Financial Performance - Revenue for 2021 reached HK$21,950.4 million, with 64% from ferrous metals and 33% from non-ferrous metals[14] - Gross profit for the year was HK$1,888.5 million, reflecting a significant contribution from metal recycling operations[14] - The profit for the year was HK$1,117.5 million, compared to a loss of HK$577.3 million in 2020[15] - The Group's total tonnage and revenue for the fiscal year 2021 were 4.33 million tonnes and HK$21,950.4 million, representing increases of 0.8% and 64.2% compared to 2020[47] - Gross profit for the year rose by 99.5% compared to 2020, with the gross profit margin increasing from 7.1% in 2020 to 8.6% in 2021[47] - Profit before interest and tax (EBIT) improved significantly, reaching HK$1,117.5 million compared to a loss of HK$577.3 million in 2020, marking a 293.6% increase[63] - The profit for the year turned positive at HK$692.0 million, a 180.1% increase from a loss of HK$864.2 million in 2020[63] - Basic earnings per share improved to HK$0.44 from a loss per share of HK$0.53 in the previous financial year[75] Operational Highlights - The total tonnage processed in 2021 was 4,327,171 tonnes, a slight increase from 4,292,449 tonnes in 2020[16] - The company achieved a total recovery rate of approximately 97% for end-of-life vehicles, exceeding the EU directive target of 95%[19] - The company operates 80 yards in Germany, covering a wide range of collection, sorting, and processing services[26] - Chiho recorded significant growth in both top-line and bottom-line performance for the fiscal year 2021[40] - The rebound of global industrial activities led to strong demand for ferrous and non-ferrous metals, benefiting Chiho directly[41] - The European segment revenue surged by 78.8% to HK$19,150.0 million from HK$10,708.9 million in the previous year[63] - The Asian segment revenue grew by 24.6% to HK$2,130.8 million from HK$1,710.5 million in 2020[63] - The North American segment revenue decreased by 6.8% to HK$1,012.4 million from HK$1,086.1 million in the previous year[63] Investments and Future Plans - Investments in new recycling facilities for end-of-life vehicles and electric vehicle batteries are expected to commence operations in 2022[22] - Heavy investments were made in operations in China, focusing on establishing new recycling facilities for industrial and electric vehicle batteries[43] - The new industrial recycling facility in Binzhou, China, is expected to bring long-term revenue growth[43] - The company plans to recycle approximately 60,000 EV batteries annually, leveraging new facilities in Binzhou and Taizhou[54] - A new ELV and EV battery recycling facility is planned in Taizhou, China, designed to process up to 50,000 ELVs and 10,000 tonnes of EV batteries per year[50] Financial Ratios and Management - The current ratio improved to 16.7% in 2021 from 23.3% in 2020, indicating better liquidity management[16] - The gearing ratio increased to 1.13 in 2021 from 1.03 in 2020, reflecting a rise in financial leverage[16] - Total external borrowings as of December 31, 2021, were HK$1,661.9 million, down from HK$2,298.4 million in 2020[77] - The Group's financial resources remain steady, with cash and bank balances amounting to HK$924.7 million as of December 31, 2021[75] - The improvement in gross profit margin is attributed to margin management during rising scrap prices and a focus on high-margin businesses[73] Corporate Governance and Leadership - The Company aims to increase transparency with investors and shareholders to strengthen corporate governance[121] - The board continues to engage regularly with investors to keep them informed of corporate and business developments[121] - The Company is focused on expanding its strategic and investment committees to enhance decision-making processes[135] - The Company aims to leverage the extensive experience of its directors in mergers and acquisitions to drive future growth[138] - The Company has undergone significant leadership changes, with multiple executives resigning from key positions within a short timeframe[165] Risk Management - The Group's risk management strategy aims to mitigate market risks including commodity price risk, foreign currency risk, interest rate risk, credit risk, and liquidity risk[110] - The Group's commodity price risk hedging policy has been updated to adapt to changing operating conditions[110] - The Board closely monitors foreign currency borrowings due to the volatility of exchange rates[110] Employee and Workforce - As of December 31, 2021, the Group had a workforce of 2,866 employees, an increase from 2,832 employees in 2020[112] - The Group's total staff costs for the year were approximately HK$1,111.0 million, compared to HK$1,065.6 million in 2020, reflecting an increase of about 4.3%[113] - The remuneration of employees is determined based on market standards, individual performance, and contributions to the Group[113]

