CRE 中 國稀土控股有限公司 China Rare Earth Holdings Limited (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立之有限公司) Stock code 股份代號：00769 Annual Report 2019 0 ry IX 13 / 8 中国民主席的歌唱 프랑斯基本 12 CRE 宜兴新成利成熟太甚至想公里 http://www.asia.com/ m M . 目 錄 CONTENTS 2 公司資料 Corporate Information 財務摘要 Financial Highlights 4 6 主席報告書 Chairman's Statement 董事及高級管理人員簡介 Directors and Senior Management Profile 16 20 企業管治報告 Corporate Governance Report 董事會報告 Directors' Report 34 46 獨立核數師報告 Independent Auditor's Report 55 綜合損益 ...

Financial Performance - Revenue for the six months ended June 30, 2019, was HKD 438,972,000, a slight increase from HKD 434,626,000 in the same period of 2018, representing a growth of 1%[5] - Gross profit for the same period was HKD 42,978,000, compared to HKD 18,405,000 in 2018, indicating a significant increase of 133%[5] - Operating profit for the first half of 2019 was HKD 16,919,000, a turnaround from an operating loss of HKD 9,212,000 in the previous year[5] - Net profit for the period was HKD 14,095,000, compared to a net loss of HKD 11,682,000 in the same period of 2018, marking a substantial improvement[5] - Basic and diluted earnings per share for the period were HKD 0.60, compared to a loss per share of HKD 0.49 in 2018[5] - Total comprehensive income for the period was HKD 3,790,000, a recovery from a comprehensive loss of HKD 33,657,000 in the previous year[7] - The overall gross profit margin for the period was approximately 10%, an improvement from about 4% in the same period last year[76] - The company reported total revenue of HKD 438,972 thousand for the first half of 2019, a slight increase from HKD 434,626 thousand in the same period of 2018, representing a growth of approximately 0.8%[45] Cash Flow and Assets - Cash and cash equivalents as of June 30, 2019, amounted to HKD 1,711,316,000, an increase from HKD 1,666,292,000 at the end of 2018[10] - The company reported a net cash inflow from operating activities of HKD 50,430,000 for the six months ended June 30, 2019, compared to a net outflow of HKD 245,539,000 for the same period in 2018[19] - The cash and cash equivalents at the end of the period increased to HKD 1,711,316,000 from HKD 1,395,541,000 as of June 30, 2018[19] - The net value of current assets was approximately HKD 2,338,390,000, an increase of about HKD 17,649,000 compared to the end of 2018[88] - Total assets less current liabilities stood at HKD 2,626,415,000, slightly up from HKD 2,618,682,000 at the end of 2018[12] Liabilities and Equity - Non-current liabilities included lease liabilities of HKD 3,943,000, indicating ongoing commitments in operational leases[12] - As of June 30, 2019, the total equity attributable to owners of the company was HKD 2,616,748,000, a decrease from HKD 2,740,593,000 as of January 1, 2018[15] - The company incurred a loss of HKD 11,372,000 during the period, contributing to the cumulative loss of HKD 287,915,000 as of June 30, 2019[15] - The group’s total liabilities to total assets ratio remained at approximately 5%[88] Segment Performance - Revenue from external customers for rare earth products was HKD 284,315 thousand, up from HKD 279,501 thousand in 2018, indicating a growth of about 1.0%[48] - The reported segment profit for rare earth products was HKD 12,907 thousand, significantly higher than HKD 4,140 thousand in the previous year, reflecting an increase of approximately 211.5%[45] - The total revenue from refractory products was HKD 154,657 thousand, slightly down from HKD 155,125 thousand in the same period of 2018, indicating a decrease of about 0.3%[45] - The revenue from the rare earth segment increased by about 2% to approximately HKD 284,315,000, accounting for about 65% of the total revenue[73] - The refractory materials segment generated revenue of approximately HKD 154,657,000, which is similar to approximately HKD 155,125,000 from the previous year, accounting for about 35% of total revenue[76] Operational Changes and Investments - The company adopted HKFRS 16 "Leases" starting January 1, 2019, which required changes in accounting policies and adjustments[23] - The company invested approximately HKD 676,000 in property, plant, and equipment during the six months ended June 30, 2019, significantly lower than approximately HKD 14,863,000 in the same period last year[61] - The company recognized a tax expense of HKD 2,603 thousand for the current period, compared to HKD 2,470 thousand in the previous year, which is an increase of approximately 5.4%[53] Corporate Governance and Compliance - The board of directors confirmed compliance with the securities trading code during the six months ending June 30, 2019[122] - The company maintained sufficient public float as required by the listing rules during the review period[123] - The board consists of four executive directors and three independent non-executive directors as of the report date[124] - The company has adopted its own corporate governance code in accordance with the corporate governance code outlined in the listing rules[119] - The audit committee reviewed the accounting principles and practices adopted by the group[118] Shareholding and Dividends - YY Holdings Limited holds 707,179,200 shares of the company, accounting for approximately 30.20% of the total issued shares[113] - Jiang Quanlong holds a 5% equity interest in Yixing New Weili Rare Earth Co., Ltd.[107] - The group did not declare an interim dividend for the six months ended June 30, 2019, consistent with the previous year[92] - The beneficial owner, Qian Yuanying, holds 3,000,000 shares with a 30% voting power deferral[1] - Jiang Quanlong holds 7,000,000 shares with a 70% voting power deferral[1]

