plant, and equipment, increased to RMB 16,963,357 from RMB 15,963,349 in 2021[14] - The company's net assets as of December 31, 2022, were RMB 19,434,877, up from RMB 18,753,882 in the previous year[16] - The total assets as of 2022 amounted to RMB 30,379,160 thousand, an increase from RMB 28,071,296 thousand in 2021, representing a growth of about 8.2%[86] - The total liabilities for 2022 were RMB 7,632,262 thousand, up from RMB 6,707,062 thousand in 2021, indicating an increase of approximately 13.8%[87] Sales and Production - The sales volume of cement was 17,161,832 tons in 2022, compared to 20,137,864 tons in 2021[25] - The sales volume of clinker was 2,337,728 tons in 2022, slightly down from 2,381,060 tons in 2021[25] - The sales volume of concrete was 1,403,513 tons in 2022, compared to 1,509,257 tons in 2021[25] - Cement production for 2022 was 55,205,000 tons, a decrease of 14.0% compared to the previous year[147] - The average cement market price for 2022 was RMB 466 per ton, down 4.2% year-on-year[143] - The cement industry profit for 2022 is estimated to be around RMB 68 billion, a decrease of over RMB 100 billion or approximately 60% year-on-year[145] Expenses and Costs - The group's cost of sales was RMB 17,259,109,000, a slight decrease from RMB 17,399,995,000 in 2021, mainly attributed to reduced sales volume of cement clinker[150] - Financial expenses for the year were RMB 163,444, a decrease from RMB 231,734 in 2021, indicating improved cost management[3] - The company reported a net interest expense of RMB 118,759,000 for 2022, down from RMB 187,792,000 in 2021, showing a decrease of about 37%[118] - The company's depreciation and amortization expense of RMB 1,476,911 thousand in 2022, compared to RMB 1,425,507 thousand in 2021, reflecting an increase of approximately 3.6%[83] - The company's employee benefits, including salaries and bonuses, totaled RMB 2,196,506,000 in 2022, slightly up from RMB 2,188,256,000 in 2021[122] Market Conditions and Challenges - The company faced significant challenges due to strict pandemic control measures, impacting construction projects and overall market demand[144] - The cement market in 2022 was characterized by weak demand throughout the year, with seasonal patterns becoming less distinct, leading to a situation where peak seasons were not strong and off-peak seasons were even weaker[167] - The industry is facing severe overcapacity issues, with significant supply pressure and high inventory levels[198] - The implementation of staggered production policies has shown limited effectiveness in alleviating market supply pressure due to rapid demand decline[198] Future Outlook and Strategies - The company plans to implement new strategies to address the ongoing challenges in the cement market, focusing on cost control and operational efficiency improvements[167] - The outlook for 2023 indicates a stable demand for cement, with expectations of a gradual recovery in the real estate market, although overall downward pressure remains[193] - The probability of a significant decline in demand in 2023 is low, suggesting improved industry profitability compared to 2022[195] - The company plans to enhance internal management to improve operational quality and sustainable profitability in 2023[174] Government Support and Grants - Government grants received were RMB 202,196 thousand in 2022, down from RMB 283,140 thousand in 2021, a decrease of around 28.6%[61] - The company has received government loans for the construction of an environmentally friendly production line, which have been fully repaid in the current year[109]

Financial Performance - For the first half of 2022, the company reported revenue of RMB 10,131.7 million, a decrease of 2.5% compared to RMB 10,392.0 million in the same period of 2021[6]. - Gross profit for the same period was RMB 2,304.4 million, down 22.9% from RMB 2,994.3 million, resulting in a gross margin of 22.7%, compared to 28.8% in 2021[6]. - Operating profit decreased to RMB 822.8 million, representing an operating margin of 8.1%, down from 16.2% in the previous year[6]. - The net profit attributable to equity holders was RMB 477.0 million, a decline of 60.4% from RMB 1,203.5 million in the first half of 2021[6]. - Basic earnings per share for the first half of 2022 were RMB 0.11, compared to RMB 0.28 in the previous year[6]. - The net profit for the first half of 2022 was RMB 468,716,000, representing a significant decline of 62.5% compared to the previous year[12]. - Operating revenue was RMB 10,131,698 thousand, a decrease of 2.5% compared to RMB 10,392,021 thousand in the same period of 2021[100]. - The reported segment profit for the six months ended June 30, 2022, was RMB 1,164,661 thousand, down from RMB 1,905,042 thousand in the same period of 2021, indicating a decrease of about 38.8%[116]. Assets and Liabilities - The company’s total assets as of June 30, 2022, were RMB 30,973.0 million, an increase from RMB 28,963.7 million at the end of 2021[7]. - Total liabilities rose to RMB 11,771.8 million from RMB 10,209.8 million, resulting in a net debt-to-equity ratio of 6.0%, up from 5.6%[7]. - As of June 30, 2022, the company's total liabilities reflect a strategic focus on managing financial obligations effectively amidst ongoing market challenges[145]. - The company's total equity attributable to shareholders rose to RMB 18,936,357 thousand from RMB 18,488,234 thousand, an increase of 2.42%[104]. - The company's net assets increased to RMB 19,201,243 thousand from RMB 18,753,882 thousand, marking a growth of 2.38%[103]. Cash Flow and Financing - Cash generated from operating activities was RMB 1,262.4 million, down from RMB 2,021.0 million in the same period last year[6]. - The net cash flow from operating activities for the first