Revenue Growth - Segment revenue in Asia increased by 115.4% to HK$1,150.8 million compared to HK$534.3 million in 2020[20] - Revenue from Europe and North America rose by 101.7% to HK$9,719.1 million, up from HK$4,818.7 million in 2020[20] - Total revenue for the period reached HK$11,162.2 million, representing a 91.0% increase from HK$5,843.7 million in 2020[20] - Revenue for the first half of 2021 reached HK$11,162.2 million, a significant increase of 91.0% compared to the same period in 2020[35] - The Europe segment sold 2.11 million tonnes of recycled products, a 22.2% increase compared to 1.72 million tonnes in the same period last year[97] - Segment revenue for Europe increased two-fold to HK$9,719.1 million compared to the same period in 2020, driven by strong demand for metals as industrial activities resumed[97] - The Asia segment's sales tonnage increased by 29.4% to 0.11 million tonnes, with segment revenue reaching HK$1,150.8 million, more than double that of 2020[99] Profitability - Gross profit surged by 219.9% to HK$1,005.9 million, compared to HK$314.4 million in the previous year[20] - Profit before interest and tax (EBIT) improved to HK$500.1 million from a loss of HK$175.8 million in 2020, marking a 384.5% increase[20] - Profit for the period was HK$225.9 million, a significant recovery from a loss of HK$287.9 million in 2020, reflecting a 178.5% increase[20] - Earnings per share attributable to shareholders improved to HK$0.14 from a loss of HK$0.17 in the previous year, representing a 182.4% increase[20] - Total comprehensive profit for the period attributable to shareholders was HK$102.6 million, compared to a loss of HK$424.8 million in 2020[134] - The Group reported a net profit of HK$225.9 million for the six months ended 30 June 2021[165] Operational Efficiency - The gross profit margin increased to 9.0% from 5.4% in 2020, showing a 3.6% improvement[20] - Total operating expenses for the period were HK$654.9 million, an increase of 20.7% over the same period last year, but as a percentage of revenue, it decreased to 5.9% (2020: 9.3%)[68] - The Group's operational efficiency incentives implemented last year contributed to the improved profitability of the Europe segment[97] Cash Flow and Liquidity - Cash generated from operations before changes in working capital was HK$658.6 million, up from HK$133.4 million in 2020, a 393.7% increase[20] - Cash and cash equivalents decreased from HK$913.8 million to HK$356.9 million, a decline of 60.9%[138] - Net cash used in operating activities for the six months ended June 30, 2021, was HK$203.6 million, a decrease from HK$166.0 million in 2020[154] - The Group is in discussions with financial institutions for a new secured long-term borrowing of no less than HK$1,200.0 million[169] - The Group's financial position indicates significant uncertainty regarding its ability to continue as a going concern[165] Market and Strategic Initiatives - The Group is collaborating with China Hongqiao Ltd. to establish a new industrial recycling facility in Binzhou, China, as part of its strategy to capture growth opportunities in the recycling sector[31] - The restructuring in North America involves divesting loss-making facilities to focus on brokerage and yard businesses, aiming to enhance overall efficiency[38] - The joint venture with Hongqiao aims to build a recycling park in Binzhou, China, with a capacity to process up to 100,000 tonnes of end-of-life vehicles and mixed metals, and produce 500,000 tonnes of secondary aluminum annually[41][43] - The company aims to venture into higher margin businesses, including electric vehicle batteries recycling and plastic recycling, particularly in the Chinese market[48] - The Group's trading volume benefited from the easing of restrictions over the import of recycled metals into China with new standards for imports of both ferrous and non-ferrous scrap metals[53] Shareholder Information - As of June 30, 2021, Mr. Tu Jianhua holds a total of 978,383,181 Shares, representing approximately 60.95% of the total issued Shares of the Company, which amounts to 1,605,152,291 Shares[114] - USUM Investment Group Hong Kong Limited, a beneficial owner, also holds 978,383,181 Shares, equating to 60.95% of the Company's shareholding[120] - Other substantial shareholders include Tai Security Holding Limited with 98,773,990 Shares (6.15%) and Good Union Hong Kong Investment Limited with 44,700,000 Shares (2.78%) as of June 30, 2021[120] Risk Management - The Group's risk management strategy aims to mitigate market risks including commodity price risk, foreign currency risk, interest rate risk, credit risk, and liquidity risk[106] - The Group has adopted a commodity price risk hedging policy since 2010, which has been updated to adapt to changing operating conditions[106] - The Group's activities expose it to various financial risks, including market risk, credit risk, and liquidity risk[179] Employee and Governance - As of June 30, 2021, the Group had a workforce of 3,024 employees, an increase from 2,832 employees as of December 31, 2020[108] - The Group's total staff costs for the interim period were approximately HK$545.1 million, up from HK$497.3 million in 2020, reflecting a year-on-year increase of about 9.5%[108] - The company complied with all applicable code provisions of the Corporate Governance Code during the six months ended June 30, 2021[126]

Corporate Strategy and Operations - The company aims to become a global leader in resource recycling and environmental protection, focusing on quality returns for shareholders [4]. - In 2020, the company established a new head office in Beijing to strengthen its operations in Greater China and support growth strategies [15]. - A joint venture with China Hongqiao Group was formed to design and operate a new recycling industrial park in Binzhou City, Shandong Province [17]. - The company is the largest privately owned e-waste recycling center in Hong Kong, with a closed-loop system for material recycling [14]. - The company reported a significant focus on domestic metal trading and waste-lubricant oil recycling operations [17]. - The company has divested most operations in Northeast US in 2020, focusing future efforts on Southwest operations in Phoenix, Arizona [22]. - The company emphasizes building long-term partnerships with