Financial Performance - Revenue for the year ended December 31, 2018, was HK$902 million, an increase from HK$637 million in 2017, representing a growth of 41.5%[18] - Net loss attributable to owners of the company for 2018 was HK$5 million, a significant improvement from a net loss of HK$83 million in 2017[18] - Net assets as of December 31, 2018, were HK$2,619 million, compared to HK$2,754 million in 2017, indicating a decrease of 4.9%[18] - For the year ended December 31, 2018, the Group recorded revenue of approximately HK$902,095,000, an increase of about 42% compared to HK$637,162,000 in 2017[31] - The Group's net loss was approximately HK$7,376,000, significantly reduced by over 90% compared to approximately HK$84,781,000 in 2017, with loss per share decreasing to about HK$0.23 cents from about HK$3.54 cents[32] - The Group's overall gross profit margin improved to about 7% in 2018, up from about 4% in 2017[31] Revenue Breakdown - Rare earth products accounted for 95% of total revenue in 2018, while refractory products contributed 2%[20] - The company's revenue distribution in 2018 showed that 81% came from the People's Republic of China, 13% from Japan, and 5% from Europe[22] - Revenue from rare earth products rose to approximately HK$554,515,000, representing an increase of approximately 43% compared to HK$386,533,000 in 2017, accounting for about 61% of total revenue[31] - Revenue from refractory products increased by about 39% to approximately HK$347,580,000, compared to approximately HK$250,629,000 in 2017, accounting for about 39% of total revenue[31] Market Strategy and Expansion - The company plans to expand its market presence in Japan and Europe, focusing on increasing sales of rare earth products[26] - The company is investing in new technologies for the development of rare earth products to enhance production efficiency and product quality[26] - Future guidance indicates a target revenue growth of 10% for the upcoming fiscal year, driven by increased demand in the domestic and international markets[26] - The company is exploring potential mergers and acquisitions to strengthen its market position and expand its product offerings[26] Production and Supply Chain - The Group sold approximately 1,600 tonnes of rare earth oxides in 2018, down by more than 15% compared to the previous year, but the average selling price increased due to a higher proportion of high-priced products sold[35] - The average selling price of yttrium oxide increased by about 30%, while the average price of lanthanum oxide surged by about 70%[35] - The Group has gradually resumed production of rare earth oxides and adjusted production processes to meet customer demand[38] - The Group aims to expand raw material supply channels by importing rare earth resources from Southeast Asia and exploring direct import feasibility[67] Corporate Governance - The company adheres to corporate governance practices in compliance with the Hong Kong Stock Exchange's listing rules, ensuring good governance standards[104] - The Board of Directors consists of seven members, including four executive directors and three independent non-executive directors[113] - The Company has complied with the Corporate Governance Code throughout the year ended December 31, 2018[106] - The independent non-executive directors possess expertise in financial management and have provided strategic advice to the Company[130] Risk Management - The Group has established a risk management framework involving the Board, Audit Committee, and senior management to oversee risk management and internal control systems[191] - The Board has overall responsibility for maintaining an effective risk management and internal control system[187] - The Group's risk management procedures include assessing and evaluating identified risks according to their likely impacts and likelihood of occurrence[193] Employee and Compensation - The Group employed approximately 450 employees as of December 31, 2018, with total staff costs including directors' emoluments amounting to approximately HK$43,137,000, slightly decreased from the previous year[75] - The Group's average salary for employees increased alongside market rate adjustments despite a decrease in the number of employees[75] Environmental and Social Responsibility - The Group's environmental governance will be elevated in accordance with industry policies as part of its future strategy[83] Financial Position - The Group's cash and bank deposits as of December 31, 2018, were approximately HK$1,666,292,000, remaining stable compared to the previous year[69] - The total liabilities to total assets ratio for the Group was about 5%, indicating a strong financial position[69] - The Group did not borrow any money from banks in 2018, but had a financing facility of RMB150,000,000 (approximately HK$171,194,000) that was not utilized[74]