香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或因依 賴該等內容而引致之任何損失承擔任何責任。 張逸 香港，2025年3月4日 於本公告日期，執行董事爲張逸先生、張賀先生、徐翔先生、劉陽先生、潘聲海先生 及崔凌女士；非執行董事爲黃創新先生；獨立非執行董事爲張宇鵬先生、袁明亮先生、 盧思鴻先生、周杰先生、羅貴華先生及吳琦先生。 1 (股份代號 : 1091) 董事會會議日期 南方錳業投資有限公司（「本公司」）董事會（「董事會」）欣然宣布，本公司將於 2025年3月14日（星期五）假座香港金鐘金鐘道95號統一中心35樓A02室舉行董事會會 議，以批准（其中包括）本公司及其附屬公司截至2024年12月31日止年度之全年業績， 以及考慮派發末期股息（如有）。 承董事會命 南方錳業投資有限公司 主席 South Manganese Investment Limited 南方錳業投資有限公司 ( 於百慕達註冊成立之有限公司 ) ...

[Financial Performance](index=4&type=section&id=財務業績) This section provides an overview of the company's financial results, including income, balance sheet, and cash flow statements, along with detailed notes [Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=中期簡明綜合損益及其他全面收益表) For the six months ended June 30, 2024, the company turned from profit to loss, with total revenue decreasing by **25.9%** to **5.73 billion HKD** and gross profit significantly declining by **56.9%** to **282 million HKD** Key Financial Performance for H1 2024 (Thousand HKD) | Indicator | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | Year-on-year Change | | :--- | :--- | :--- | :--- | | **Revenue** | 5,733,287 | 7,732,538 | -25.9% | | **Gross Profit** | 282,068 | 654,960 | -56.9% | | **(Loss)/Profit Before Tax** | (135,675) | 177,373 | Turned from profit to loss | | **(Loss)/Profit for the Period** | (177,534) | 133,552 | Turned from profit to loss | | **(Loss)/Profit Attributable to Owners of the Company** | (162,783) | 134,903 | Turned from profit to loss | | **Basic (Loss)/Earnings Per Share (HKD)** | (0.0475) | 0.0393 | Turned from profit to loss | [Interim Condensed Consolidated Statement of Financial Position](index=5&type=section&id=中期簡明綜合財務狀況表) As of June 30, 2024, the company's total assets were **11.33 billion HKD**, total liabilities were **8.69 billion HKD**, and net assets were **2.63 billion HKD**, a decrease from **2.83 billion HKD** at the end of 2023, indicating liquidity pressure due to net current liabilities Financial Position Summary (Thousand HKD) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Non-current Assets** | 5,006,501 | 5,025,589 | | **Total Current Assets** | 6,319,002 | 6,340,431 | | **Total Current Liabilities** | 7,164,223 | 7,231,694 | | **Net Current Liabilities** | (845,221) | (891,263) | | **Total Non-current Liabilities** | 1,529,064 | 1,305,964 | | **Net Assets** | 2,632,216 | 2,828,362 | - The company's current liabilities exceeded its current assets by **845 million HKD** at the end of the reporting period, but the directors believe the Group has sufficient working capital for the next twelve months, thus the financial statements are prepared on a going concern basis[10](index=10&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=中期簡明綜合現金流量表) In the first half of 2024, the company generated **911 million HKD** in net cash from operating activities, a significant year-on-year increase, while net cash used in investing activities also increased substantially to **575 million HKD**, with cash and cash equivalents at period-end rising to **1.061 billion HKD** Cash Flow Summary (Thousand HKD) | Indicator | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | | :--- | :--- | :--- | | **Net Cash Generated from Operating Activities** | 911,171 | 517,739 | | **Net Cash Used in Investing Activities** | (575,312) | (271,448) | | **Net Cash Used in Financing Activities** | (247,736) | (414,574) | | **Cash and Cash Equivalents at End of Period** | 1,061,232 | 950,014 | [Notes to the Interim Condensed Consolidated Financial Statements](index=10&type=section&id=中期簡明綜合財務報表附註) The notes to the financial statements provide detailed disclosures on accounting policies, segment operations, asset and liability breakdowns, and related party transactions, highlighting that declining revenue from electrolytic manganese metal and trading businesses was a primary driver of overall revenue decrease, while the battery materials business contributed the main profit, and a significant impairment provision for an associate was a key factor in the current period's loss - The Group's principal businesses are divided into four reportable operating segments: manganese ore mining, electrolytic manganese metal and alloy materials production, battery materials production, and other businesses (primarily trading)[13](index=13&type=chunk) - Due to the Group undertaking guarantee liabilities for associate Dushan Jinmeng and repaying related bank loans, an expected credit loss provision of **108 million HKD** was recognized for the secured amounts receivable from Dushan Jinmeng[33](index=33&type=chunk) - In the first half of 2024, the Group undertook guarantee liabilities for an associate, repaying a total of approximately **322 million HKD** in loan principal and interest to banks, with the guarantee settled by period-end[59](index=59&type=chunk) [Management Discussion and Analysis](index=34&type=section&id=管理層討論及分析) This section analyzes the company's financial performance and business operations, discussing key drivers of results, segment-specific performance, liquidity, and future outlook [Financial Review and Business Overview](index=34&type=section&id=財務回顧) In the first half of 2024, the company's performance faced challenges due to global economic uncertainties and weak demand in the domestic steel industry, resulting in a **25.9%** revenue decrease and a decline in gross profit margin from **8.5%** to **4.9%**, primarily driven by falling electrolytic manganese metal prices, gross loss in trading business, and a significant **109 million HKD** impairment loss related to an associate guarantee settlement Financial Summary for H1 2024 (Million HKD) | Indicator | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | 5,733.3 | 7,732.5 | -25.9% | | **Gross Profit** | 282.1 | 655.0 | -56.9% | | **Gross Profit Margin** | 4.9% | 8.5% | -3.6pp | | **(Loss)/Profit Attributable to Owners of the Company** | (162.8) | 134.9 | Turned from profit to loss | - Core reasons for the performance decline include: electrolytic manganese metal product average selling price decrease of **15.8%**; gross loss recorded in the trading business; and an impairment loss of **108.7 million HKD** recognized on receivables from associate Dushan Jinmeng[74](index=74&type=chunk)[75](index=75&type=chunk) [Segment Performance Analysis](index=37&type=section&id=分部表現) Business segment performance diverged, with manganese ore mining revenue increasing due to higher sales volume but gross profit declining, while electrolytic manganese metal and alloy materials saw significant drops in both revenue and gross profit, recording an operating loss, and the battery materials segment, despite a revenue decrease, remained the primary profit contributor, demonstrating strong resilience, as other businesses (trading) experienced a sharp revenue decline and turned to gross loss - **Manganese Ore Mining**: Revenue increased by **12.4%** to **654 million HKD**, primarily due to higher sales volume of Gabon ore, but gross profit decreased by **13.4%**[79](index=79&type=chunk) - **Electrolytic Manganese Metal and Alloy Materials**: Revenue decreased by **28.2%** to **1.161 billion HKD**, mainly due to a **15.8%** drop in average selling price of electrolytic manganese metal products and a **75.0%** sharp decline in alloy product sales volume, with this segment recording a loss of **50.7 million HKD**[82](index=82&type=chunk)[83](index=83&type=chunk) - **Battery Materials Production**: Revenue decreased by **13.9%** to **798 million HKD**, but segment profit increased by **12.2%** to **194 million HKD**, making it the Group's most significant profit contributor[84](index=84&type=chunk)[85](index=85&type=chunk) - **Other Businesses (Trading)**: Revenue decreased by **32.3%** to **3.12 billion HKD** and recorded a gross loss of **211 million HKD**, primarily due to a decrease in manganese ore selling prices[86](index=86&type=chunk)[87](index=87&type=chunk) [Liquidity and Financial Resources](index=42&type=section&id=流動資金與財務資源) As of June 30, 2024, the Group's total borrowings slightly increased to **5.21 billion HKD**, with the net gearing ratio remaining stable at **121.2%**, and while facing liquidity pressure from **845 million HKD** in net current liabilities, management believes working capital is sufficient for the next 12 months due to successful renewal and new bank loans combined with operating cash flow, also disclosing significant credit risk with a specific customer Key Financial Ratios | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Current Ratio** | 0.88 | 0.88 | | **Quick Ratio** | 0.67 | 0.64 | | **Net Gearing Ratio** | 121.2% | 121.9% | - The Group had net current liabilities of **845 million HKD**, but the Board believes the Group can continue as a going concern, considering **221 million HKD** in new loans obtained after the period-end and internal funds[110](index=110&type=chunk) - The Group faces significant credit risk with a single customer A, with accounts receivable of **232 million HKD** fully overdue and a full bad debt provision made[111](index=111&type=chunk) [Future Development and Outlook](index=45&type=section&id=未來發展及展望) Looking ahead, the Group will