customers and suppliers to achieve mutual growth [5]. - The company is committed to corporate social responsibility, contributing to social well-being and environmental protection [5]. - The company operates 80 yards in Germany, covering South-West, Central, and Eastern regions, with over 1,400 employees [21]. - The company operates 12 yards in Austria, leading the market for ferrous scrap trading in the region [26]. - The company operates 18 yards in the Czech Republic, with a strong market share in the ferrous market [31]. - In Romania, the company operates 31 yards, benefiting from a strong supply of industrial and old scrap [32]. - The company has a joint venture in Mexico, operating 15 yards with a strong industrial supplier base [38]. Financial Performance - Revenue for the year 2020 was HK$13,368.1 million, a decrease of 13.0% from HK$15,363.4 million in 2019 [48]. - Gross profit increased by 7.8% to HK$946.5 million, compared to HK$877.9 million in 2019 [48]. - The company reported a loss before income tax of HK$809.8 million, a significant increase of 713.9% from a loss of HK$99.5 million in 2019 [48]. - Operating results showed a segment revenue decrease of 15.1% in Asia, 12.0% in Europe, and 23.0% in North America [48]. - The total assets decreased by 3.1% to HK$9,872.9 million from HK$10,190.0 million in 2019 [48]. - The company reported a net loss attributable to shareholders of HK$848.1 million for the year ended December 31, 2020, compared to a net loss of HK$128.7 million in 2019 [61]. - The gross profit margin improved to 7.1% in 2020 from 5.7% in 2019 [51]. - The Group's tonnage and revenue declined by 9.7% and 13.0% respectively compared to 2019, primarily due to lockdowns in Q2 2020 [63]. - The Group sold 4.3 million tonnes of recycled products in 2020, a 9.7% decrease compared to 4.8 million tonnes sold in 2019 [74]. - The European segment generated revenue of HK$10,708.9 million, accounting for 79.3% of total segment revenue in 2020 [78]. - The North American segment generated revenue of HK$1,086.1 million, accounting for 8.0% of total segment revenue in 2020 [78]. - The Asian segment generated revenue of HK$1,710.5 million, accounting for 12.7% of total segment revenue in 2020 [78]. Impact of COVID-19 - Inflow volume dropped approximately up to 50% during the second quarter of 2020 due to lockdown measures [59]. - The company implemented cost-saving measures and ensured liquidity across its more than 250 global sites during the COVID-19 pandemic [59]. - The second half of 2020 performed better than the same period in 2019, indicating a recovery in operations [61]. - The company resumed operations in China in April 2020 after lockdowns were lifted, contributing to a quick economic recovery [59]. - The management team focused on maintaining a safe working environment while ensuring business continuity during the pandemic [59]. - The Group's treasury policies focus on mitigating commodity price fluctuations and foreign currency exchange risks through futures and forward contracts [111]. - The Group noted strong sales volumes and favorable commodity prices towards the end of 2020, contributing to overall business recovery [105]. Cost Management and Efficiency - The company conducted a thorough portfolio review leading to optimisation initiatives, including restructuring and disposal of non-performing assets, resulting in one-off non-cash impairments of HK$519.2 million [61]. - Cost-cutting measures were implemented to enhance efficiency during the pandemic, focusing on managing variable costs [66]. - The company implemented various optimization initiatives, including cost savings and restructuring of non-performing assets [96]. - The company adopted various cost-cutting measures to improve operational efficiency starting from 2021 [87]. - The Group's total operating expenses increased by 11.5% to HK$1,138.8 million, with operating expenses as a percentage of revenue rising from 6.6% to 8.5% [87]. Leadership and Governance - Mr. Rafael Heinrich Suchan was appointed as CEO and executive director on March 1, 2020, and is involved in multiple committees [163]. - The Company has a strong executive team with members serving on multiple strategic committees, enhancing decision-making capabilities [163]. - The leadership team includes members with diverse international experience, contributing to a global perspective in strategy [165]. - The company has a diverse board with independent non-executive directors, ensuring a range of expertise in financial consultancy and corporate management [198]. - The company is focused on strategic investments and corporate management, as evidenced by the roles of its directors in various financial institutions [194]. - The company has a strong emphasis on governance, with independent directors serving on key committees such as audit and remuneration [200]. Market Outlook and Future Prospects - The Group anticipates continued growth in recycled non-ferrous metal volume in 2021 due to strong demand in the Chinese market [71]. - The new import standards for recycled metals in China, effective November 1, 2020, are expected to benefit the company's operations significantly [61]. - Stimulus packages in China, Europe, and North America are anticipated to drive demand for ferrous and non-ferrous metal scrap, aiding business recovery [61]. - The Chinese market is expected to improve as the government lifts import restrictions on non-ferrous scraps and promotes investments and infrastructure [139]. - The Group expects the first pour of liquid aluminium by the end of 2021, with the ELV processing line going live by mid-2022 [70].

