Financial Performance - Total revenue for the year ended December 31, 2022, was RMB 11,055,439 thousand, a decrease of 13.1% compared to RMB 12,716,775 thousand in 2021[2] - Gross profit for the same period was RMB 2,713,844 thousand, down 16.1% from RMB 3,233,825 thousand in the previous year[2] - Net profit attributable to the owners of the company was RMB 448,690 thousand, reflecting a significant decline of 62.6% from RMB 1,200,590 thousand in 2021[2] - Basic earnings per share decreased to RMB 0.15, down 62.6% from RMB 0.41 in the prior year[2] - The profit before tax for the year was RMB 687,886,000, compared to RMB 1,453,103,000 in 2021, indicating a decrease of approximately 53%[14] - The total profit and comprehensive income for the year ended December 31, 2022, was RMB 448,690,000, a decrease from RMB 1,200,590,000 in 2021, representing a decline of approximately 62.7%[25] - The company's gross profit for 2022 was approximately RMB 2,713.8 million, a decrease of RMB 520.0 million or 16.1%, with the gross margin declining from about 25.4% in 2021 to approximately 24.5% in 2022[40] - The company's profit before tax was approximately RMB 687.9 million, a decrease of RMB 765.2 million or about 52.7% compared to the previous year[47] - The profit attributable to the company's owners for the year ended December 31, 2022, was approximately RMB 448.7 million, a decrease of RMB 751.9 million or about 62.6% compared to approximately RMB 1,200.6 million for the year ended December 31, 2021[49] Revenue Breakdown - Cement sales contributed RMB 8,552,711,000, down from RMB 11,405,703,000 in the previous year, reflecting a significant decline[12] - Revenue from cement sales was approximately RMB 8,552.7 million, down RMB 2,853.0 million or 25.0%, with cement sales volume decreasing from approximately 35.7 million tons in 2021 to about 27.7 million tons in 2022, a reduction of 22.3%[38] - Revenue from clinker sales increased by RMB 424.5 million or 99.8% to approximately RMB 849.8 million, driven by higher sales volume and prices[38] - Revenue from aggregate sales was approximately RMB 1,653.0 million, an increase of RMB 767.2 million or 86.6%, with sales volume rising from about 20.0 million tons in 2021 to approximately 41.9 million tons in 2022, an increase of 109.1%[38] Assets and Liabilities - Total assets as of December 31, 2022, were RMB 32,343,592 thousand, a slight decrease of 1.0% from RMB 32,658,235 thousand in 2021[2] - Total liabilities decreased by 5.0% to RMB 15,753,498 thousand from RMB 16,589,957 thousand in the previous year[2] - Total equity increased by 3.2% to RMB 16,590,094 thousand compared to RMB 16,068,278 thousand in 2021[2] - Current assets were RMB 16,874,102 thousand, showing a minor decrease of 0.3% from RMB 16,925,766 thousand in the prior year[2] - Trade receivables decreased to RMB 159,599,000 in 2022 from RMB 234,797,000 in 2021, reflecting a decline of approximately 32%[27] - The total amount of trade and other receivables was RMB 10,160,857,000 in 2022, compared to RMB 9,168,650,000 in 2021, showing an increase of approximately 10.8%[27] - Inventory rose from approximately RMB 850.7 million as of December 31, 2021, to approximately RMB 1,043.0 million as of December 31, 2022, mainly due to an increase in inventory quantity[52] - Cash and cash equivalents decreased by RMB 1,322.8 million or 57.2% to approximately RMB 987.8 million as of December 31, 2022, from approximately RMB 2,310.6 million as of December 31, 2021[53] - Total borrowings and bonds amounted to approximately RMB 9,622.7 million as of December 31, 2022, a decrease of approximately RMB 1,042.0 million or 9.8% from approximately RMB 10,664.7 million in 2021[54] - The debt-to-asset ratio was approximately 48.7% as of December 31, 2022, a decrease of 2.1 percentage points from approximately 50.8% as of December 31, 2021[56] Expenses and Costs - The financial expenses for the year ended December 31, 2022, totaled RMB 1,033,388 thousand, an increase of 3.2% from RMB 1,001,454 thousand in 2021[22] - The company reported a decrease in value-added tax refunds from RMB 269,384 thousand in 2021 to RMB 173,390 thousand in 2022, a decline of 35.6%[19] - The company's administrative expenses not allocated to segments amounted to RMB 164,663,000, compared to RMB 203,379,000 in the previous year, indicating a reduction in overhead costs[14] - Selling and distribution expenses decreased by RMB 175.7 million or 42.2% to approximately RMB 240.6 million, primarily due to reduced transportation and packaging costs from lower cement sales[42] - The company's finance costs increased by RMB 31.9 