cautiously implement investment plans due to economic recovery uncertainties, anticipating continued challenges in the traditional manganese product market, which the industry has addressed through production cuts and technological upgrades, while remaining optimistic about the battery materials production sector (e.g., electrolytic manganese dioxide, lithium manganese oxide), aiming to consolidate its market leadership and capitalize on opportunities from new energy vehicle development - The Group will invest cautiously, focusing on five major business segments: ore, traditional manganese products, new energy materials, alloy materials, supply chain logistics, and solid waste utilization, to enhance internal efficiency[116](index=116&type=chunk) - The outlook for the traditional electrolytic manganese metal market remains challenging, with industry participants advocating for production cuts, while the Group is optimistic about the battery materials production sector and will continue R&D to consolidate its leading position[116](index=116&type=chunk) [Other Disclosure Information](index=45&type=section&id=其他披露資訊) This section covers the company's ESG practices, updates on manganese ore resources and reserves, and corporate governance details [Environmental, Social and Governance (ESG) Report](index=45&type=section&id=環境、社會及管治報告) This report outlines the company's sustainability philosophy and practices, focusing on four key areas: production safety, energy conservation and environmental protection, employee development, and social welfare, with no fatal accidents or work-related injuries reported during the period, and detailed disclosures on key performance indicators such as electricity and water consumption, exhaust gas, and greenhouse gas emissions, emphasizing the integration of ESG management into daily operations and commitment to exceeding regulatory requirements for green and harmonious development - The company categorizes significant ESG management matters into four aspects: production safety and labor protection, energy conservation and environmental protection, establishing an excellent operating system (employee training and growth), and social welfare[118](index=118&type=chunk) Key ESG Performance for H1 2024 | Key Area | Key Performance Indicator | H1 2024 | | :--- | :--- | :--- | | **Production Safety** | Fatalities | 0 | | | Work-related Injuries | 0 | | **Energy Conservation & Environmental Protection** | Total Electricity Consumption (Thousand kWh) | 769,696 | | | Total Water Consumption (Tons) | 2,865,271 | | | Greenhouse Gas Emissions (Tons) | 19,619 | | **Social Welfare** | Donation Amount (HKD) | 348,000 | - The company continuously invests in production safety, strictly implementing the "Six Major Systems" construction in Chinese mining areas and maintaining Level 2 safety production standardization for multiple production units[123](index=123&type=chunk) [Manganese Ore Resources and Reserves Summary](index=59&type=section&id=我們的錳礦資源摘要及我們的錳礦石儲量摘要) The report updates the company's manganese ore resources and reserves data for each mining area as of June 30, 2024, with total mineral resources of approximately **103.08 million tons** and total ore reserves of approximately **79.20 million tons**, slightly decreased from the end of 2023 due to mining depletion, while exploration activities focused on the Bembélé manganese mine in Gabon, and domestic Chinese mines concentrated on capacity expansion and equipment upgrades Manganese Ore Resources and Reserves Summary (Million Tons) | Category | As of June 30, 2024 | As of December 31, 2023 | | :--- | :--- | :--- | | **Total Mineral Resources** | 103.08 | 105.72 | | **Total Ore Reserves** | 79.20 | 81.84 | - Exploration activities are primarily conducted at the Bembélé manganese mine in Gabon to study deep mineralization patterns and provide data for further detailed exploration[151](index=151&type=chunk)[156](index=156&type=chunk) - The Daxi manganese mine's **1 million tons/year** underground mining expansion project continues to advance, and the Bembélé manganese mine completed infrastructure projects like the high-level water tank for the beneficiation plant to reduce costs and enhance transportation capacity[156](index=156&type=chunk)[160](index=160&type=chunk) [Corporate Governance and Other Information](index=67&type=section&id=企業管治及其他信息) The company complied with most provisions of the Corporate Governance Code during the reporting period, with one deviation: the roles of Chairman and Chief Executive Officer are held by the same individual, Mr. Li Weijian, and the company has adopted securities dealing codes no less stringent than the standard code, with all directors confirming compliance, while the report also discloses major shareholder holdings, including Mr. Sun Mingwen and Guangxi Damang indirectly holding **29.00%** and **22.64%** of shares respectively, with no purchases, redemptions, or sales of listed securities during the period - The company deviated from Corporate Governance Code Provision C.2.1, where the roles of Chairman and Chief Executive Officer are combined and held by Mr. Li Weijian, an arrangement the Board considers optimal given the company's challenges[177](index=177&type=chunk)[178](index=178&type=chunk) - All directors confirmed compliance with the company's securities dealing code during the reporting period[179](index=179&type=chunk) Major Shareholder Holdings (as of June 30, 2024) | Shareholder Name | Number of Shares Held (Long Position) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | | Sun Mingwen (through Youfu Investment) | 994,260,000 | 29.00% | | Guangxi Damang (through Guinan Damang) | 776,250,000 | 22.64% | | Ma Xuedong (through Fengxiang Investment) | 184,740,000 | 5.39% |

[Financial Summary](index=1&type=section&id=Financial%20Summary) For the first half of 2024, the company's revenue decreased by 25.9% year-on-year to HKD 5.73 billion, with gross profit significantly declining by 56.9%, leading to a turnaround from profit to loss, recording an operating loss of HKD 10.4 million and a loss attributable to owners of the company of HKD 163 million, compared to a profit of HKD 135 million in the same period last year [Summary of Financial Performance](index=1&type=section&id=Summary%20of%20Financial%20Performance) In the first half of 2024, the company's revenue decreased by 25.9% to HKD 5.73 billion, and gross profit significantly declined by 56.9%, resulting in a turnaround from profit to loss, with an operating loss of HKD 10.4 million and a loss attributable to owners of the company of HKD 163 million, compared to a profit of HKD 135 million in the prior year period 2024 First Half Key Financial Indicators | Indicator | 2024 First Half | 2023 First Half | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 5.733 billion | HKD 7.733 billion | -25.9% | | Gross Profit | HKD 282 million | HKD 655 million | -56.9% | | Gross Margin | 4.9% | 8.5% | -3.6 percentage points | | Operating (Loss)/Profit | (HKD 10.4 million) | HKD 184 million | Turned from profit to loss | | (Loss)/Profit attributable to owners of the Company | (HKD 163 million) | HKD 135 million | Turned from profit to loss | - Net impairment loss on financial assets significantly increased from HKD 6.7 million in the prior year period to **HKD 101 million**, contributing significantly to the loss[1](index=1&type=chunk) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's interim condensed consolidated financial statements, including the statement of profit or loss, statement of financial position, and notes to the financial statements [Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) In the first half of 2024, the company turned from profit to loss, recording a loss for the period of HKD 178 million, compared to a profit of HKD 134 million in the prior year period, primarily due to a 25.9% decrease in revenue and a significant 56.9% reduction in gross profit, further exacerbated by a notable increase in impairment losses on financial assets to HKD 101 million, resulting in a basic loss per share of HKD 0.0475 Summary of Profit or Loss Statement (For the six months ended June 30) | Item (HKD Thousand) | 2024 (Unaudited) | 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 5,733,287 | 7,732,538 | | Gross Profit | 282,068 | 654,960 | | Operating (Loss)/Profit | (10,360) | 184,142 | | (Loss)/Profit before tax | (135,675) | 177,373 | | (Loss)/Profit for the period | (177,534) | 133,552 | | (Loss)/Profit attributable to owners of the Company | (162,783) | 134,903 | - Basic and diluted loss per share was **HKD 0.0475**, while earnings per share were HKD 0.0393 in the prior year period[4](index=4&type=chunk) [Interim Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, the company's total assets were HKD 11.326 billion, total liabilities were HKD 8.693 billion, and net assets were HKD 2.632 billion, a decrease from the end of 2023, notably with net current liabilities of HKD 845 million indicating short-term repayment pressure Summary of Financial Position Statement (HKD Thousand) | Item | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total non-current assets | 5,006,501 | 5,025,589 | | Total current assets | 6,319,002 | 6,340,431 | | Total current liabilities | 7,164,223 | 7,231,694 | | Net current liabilities | (845,221) | (891,263) | | Total non-current liabilities | 1,529,064 | 1,305,964 | | Net assets | 2,632,216 | 2,828,362 | [Notes to the Financial Statements](index=6&type=section&id=Notes%20to%20the%20Financial%20Statements) The financial statements are prepared on a going concern basis, as the directors believe the Group has sufficient working capital for the next twelve months despite net current liabilities of HKD 845 million, having successfully renewed or obtained new bank loans after the reporting period, with business operations segmented into manganese ore mining, electrolytic manganese metal and alloy materials production, battery materials production, and other businesses, and no interim dividend is recommended - Going Concern: Despite net current liabilities of **HKD 845 million** as of June 30, 2024, the directors believe the Group has sufficient working capital to meet its needs for the next twelve months, thus the financial statements are prepared on a going concern basis[7](index=7&type=chunk) - The Group's business is segmented into four reportable operating segments: **Manganese Ore Mining** (China and Gabon), **Electrolytic Manganese Metal and Alloy Materials Production** (China), **Battery Materials Production** (China), and **Other Businesses** (China and Hong Kong)[9](index=9&type=chunk) - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2024[26](index=26&type=chunk) [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth review of the company's financial performance, business segment results, liquidity, financial resources, risk management, and future outlook [Financial Review](index=17&type=section&id=Financial%20Review) In the first half of 2024, the average selling price of electrolytic manganese metal products fell by 15.8% due to weak demand from the downstream steel industry, leading to a 40.5% reduction in gross profit contribution, while the trading business incurred a gross loss, and an impairment loss of HKD 109 million was recognized due to the guarantee liability for an associate company, Dushan Jinmeng, with these multiple factors collectively causing the company to turn from profit to loss, resulting in a loss attributable to owners of HKD 163 million - Due to slower economic growth in China caused by reduced real estate development investment, steel consumption stagnated, leading to weak demand for electrolytic manganese metal products and a **15.8% decline in average selling price**[31](index=31&type=chunk) - Despite the impact of electric vehicle tariffs, the **Battery Materials Production segment** achieved encouraging results due to its well-established supply chain and cost advantages[31](index=31&type=chunk) - The Group recognized an impairment loss of **HKD 109 million** on receivables from associate company Dushan Jinmeng, as the Group fulfilled its bank financing guarantee for the company[32](index=32&type=chunk) - Total revenue decreased by **25.9% to HKD 5.733 billion**, primarily due to lower average selling prices of electrolytic manganese metal and alloy products, reduced sales volume of alloy products, and decreased sales revenue from the trading business[34](index=34&type=chunk) [Business Segment Performance](index=20&type=section&id=Business%20Segment%20Performance) Business segment performance varied, with manganese ore mining revenue increasing by 12.4% due to higher sales volume but gross profit declining, electrolytic manganese metal and alloy segment revenue significantly decreasing by 28.2% and recording a loss due to lower prices and sales volume, battery materials segment revenue decreasing by 13.9% but segment profit growing by 12.2% due to effective cost control, and other businesses (trading) revenue significantly decreasing by 32.3% and incurring a gross loss [Manganese Ore Mining Segment](index=20&type=section&id=Manganese%20Ore%20Mining%20Segment) Segment revenue increased by 12.4% year-on-year to HKD 654 million due to increased sales volume of Gabon ore amid short-term market supply tightness, however, gross profit decreased by 13.4% to HKD 111 million due to lower average selling prices, while segment profit increased by 7.0% to HKD 80.3 million Manganese Ore Mining Segment Performance (For the six months ended June 30) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Revenue (HKD Thousand) | 654,278 | 581,908 | | Gross Profit (HKD Thousand) | 111,062 | 128,311 | | Gross Margin (%) | 17.0% | 22.1% | - Segment profit recorded **HKD 80.3 million**, a year-on-year increase of **7.0%**[36](index=36&type=chunk) [Electrolytic Manganese Metal and Alloy Materials Production Segment](index=21&type=section&id=Electrolytic%20Manganese%20Metal%20and%20Alloy%20Materials%20Production%20Segment) Segment revenue significantly decreased by 28.2% year-on-year to HKD 1.161 billion, primarily due to a 15.8% decline in the average selling price of electrolytic manganese metal products and a sharp 75.0% reduction in alloy product sales volume due to production suspension, resulting in a loss of HKD 50.7 million for this segment after recognizing a HKD 109 million loss from fulfilling guarantee liabilities for an associate company Electrolytic Manganese Metal and Alloy Materials Segment Performance (For the six months ended June 30) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Revenue (HKD Thousand) | 1,160,859 | 1,615,881 | | Gross Profit (HKD Thousand) | 138,617 | 191,109 | | Segment (Loss)/Profit (HKD Thousand) | (50,664) | 83,950 | - Average selling price of electrolytic manganese metal products decreased by **15.8%**; alloy product sales volume decreased by **75.0%** due to production suspension[38](index=38&type=chunk) [Battery Materials Production Segment](index=22&type=section&id=Battery%20Materials%20Production%20Segment) Segment revenue decreased by 13.9% year-on-year to HKD 798 million, mainly due to slight declines in both the selling price and sales volume of its main product, electrolytic manganese dioxide, however, despite the revenue decrease, segment profit increased by 12.2% year-on-year to HKD 194 million, benefiting from reduced administrative expenses Battery Materials Production Segment Performance (For the six months ended June 30) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Revenue (HKD Thousand) | 797,934 | 926,713 | | Gross Profit (HKD Thousand) | 243,476 | 255,903 | | Segment Profit (HKD Thousand) | 193,992 | 172,874 | - Average selling price of the main product, electrolytic manganese dioxide, decreased by **4.2%**, and sales volume decreased by **5.3%**[39](index=39&type=chunk) [Other Businesses Segment](index=23&type=section&id=Other%20Businesses%20Segment) Other businesses, primarily trading, saw revenue significantly decrease by 32.3% year-on-year to HKD 3.12 billion and recorded a gross loss of HKD 211 million, mainly due to a decline in manganese ore selling prices Other Businesses Segment Performance (For the six months ended June 30) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Revenue (HKD Thousand) | 3,120,216 | 4,608,036 | | Gross (Loss)/Profit (HKD Thousand) | (211,087) | 79,637 | [Liquidity and Financial Resources](index=26&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2024, the Group held cash and bank balances of HKD 1.631 billion, total borrowings of HKD 5.205 billion, and a net gearing ratio of 121.2%, largely consistent with the beginning of the year, and despite net current liabilities of HKD 845 million, the directors believe measures such as bank loan renewals ensure sufficient working capital for the next 12 months, thus the financial statements are prepared on a going concern basis Key Financial Ratios | Ratio | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Current Ratio | 0.88 | 0.88 | | Quick Ratio | 0.67 | 0.64 | | Net Gearing Ratio | 121.2% | 121.9% | - As of June 30, 2024, the Group's cash and bank balances (including restricted and pledged deposits) amounted to **HKD 1.631 billion**, with total borrowings of **HKD 5.205 billion**[55](index=55&type=chunk) - The Group had net current liabilities of **HKD 845 million**, but the Board of Directors believes the Group has sufficient working capital to meet its needs for the next 12 months, thus the interim condensed consolidated financial statements have been prepared on a going concern basis[61](index=61&type=chunk) [Risk Management](index=29&type=section&id=Risk%20Management) The Group primarily faces credit risk, interest rate risk, and foreign exchange risk, with credit risk concentrated on a single customer A (HKD 232 million in trade receivables, fully provided for) and receivables from associate company Dushan Jinmeng (HKD 321 million, with HKD 108 million impairment recognized), interest rate risk stemming from floating-rate debt, and foreign exchange risk arising from operations across Hong Kong, mainland China, and Gabon, though the Group considers overall risk manageable - Credit Risk: Trade receivables from customer A of **HKD 232 million** are fully overdue and fully provided for, additionally, receivables from associate company Dushan Jinmeng