Financial Performance - For the six months ended June 30, 2020, the company reported a net loss attributable to shareholders of HK$278.7 million, compared to a net profit of HK$2.0 million in 2019, representing a significant decline of 13,885%[14]. - Total revenue for the first half of 2020 was HK$5,843.7 million, a decrease of 32.8% from HK$8,700.3 million in the same period of 2019[7]. - The gross profit margin decreased to 5.4% in 2020 from 5.9% in 2019, indicating a decline in profitability[7]. - The loss before interest and tax (EBIT) was HK$175.8 million, compared to a profit of HK$94.5 million in the previous year, marking a decline of 286%[7]. - Gross profit for the first half of 2020 was HK$314.4 million, a drop of 39.0% year-on-year, with a gross profit margin of 5.4% compared to 5.9% in 2019[45]. - The company reported a loss for the period of HK$287.9 million, compared to a profit of HK$1.1 million in the prior year[172]. - Basic and diluted loss per share attributable to shareholders was HK$0.17 for the period[172]. - Other comprehensive loss for the period amounted to HK$148.1 million, leading to a total comprehensive loss of HK$436.0 million[175]. Revenue and Sales - The Group's total tonnage sold and revenue decreased by 20.1% and 32.8%, respectively, during the first half of 2020 compared to the same period in 2019[15]. - The company experienced a significant drop in segment revenues across all regions: Asia down 51.2%, Europe down 30.3%, and North America down 36.3%[7]. - In Europe, tonnage sold and revenue dropped 20.7% and 30.3%, respectively, while in North America, the declines were 21.4% and 36.3% compared to the previous year[16]. - The Group sold over 2.0 million tonnes of recycled products in the first half of 2020, a decrease of 20.1% compared to 2.5 million tonnes in the same period of 2019[32]. - Asia segment sales tonnage decreased by approximately 6.2% from 0.094 million tonnes to 0.088 million tonnes compared to the first half of 2019[102]. - Segment revenue for Asia dropped 51.2% from HK$1,094.2 million to HK$534.3 million compared to the first half of the previous year[102]. Assets and Liabilities - The company's total assets as of June 30, 2020, were HK$9,474.2 million, down 7.0% from HK$10,190.0 million at the end of 2019[9]. - Total equity attributable to shareholders decreased from HK$4,931.0 million to HK$4,495.9 million, reflecting a decrease of around 8.8%[182]. - Total liabilities decreased from HK$5,259.0 million to HK$4,978.3 million, a reduction of about 5.3%[182]. - Current ratio decreased from 1.01 as of December 31, 2019, to 0.94 as of June 30, 2020, indicating tighter liquidity conditions[60]. - Cash and pledged bank deposits decreased by 26.6% to HK$716.4 million from HK$976.5 million in 2019[9]. - Inventories as of June 30, 2020, were HK$1,273.9 million, down from HK$1,495.9 million as of December 31, 2019, with inventory turnover days increasing from 41 days to 46 days[63][65]. Operational Challenges - The company faced operational challenges due to COVID-19 lockdowns, impacting its business performance in China and globally[14]. - The pandemic and lockdown measures led to a significant drop in scrap flow, affecting manufacturing and consumption of scraps[34]. - The easing of lockdown measures began in late March for China and late April for Europe, with business activities gradually recovering but not yet returning to normal levels compared to the previous year[34]. - The Group has implemented cost-saving measures, including management salary cuts and reduced temporary staff, to enhance efficiency and conserve cash during the pandemic[20]. Strategic Initiatives - The Group signed a Memorandum of Understanding with Shandong Weiqiao Pioneering Group to develop a recycling industrial park in Shandong Province, targeting an annual throughput of over 200,000 tonnes of secondary aluminum scrap and 50,000 End of Life Vehicles (ELVs) in the first phase[24]. - The Group's strategy focuses on contributing to a sustainable and circular economy by using recycled materials instead of primary ores, thereby reducing carbon footprint[24]. - The Group anticipates a long-term shift in the steel-making industry towards electric arc furnaces, utilizing scrap to reduce emissions[23]. - The Group expanded into new markets in South/Southeast Asia, enhancing geographic diversification to mitigate risks associated with reliance on a single market[89]. Shareholder Information - Mr. Tu Jianhua holds a long position of 1,008,885,181 shares, representing approximately 62.85% of the Company's shareholding[128]. - As of June 30, 2020, the total number of issued Shares of the Company was 1,605,152,291 Shares[133]. - USUM Investment Group Hong Kong Limited held 1,008,885,181 Shares, representing 62.85% of the total shareholding in the Company[144]. - Tai Security Holding Limited holds 98,773,990 Shares, accounting for 6.15% of the Company's total shares[144]. - The interests of substantial shareholders are recorded in the register required under Section 336 of the SFO[143]. Corporate Governance - The company complied with all applicable code provisions of the Corporate Governance Code throughout the six months ended June 30, 2020, except for a temporary deviation regarding the roles of chairman and CEO[153]. - Mr. Qin Yongming resigned as CEO effective March 1, 2020, while remaining as an executive director and chairman of the board[154]. - Rafael Heinrich Suchan was appointed as CEO effective March 1, 2020, to enhance compliance with corporate governance standards[154].