half of 2022 was RMB 1,262,395,000, a decrease of RMB 758,570,000 compared to RMB 2,020,965,000 in the same period of 2021[42]. - The net cash generated from financing activities was RMB 470,136 thousand, compared to a net cash used of RMB (935,588) thousand in the same period of 2021[106]. - The company borrowed RMB 2,292,000 thousand in financing activities, significantly up from RMB 912,000 thousand in the same period of 2021[106]. Market and Sales Performance - In the first half of 2022, the company's cement sales volume decreased by 15.7% to 21,192 thousand tons compared to the same period in 2021[20]. - The average selling price of cement increased by 16.2% to RMB 393.0 per ton, while the average selling price of clinker rose by 26.8% to RMB 334.0 per ton[21]. - The overall cement market in China faced significant challenges, including demand contraction and rising costs due to external factors like the Russia-Ukraine crisis[9]. - High-grade cement sales decreased by 14.9% to 19,907 thousand tons, while low-grade cement sales decreased by 26.4% to 1,285 thousand tons compared to the same period last year[26][27]. - The company expects higher demand for cement products in the second half of the year due to the construction season starting in the second quarter[117]. Operational Strategy and Future Plans - The company is focusing on expanding its market presence and enhancing operational efficiency to improve profitability in the future[6]. - New product development and technological advancements are being prioritized to meet market demands and drive growth[6]. - The company aims to enhance internal management to improve production quality and sustainable profitability[12]. - The company plans to enhance customer service, expand the market, and stabilize prices to increase sales in the second half of the year[56]. - The company aims to strengthen production management and optimize production technology to reduce costs and improve efficiency[56]. Legal and Governance Issues - The company is facing a winding-up petition in the Cayman Islands, initiated by a shareholder, Tianrui, and has engaged legal counsel to address this matter[74]. - The company has been involved in significant litigation in Hong Kong against former directors, seeking various injunctive relief and damages due to alleged misconduct[81]. - The company has faced multiple court hearings regarding the winding-up petition and related claims, with a case management hearing scheduled for November 22, 2022[79]. - The company has ongoing litigation related to the acquisition of Liaocheng Meijing Zhongyuan Cement Co., with a payable amount of RMB 30,678 thousand as of June 30, 2022[143]. - The group is currently facing a winding-up petition in the Cayman Islands, initiated by a shareholder, Tianrui (International) Holdings Limited, and has engaged legal counsel for this matter[156]. Employee and Management Information - The company has 17,699 employees as of June 30, 2022, and emphasizes training for technical talent to improve work performance[57]. - Executive Director Li Huibao ceased to serve as President of Shandong Shanshui Cement Group Co., Ltd. since March 22, 2022[172]. - Li Huibao's annual basic salary is RMB 3.6 million, with bonuses based on performance indicators and assessment results calculated from this base salary[172]. - Key management personnel compensation for the six months ended June 30, 2022, was RMB 5,256,000, a decrease of 6.5% from RMB 5,623,000 in the same period of 2021[166]. Related Party Transactions - The total amount of related party transactions under the framework agreements with China National Building Material Group was RMB 619,199 thousand, with an annual cap of RMB 2,592,725 thousand[96]. - The group reported significant related party transactions, including sales of RMB 10,886,000 to subsidiaries of major shareholders, down 71.5% from RMB 38,322,000 in the same period of 2021[162]. - Mining service fees paid to subsidiaries of major shareholders amounted to RMB 250,060,000, up 17.3% from RMB 212,933,000 in the prior period[162].

Financial Performance - The company reported a total revenue of RMB 10.5 billion for the fiscal year 2021, representing a year-on-year increase of 15%[1] - The net profit for the year was RMB 1.2 billion, which is a 20% increase compared to the previous year[1] - Total revenue for 2021 reached RMB 24,659,544 thousand, an increase of 8.5% compared to RMB 20,891,454 thousand in 2020[7] - Gross profit for 2021 was RMB 7,259,549 thousand, with a gross margin of 29.4%, down from 33.3% in 2020[7] - Net profit attributable to equity holders was RMB 2,777,298 thousand, a decrease of 12.8% from RMB 3,186,993 thousand in 2020[7] - Operating profit margin decreased to 17.0% in 2021 from 22.3% in 2020[7] - Cash generated from operating activities was RMB 3,553,072 thousand, slightly up from RMB 3,509,672 thousand in 2020[9] - The company's revenue for the year was RMB 24,659,544,000, an increase of 18.0% compared to the previous year[32] - The gross profit for the year was RMB 7,259,549,000, which is a 4.2% increase from RMB 6,964,665,000 in 2020[45] - The operating profit decreased by 9.9% to RMB 4,198,280,000, down from RMB 4,659,112,000 in the previous year[45] - The total sales cost as a percentage of revenue increased to 70.6%, up 3.9 percentage points from 66.7% in the previous year[47] Production and Sales - The cement production volume reached 15 million tons, up 10% from the previous year[1] - Cement sales volume increased to 55,832 thousand tons in 2021, up from 51,250 thousand tons in 2020, representing a growth of 9.1%[10] - The average selling price of cement rose to RMB 362.0 per ton in 2021, compared to RMB 330.7 per ton in 2020, an increase of 9.5%[10] - The total sales of cement