amount to **HKD 321 million**, with an impairment loss of **HKD 108 million** recognized[63](index=63&type=chunk) - Interest Rate Risk: The Group faces the risk of interest rate fluctuations on floating-rate debt, and finance costs will increase if the China Loan Prime Rate rises[64](index=64&type=chunk) - Foreign Exchange Risk: The Group's operations involve HKD, RMB, USD, and CFA Franc, posing certain foreign exchange risks, especially for USD-denominated purchases and financing in its China operations[65](index=65&type=chunk)[66](index=66&type=chunk) [Business Model, Strategies and Outlook](index=31&type=section&id=Business%20Model%2C%20Strategies%20and%20Outlook) The Group is committed to becoming a globally leading integrated manganese industry chain producer, and while the electrolytic manganese metal market faces challenges due to the weak steel industry, the Group remains optimistic about the battery materials production sector, particularly new energy vehicle-related materials, and will continue to focus on cost reduction, efficiency improvement, technological research and development, and seizing green development opportunities - The Group's strategy is to become a globally leading one-stop integrated upstream and downstream manganese ore producer, aiming to achieve this through resource expansion, efficiency enhancement, and strengthening customer relationships[67](index=67&type=chunk) - Outlook: The outlook for the electrolytic manganese metal segment is challenging, with the industry advocating for production cuts and technological upgrades, while the battery materials production sector has an optimistic outlook, benefiting from the development of the new energy vehicle industry[69](index=69&type=chunk) [Other Disclosures](index=32&type=section&id=Other%20Disclosures) This section covers corporate governance, dividend policy, and securities transactions and buybacks [Corporate Governance](index=32&type=section&id=Corporate%20Governance) During the reporting period, the company complied with most provisions of the Corporate Governance Code, with one deviation: the roles of Chairman and Chief Executive Officer are held by the same individual, Mr. Li Weijian, which deviates from Code Provision C.2.1, however, the Board believes this arrangement is in the company's best interest during the current challenging period and will continue to review it - The company deviated from Code Provision C.2.1 of the Corporate Governance Code, where the roles of Chairman and Chief Executive Officer are held by the same person, Mr. Li Weijian[70](index=70&type=chunk)[71](index=71&type=chunk) - The Board believes that Mr. Li's simultaneous holding of both positions is the best choice for leading and overseeing the company during this challenging period[71](index=71&type=chunk) [Dividend Policy](index=15&type=section&id=Dividend%20Policy) The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2024, consistent with the policy for the same period last year - The Board of Directors does not recommend the payment of any interim dividend for the first half of 2024 (first half of 2023: nil)[26](index=26&type=chunk)[54](index=54&type=chunk) [Securities Transactions and Buybacks](index=33&type=section&id=Securities%20Transactions%20and%20Buybacks) The company has adopted a code for directors' securities transactions, and all directors have confirmed compliance, with no purchases, redemptions, or sales of the company's listed securities by the company or any of its subsidiaries during the reporting period - All directors have confirmed compliance with the required standards of the code for securities transactions throughout the reporting period[72](index=72&type=chunk) - During the six months ended June 30, 2024, neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities[73](index=73&type=chunk)

Financial Performance - The company's revenue for 2023 was HKD 17,134.0 million, an increase of 6.9% compared to HKD 16,031.9 million in 2022, primarily due to increased sales volume of Gabonese ore and higher trading business revenue[36]. - The manganese mining segment generated revenue of HKD 1,313.7 million, up 4.5% from HKD 1,257.2 million in 2022[35]. - The trading business reported revenue of HKD 11,348.0 million, a significant increase of 20.6% from HKD 9,411.0 million in the previous year[35]. - Revenue from the production of electrolytic manganese and alloy materials was HKD 2,754.0 million, reflecting an 18.4% decrease from HKD 3,377.0 million in 2022[35]. - The battery materials production segment generated revenue of HKD 1,718.2 million, down 13.5% from HKD 1,986.7 million in 2022[35]. - The overall gross profit decreased by 31.9% to HKD 934.1 million in 2023, down from HKD 1,372.3 million in 2022, with a gross margin of 5.5% compared to 8.6% in 2022[68]. - The profit attributable to the owners of the company was HKD 64.1 million in 2023, down from HKD 336.1 million in 2022[72]. - The earnings per share for the owners of the company were HKD 0.0187 in 2023, compared to HKD 0.0980 in 2022[73]. - The profit before tax for 2023 was HKD 109,930, a significant decrease of 72.1% from HKD 394,879 in the previous year[105]. - The net profit attributable to the owners of the company for 2023 was HKD 64,144, down 81.0% from HKD 336,091 in 2022[105]. Operational Highlights - The total mining production for 2023 reached 2,240 thousand tons, an increase from 2,186 thousand tons in 2022, representing a growth of approximately 2.5%[150]. - The total production of manganese concentrate at the Daxin Concentration Plant was 820 thousand tons in 2023, compared to 639 thousand tons in 2022, marking a significant increase of approximately 28.3%[160]. - The production of electrolytic manganese dioxide at the Daxin plant was 20.1 thousand tons in 2023, an increase from 18.2 thousand tons in 2022[163]. - The total production of sulfuric manganese reached 30.3 thousand tons in 2023, up from 17.6 thousand tons in 2022, indicating a growth of approximately 72.0%[156]. - The average manganese grade for open-pit mining in 2023 was 29.0%, up from 28.8% in 2022[150]. - The average grade of carbonated manganese ore at the Daxin mine was 12.5% in 2023, slightly down from 12.9% in 2022[160]. Strategic Initiatives - The company aims to enhance strategic control over manganese resources and reserves through exploration and acquisitions[100]. - The company plans to establish and strengthen strategic business relationships with selected key customers and industry-leading partners[87]. - The company aims to enhance operational efficiency and profitability while navigating challenges in the market due to inflation and economic uncertainties[109]. - The company plans to continue focusing on five major business segments to improve internal efficiency and management skills[109]. - The company is committed to monitoring financial instruments and cash flow forecasts to manage funding shortfall risks effectively[84]. - The company is advocating for production limits and technological upgrades to address challenges in the electrolytic manganese sector[111]. - The company is strengthening its strategic control over manganese resources by sourcing high-grade manganese ore from overseas suppliers[111]. Market Environment - The global economic environment in 2023 remained relatively stagnant, with increased borrowing costs and rising production costs impacting recovery[34]. - The ongoing geopolitical uncertainties, including the Israel-Hamas conflict, have added further complexity to the economic recovery path[34]. - The outlook for the electrolytic manganese segment in 2024 is expected to be challenging due to oversupply and rising production costs in the steel industry[111]. - The Chinese government has announced a "green stimulus plan" with a scale of approximately $195 billion, aimed at accelerating the development of new energy and electric vehicle industries, which presents significant market opportunities for the company's cathode battery materials[112]. Governance and Management - The company emphasizes the importance of maintaining a good corporate governance structure to protect shareholder interests[187]. - The board consists of nine members, including four executive directors, two non-executive directors, and three independent non-executive directors[197]. - The company has a balanced board composition to ensure effective independent judgment[189]. - The chairman and CEO positions have been combined since December 22, 2020, which the board believes enhances operational efficiency[196]. - The board will review the separation of the chairman and CEO roles to align with the best interests of the company[196]. Environmental and Safety Compliance - The company aims to enhance environmental indicators while considering practical possibilities and socio-economic factors[2]. - The company is committed to complying with health, safety, and environmental regulations applicable in China and Gabon[2]. - The company regularly reviews and updates its health, safety, and environmental management practices to align with international standards[2]. - The company is dedicated to ensuring a safe working environment for its employees[187].