Company Overview - Chiho Environmental Group is one of the largest metal recyclers globally, with major operations across Asia, Europe, and North America[10]. - The company operates 80 yards in Germany, employing over 1,400 staff and utilizing advanced post-shredder material recovery technology[14]. - In the USA, Chiho operates 5 yards and has a robust supplier base in selected areas, with a total of 240 employees[17]. - The company has a strong market share in the Czech Republic's ferrous market, operating 61 yards with over 370 employees[20]. - In Romania, Chiho operates 38 yards, benefiting from a strong supply of industrial and old scrap, with over 600 employees[23]. - Chiho is the largest privately owned e-waste recycling center in Hong Kong, with a closed-loop recycling system[11]. - The company has a diversified business model, including brokerage and yard operations in the USA[17]. - Chiho's operations in Austria include 16 yards, making it a market leader in ferrous scrap trading[19]. - The company has established joint ventures in Thailand and with Heng Hup Group for dismantling scrap motors and mixed scrap metal, expected to commence operations in 2020[32][30]. - The company has a strong presence in northern Mexico, supported by a robust industrial supplier base[28]. - The Group's organizational structure was adjusted to support the development of Southeast Asia operations and domestic scrap metal collection in China[57]. - As of December 31, 2019, the Group had a workforce of 3,115 employees[200]. - Approximately 350 separation and selection workers were engaged through local recognized contractors[200]. - The Group has not experienced any strikes, work stoppages, or significant labor disputes affecting operations in the past[200]. - There have been no significant difficulties in recruiting and retaining qualified staff[200]. - The Group continues to maintain good relationships with its employees[200]. Financial Performance - Revenue for the year ended December 31, 2019, was HK$15,363.4 million, a decrease of 26.5% from HK$20,912.8 million in 2018[36]. - Gross profit for 2019 was HK$877.9 million, down 47.9% from HK$1,684.1 million in 2018[36]. - The company reported a loss for the year of HK$133.8 million, compared to a profit of HK$399.0 million in 2018, representing a decrease of 133.5%[36]. - The gross profit margin decreased to 5.7% in 2019 from 8.1% in 2018, a decline of 2.4 percentage points[39]. - The net profit margin was (0.8%) in 2019, down from 1.9% in 2018, a decrease of 2.7 percentage points[39]. - The loss attributable to shareholders for the year ended December 31, 2019, was HK$128.7 million, a year-on-year decrease of approximately 132.1% compared to a profit of HK$401.2 million in 2018[62]. - Revenue from Europe decreased by 19.8% year-on-year to HK$12,166.8 million in 2019, with a segment profit of HK$379.7 million, representing a year-on-year decrease of 14.4%[63]. - Revenue from North America decreased by 40.9% to HK$1,410.9 million in 2019, resulting in a segment loss of HK$48.4 million compared to a profit of HK$8.4 million in 2018[64]. - Revenue from the Asia region decreased by 46.3% to HK$2,015.4 million in 2019, with a segment loss of HK$172.3 million compared to a profit of HK$275.2 million in 2018[65]. - The overall decline in revenue and profit was attributed to sluggish industrial activities in Europe and North America, impacting global metal demand[51]. - The Group's China operations were significantly impacted by the import restrictions on scrap motors, affecting sales and production[83]. - The decline in revenue was largely driven by a slowdown in global industrial activities and soft demand for metal scraps[82]. - The Group's treasury policies aim to mitigate foreign currency exchange rate fluctuations through the use of forward foreign exchange contracts[135]. - The Group achieved a recovery rate of approximately 97% for end-of-life vehicles (ELV), ranking as a world leader in post-shredding technologies[166]. Operational Challenges - The US-China trade dispute has negatively impacted the global economy, affecting demand in traditional industries and leading to a slowdown in the European economy[42][43]. - The Group's Taizhou plant faced significant