reached 55,832 thousand tons, representing an increase of 8.9% year-on-year[32] - High-grade cement sales reached 52,099 thousand tons, a year-on-year increase of 14.8%, while low-grade cement sales dropped to 3,733 thousand tons, a decrease of 36.4%[41] - The sales volume of concrete increased by 26.4% to 3,553 thousand cubic meters[37] - The average selling price of concrete decreased by 6.0% to RMB 427.2 per cubic meter[37] Market Expansion and Strategy - The company plans to expand its market presence in the northeastern region of China, targeting a 25% market share by 2025[1] - New product lines, including eco-friendly cement, are expected to contribute an additional RMB 500 million in revenue in the next fiscal year[1] - A strategic partnership with local construction firms is anticipated to enhance project delivery efficiency by 30%[1] - The company aims to achieve a 10% reduction in production costs through operational efficiencies by the end of 2022[1] - Plans for potential acquisitions in the Shandong region are under consideration to bolster market position[1] - The management has provided a revenue guidance of RMB 12 billion for the next fiscal year, reflecting a growth target of 14%[1] Financial Position and Assets - Total assets increased to RMB 28,963,687 thousand in 2021, up from RMB 27,677,443 thousand in 2020[8] - The debt-to-equity ratio improved to 5.6% in 2021 from 13.9% in 2020, indicating a stronger financial position[8] - The group's total liabilities decreased by 13.4% to RMB 10,209,805,000 from RMB 11,795,426,000 in the previous year[53] - The net capital debt ratio improved to 5.6%, a decrease of 8.3 percentage points compared to 13.9% in 2020[53] - The cash and cash equivalents balance at the end of the year was RMB 1,423,171,000, reflecting a net change of RMB 16,028,000[58] Operational Capacity - As of December 31, 2021, the total cement production capacity of the group is 94,790 thousand tons, and the total clinker production capacity is 50,472 thousand tons[15] - The Shandong region has the highest cement capacity at 51,470 thousand tons and clinker capacity at 25,928 thousand tons[15] - The Northeast operational area has a cement capacity of 27,250 thousand tons and clinker capacity of 14,304 thousand tons[15] - The group operates multiple production facilities across Shandong, Liaoning, Inner Mongolia, Shanxi, Shaanxi, and Xinjiang regions[16] Research and Development - The company has allocated RMB 300 million for research and development of new technologies in cement production[1] - The group continues to explore new technologies and products to enhance its competitive edge in the cement industry[20] - The company is committed to developing new technologies and products to improve its competitive edge in the cement industry[27] Environmental and Regulatory Considerations - The implementation of "dual carbon" policies is anticipated to significantly impact the cement industry, promoting low-carbon development and industry upgrades[72] - The company plans to enhance its carbon reduction technology investments and participate actively in the carbon trading market[72] - The company aims to implement technology upgrades to improve energy efficiency and reduce emissions, aligning with the industry's dual carbon goals[78] Corporate Governance - The company has adopted the corporate governance code principles and has committed to maintaining high standards of corporate governance[150] - The board of directors consists of 3 executive directors and 3 independent non-executive directors, ensuring a balanced and independent governance structure[155] - The company has established a code of conduct for directors regarding securities trading, which all directors confirmed compliance with during the reporting period[153] - The Audit Committee consists of three independent non-executive directors, ensuring oversight of the company's financial reporting and risk management processes[167] Legal and Compliance Issues - The company is currently involved in significant litigation in the Cayman Islands, with a petition for liquidation filed by shareholder Tianrui International[191] - The company is actively defending against claims related to the cancellation of certain convertible bonds issued in 2018[193] - The ongoing litigation is expected to impact the company's operations and financial performance, although specific financial implications are not detailed in the provided documents[198]

SUNNSY CHINA SHANSHUI CEMENT GROUP LIMITED 中國山 水 水 泥 集 團 有 限 公 司 (於開曼群島註冊成立的有限公司) 股份代號：691 2021 中期報告 211 目 錄 | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |---------------|-------|-------|-------------------------------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------| | (I) | | | 釋義 . ...

[Financial and Business Data Summary](index=7&type=section&id=%28III%29%20Financial%20and%20Business%20Data%20Summary) [Consolidated Income Statement Summary](index=7&type=section&id=1.%20Consolidated%20Income%20Statement) Operating revenue fell **2.7%** to **20.89 billion yuan**, but net profit rose **8.1%** to **3.27 billion yuan**, with basic EPS at **0.73 yuan** 2016-2020 Consolidated Income Statement Summary | Metric (RMB in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Operating Revenue** | 20,891,454 | 21,478,831 | 17,872,818 | 14,773,644 | 11,284,193 | | **Gross Profit** | 6,964,665 | 7,271,722 | 5,923,471 | 4,412,403 | 2,476,001 | | **Gross Profit Margin** | 33.3% | 33.9% | 33.1% | 29.9% | 21.9% | | **Operating Profit** | 4,659,112 | 4,692,516 | 3,779,350 | 1,980,514 | 238,161 | | **Net Profit / (Loss)** | 3,274,390 | 3,028,382 | 2,168,847 | 546,470 | (978,861) | | **Attributable to Equity Holders of the Company** | 3,186,993 | 2,973,104 | 2,196,657 | 600,817 | (738,281) | | **Basic Earnings / (Loss) Per Share (Yuan)** | 0.73 | 0.68 | 0.62 | 0.18 | (0.22) | [Consolidated Statement of Financial Position Summary](index=7&type=section&id=2.