Financial Performance - In 2023, the company's revenue was HKD 17,134.0 million, an increase from HKD 16,031.9 million in 2022[2] - The gross profit for 2023 was HKD 934.1 million, down from HKD 1,372.3 million in 2022, resulting in a gross margin of 5.5%, a decrease of 3.1 percentage points from 8.6% in 2022[2] - The profit attributable to the company's owners was HKD 64.1 million in 2023, compared to HKD 336.1 million in 2022[2] - The basic earnings per share for 2023 was HKD 0.0187, down from HKD 0.0980 in 2022[6] - The operating profit for the year was HKD 17,342,928, with a pre-tax profit of HKD 109,930 after accounting for financial expenses of HKD 224,719[42] - The group reported a net profit of HKD 72,386 for the year, after tax expenses of HKD 37,544[42] - The operating profit decreased by 75.9% to HKD 123.7 million in 2023, down from HKD 514.2 million in 2022, primarily due to reduced gross profit contributions from electrolytic manganese products[115] - The EBITDA for 2023 was HKD 780.2 million, a decrease of 41.0% from HKD 1,323.0 million in 2022[115] - The group’s profit attributable to owners was HKD 64.1 million in 2023, down from HKD 336.1 million in 2022, with earnings per share decreasing to HKD 0.0187 from HKD 0.0980[161][162] Revenue Breakdown - The total revenue for the year ending December 31, 2023, reached HKD 17,133,960, with external sales from the manganese mining segment in China amounting to HKD 131,203 and from Gabon at HKD 1,182,462[42] - Total external customer sales reached HKD 16,031,885,000, with significant contributions from electrolytic manganese and alloy materials production at HKD 3,377,047,000 and battery materials production at HKD 1,986,662,000[43] - Revenue from mainland China reached HKD 16,581,604, an increase of 10.6% from HKD 14,989,718 in the previous year[69] - Total customer contract revenue for the year ended December 31, 2023, was HKD 17,133,960, up from HKD 16,031,885 in 2022, representing a growth of 6.9%[96] - Sales of manganese mining products amounted to HKD 1,313,665, while battery materials production generated HKD 2,754,029 in revenue[96] - The total revenue from manganese ore mining increased by 4.5% to HKD 1,313.7 million in 2023, up from HKD 1,257.2 million in 2022[145] - The total revenue from trading business rose by 20.6% to HKD 11,348.0 million in 2023, compared to HKD 9,411.0 million in 2022[145] - The revenue from electrolytic manganese and alloy materials production was HKD 2,754.0 million in 2023, representing an 18.4% increase[145] Expenses and Liabilities - The total current liabilities amounted to HKD 7,231.7 million, compared to HKD 7,073.7 million in 2022[8] - The total non-current liabilities decreased to HKD 1,305.9 million in 2023 from HKD 1,544.6 million in 2022[25] - The total financial expenses for 2023 were HKD 243.2 million, slightly up from HKD 221.3 million in 2022[100] - Administrative expenses increased by 3.3% to HKD 644.8 million in 2023, up from HKD 623.9 million in 2022, mainly due to increased R&D spending on battery materials and alloys[156] - The group’s net current liabilities increased to 891.3 million HKD, up from 746.3 million HKD in 2022, due to more long-term loans maturing within one year[197] Asset Management - As of December 31, 2023, the net debt ratio increased to 121.9%, up from the previous year's figure[2] - The total assets less current liabilities were HKD 4,134.3 million, a decrease from HKD 4,376.9 million in 2022[24] - The total assets of the group amounted to HKD 11,366,020, while total liabilities were HKD 8,537,658, resulting in a net asset position[42] - The total assets amounted to HKD 11,450,624,000, while total liabilities were HKD 8,618,338,000, resulting in a net asset position[43] - Cash and bank balances as of December 31, 2023, were HKD 1,291.2 million, down from HKD 1,606.3 million in 2022[166] Market and Operational Insights - The company continues to expand its operations in the manganese mining and battery materials production sectors, focusing on enhancing production capabilities and market reach[38] - The group is exploring new strategies for market expansion and product development, particularly in battery materials and manganese production[88] - The company plans to continue expanding its market presence and investing in new technologies to enhance production capabilities[43] - The group’s largest customer accounted for less than 10% of total revenue, indicating a diversified customer base[71] Impairments and Losses - The company recognized impairment losses totaling HKD 132,632,000 during the year, impacting overall profitability[43] - The company experienced a net loss from financial assets of HKD 8.9 million in 2023, compared to a minor loss of HKD 164, indicating a substantial increase in financial asset impairments[112] - Financial asset impairment losses in 2023 were HKD 8.9 million, compared to HKD 0.2 million in 2022, primarily from long-aged customers in the battery materials segment[158] Dividends and Shareholder Returns - The company did not recommend any dividend payment for the year ended December 31, 2023[6] - The board did not recommend any dividend payment for the year ending December 31, 2023, consistent with the previous year[189]

Financial Performance - For the six months ended June 30, 2023, total revenue was HKD 7,732,538, a decrease of 14.2% compared to HKD 9,008,594 for the same period in 2022[19] - The operating profit for the period was HKD 724,208, with a notable increase from the previous year's HKD 600,000, reflecting a growth of around 20.7%[44] - The net profit for the period was HKD 397,656, compared to HKD 383,199 in the same period last year, indicating a year-on-year increase of approximately 3.8%[52] - The gross profit was HKD 655.0 million, a decrease of 42.3% compared to HKD 1,134.5 million in the first half of 2022, with a gross margin of 8.5%, down 4.1 percentage points from 12.6% in the previous year[125] - The profit attributable to the owners of the company was HKD 134.9 million, a decrease of 64.8% from HKD 383.2 million in the first half of 2022[157] Cash Flow and Liquidity - The net cash flow from operating activities for the six months ended June 30, 2023, was HKD 517,739, compared to HKD 389,866 for the same period in 2022, representing a 32.8% increase[11] - The company’s cash and cash equivalents decreased by HKD 168,283, resulting in a closing balance of HKD 950,014 as of June 30, 2023, down from HKD 1,324,256 at the end of 2022[11] - The cash flow from financing activities showed a net outflow of HKD 414,574 for the six months ended June 30, 2023, compared to a net inflow of HKD 377,606 in the same period of 2022[11] - As of June 30, 2023, the group's cash and bank balances (including pledged deposits) amounted to HKD 1,705.8 million, an increase from HKD 1,606.3 million as of December 31, 2022[199] - The group's net borrowings, after deducting cash and bank balances, were HKD 2,610.8 million, down from HKD 2,854.1 million as of December 31, 2022[199] Taxation - The company reported a total tax expense of HKD 43,821 for the six months ended June 30, 2023, down from HKD 109,507 for the same period in 2022, indicating a significant reduction of 60%[25] - The actual tax rate for the first half of 2023 was 24.7%, up from 21.6% in the first half of 2022[174] - The company is benefiting from a preferential corporate income tax rate of 15% due to its operations in Guangxi, which will expire in 2030[26] Revenue Breakdown - The production segment for electrolytic manganese and alloy materials generated revenue of HKD 1,615,881, a decrease of 28.5% from HKD 2,263,223 in the previous year[19] - The total revenue from manganese ore mining in the first half of 2023 was HKD 581.9 million, a decrease of 9.0% compared to HKD 639.6 million in the first half of 2022[129] - The total revenue from battery materials production was HKD 926.7 million in the first half of 2023, a decrease of 12.2% compared to HKD 1,054.9 million in the first half of 2022[129] - The total revenue from trading business was HKD 4,608.0 million in the first half of 2023, an 8.8% decrease from HKD 5,050.9 million in the first half of 2022[129] Environmental Impact - The company has maintained a commitment to environmental protection, with no significant penalties or prosecutions for violations of environmental regulations during the reporting period[57] - The company achieved a reduction in nitrogen oxides (NOx) emissions to 17 tons in the first half of 2023, down from 21 tons in 2021[79] - The total greenhouse gas emissions for the first half of 2023 amounted to 78,478 tons, with scope 1 emissions at 72,681 tons and scope 2 emissions at 5,797 tons[79] - The company reported a significant increase in slag emissions to 1,191,361 tons in