million or 3.2% to approximately RMB 1,033.4 million, mainly due to increased interest on other financial liabilities[45] - The total depreciation and amortization for the year was RMB 1,197,181,000, slightly up from RMB 1,188,599,000 in the previous year[25] - The group’s research and development costs recognized as expenses amounted to RMB 444,345,000 in 2022, down from RMB 462,611,000 in 2021[25] - The group’s capitalized employee benefits expenses decreased to RMB 376,418,000 in 2022 from RMB 363,497,000 in 2021, reflecting a slight increase of about 3.3%[25] Market and Industry Trends - The national cement production in 2022 was 2.13 billion tons, a decline of 10.5% year-on-year, marking the lowest production level since 2012[35] - The average market price of cement in 2022 was RMB 466 per ton, down 4.2% year-on-year, while the manufacturing costs increased significantly due to rising coal prices[36] - The cement industry is expected to see a profit of around RMB 68 billion in 2022, a decrease of over RMB 100 billion or approximately 60% compared to 2021[36] - The company anticipates that the overall cement industry will benefit from policies promoting "carbon neutrality" and environmental control, leading to an optimized supply-demand relationship[67] Strategic Initiatives - The company plans to focus on expanding its market presence and enhancing product offerings in the upcoming fiscal year[7] - The company is focused on expanding its industry chain into areas such as mining integration, new materials, and photovoltaic energy[67] - The company has integrated new technologies and smart manufacturing solutions, receiving awards such as the Outstanding Application Award for Smart Manufacturing Solutions in the process industry[68] - The company is actively developing photovoltaic power generation projects in response to national "carbon neutrality" and new energy policies[68] - The company has been recognized with 13 national or provincial-level green mines and 9 green factories, enhancing its commitment to ecological restoration and green production[68] Corporate Governance - The company has maintained a high level of corporate governance, adhering to the corporate governance code and ensuring accountability to shareholders[69] - The company did not propose a final dividend for the year ending December 31, 2022[74] - The company has not engaged in the purchase, sale, or redemption of its listed securities during the year ending December 31, 2022[73]

Financial Performance - For the first half of 2022, the company's revenue was RMB 5,321.0 million, a decrease of approximately RMB 411.8 million or 7.2% compared to the same period in 2021[11]. - Gross profit for the first half of 2022 was RMB 1,448.998 million, down 17.4% from RMB 1,753.881 million in the same period last year[9]. - Net profit attributable to the company's owners was RMB 456.536 million, a decline of approximately RMB 295.1 million or 39.3% year-on-year[9]. - The company sold approximately 13.4 million tons of cement, a decrease of about 4.1 million tons or 23.4% compared to approximately 17.5 million tons in the same period of 2021[11]. - The average selling price of cement increased to RMB 322.7 per ton, an increase of RMB 32.3 or 11.1% year-on-year[11]. - The company's revenue for the first half of 2022 was approximately RMB 4,340.8 million, a decrease of RMB 67.8 million or 1.5% compared to RMB 4,408.6 million in the same period last year[16]. - The company's gross profit for the first half of 2022 was approximately RMB 1,449.0 million, down RMB 304.9 million or 17.4% from RMB 1,753.9 million in the previous year[18]. - The gross margin decreased to 27.2% in the first half of 2022 from 30.6% in the same period last year, primarily due to rising unit costs of cement[18]. - The profit attributable to the owners of the company for the first half of 2022 was approximately RMB 456.5 million, a decrease of RMB 295.1 million or 39.3% compared to RMB 751.6 million in the same period of 2021, with a net profit margin of 8.6%, down 4.5 percentage points year-on-year[27]. - The company reported a profit attributable to owners of RMB 456,536,000, down from RMB 751,571,000 in the same period last year[91]. Assets and Liabilities - The company recorded a total asset value of RMB 33,003.220 million as of June 30, 2022, reflecting a 1.1% increase from RMB 32,658.235 million at the end of 2021[9]. - The company's total liabilities decreased by 0.9% to RMB 16,439.190 million from RMB 16,589.957 million at the end of 2021[9]. - Trade and other receivables decreased from RMB 8,351.3 million as of December 31, 