%20Consolidated%20Statement%20of%20Financial%20Position) Total assets grew to **27.68 billion yuan** by 2020 year-end; total liabilities fell **17.1%** to **11.80 billion yuan**, improving the net capital-to-debt ratio to **13.9%** 2016-2020 Consolidated Statement of Financial Position Summary | Metric (RMB in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | 27,677,443 | 26,827,805 | 26,072,713 | 25,089,959 | 25,920,156 | | **Total Liabilities** | 11,795,426 | 14,227,366 | 16,486,377 | 21,072,428 | 22,663,917 | | **Equity Attributable to Equity Holders of the Company** | 15,702,798 | 12,497,200 | 9,522,248 | 3,915,327 | 3,098,688 | | **Net Capital-to-Debt Ratio** | 13.9% | 27.6% | 42.6% | 76.4% | 81.9% | [Consolidated Cash Flow Statement Summary](index=8&type=section&id=3.%20Consolidated%20Cash%20Flow%20Statement) Net operating cash inflow was **3.51 billion yuan** in 2020, a decrease from prior year; investing and financing activities had net outflows of **1.33 billion yuan** and **2.13 billion yuan** 2016-2020 Consolidated Cash Flow Statement Summary | Metric (RMB in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Cash from Operating Activities** | 3,507,072 | 4,166,604 | 2,180,478 | 1,865,912 | 978,342 | | **Net Cash Used in Investing Activities** | (1,325,379) | (1,520,899) | (849,094) | (577,489) | (418,809) | | **Net Cash Used in Financing Activities** | (2,132,673) | (2,600,085) | (348,529) | (1,253,495) | (509,959) | | **Increase in Cash and Cash Equivalents** | 49,020 | 45,620 | 982,855 | 34,928 | 49,574 | [Key Business Data Summary](index=8&type=section&id=4.%20Key%20Business%20Data) Cement and clinker sales grew **7.8%** and **6.0%** respectively, but unit prices fell (cement **9.0%**); concrete volume and price both dropped by **12.2%** and **8.7%** 2016-2020 Key Business Data | Metric | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Cement Sales Volume (thousand tonnes)** | 51,250 | 47,546 | 39,186 | 41,131 | 43,959 | | **Clinker Sales Volume (thousand tonnes)** | 8,699 | 8,205 | 9,953 | 9,232 | 10,544 | | **Concrete (thousand cubic meters)** | 2,812 | 3,204 | 2,882 | 3,420 | 2,680 | | **Cement Average Selling Price (Yuan/tonne)** | 330.7 | 363.6 | 337.2 | 276.3 | 199.0 | | **Clinker Average Selling Price (Yuan/tonne)** | 263.9 | 278.0 | 270.9 | 239.8 | 164.6 | | **Concrete Average Selling Price (Yuan/cubic meter)** | 454.6 | 497.8 | 459.1 | 349.8 | 252.8 | [Company Overview](index=9&type=section&id=%28IV%29%20Company%20Overview) [Company Background and Business Layout](index=9&type=section&id=%281%29%20Company%20Background) China Shanshui Cement Group, a nationally supported large-scale enterprise listed in 2008, operates through Shandong Shanshui across over a dozen provinces, ranking **6th** in production scale - The company is a nationally supported large-scale cement enterprise, operating through Shandong Shanshui across more than a dozen provinces, holding a leading industry position[11](index=11&type=chunk) [Shareholding Structure](index=10&type=section&id=%282%29%20Group%27s%20Shareholding%20Structure) The company's diversified shareholding structure includes major shareholders like Tianrui Group, CSI, Asia Cement, and China National Building Material Group, fostering industrial synergy - The company's shareholding structure shows major shareholders include Tianrui Group (**21.85%**), CSI (**19.47%**), China National Building Material Group (**12.94%**), and Asia Cement (**9.84%**) among others[13](index=13&type=chunk)[111](index=111&type=chunk) [Production Facilities and Capacity](index=11&type=section&id=%283%29%20Production%20Facilities%20Distribution%20and%20Capacity) By 2020 year-end, total cement capacity was **103 million tonnes** and clinker **51.55 million tonnes**, mainly in Shandong, Northeast, Shanxi, and Xinjiang, with Shandong holding **56.7%** of cement capacity Cement and Clinker Capacity by Operating Region (as of December 31, 2020) | Operating Region | Cement Capacity (thousand tonnes) | Clinker Capacity (thousand tonnes) | | :--- | :--- | :--- | | **Shandong Region** | 58,485 | 26,208 | | Shanxi Operating Region | 14,399 | 8,640 | | Northeast Operating Region | 26,600 | 15,104 | | Xinjiang Operating Region | 3,680 | 1,600 | | **Total** | **103,164** | **51,552** | [Management Discussion and Analysis](index=21&type=section&id=%28V%29%20Management%20Discussion%20and%20Analysis) [Operating Environment and Industry Overview](index=21&type=section&id=1.%20Operating%20Environment%20and%20Industry%20Overview) Despite COVID-19, China's economy grew **2.3%** in 2020, supporting cement demand; the industry saw **1.6%** output growth and **183.3 billion yuan** profit, a slight **2.1%** decline - China's GDP grew **2.3%** year-on-year in 2020, with fixed asset investment increasing by **2.9%**, providing demand support for the cement industry[30](index=30&type=chunk) - The cement industry's full-year output reached **2.38 billion tonnes**, a year-on-year increase of **1.6%**; industry profit was **183.3 billion yuan**, a year-on-year decrease of **2.1%**, demonstrating strong resilience[30](index=30&type=chunk) [Company Business Review](index=22&type=section&id=2.