challenges in 2019, relocating its primary business abroad and dismissing most long-time employees due to changes in national policies[56]. - The Group's operations in Europe and North America were streamlined to optimize the cost structure in response to market changes[60]. - The impact of the COVID-19 pandemic on the Group's businesses is currently difficult to assess, with significant disruptions to global supply chains noted[72]. - Scrap prices in Europe dropped on average by 9% in 2019, impacting overall profitability[168]. Future Plans and Investments - The Group plans to increase output in South and Southeast Asia processing yards, anticipating a rise in demand for copper due to the shift towards electric vehicles[75]. - The Group's R&D will focus on improving the processing of materials from the future automotive industry, including scrap, motors, and batteries[76]. - The new Measures for the Management of End-of-Life Vehicle Recycling in China will allow the Group to explore opportunities in the ELV business through joint ventures or its own resources[77]. - The Group is expanding into new markets in South/Southeast Asia to mitigate risks associated with reliance on a single market[164]. - The Group plans to expand its operations in South and Southeast Asia, aiming to replace China as a recycling base[79]. - The Group invested in a new plastic recycling line in Europe, set to commence operations in early 2020, to process waste plastic and produce high-value LDPE and HDPE pellets[71]. - A new plastic recycling line is set to launch in 2020 to address Europe's plastic waste issues[174]. Capital and Assets Management - Total assets decreased by 10.5% to HK$10,190.0 million in 2019 from HK$11,387.5 million in 2018[36]. - Shareholders' funds decreased by 4.5% to HK$4,941.3 million, with shareholders' funds per share down 4.3% from HK$3.22 to HK$3.08[113]. - Total external borrowings were approximately HK$3,556.5 million, down from HK$3,787.6 million in the previous year[116]. - The gearing ratio increased to 34.9% from 33.3% in the previous year, calculated based on total borrowings divided by total assets[117]. - Inventories decreased to HK$1,495.9 million from HK$2,105.7 million, with inventory turnover days increasing slightly to 45 days due to soft sales[124]. - Net trade and bills receivables decreased from HK$1,367.5 million as of December 31, 2018, to HK$957.3 million as of December 31, 2019, with debtor turnover days increasing from 23 days to 28 days[128]. - Trade and bills payables decreased from HK$1,042.9 million in 2018 to HK$639.3 million in 2019, with creditor turnover days remaining flat at 21 days[132]. - Capital expenditure for the year ended December 31, 2019, was HK$733.2 million, an increase from HK$602.1 million in 2018, with HK$337.5 million financed from internal resources and HK$395.7 million through lease arrangements[137]. - As of December 31, 2019, the Group had pledged assets with a carrying value of approximately HK$3,807.4 million to secure borrowings, down from HK$4,308.3 million in 2018, representing a decrease of about 11.6%[190]. - The Group's capital commitments for property, plant, and equipment amounted to HK$128.9 million as of December 31, 2019, an increase from HK$116.6 million in 2018, reflecting a rise of approximately 10.5%[190]. - As of December 31, 2019, the Group reported no contingent liabilities, a decrease from HK$27.4 million in 2018, indicating a reduction of 100%[190]. - The Group is involved in ongoing legal proceedings with Delco Participation B.V. regarding a claim of HK$57.8 million related to alleged non-payment of loans, which is still in progress[190]. Risk Management - The Group has adopted a commodity price risk hedging policy as of March 7, 2018, to mitigate market risks associated with commodity prices[198]. - The Board closely monitors foreign currency borrowings to manage risks related to volatile exchange rates, particularly for Euro and Renminbi[198]. - The Group follows best practices for cash collection on sales of recycled products to minimize credit risk and potential impairment losses[198]. - The Group maintains a balance between funding continuity and flexibility through the use of bank borrowings to manage liquidity risk[198].