2021, to RMB 8,106.8 million as of June 30, 2022, mainly due to the collection of cash from matured receivables[28]. - Inventory increased from RMB 850.7 million as of December 31, 2021, to RMB 1,283.9 million as of June 30, 2022, primarily due to an increase in both quantity and unit cost[29]. - As of June 30, 2022, the company's total borrowings and bonds amounted to approximately RMB 10,265.8 million, a decrease of about RMB 398.9 million from RMB 10,664.7 million as of December 31, 2021[34]. - The company's debt-to-asset ratio as of June 30, 2022, was 49.8%, down 1.0 percentage point from 50.8% as of December 31, 2021, due to an increase in equity[36]. - The net debt-to-equity ratio as of June 30, 2022, was 16.3%, a decrease of 8.5 percentage points from 24.8% as of December 31, 2021[37]. - The company had pledged assets with a book value of approximately RMB 5,441.9 million as of June 30, 2022, compared to RMB 4,259.1 million as of December 31, 2021[40]. Operational Highlights - The company has a clinker production capacity of 28.4 million tons and a cement production capacity of 56.4 million tons[11]. - The company sold approximately 1.4 million tons of clinker, an increase of 0.7 million tons compared to 0.7 million tons in the same period of 2021[11]. - In the first half of 2022, China's cement production reached 977 million tons, a year-on-year decrease of 15% compared to a 14.1% increase in the same period last year[14]. - The average national cement price in the first half of 2022 was RMB 499 per ton, down 10.6% from the end of last year, primarily due to weak macroeconomic conditions and reduced demand from the real estate sector[14]. Expenses and Income - Other income for the first half of 2022 was approximately RMB 391.4 million, an increase of RMB 56.0 million or 16.7% compared to RMB 335.4 million in the same period last year[19]. - The company's sales and distribution expenses were approximately RMB 158.1 million, a decrease of RMB 42.3 million or 21.1% from RMB 200.4 million in the previous year[20]. - Administrative expenses increased to approximately RMB 462.7 million, up RMB 37.5 million or 8.8% from RMB 425.2 million in the same period last year[21]. - The company recorded a foreign exchange loss of RMB 102 million in the reporting period, compared to a gain of RMB 21 million in the same period last year[24]. - For the first half of 2022, the company's profit before tax was approximately RMB 610.0 million, a decrease of about RMB 377.8 million or 38.2% compared to RMB 987.8 million in the same period of 2021[25]. - The income tax expense for the first half of 2022 was approximately RMB 114.3 million, down RMB 78.5 million or 40.7% from RMB 192.8 million in the same period of 2021, primarily due to the decrease in profit before tax[26]. Shareholder Information - As of June 30, 2022, the total shares held by Yu Kuo amounted to 2,044,484,822, representing 69.58% of the company's equity[54]. - China Tianrui Group Cement Co., Ltd. has a significant shareholder structure, with major shareholders controlling 69.58% of the shares[54]. - China Huarong Asset Management Co., Ltd. holds 470,000,000 shares, which is 16.00% of the total equity[54]. - The major shareholders include Best Ego Limited with 300,000,000 shares (10.21%) and China Cinda Asset Management Co., Ltd. with 260,000,000 shares (8.85%)[56]. Corporate Governance - The company continues to maintain high standards of corporate governance and has not appointed a new CEO since December 1, 2015, while an executive committee manages daily operations[63]. - The company has not entered into any arrangements that would allow directors to benefit from purchasing shares or bonds of the company during the six months ending June 30, 2022[56]. - No significant contracts were disclosed that would give directors a substantial interest related to the company's business during the reporting period[59]. - The company has not filed any interest disclosure forms during the six months ending June 30, 2022[55]. Future Outlook - The group anticipates that cement demand will remain stable or see slight growth in the second half of 2022, despite weak new construction in the real estate sector[45]. - The group plans to actively align with national policies to expand investment and stabilize the economy, enhancing operational efficiency and market order[48]. - The group aims to increase industry concentration and optimize market layout while integrating mining resources for future development[48]. - The group is committed to transitioning towards "green" and "intelligent" development to enhance its core competitiveness[48].