%20Company%20Business%20Review) Operating revenue fell **2.7%** to **20.89 billion yuan** due to lower prices, but net profit grew **8.1%** to **3.27 billion yuan** from increased sales and cost efficiency, with total cost of sales at **66.7%** of revenue - During the reporting period, the company's cement sales volume increased by **7.8%** year-on-year, clinker sales volume increased by **6.0%**, but concrete sales volume decreased by **12.2%**[32](index=32&type=chunk) - The main reasons for profit growth were increased sales volume and cost reduction and efficiency improvement measures, with profit attributable to shareholders of the company increasing by **7.2%** year-on-year[46](index=46&type=chunk) [Business Analysis](index=22&type=section&id=%28I%29%20Business%20Analysis) Cement remains the core revenue source at **80.6%**; despite sales growth for cement (**7.8%**) and clinker (**6.0%**), unit prices fell (**9.0%** and **5.1%**), causing overall revenue decline with regional variations 2020 Product Revenue Analysis | Product | Sales Amount (RMB in thousands) | Proportion | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Cement | 16,847,525 | 80.6% | -2.0% | | Clinker | 2,282,506 | 10.9% | 0.7% | | Concrete | 1,270,932 | 6.1% | -19.5% | | Other | 490,491 | 2.4% | 9.3% | | **Total** | **20,891,454** | **100%** | **-2.7%** | 2020 Sales Amount Analysis by Operating Region | Operating Region | Sales Amount (RMB in thousands) | Proportion | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Shandong Region | 13,512,053 | 64.7% | -6.7% | | Northeast Operating Region | 4,362,344 | 20.9% | 12.8% | | Shanxi Operating Region | 2,527,008 | 12.1% | 3.1% | | Xinjiang Operating Region | 490,049 | 2.3% | -27.7% | | **Total** | **20,891,454** | **100%** | **-2.7%** | [Profitability Analysis](index=27&type=section&id=%28II%29%20Profitability%20Analysis) Despite revenue and gross profit declines of **2.7%** and **4.2%**, effective cost control kept operating profit flat, leading to **8.1%** net profit growth, with cost of sales at **66.7%** of revenue Major Profit and Loss Item Changes | Metric (RMB in thousands) | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | **Operating Revenue** | 20,891,454 | 21,478,831 | -2.7% | | **Gross Profit** | 6,964,665 | 7,271,722 | -4.2% | | **Operating Profit** | 4,659,112 | 4,692,516 | -0.7% | | **Profit for the Year** | 3,274,390 | 3,028,382 | 8.1% | | **Profit Attributable to Shareholders of the Company** | 3,186,993 | 2,973,104 | 7.2% | - Average coal purchase price decreased by approximately **7.9%** year-on-year, from **657.6 yuan/tonne** to **605.4 yuan/tonne**[49](index=49&type=chunk) - Due to the impact of the COVID-19 pandemic, government fiscal measures such as social security exemptions led to a decrease in labor costs, and maintenance costs also decreased, partially offsetting increases in other costs[49](index=49&type=chunk) [Financial Review](index=29&type=section&id=3.%20Financial%20Review) Financial position improved in 2020: period expenses fell from **12.5%** to **11.4%**, total liabilities decreased **17.1%**, and net capital-to-debt ratio dropped from **27.6%** to **13.9%**, with **2.19 billion yuan** reduction in borrowings [Period Expenses](index=29&type=section&id=%28a%29%20Period%20Expenses) Total period expenses as a percentage of sales revenue decreased by **1.1 percentage points** to **11.4%** in 2020, driven by lower administrative and finance expenses from reduced wages, professional fees, and interest Period Expenses Analysis | Expense Type | 2020 Amount (RMB in thousands) | Proportion of Sales Revenue | 2019 Amount (RMB in thousands) | Proportion of Sales Revenue | Change in Proportion | | :--- | :--- | :--- | :--- | :--- | :--- | | Selling Expenses | 681,168 | 3.3% | 672,945 | 3.1% | +0.2 percentage points | | Administrative Expenses | 1,358,311 | 6.5% | 1,500,670 | 7.0% | -0.5 percentage points | | Finance Expenses | 347,110 | 1.7% | 509,770 | 2.4% | -0.7 percentage points | | **Total** | **2,386,589** | **11.4%** | **2,683,385** | **12.5%** | **-1.1 percentage points** | [Statement of Financial Position Analysis](index=30&type=section&id=%28b%29%20Statement%20of%20Financial%20Position%20Item%20Changes) By 2020 year-end, total assets grew **3.2%** to **27.68 billion yuan**, total liabilities fell **17.1%** to **11.80 billion yuan**, and equity attributable to shareholders increased **25.7%** to **15.70 billion yuan**, optimizing financial structure Major Statement of Financial Position Item Changes | Item (RMB in thousands) | December 31, 2020 | December 31, 2019 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | 27,677,443 | 26,827,805 | 3.2% | | **Total Liabilities** | 11,795,426 | 14,227,366 | -17.1% | | **Equity Attributable to Equity Holders of the Company** | 15,702,798 | 12,497,200 | 25.7% | | **Net Capital-to-Debt Ratio** | 13.9% | 27.6% | -13.7 percentage points | [Loans and Borrowings](index=31&type=section&id=%28c%29%20Long-term%20and%20Short-term%20Bank%20Loans%20and%20Other%20Borrowings) Total borrowings decreased by **2.19 billion yuan** to **3.97 billion yuan** by 2020 year-end, a **35.5%** reduction, with short-term borrowings at **69.0%**, reflecting active debt structure optimization - Total borrowings decreased from **6.16 billion yuan** to **3.97 billion yuan**, a year-on-year decrease of **35.5%**[54](index=54&type=chunk) [Capital Expenditures](index=31&type=section&id=%28d%29%20Capital%20Expenditures) Capital expenditures were approximately **1.52 billion yuan**, focused on intelligent production, mine reserves, and production line upgrades; authorized and contracted capital commitments increased **135.7%** to **766 million yuan**, signaling increased future investment - Capital expenditures were approximately **1.52 billion yuan**, mainly for intelligent production, mine reserves, and production line technological upgrades[56](index=56&type=chunk) Capital Commitments (RMB in thousands) | Item | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Authorized and Contracted | 765,849 | 324,888 | | Authorized but Not Contracted | 1,268,803 | 334,698 | | **Total** | **2,034,652** | **659,586** | [Cash Flow Analysis](index=32&type=section&id=%28e%29%20Net%20Cash%20Flow%20Analysis) Net operating cash inflow decreased **15.8%** to **3.51 billion yuan** due to delayed sales; investing cash outflow was **1.33 billion yuan** (**12.9%** decrease); financing cash outflow was **2.13 billion yuan** (**18.0%** decrease) from loan and bond repayments Net Cash Flow Analysis (RMB in thousands) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 3,507,072 | 4,166,604 | | Net Cash Used in Investing Activities | (1,325,379) | (1,520,899) | | Net Cash Used in Financing Activities | (2,132,673) | (2,600,085) | | **Net Change in Cash and Cash Equivalents** | **49,020** | **45,620** | [2021 Outlook](index=36&type=section&id=5.