the first half of 2023, compared to 819,144 tons in the same period of 2022[81] - Tailings emissions for the first half of 2023 were recorded at 460,065 tons, a decrease from 532,036 tons in the same period of 2022[82] Operational Efficiency - The company has implemented measures to optimize production layout and improve mining methods, which are expected to reduce operational costs significantly[58] - The company is focusing on enhancing safety measures and environmental risk management in its operations, particularly in the electrolytic manganese production process[97] - The company aims to improve the recovery rate of washing water in the electrolytic manganese production process to reduce energy consumption[98] Management and Governance - The total remuneration paid to key management personnel for the first half of 2023 was HKD 22,000, significantly higher than HKD 4,683 in the same period of 2022[117] - The board does not recommend the payment of any interim dividend for the six months ended June 30, 2023[198] Safety and Compliance - The company reported zero fatal accidents and zero work-related injury days lost across all regions for the first half of 2023, maintaining a strong safety record[102] - The company is committed to complying with all safety and labor standards in Hong Kong, mainland China, and Gabon, with no significant violations reported for the first half of 2023[104]

Manganese Ore Mining Segment Performance - Manganese ore mining segment turned a profit of HKD 73.4 million in 2022, compared to a loss of HKD 180.6 million in 2021, primarily due to the early termination of subcontracting services at the Bembélé manganese mine in Gabon, which incurred settlement expenses of HKD 166.0 million in 2021[31] - Manganese ore mining revenue increased to HKD 1,257.2 million in 2022, accounting for 74.2% of total revenue, up from HKD 721.7 million in 2021[29] - Manganese mining segment revenue increased by 74.2% to 1,257.2 million HKD in 2022 from 721.7 million HKD in 2021 due to expanded mining operations at the Bembélé manganese mine[176] Electrolytic Manganese Metal Products Performance - The company's electrolytic manganese metal products saw an 8.1% decrease in average selling price to HKD 20,322 per ton in 2022, down from HKD 22,121 per ton in 2021[26] - Gross profit margin for electrolytic manganese metal products dropped by 28.2 percentage points to 16.0% in 2022, compared to 44.2% in 2021[26] - Gross profit contribution from electrolytic manganese metal products decreased by 71.5% to HKD 385.8 million in 2022, down from HKD 1,355.7 million in 2021[26] - Electrolytic manganese product sales volume decreased by 14.6% to 118,500 tons in 2022 (2021: 138,682 tons), with an average selling price decrease of 8.1% to HKD 20,322 per ton (2021: HKD 22,121 per ton)[52] Trade Business Performance - Trade business revenue grew to HKD 9,411.0 million in 2022, representing 58.8% of total revenue, up from HKD 5,924.6 million in 2021[29] - The total sales cost increased by 39.7% to HKD 14,659.6 million in 2022 (2021: HKD 10,491.8 million), in line with the increase in trade business revenue and sales costs[36] Battery Materials Production Performance - Battery materials production revenue increased to HKD 1,986.7 million in 2022, representing 18.7% of total revenue, up from HKD 1,673.9 million in 2021[29] - The battery materials production division's revenue increased by 18.7% to HKD 1,986.7 million in 2022 (2021: HKD 1,673.9 million), and gross profit increased by 55.7% to HKD 692.5 million (2021: HKD 444.7 million)[53] - The average selling price of lithium manganate increased by 130.3% to HKD 99,597 per ton in 2022 (2021: HKD 43,236 per ton), in line with the surge in lithium carbonate prices[35] Financial Performance Overview - Total revenue increased by 24.9% to HKD 16,031.9 million in 2022 (2021: HKD 12,830.8 million), while gross profit decreased by 41.3% to HKD 1,372.3 million (2021: HKD 2,338.9 million), with a gross margin of 8.6% (2021: 18.2%)[46] - The company's operating profit decreased by 59.0% to HKD 514.2 million in 2022, compared to HKD 1,254.1 million in 2021, mainly due to reduced gross profit contribution from electrolytic manganese metal products[28] - The company's attributable profit to owners was HKD 336.1 million in 2022 (2021: HKD 454.6 million)[46] - The company's profit attributable to owners for 2022 was HK$336.1 million, a decrease from HK$454.6 million in 2021[60] - Revenue increased by 24.9% to 16,031,885 thousand HKD in 2022 compared to 12,830,762 thousand HKD in 2021[175] - Gross profit decreased by 41.3% to 1,372,332 thousand HKD in 2022 from 2,338,939 thousand HKD in 2021, with gross margin dropping to 8.6% from 18.2%[175] - Operating profit fell by 59.0% to 514,169 thousand HKD in 2022 from 1,254,104 thousand HKD in 2021[175] - Profit before tax decreased by 27.7% to 394,879 thousand HKD in 2022 from 546,344 thousand HKD in 2021[175] - Net profit attributable to the company's owners dropped by 26.1% to 336,091 thousand HKD in 2022 from 454,583 thousand HKD in 2021[175] Impairment Losses and Adjustments - The company recognized non-cash impairment losses of HKD 119.7 million for property, plant, and equipment, and mining rights in 2022 (2021: HKD 236.4 million)[46] - The company adjusted its investment and expansion plans for the Changgou and Waifu manganese mines, resulting in impairment losses of HKD 70.9 million and HKD 48.8 million, respectively[40][43] - The company recognized a non-cash impairment loss of 119.7 million HKD related to mining rights in 2022[164] Financial Position and Liquidity - Cash and bank balances (including pledged deposits) increased to HK$1,606.3 million in 2022 from HK$1,245.9 million in 2021, while borrowings increased to HK$4,460.4 million from HK$4,113.9 million[64] - Net current liabilities decreased to HK$746.3 million in 2022 from HK$1,584.9 million in 2021, primarily due to obtaining more long-term loans[67] - Fixed-rate and floating-rate borrowings were HK$3,534.7 million and HK$925.7 million respectively in 2022, with fixed-rate loans carrying interest rates between 1.40% and 9.3%[69] - The company's financial expenses remained stable at HK$221.3 million in 2022, compared to HK$236.0 million in 2021[83] - The net debt ratio decreased to 90.1% as of December 31, 2022 (2021: 92.3%)[46] - The group's quick ratio improved to 0.63 in 2022 from 0.60 in 2021, while the net debt ratio decreased to 90.1% from 92.3%[126] - The company's current liabilities exceeded its current assets by HKD 746.3 million as of December 31, 2022, raising liquidity risk concerns[128] - The company successfully renewed or obtained new bank loans amounting to HKD 3,145.5 million from January 1, 2023, to September 30, 2023, addressing liquidity concerns[128] Tax and Dividend Information - The effective tax rate for 2022 was 13.3%, lower than the statutory corporate income tax rate due to the utilization of unrecognized tax loss balances by certain profitable subsidiaries[84] - The company did not recommend any dividend for the year ended December 31, 2022, consistent with 2021[85] - The company did not recommend the payment of any dividends for the year[170] Operational and Strategic Developments - The company is exploring ways to improve its borrowing structure, including short-term and medium-term notes, to optimize interest rates and repayment terms[93] - The group is negotiating a repayment schedule with Customer A and preparing for legal action to expedite the recovery of overdue amounts[108] - The group faces interest rate risk due to fluctuations in the China Loan Prime Rate and LIBOR, which could increase financial expenses if rates rise[108] - The group uses interest rate swap contracts to manage interest rate risk by converting some floating-rate USD borrowings to fixed rates[108] - The group's operations in China and Gabon face foreign exchange risks, with revenues and expenses denominated in RMB, USD, and Central African CFA francs[111] - The group aims to become a leading global manganese producer with a focus on improving operational efficiency and profitability[112] - The electrolytic manganese division faces challenges due to oversupply and rising production costs in the steel industry, leading to reduced demand[114] - The company is optimistic about China's economic recovery following the relaxation of COVID-19 quarantine measures and lockdown policies at the end of 2022[133] - The company focuses on five business segments: ore and traditional manganese-related products, new energy materials, alloy materials, supply chain logistics, and solid waste resource utilization[134] - The company is actively developing new energy battery materials, including electrolytic manganese dioxide and lithium manganate, to expand