Company Overview - China Tianrui Group Cement Company Limited is one of the 12 national key supported large cement groups in China, designated for merger and restructuring in the cement industry, receiving government support in project approvals and credit approvals[8]. - The company has established a strong market presence in Henan and Liaoning provinces, with additional involvement in Tianjin and Anhui, creating three core regional markets[8]. - The company has a robust resource reserve with rich limestone resources in its main operating areas, ensuring a stable supply for its production lines[8]. - The company has successfully participated in major infrastructure projects in China, including high-speed rail and water diversion projects, due to its adherence to international management standards and product quality certifications[8]. Production and Technology - As of December 31, 2021, all clinker production lines utilize advanced NSP technology and are equipped with waste heat recovery power generation technology, significantly reducing electricity costs and pollution[8]. - The company has a daily production capacity of over 12,000 tons at its Zhengzhou Xinyang clinker production line, which is recognized as world-leading[8]. - The company has invested in advanced environmental protection technologies, including waste heat recovery and low nitrogen oxide emission facilities, contributing to sustainable development[9]. - The company has implemented intelligent upgrades across various production and management processes, with several factories upgraded to smart factories[8]. Financial Performance - The total revenue for the year ended December 31, 2021, was RMB 12,716,775, representing a 4.5% increase from RMB 12,170,754 in 2020[20]. - Gross profit decreased by 23.0% to RMB 3,233,825 from RMB 4,197,961 in the previous year[20]. - EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) fell by 22.8% to RMB 3,643,156 compared to RMB 4,719,579 in 2020[20]. - Net profit attributable to the owners of the company was RMB 1,200,590, down 35.5% from RMB 1,860,580 in 2020[20]. - Basic earnings per share decreased by 35.5% to RMB 0.41 from RMB 0.63 in the previous year[20]. Assets and Liabilities - Total assets increased slightly by 0.7% to RMB 32,658,235 from RMB 32,439,501 in 2020[21]. - Total liabilities decreased by 5.8% to RMB 16,589,957 from RMB 17,616,603 in the previous year[21]. - Total equity increased by 8.4% to RMB 16,068,278 from RMB 14,822,898 in 2020[21]. - The company's financial expenses for the year ended December 31, 2021, were approximately RMB 1,001.5 million, a decrease of RMB 179.6 million or 15.2% compared to approximately RMB 1,181.1 million in 2020[30]. Market and Sales - In 2021, the company's cement sales volume was approximately 35.7 million tons, a decrease of about 0.1 million tons or 0.4% compared to 2020[22]. - The average price of cement increased to approximately RMB 319.8 per ton, up RMB 14.4 per ton or 4.7% from the same period in 2020[22]. - Aggregate sales volume reached approximately 20.0 million tons, an increase of about 6.8 million tons or 52.2% compared to 2020[22]. - Revenue from cement sales was approximately RMB 11,405.7 million, an increase of RMB 465.6 million or 4.3% from 2020[27]. Strategic Initiatives - The company is committed to enhancing its competitiveness and sustainable development capabilities, aiming for better performance in the future[9]. - The company plans to continue implementing environmental protection policies and pursue green development, including the establishment of green factories and mines[48]. - The company aims to enhance digital transformation and improve production efficiency through the development of smart factories[48]. - The company is expanding its market presence, targeting new regions in Southeast Asia, aiming for a 25% market share by 2025[51]. Governance and Management - The board of directors consists of eight members, including four executive directors and three independent non-executive directors, ensuring a diverse governance structure[136]. - The company emphasizes the importance of internal controls and transparency in its corporate governance practices[132]. - The management team includes experienced professionals with significant backgrounds in the cement industry and finance[59][60]. - The company has appointed independent non-executive directors with diverse expertise in finance and law[56][58]. Corporate Social Responsibility - The company actively participates in environmental and social responsibility initiatives, including waste disposal projects capable of processing 350,000 tons of solid and hazardous waste annually[127]. - The company donated over RMB 20 million in cash and materials for post-disaster reconstruction efforts following severe flooding in regions like Zhengzhou and Xinxiang[127]. Future Outlook - The outlook for cement demand in 2022 is expected to remain stable, supported by government policies promoting infrastructure investment and real estate market recovery[48]. - The company acknowledges the risk of a global economic slowdown potentially leading to decreased demand for cement and clinker in the Chinese market[130]. - The company plans to adopt a cautious approach to capacity expansion and will focus on improving operational efficiency due to the anticipated decrease in demand[130].