Financial Performance - Revenue for the first half of 2019 decreased by 21.4% to HK$8,700.3 million compared to HK$11,062.2 million in 2018[7] - Gross profit fell by 48.7% to HK$515.6 million, resulting in a gross profit margin of 5.9%, down from 9.1% in the previous year[7] - Profit for the period plummeted by 99.7% to HK$1.1 million, compared to HK$331.2 million in the same period of 2018[7] - EBIT decreased by 84.3% to HK$94.5 million from HK$600.8 million in the previous year[7] - Earnings per share attributable to shareholders dropped by 99.5% to HK$0.001 from HK$0.21[8] - Overall revenue and profit decreased in the first half of 2019, with total tonnage sold down by 7.5%, leading to a revenue decline of 16.3% in European and North American segments due to the China-US trade dispute and solid waste policy changes[21] - In the Asian business segment, total tonnage sold decreased by 35.6%, resulting in a revenue decrease of 43.0%, primarily due to the ban on mixed metal scrap imports in China[22] - Total comprehensive loss for the period was HK$33.8 million, compared to a comprehensive income of HK$207.2 million in 2018[179] Assets and Liabilities - The total assets decreased by 3.7% to HK$10,966.8 million from HK$11,387.5 million[10] - Cash and pledged bank deposits dropped by 18.0% to HK$829.2 million, down from HK$1,010.7 million[10] - Non-current assets decreased to HK$6,141.3 million as of June 30, 2019, from HK$6,058.0 million at the end of 2018[181] - Current assets decreased to HK$4,824.5 million as of June 30, 2019, down from HK$5,329.5 million at the end of 2018[181] - Total liabilities decreased to HK$5,841.7 million from HK$6,241.6 million, a decline of 6.4%[184] - Non-current liabilities increased significantly, with borrowings rising to HK$2,613.2 million from HK$1,358.5 million, marking an increase of 92.3%[184] - The company reported a significant increase in lease liabilities, which rose to HK$465.1 million from HK$23.4 million, an increase of 1,885.8%[184] Market and Operational Developments - The company formed joint ventures in India and Malaysia to enhance its presence in the Southeast and South Asian markets[16] - The Taizhou plant is undergoing transformation to focus on the domestic metal scrap recycling market and expand its recycled aluminum ingots business[15] - The negative impacts from the China-US trade dispute are affecting consumer spending, particularly in the automotive sector, which is crucial for the company's metal recycling business[14] - The Group plans to establish scrap metal recycling collection points in China to create domestic recycling channels, anticipating that the scrap metal recycling industry will become a significant market in the future[32] - The European market is expected to see increased demand for steel scrap due to the transition to electric arc furnaces and stricter environmental policies aimed at achieving carbon neutrality by 2050[25] - The Group is expanding into new markets in South/Southeast Asia to mitigate risks associated with reliance on a single market[104] - The company is diversifying into non-metallic businesses such as recycled plastics and paper to mitigate challenges in the recycled metal recycling business[112] Shareholder Information - Mr. Tu Jianhua held a long position of 1,008,885,181 shares, representing 62.85% of the company's total issued shares[134] - The total number of issued shares of the company as of June 30, 2019, was 1,605,152,291 shares[135] - The largest single shareholder of USUM Group, which holds shares in the company, is Loncin Holdings with a 45.956% equity interest[137] - The total number of shares held by substantial shareholders indicates a strong concentration of ownership within the company[144] - The data reflects a diverse range of substantial shareholders, including both beneficial owners and interests in controlled corporations[147] Corporate Governance - The Company has complied with all applicable provisions of the Corporate Governance Code as of June 30, 2019, except for the separation of the roles of Chairman and CEO, which is deemed appropriate by the Board[158] - The roles of chairman and CEO are held by the same individual, Mr. Qin Yongming, which the board believes provides strong and consistent leadership[154] - The Company aims to enhance investor relations and keep shareholders updated on corporate developments[124] - The Company did not recommend the payment of an interim dividend for the six months ended June 30, 2019[161] - The Audit Committee reviewed and approved the Group's unaudited condensed consolidated results for the six months ended June 30, 2019[161]

Operations and Market Position - The Group processed and sold 5.29 million tonnes of metals, contributing to an approximate saving of 4 million tonnes of CO2[9]. - The Group is the largest importer of copper-based scrap metal in China and the largest global scrap motor buyer in 2018[11]. - The Group operates 85 yards in Germany, covering South-West, Central, and Eastern regions, with over 1,900 employees and advanced material recovery technology[15]. - The new fine metal sorting line was taken into operation in 2018, enhancing operational efficiency[15]. - The Group has a strong market position in Austria for ferrous scrap trading, operating 15 yards and a joint venture with Voestalpine Group[20]. - In Poland, the Group operates 6 yards in the most industrialized and scrap-rich areas, focusing on comprehensive collection and processing services[17]. - The Group's operations in the Czech Republic include 61 yards, maintaining a strong market share in the ferrous market[20]. - The number of yards in operation in Romania is 27, with a strong supply from industrial accounts[25]. - The company operates 18 yards in Slovenia, focusing on non-ferrous operations and recycling[24]. - In Denmark, the company plans to operate a deep-sea harbor yard by late 2019, enhancing its non-metals business potential[25]. - The Group's main business involves metal recycling, focusing on ferrous and nonferrous metals such as steel, copper, and aluminum, with local markets being the primary sales channels[43]. - The Group's operations have expanded from Asia to Europe and North America, positioning