applications in electric vehicles and other tools[144] - The company established an independent investigation committee on March 31, 2023, to address audit concerns[149] - The company's two subsidiaries were recognized as Guangxi Digital Workshops and Guangxi Green Manufacturing Enterprises[157] - The company was selected as one of the first batch of manufacturing single champion demonstration enterprises in Guangxi in 2022[189] - The company's high-performance lithium-ion battery cathode material key technology and industrialization project won the second prize of the Guangxi Autonomous Region Science and Technology Progress Award in 2022[189] Asset and Liability Changes - Prepayments, other receivables, and other assets classified as current assets decreased by 21.7% to HK$1,380.9 million in 2022[65] - Other payables and accrued expenses decreased by 30.7% to HK$1,521.4 million in 2022, mainly due to reduced advances from trade business customers and decreased VAT payable in China[66] - Inventory increased by 32.2% to HKD 1,849.1 million in 2022, driven by higher inventory and production materials at the Bembélé manganese mine in Gabon[89] - Trade payables and notes increased by 65.3% to HKD 2,148.9 million in 2022, mainly due to increased production and trade-related payables[90] - Total borrowings increased to HKD 4,460.4 million in 2022, with HKD 3,266.9 million due within one year[93] - Total assets increased to 11,450,624 thousand HKD in 2022 from 10,984,343 thousand HKD in 2021[185] - Total liabilities increased to 8,618,338 thousand HKD in 2022 from 8,248,510 thousand HKD in 2021[185] Corporate Governance and Auditing - The company appointed PricewaterhouseCoopers as its new auditor effective October 19, 2022, following the resignation of Ernst & Young[135] - The company is addressing internal control deficiencies identified in an independent review to meet the Hong Kong Stock Exchange's resumption guidance[139] - The group's financial statements for 2021 were restated due to underreporting of reserves and overreporting of non-controlling interests[118][119] - The group may incur additional income tax expenses and related late payment fees due to past tax planning arrangements for certain subsidiaries[121] Other Financial Metrics - EBITDA for 2022 decreased by 20.8% to 1,048.0 million HKD from 1,323.0 million HKD in 2021[164] - Other income and gains increased by 15.7% to 183.2 million HKD in 2022, primarily due to foreign exchange gains[166] - The company holds 33% equity in an associate company, with outstanding bank loans secured by the associate's land, property, plant, and equipment[95] - The company used HK$7.2 million in 2022 to pay the Chinese government for the extension of mining rights for the Changgou Manganese Mine, with annual payments of approximately RMB 6.2 million required from 2023 to 2032[63] - Total funds raised from the IPO amounted to HKD 1,983 million, with HKD 1,894 million (95.5%) utilized as of December 31, 2022[86] - The company's registered office is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda[155] - The company's headquarters in Hong Kong is located at Room A02, 35/F, United Centre, 95 Queensway, Admiralty, Hong Kong[155]

Financial Performance - For the six months ended June 30, 2023, the gross profit was HKD 654,960,000, compared to HKD 1,134,497,000 for the same period in 2022, representing a decrease of approximately 42.2%[2] - The total revenue for the six months was HKD 7,732,538,000, down from HKD 9,008,594,000 in the previous year, indicating a decline of about 14.2%[32] - The profit attributable to the owners of the parent company for the period was HKD 134,903,000, a significant decrease from HKD 383,199,000 in the prior year, reflecting a drop of approximately 64.8%[24] - The company reported a net profit of HKD 133,552, a decline of 66.4% compared to HKD 397,656 in the same period last year[45] - For the first half of 2023, the company's EBITDA decreased by 39.0% to HKD 515.8 million, compared to HKD 844.9 million in the same period of 2022[187] Revenue and Sales - Revenue for the first half of 2023 was HKD 7,732,538, a decrease of 14.2% compared to HKD 9,008,594 in the same period of 2022[45] - The revenue from the electrolytic manganese and alloy materials production segment decreased by 28.6% to HKD 1,615.9 million in the first half of 2023, down from HKD 2,263.2 million in the same period of 2022[64] - The lithium battery materials production segment recorded a revenue of HKD 926.7 million in the first half of 2023, a decrease of 12.2% from HKD 1,054.9 million in the same period of 2022[58] - Revenue from the battery materials production segment decreased by 12.2% to HKD 926.7 million for the first half of 2023, compared to HKD 1,054.9 million in the same period of 2022, with a profit drop of 51.8% to HKD 172.9 million[86] Cost and Expenses - The total sales cost decreased by 10.1% to HKD 7,077.6 million in the first half of 2023, compared to HKD 7,874.1 million in the same period of 2022[69] - Sales and distribution expenses increased by 14.7% to HKD 84.5 million in the first half of 2023, primarily due to rising transportation costs[90] - Financial expenses rose by 11.9% to HKD 119.6 million in the first half of 2023, attributed to increased interest on discounted bills and overall borrowing[92] Market Conditions and Challenges - The company anticipates ongoing challenges in the global economy, including high borrowing costs and rising production expenses, which may impact future performance[46] - The company is facing challenges in the electrolytic manganese segment due to oversupply and rising production costs, which may weaken demand for its products[113] Assets and Liabilities - As of June 30, 2023, the group's net current liabilities decreased to HKD 648.1 million from HKD 746.3 million as of December 31, 2022, due to a slight reduction in bank and other borrowings[81] - The company's current liabilities totaled HKD 7,036.5 million as of June 30, 2023, compared to HKD 7,073.7 million at the end of 2022[196] - The total liabilities for loans repayable within five years amounted to HKD 97,272,000, compared to HKD 93,019,000 in the previous year, showing a slight increase of 2.4%[20] Strategic Initiatives - The company plans to continue expanding its market presence and investing in new product development to drive future growth[7] - The company aims to enhance operational efficiency and profitability as part of its long-term growth strategy[111] - The company is exploring various methods to improve its borrowing structure, including short-term or medium-term notes and more long-term bank loans[126] Governance and Compliance - The company has appointed a new auditor, PwC, following the resignation of Ernst & Young, effective October 19, 2022, to maintain good corporate governance standards[142] - An independent investigation committee has been established to address audit concerns raised by the previous auditor regarding the company's manganese ore trading business in Ghana[162] - The company is actively taking steps to rectify issues that led to the suspension of trading and is committed to full compliance with listing rules[147] Research and Development - Research and development costs increased to HKD 48,310, up from HKD 35,108 in the previous year[45] - As the largest manufacturer of electrolytic manganese dioxide in China, the company is optimistic about the battery materials production sector and continues to invest in R&D to improve product quality and expand applications in electric vehicles and other electric tools[141]