Company Information [Company Overview](index=3&type=section&id=Company%20Overview) The company overview details China Tianrui Group Cement's foundational information, including its Cayman Islands registration, Hong Kong listing (01252), and key governance structures - The company's **Chairman and Non-executive Director** is Mr. Li Liufa, with **Executive Directors** including Ms. Li Fengluan, Mr. Ding Jifeng, Mr. Xu Wuxue, and Mr. Li Jiangming[15](index=15&type=chunk) - The company's auditor is **Deloitte Touche Tohmatsu**[16](index=16&type=chunk) Financial and Operational Highlights [Financial Highlights](index=5&type=section&id=Financial%20Highlights) H1 2021 revenue grew 9.1%, profit attributable to owners increased 4.5%, total liabilities decreased 9.3%, and total equity rose 5.4% Key Financial Data for H1 2021 | Metric | H1 2021 (RMB thousands) | H1 2020 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 5,732,761 | 5,253,673 | +9.1% | | Gross Profit | 1,753,881 | 1,735,625 | +1.1% | | Profit Attributable to Owners | 751,571 | 718,959 | +4.5% | | Basic EPS (RMB) | 0.26 | 0.24 | +4.5% | | Metric | As of June 30, 2021 (RMB thousands) | As of Dec 31, 2020 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 31,604,499 | 32,439,501 | -2.6% | | Total Liabilities | 15,986,591 | 17,616,603 | -9.3% | | Total Equity | 15,617,908 | 14,822,898 | +5.4% | [Business Review](index=6&type=section&id=Business%20Review) H1 2021 saw strong overall performance, with cement sales volume up 10.6% and limestone aggregate volume and price significantly increasing - As of June 30, 2021, the Group's production capacity included **28.4 million tons of clinker**, **56.4 million tons of cement**, and **19.2 million tons of limestone aggregate**[20](index=20&type=chunk) Key Product Sales Volume and Price Changes (H1 2021 vs H1 2020) | Product | Sales Volume | YoY Change | Average Price (RMB/ton) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Cement | 17.5 million tons | +10.6% | 290.4 | -2.9% | | Limestone Aggregate | 8.6 million tons | +15.9% | 53.1 | +14.8% | | Clinker | 0.7 million tons | Flat | - | - | Management Discussion and Analysis [Macroeconomic and Industry Environment](index=7&type=section&id=Macroeconomic%20and%20Industry%20Environment) H1 2021 saw infrastructure investment growth supporting regional cement demand, though industry profitability declined later due to rising costs and demand drop - National infrastructure investment grew by **7.8%** year-on-year, with Henan and Liaoning provinces, key regions for the Group, exceeding this at **9.6%** and **16.5%** respectively[21](index=21&type=chunk) - National cement production increased by **14%** year-on-year in H1, though May and June saw negative monthly growth, leading to significant industry profit decline due to price drops and rising raw material costs[23](index=23&type=chunk) [Financial Review](index=8&type=section&id=Financial%20Review) The Group's H1 financial performance saw revenue growth and increased profit attributable to owners, despite a decline in gross margin due to rising costs Revenue by Product and Region (RMB millions) | Item | H1 2021 (RMB millions) | H1 2020 (RMB millions) | Increase | | :--- | :--- | :--- | :--- | | **By Product** | | | | | Cement Sales | 5,086.1 | 4,736.7 | +7.4% | | Limestone Aggregate | 454.7 | 341.6 | +33.1% | | Clinker Sales | 192.0 | 175.4 | +9.5% | | **By Region** | | | | | Central China | 4,408.6 | 4,082.5 | +8.0% | | Northeast China | 1,324.2 | 1,171.2 | +13.1% | - Cost of sales increased by **13.1%** to **RMB 3.98 billion**, mainly due to rising raw coal prices, with coal costs rising from **29.6% to 35.4%** of total sales cost[25](index=25&type=chunk) - Gross profit margin decreased from **33.0% to 30.6%**, primarily due to lower cement prices[25](index=25&type=chunk) - Administrative expenses significantly increased by **55.4%** to **RMB 425 million**, driven by R&D and "Green Mine" project