it as a leading global mixed metal recycler[139]. - The Europe segment provides comprehensive recycling services and is recognized as a leader in ferrous and non-ferrous metal recycling technologies[142]. Financial Performance - Total revenue for 2018 was HK$20,912.8 million, an increase of 13.1% from HK$18,491.0 million in 2017[29]. - Revenue from Europe increased by 28.0% to HK$14,883.1 million, while revenue from Asia decreased by 22.1% to HK$3,751.4 million[29]. - Gross profit before the adoption of HKFRS 15 was HK$2,304.7 million, a decrease of 1.0% compared to HK$2,329.0 million in 2017[29]. - The net profit margin decreased to 4.0% from 5.0% in the previous year[32]. - The company generated HK$674.0 million in cash from operations, down 20.7% from HK$850.3 million in 2017[29]. - The equity attributable to shareholders increased by 2.0% to HK$5,175.3 million from HK$5,073.1 million in 2017[29]. - The annual profit attributable to shareholders for 2018 was HK$401.2 million, a decrease of approximately 6.0% from HK$426.8 million in 2017, with basic and diluted earnings per share at HK$0.25[57]. - Revenue from ferrous metals accounted for 55% of total revenue in FY2018, while non-ferrous metals contributed 41%[134]. - The gross profit for the year ended 31 December 2018 was HK$1,684.1 million, a decrease of 27.7% from HK$2,329.0 million in 2017, resulting in a gross profit margin of 8.1%[72]. - Total operating expenses decreased by 28.6% to HK$1,332.3 million, representing 6.4% of revenue in 2018 compared to 10.1% in 2017[72]. - Profit before income tax for 2018 was HK$469.4 million, with a net profit margin of 1.9%[74]. - The share of post-tax profit from associates and joint ventures increased by 15.3% to HK$125.5 million in 2018[72]. - The Group's financial position is becoming more stable, with continuous improvement in cash flow and a reduction in debt ratio to lower financial costs[63]. Market Challenges and Opportunities - In 2018, the global recycling industry faced challenges due to intensified geopolitical differences and trade protectionism, particularly from the China-US trade dispute[41]. - The high tariffs imposed by Europe and America on lower-priced steel from China have indirectly benefited local recycled steel industries, although overall trade protectionism may harm economic growth[43]. - The demand for recycled steel in Europe is expected to increase as steel mills transition from blast furnaces to electric arc furnaces, which primarily use recycled steel as raw material[47]. - The main product in China is recycled copper, with the Group aiming to expand its high-value copper recycling business despite market uncertainties[48]. - The Chinese government is increasing investment in infrastructure to stimulate economic growth, which is beneficial for copper demand[48]. - The domestic recycling industry is consolidating, leading to more copper scraps being recycled through legitimate channels, which the Group plans to leverage to expand market share[48]. - The carbon tax issue in Europe has significantly increased since 2017, putting pressure on steel factories and influencing the demand for recycled materials[49]. - The Group anticipates a significant increase in demand for steel scrap due to the promotion of energy conservation and emission reduction initiatives in China[50]. Strategic Initiatives and Future Outlook - The Group aims to implement stringent risk management and hedging policies while pursuing organic growth and prudent mergers and acquisitions[61]. - A new round of financing was completed at a lower cost, even amid rising interest rates by the Federal Reserve[61]. - The management remains cautiously optimistic about the long-term prospects of the Group while preparing for short-term market changes[61]. - The management emphasizes the importance of sustainable development in the circular economy as a key driver for future growth[65]. - The Group plans to expand its domestic scrap metal business in China, leveraging the consolidation of the local recycling industry[52]. - The Group will supply the PRC market with high-grade recycled copper processed in Europe and North America, as well as new facilities in Southeast Asia[48]. Employee Relations and Governance - As of December 31, 2018, the Group had a total workforce of 3,338 employees, with an additional 805 workers engaged through local contractors[169]. - The total staff costs for the year amounted to approximately HK$1,272.8 million, which includes basic salary, provident fund, insurances, and other benefits[170]. - The Group has not experienced any strikes or significant labor disputes that affected operations in the past, indicating stable employee relations[169]. - The remuneration of employees is determined based on market standards, individual performance, and contributions to the Group[170]. - The Board believes that maintaining good relationships with investors will strengthen corporate governance and transparency[172]. Leadership and Management - Mr. Tu Jianhua has been an executive director since April 29, 2015, and served as CEO for a brief period in 2016[180]. - Mr. Qin Yongming joined the Group on June 1, 2016, and has held multiple leadership roles, including CEO and chairman of the Board[191]. - Mr. Tu's annual salary is HK$2,300,000, with a discretionary bonus subject to annual review[184]. - Mr. Qin's annual salary is HK$5,021,104, also with a discretionary bonus subject to annual review[192]. - Mr. Qin has extensive experience in corporate operation management and procurement, previously working with LafargeHolcim group[191]. - Mr. Tu is a member of various committees, including the executive committee and strategy and investment committee[180]. - Mr. Qin serves as the chairman of multiple committees, including the executive committee and pricing committee[191]. - Both directors' remuneration is determined based on their duties, qualifications, experience, and market conditions[184][192]. - Mr. Wong Wun Lam serves as the Chief Financial Officer with an annual salary of HK$2,600,000 and is entitled to a discretionary bonus[198]. - Mr. Wong has over 29 years of extensive experience in financial management prior to joining the Company[199].