Financial Performance - In 2022, the company's revenue was HKD 16,031.9 million, an increase of 24.9% compared to HKD 12,830.8 million in 2021 [77]. - The gross profit for 2022 was HKD 1,372.3 million, with a gross profit margin of 8.6%, down from 18.2% in 2021, representing a decline of 9.6 percentage points [77]. - The profit attributable to the company's owners for 2022 was HKD 336.1 million, down from HKD 454.6 million in 2021 [83]. - The company reported a total comprehensive income of HKD 65,915 for the year, down from HKD 470,752 in 2021, a decline of 86% [100]. - The net profit for the year was HKD 342,314, compared to HKD 356,295 in the previous year, reflecting a decrease of 3.9% [99]. - The group reported a total capital expenditure of HKD 820,077,000 for the year, which includes investments in property, plant, and equipment [122]. - The group’s operating profit before tax was HKD 546,344,000, after accounting for interest income and other expenses [122]. - The group’s operating profit decreased by 59.0% to HKD 514.2 million in 2022, down from HKD 1,254.1 million in 2021 [170]. Impairment and Liabilities - In 2022, the company recognized impairment losses of HKD 70.9 million and HKD 48.8 million for the Changgou Manganese Mine and the Waif Manganese Mine, respectively, due to a significant decline in manganese ore demand [4]. - The company reported a non-cash impairment loss of HKD 119.7 million for property, plant, and equipment, and mining rights in 2022 [77]. - The total current liabilities amounted to HKD 7,073.7 million, a slight decrease from HKD 7,450.9 million in the previous year [86]. - Non-current liabilities increased to HKD 1,544.6 million from HKD 797.6 million in the previous year [86]. - The company must comply with all resumption guidance and rectify issues causing the suspension by September 29, 2024, or risk delisting [40]. Debt and Financing - As of December 31, 2022, the company's net current liabilities decreased to HKD 746.3 million from HKD 1,584.9 million in 2021, attributed to obtaining more long-term loans during the year [16]. - As of December 31, 2022, the company had secured new bank loans amounting to HKD 3,145.5 million, ensuring sufficient operating funds for the next twelve months [22]. - The company’s fixed and floating rate borrowings amounted to HKD 3,534.7 million and HKD 925.7 million, respectively, as of December 31, 2022 [18]. - The financial expenses for 2022 were HKD 221,307, a decrease from HKD 236,012 in 2021, showing a reduction of 6.2% [99]. Corporate Governance and Compliance - The independent investigation report was completed on September 15, 2023, and the board accepted the findings, considering them reasonable and acceptable [30]. - The company is taking appropriate steps to rectify issues that led to the suspension of trading and will comply with listing rules to the satisfaction of the Stock Exchange [31]. - The audit committee has reviewed the accounting policies and discussed matters related to audit, risk management, internal controls, and financial reporting for the year ended December 31, 2022 [44]. - The company is committed to maintaining a good corporate governance structure and adhering to applicable statutory and regulatory requirements [46]. Market and Strategic Initiatives - The company plans to enhance manganese resource control through exploration and acquisitions, focusing on five major business segments for future growth [27]. - The company aims to become a leading one-stop manganese producer globally, focusing on flexible business models and prudent risk management to maintain long-term profitability and asset growth [35]. - The Chinese government's "Green Stimulus Plan" is approximately $195 billion, focusing on accelerating the development of new energy and electric vehicle industries, which presents growth opportunities for the company [37]. - The company plans to focus on market share acquisition, securing raw material supply, and enhancing product R&D [197]. - The company aims to expand production to other battery materials, including lithium manganese and high-purity manganese sulfate [197]. Revenue Segmentation - Revenue from manganese mining increased by 74.2% to HKD 1,257.2 million in 2022, up from HKD 721.7 million in 2021 [172]. - Revenue from trading business rose by 58.8% to HKD 9,411.0 million in 2022, compared to HKD 5,924.6 million in 2021 [172]. - Revenue from the production of electrolytic manganese and alloy materials decreased by 25.1% to HKD 3,377.0 million in 2022, down from HKD 4,510.5 million in 2021 [172]. - Revenue from battery materials production increased by 18.7% to HKD 1,986.7 million in 2022, compared to HKD 1,673.9 million in 2021 [172]. - The total revenue from external customers for the manganese mining segment in China was HKD 134,391,000, while the total revenue from the battery materials production segment was HKD 1,673,925,000 [122].

Financial Performance - In the first half of 2023, the company reported a loss of HKD 70,000 from its joint ventures, compared to a profit of HKD 346,000 in the same period of 2022[5]. - The group reported a profit attributable to owners of HKD 134.9 million for the first half of 2023, down from HKD 383.2 million in the same period of 2022[43]. - Revenue for the first half of 2023 was HKD 7,732.5 million, a decrease of 14.2% compared to HKD 9,008.6 million in the first half of 2022[67]. - Gross profit for the first half of 2023 was HKD 655.0 million, with a gross margin of 8.5%, down from 12.6% in the first half of 2022, representing a decline of 4.1 percentage points[67]. - Operating profit for the first half of 2023 was HKD 184.1 million, a decrease of 70.8% from HKD 630.5 million in the first half of 2022[67]. - The company reported a net profit of HKD 133.6 million for the first half of 2023, compared to HKD 397.7 million in the same period last year[68]. - The effective tax rate for the first half of 2023 was 24.7%, higher than the 21.6% in the same period of 2022[42]. - Other income and gains for the first half of 2023 were HKD 64.0 million, down from HKD 102.4 million in the first half of 2022[67]. - Financial expenses for the first half of 2023 were HKD 119.6 million, compared to HKD 106.9 million in the previous year[67]. - The total tax expense for the period was HKD 43,821, down from HKD 109,507 in the previous year, indicating a reduction of 60%[94]. Assets and Liabilities - As of June 30, 2023, the company's net current liabilities decreased to HKD 648.1 million from HKD 746.3 million as of December 31, 2022[9]. - The group's total borrowings decreased to HKD 4,316.6 million from HKD 4,460.4 million as of December 31, 2022[30]. - The group's trade receivables and notes decreased by HKD 321.2 million to HKD 1,162.8 million as of June 30, 2023, primarily due to an increase in discounted notes[26]. - The current ratio improved to 0.91 as of June 30, 2023, compared to 0.89 as of December 31, 2022[34]. - The net debt ratio decreased to 82.6% as of June 30, 2023, from 90.1% as of December 31, 2022[34]. - The group's total liabilities decreased to HKD 7,036,533 thousand from HKD 7,073,730 thousand, a reduction of approximately 0.53%[72]. - The company reported a slight increase in net assets to HKD 2,833,612 thousand from HKD 2,832,286 thousand, reflecting stable equity[72]. - The non-controlling interests decreased slightly to HKD 3,159,479 thousand from HKD 3,168,078 thousand, indicating minor changes in subsidiary performance[72]. Revenue Breakdown - Total revenue for the six months ended June 30, 2023, was HKD 7,732,538 thousand, with significant contributions from manganese mining and production[88]. - Revenue from mainland China accounted for HKD 7,402,396 thousand, representing a substantial portion of total sales[88]. - Manganese mining revenue was HKD 581,908, down from HKD 639,561, representing a decline of 9%[114]. - Electrolytic manganese and alloy materials production revenue was HKD 1,615,881, a decrease of 29% from HKD 2,263,223[114]. - Battery materials production revenue was HKD 926,713, down from HKD 1,054,924, reflecting a decline of 12%[114]. - Other businesses generated revenue of HKD 4,608,036, a decrease of 9% from HKD 5,050,886[114]. Operational Insights - The company is optimistic about the battery materials production sector and continues to enhance its leading position through ongoing R&D efforts[4]. - The company anticipates challenges in the second half of 2023 for its electrolytic manganese segment due to oversupply and rising production costs faced by steel manufacturers[3]. - The company plans to enhance manganese resource exploration and strategic control through acquisitions[22]. - The company aims to improve operational efficiency and profitability as part of its long-term growth strategy[22]. - The company is focused on expanding its market presence and enhancing operational efficiency through strategic investments in non-wholly owned subsidiaries[74]. - The company remains optimistic about the battery materials segment and plans to focus on market share expansion and product development[155]. Governance and Compliance - The company has appointed an independent internal control consultant to review its internal control procedures, which has identified several deficiencies that have since been rectified[180]. - The board of directors and audit committee have discussed the rotation of auditors, resulting in the resignation of Ernst & Young and the appointment of PwC as the new auditor effective October 19, 2022[190]. - The company is taking appropriate steps to rectify issues that led to the suspension of trading and is committed to complying with listing rules to regain trading approval[195]. - The company has adhered to the corporate governance code principles and applicable provisions, except for a deviation from code provision A.2.1[181]. - All directors have confirmed compliance with the securities trading code during the six months ended June 30, 2023[199].