investments[28](index=28&type=chunk) - Finance costs decreased by **10.6%** to **RMB 506 million**, primarily due to a gradual reduction in borrowings and bonds[29](index=29&type=chunk) - Income tax expense decreased by **19.8%** to **RMB 193 million**, mainly due to preferential tax rates for high-tech subsidiaries and lower pre-tax profit[29](index=29&type=chunk) [Financial Position and Liquidity](index=11&type=section&id=Financial%20Position%20and%20Liquidity) The Group's H1 2021 financial position significantly improved, with total borrowings decreasing by RMB 1.59 billion and net gearing ratio dropping to 14.1% - The Group's total borrowings and bonds decreased by approximately **RMB 1.59 billion**, from **RMB 11.22 billion** to **RMB 9.63 billion**[35](index=35&type=chunk) Changes in Key Financial Ratios | Ratio | June 30, 2021 | Dec 31, 2020 | Trend | | :--- | :--- | :--- | :--- | | Net Gearing Ratio | 14.1% | 35.9% | Significant Decrease | | Debt-to-Asset Ratio | 50.6% | 54.3% | Decrease | | Current Ratio | 1.4 | 1.2 | Increase | | Quick Ratio | 1.3 | 1.1 | Increase | | Equity Ratio | 1.0 | 1.2 | Decrease | - H1 capital expenditure was approximately **RMB 136 million**, a significant decrease from **RMB 333 million** in the prior year period[38](index=38&type=chunk) - As of June 30, 2021, assets with a book value of approximately **RMB 4.08 billion** were pledged to secure bank borrowings[38](index=38&type=chunk) [Business Outlook](index=14&type=section&id=Business%20Outlook) H2 2021 outlook anticipates increased infrastructure investment stimulating cement demand, supported by new capacity policies, with the Group focusing on regional advantages and cost control - Government is expected to increase infrastructure investment in major water conservancy, urban drainage, and transportation projects, supporting and stimulating cement demand[44](index=44&type=chunk) - MIIT's new capacity replacement policy, with increased replacement ratios, is expected to further reduce future capacity, addressing overcapacity and supporting dual carbon goals[44](index=44&type=chunk) - Group strategy focuses on leveraging regional advantages in Central and Northeast China, seizing post-disaster reconstruction opportunities, exploring coastal markets, and enhancing cost efficiency across operations[45](index=45&type=chunk) Disclosure of Interests [Directors' and Major Shareholders' Interests](index=16&type=section&id=Directors%27%20and%20Major%20Shareholders%27%20Interests) As of June 30, 2021, Chairman Mr. Li Liufa and spouse jointly held approximately 69.58% of the company's shares, with other major shareholder interests also disclosed Shareholding of Directors and Major Shareholders (as of June 30, 2021) | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Shareholding Percentage | | :--- | :--- | :--- | :--- | | Mr. Li Liufa | Interest in controlled corporation/Long position | 2,044,484,822 | 69.58% | | Ms. Li Fengluan | Interest in controlled corporation/Long position | 2,044,484,822 | 69.58% | | Yukuo Limited | Beneficial owner/Long position | 2,044,484,822 | 69.58% | | Export-Import Bank of China | Interest in security/Long position | 315,000,000 | 10.72% | | China Huarong Asset Management | Interest in controlled corporation/Long position | 470,000,000 | 16.00% | - Controlling shareholder Yukuo Limited pledged **580 million shares** (approximately **19.74%** of total share capital) to secure loans[54](index=54&type=chunk) [Other Interests Disclosure](index=19&type=section&id=Other%20Interests%20Disclosure) No share options were granted; Chairman Li Liufa's approved competing business interests were disclosed, alongside details of loans secured by controlling shareholder share pledges - The company adopted a share option scheme in 2011, but **no share options have been granted** since its adoption and up to the end of the reporting period[55](index=55&type=chunk)[56](index=56&type=chunk) - Controlling shareholder Yukuo pledged