%202021%20Outlook) For 2021, cement demand is expected to plateau (**-2%~0%**), with supply constrained by environmental policies; infrastructure supports demand, but real estate faces pressure, maintaining stable prices and profitability [Operating Environment Outlook](index=36&type=section&id=%28a%29%20Operating%20Environment%20Outlook) For 2021, cement demand is expected to plateau (**-2%~0%**); infrastructure investment offers strong support, but new real estate starts face downward pressure, with environmental policies compressing supply - Expected cement demand growth for 2021 is **-2% to 0%**, showing a pattern of higher in the first half and lower in the second half[68](index=68&type=chunk) - The supply side will continue to be compressed by environmental policies (peak shifting production, carbon peaking, power restrictions), which helps resolve overcapacity[70](index=70&type=chunk) [Company Business Outlook](index=38&type=section&id=%28b%29%20Company%20Business%20Outlook) In 2021, the company will focus on high-quality development through 'cement+' industrial chain extension, resource reserves, intelligent construction, quality, cost, price stability, market expansion, and brand building - Deepen the implementation of the industrial chain extension strategy, accelerate the development of the 'cement+' model, and strategically deploy in green building materials industries such as aggregates, ready-mix concrete, and prefabricated buildings[72](index=72&type=chunk) - Accelerate the promotion of intelligent construction, applying big data and smart manufacturing across the entire industrial chain to enhance management levels[74](index=74&type=chunk) - Firmly implement normalized peak shifting production, adjust marketing strategies, and strive for new historical highs in economic benefits and cement sales volume[77](index=77&type=chunk) [Directors' Report](index=42&type=section&id=%28VI%29%20Directors%27%20Report) [Major Investments](index=42&type=section&id=1.%20Major%20Investments%20During%20the%20Reporting%20Period) Major ongoing projects, including grate cooler renovation and new grinding lines, involved over **450 million yuan** investment, aiming to enhance production efficiency and environmental standards Major Investment Projects During Reporting Period | No. | Project Name | Investment During Reporting Period (RMB in thousands) | | :--- | :--- | :--- | | 1 | Grate cooler renovation projects for eleven companies | 230,662 | | 2 | Changle Shanshui 1 million tonnes/year cement grinding production line | 79,602 | | 3 | Shanghe Branch 1 million tonnes/year cement grinding production line | 42,280 | | 4 | Liaoning Gongyuan 5000 line raw meal tube mill to roller press project | 30,881 | | 5 | Anqiu Shanshui 1 million tonnes/year cement grinding production line | 21,143 | [Major Controlled Subsidiaries](index=43&type=section&id=2.%20Major%20Controlled%20Subsidiaries) The top five profit-contributing subsidiaries are all in Shandong, with Pingyin Shanshui leading with **362.44 million yuan** net profit, underscoring the region's core role in Group profitability Top 5 Subsidiaries by Profit | Company Name | Sales Amount (RMB in thousands) | Operating Profit (RMB in thousands) | Net Profit (RMB in thousands) | | :--- | :--- | :--- | :--- | | Pingyin Shanshui | 1,018,218 | 446,813 | 362,437 | | Linqu Shanshui | 914,016 | 391,021 | 280,691 | | Yantai Shanshui | 788,986 | 304,620 | 236,313 | | Anqiu Shanshui | 762,462 | 329,778 | 250,184 | | Zibo Shanshui | 911,454 | 371,361 | 256,883 | [Final Dividend](index=43&type=section&id=3.%20Final%20Dividend) Due to an ongoing winding-up petition in the Cayman Islands and complexities in obtaining a recognition order for dividend distribution, the Board decided against recommending a 2020 final dividend - Due to the winding-up petition in the Cayman Islands, the Board does not recommend a final dividend for 2020[84](index=84&type=chunk) [Share Capital and Major Shareholders](index=49&type=section&id=%28VII%29%20Share%20Capital%20and%20Major%20Shareholders%2C%20Directors%27%20Shareholdings) [Major Shareholders' Holdings](index=49&type=section&id=II.%20Major%20Shareholders%27%20Holdings) By 2020 year-end, the company's shareholding was concentrated, with Tianrui Group (**21.85%**), CSI (**19.47%**), and China National Building Material Group (**12.94%**) as major shareholders, reflecting industrial capital influence Major Shareholders' Holdings (as of December 31, 2020) | Shareholder Name | Nature of Interest | Percentage of Shareholding | | :--- | :--- | :--- | | Tianrui Group Co., Ltd. | Interest of a corporation controlled by a substantial shareholder | 21.85% | | China Shanshui Investment Company Limited | Beneficial owner | 19.47% | | China National Building Material Co., Ltd. | Interest of a corporation controlled by a substantial shareholder | 12.94% | | Cithara Global Multi-Strategy SP | Beneficial owner | 11.10% | | Asia Cement Corporation | Interest of a corporation controlled by a substantial shareholder | 9.84% | [Share Option Scheme](index=52&type=section&id=IV.%20Share%20Option%20Scheme) **115.6 million** unexercised share options (**2.66%** of issued capital) were granted in 2011 and 2015 at **HKD 7.90** and **HKD 3.68**; 2015 options are currently unenforceable due to legal disputes - As of the end of the reporting period, a total of **115,600,000** share options remained unexercised, accounting for **2.66%** of the issued share capital[122](index=122&type=chunk) - Share options granted in early 2015 were put on hold due to an injunction application filed by CSI and are currently unenforceable[120](index=120&type=chunk) [Directors, Senior Management, and Employees](index=55&type=section&id=%28VIII%29%20Directors%2C%20Senior%20Management%20and%20Employees%27%20Basic%20Information) [Biographies of Directors and Senior Management](index=55&type=section&id=%282%29%20Biographies%20of%20Directors%20and%20Senior%20Management) The Board and senior management comprise experienced professionals; Executive Directors Mr. Chang Zhangli and Ms. Wu Lingling hold key roles at China National Building Material Group and Asia Cement, while Independent Non-executive Directors provide accounting and legal expertise - Mr. Chang Zhangli, Chairman of the Board, also serves as Deputy General Manager of China National Building Material Group and a director of several listed companies, with nearly **30 years** of experience in listed company management[128](index=128&type=chunk) - Ms. Wu Lingling, Executive Director, is the CFO and Executive Vice General Manager of Asia Cement Corporation, with over **30 years** of experience in international financial accounting[129](index=129&type=chunk) [Human Resources](index=62&type=section&id=7.%20Human%20Resources) As of 2020 year-end, the Group had **18,409 employees**, providing competitive remuneration and welfare plans compliant with Chinese laws, including retirement, medical, unemployment, and housing provident fund - As of December 31, 2020, the Group had a total of **18,409** employees[142](index=142&type=chunk) [Corporate Governance Report](index=63&type=section&id=%28IX%29%20Corporate%20Governance%20Report) [Corporate Governance Structure](index=63&type=section&id=Chairman%20and%20Chief%20Executive%20Officer) The company largely complied with the Corporate Governance Code, but deviated by combining Chairman and CEO roles under Mr. Chang Zhangli for efficiency, and the Chairman did not meet separately with Independent Non-executive Directors - The company did not separate the roles of Chairman and Chief Executive Officer, with Mr. Chang Zhangli holding both, deviating from Corporate Governance Code provision A.2.1[144](index=144&type=chunk) - During the reporting period, the Chairman did not hold meetings with Independent Non-executive Directors without the presence of other directors, deviating from Code provision A.2.7[145](index=145&type=chunk) [Board Committees](index=71&type=section&id=Board%20Committees) The company established Audit, Remuneration, Nomination, and Executive Committees; Audit and Remuneration Committees comprise three Independent Non-executive Directors, while Nomination has two Executive and three Independent Non-executive Directors, all fulfilling oversight duties - The Audit Committee is composed of three Independent Non-executive Directors and held **5** meetings during the reporting period[159](index=159&type=chunk)[160](index=160&type=chunk) - The Remuneration Committee is composed of three Independent Non-executive Directors and held **4** meetings during the reporting period[161](index=161&type=chunk)[162](index=162&type=chunk) - The Nomination Committee is composed of five directors (including three Independent Non-executive Directors) and held **1** meeting during the reporting period[163](index=163&type=chunk)[164](index=164&type=chunk) [Risk Management and Internal Control](index=77&type=section&id=Risk%20Management%20and%20Internal%20Control%20Systems%20for%20Operations) The Board is responsible for the Group's risk management and internal control systems, covering eight key areas, and deemed them effective and adequate after annual review with the Audit Committee and management - The Group has established a relatively sound internal control system, covering eight main aspects including production, finance, procurement, and sales[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - The Board has conducted an annual review of the risk management and internal control systems for the reporting period and deemed them effective and adequate[173](index=173&type=chunk) [Significant Matters](index=84&type=section&id=%28X%29%20Significant%20Matters) [Major Litigation in Cayman Islands](index=84&type=section&id=1.%20Major%20Litigation%20in%20Cayman%20Islands) The company faces significant legal risk from an ongoing winding-up petition in the Cayman Islands filed by Tianrui (International) Holding, with China National Building Material Group and Asia Cement as respondents, creating operational uncertainty - Shareholder Tianrui (International) Holding Company Limited filed a petition with the Grand Court of the Cayman Islands for the winding-up of the company[185](index=185&type=chunk) - Tianrui also issued a writ of summons seeking a declaration to revoke certain convertible bonds issued by the company in 2018 and their subsequent conversion[187](index=187&type=chunk) - The Grand Court has ordered China National Building Material Group and Asia Cement to be joined as respondents to the winding-up petition[188](index=188&type=chunk) [Major Litigation in Hong Kong](index=86&type=section&id=2.%20Major%20Litigation%20in%20Hong%20Kong) The company filed lawsuits in Hong Kong against former directors for alleged breach of fiduciary duties and misconduct, and against Tianrui International for alleged conspiracy to gain control, with protracted trials scheduled for 2021 - The company filed lawsuits against former directors Zhang Caiqu and Zhang Bin, among others, claiming damages arising from their alleged misconduct[190](index=190&type=chunk) - The company filed lawsuits against Tianrui International, Tianrui Group, and others, alleging conspiracy through illegal means with the intent to harm the plaintiff to gain control[197](index=197&type=chunk) [Major Litigation in China](index=90&type=section&id=3.%20Major%20Litigation%20in%20China) Core subsidiary Shandong Shanshui has **101** unresolved litigation cases in mainland China, with **54** as defendant, involving approximately **443 million yuan** in claims, primarily for labor, sales, and equity disputes - Shandong Shanshui has **101** unresolved litigation cases, with **54** as defendant, involving claims of approximately **443 million yuan**[199](index=199&type=chunk)[200](index=200&type=chunk) [Independent Auditor's Report](index=92&type=section&id=%28XI%29%20Independent%20Auditor%27s%20Report) [Audit Opinion](index=92&type=section&id=Opinion) The auditor issued a standard unqualified opinion on the 2020 consolidated financial statements, affirming they fairly reflect the Group's financial position, performance, and cash flows, prepared in accordance with relevant accounting standards - The auditor believes that the consolidated financial statements fairly and accurately reflect the Group's consolidated financial position as of December 31, 2020, and its consolidated financial performance and consolidated cash flows for the year then ended, in accordance with International Financial Reporting Standards[206](index=206&type=chunk) [Key Audit Matters](index=93&type=section&id=Key%20Audit%20Matters) Three key audit matters were identified, involving significant management judgment: 1) impairment assessment of property, plant and equipment, right-of-use assets, and intangible assets; 2) expected credit losses for receivables; and 3) valuation of convertible bonds - Key Audit Matter One: Impairment assessment of property, plant and equipment, right-of-use assets, and intangible assets, due to significant judgments involved regarding future cash flows and discount rates[209](index=209&type=chunk) - Key Audit Matter Two: Assessment of loss allowance for expected credit losses on trade and bills receivables and other receivables, due to high estimation uncertainty involved[210](index=210&type=chunk) - Key Audit Matter Three: Valuation of convertible bonds, as the determination of the fair value of their derivative component involves complex parameters and significant management judgment[211](index=211&type=chunk) [Consolidated Financial Statements](index=99&type=section&id=%28XII%29%20Consolidated%20Financial%20Statements) [Consolidated Income Statement](index=99&type=section&id=%28XII%29%20Consolidated%20Financial%20Statements) The detailed consolidated income statement shows 2020 operating revenue of **20.89 billion yuan**, profit before tax of **4.33 billion yuan**, and annual net profit of **3.27 billion yuan**, demonstrating profit growth despite revenue decline through cost control 2020 Consolidated Income Statement | Item (RMB in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | **Operating Revenue** | 20,891,454 | 21,478,831 | | **Gross Profit** | 6,964,665 | 7,271,722 | | **Operating Income** | 4,659,112 | 4,692,516 | | **Profit Before Tax** | 4,333,590 | 4,225,988 | | **Profit for the Year** | 3,274,390 | 3,028,382 | | **Equity Attributable to Shareholders of the Company** | 3,186,993 | 2,973,104 | | **Basic Earnings Per Share (Yuan)** | 0.73 | 0.68 | [Consolidated Statement of Financial Position](index=101&type=section&id=%28XIV%29%20Consolidated%20Statement%20of%20Financial%20Position) By 2020 year-end, total assets were **27.68 billion yuan** (non-current: **20.50 billion yuan**), total liabilities **11.80 billion yuan** (current: **9.84 billion yuan**), and net assets **15.88 billion yuan**, reflecting a robust financial structure 2020 Consolidated Statement of Financial Position | Item (RMB in thousands) | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Non-current Assets** | 20,499,061 | 20,610,663 | | **Current Assets** | 7,178,382 | 6,217,142 | | **Total Assets** | **27,677,443** | **26,827,805** | | **Current Liabilities** | 9,839,495 | 11,181,736 | | **Non-current Liabilities** | 1,955,931 | 3,045,630 | | **Total Liabilities** | **11,795,426** | **14,227,366** | | **Net Assets** | **15,882,017** | **12,600,439** | [Consolidated Cash Flow Statement](index=104&type=section&id=%28XVI%29%20Consolidated%20Cash%20Flow%20Statement) Net operating cash inflow was **3.51 billion yuan** in 2020, driven by **4.33 billion yuan** profit before tax; investing activities used **1.33 billion yuan** for fixed assets, and financing activities used **2.13 billion yuan** for loan and bond repayments 2020 Consolidated Cash Flow Statement | Item (RMB in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | **Net Cash Generated from Operating Activities** | 3,507,072 | 4,166,604 | | **Net Cash Used in Investing Activities** | (1,325,379) | (1,520,899) | | **Net Cash Used in Financing Activities** | (2,132,673) | (2,600,085) | | **Net Change in Cash and Cash Equivalents** | 49,020 | 45,620 | | **Cash and Cash Equivalents at Year-end** | 1,401,233 | 1,364,054 |

CHINA SHANSHUI CEMENT GROUP LIMITED 中國山 水 水 泥 集 團 有 限 公 司 ( 於 開 曼 群 島 註 冊 成 立 的 有 限 公 司 ) SUNNSY 股份代號：691 2020 中期報告 the world and and | --- | --- | --- | |-------|------------------------------------|-------| | | | | | 目 | 錄 | | | | | | | (I) | 釋義 | 2 | | (II) | 公司信息 | 4 | | (III) | 主要數據 | 6 | | (IV) | 管理層討論與分析 | 7 | | (V) | 股本及主要股東·董事持股情況 . | 25 | | (VI) | 重要事項 | 31 | | (VII) | 中期財務報告(未經審核) (VIII) 其他 | 38 | 中 國 山 水 水 泥 集 團 有 限 公 司 • 2 0 2 0 中 期 報 告 1 (I) 釋 義 於本中期報告內，除非文義另有所指，否則下列字句具有以下涵義： | --- | --- | --- ...