company shares to secure two loans for the Group, with loan agreements stipulating a minimum shareholding percentage, a breach of which constitutes default[56](index=56&type=chunk)[57](index=57&type=chunk) Corporate Governance [Governance Practices](index=22&type=section&id=Governance%20Practices) The company maintained high corporate governance standards, complying with the Listing Rules' Code, with the CEO position vacant since 2015, and no interim dividend declared - The company complied with the Corporate Governance Code, with the **Chief Executive Officer position vacant since December 1, 2015**, and daily operations managed by the Executive Committee[59](index=59&type=chunk) - The Board does not recommend the payment of a **2021 interim dividend**[61](index=61&type=chunk) - During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities[61](index=61&type=chunk) Condensed Consolidated Financial Statements [Key Financial Statements](index=23&type=section&id=Key%20Financial%20Statements) H1 2021 saw RMB 988 million profit before tax, RMB 31.6 billion total assets, and RMB 2.52 billion net cash from operations, with period-end cash slightly decreased Condensed Consolidated Statement of Comprehensive Income Summary (for the six months ended June 30, RMB thousands) | Item | 2021 (Unaudited, RMB thousands) | 2020 (Unaudited, RMB thousands) | | :--- | :--- | :--- | | Revenue | 5,732,761 | 5,253,673 | | Gross Profit | 1,753,881 | 1,735,625 | | Profit Before Tax | 987,825 | 1,012,522 | | Total Profit and Comprehensive Income for the Period | 795,010 | 772,239 | | Profit Attributable to Owners of the Company | 751,571 | 718,959 | Condensed Consolidated Statement of Financial Position Summary (RMB thousands) | Item | June 30, 2021 (Unaudited, RMB thousands) | Dec 31, 2020 (Audited, RMB thousands) | | :--- | :--- | :--- | | Total Assets | 31,604,499 | 32,439,501 | | Total Liabilities | 15,986,591 | 17,616,603 | | Total Equity | 15,617,908 | 14,822,898 | Condensed Consolidated Cash Flow Statement Summary (for the six months ended June 30, RMB thousands) | Item | 2021 (Unaudited, RMB thousands) | 2020 (Unaudited, RMB thousands) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 2,518,152 | 1,770,567 | | Net Cash (Used in) from Investing Activities | (1,647,754) | 292,427 | | Net Cash Used in Financing Activities | (1,003,955) | (1,936,424) | | Cash and Cash Equivalents at Period End | 2,278,558 | 1,955,403 | [Notes to the Financial Statements](index=28&type=section&id=Notes%20to%20the%20Financial%20Statements) Notes provide detailed financial statement information, including revenue sources, segment performance, and comprehensive details on various borrowings and pledged assets Segment Results (for the six months ended June 30, RMB thousands) | Segment | 2021 Revenue (RMB thousands) | 2021 Profit (RMB thousands) | 2020 Revenue (RMB thousands) | 2020 Profit (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Central China | 4,408,573 | 841,638 | 4,082,481 | 932,743 | | Northeast China | 1,324,188 | 157,786 | 1,171,192 | 88,319 | | **Total** | **5,732,761** | **999,424** | **5,253,673** | **1,021,062** | - As of June 30, 2021, trade receivables aged within **90 days** constituted the largest portion, approximately **RMB 510 million**[88](index=88&type=chunk) - In 2019, the Group issued **USD 140 million** in secured notes with a **12% annual interest rate**, maturing in **2022**[99](index=99&type=chunk) - As of June 30, 2021, the Group pledged assets with a book value of approximately **RMB 4.08 billion** to secure bank borrowings, including property, plant and equipment, right-of-use assets, mining rights, and bank balances[105](index=105&type=chunk) - The Group provided financial guarantees to related parties with an actual utilized amount of approximately **RMB 1.23 billion**[108](index=108&type=chunk)

[Company Information](index=4&type=section&id=Company%20Information) [Company Basic Information](index=4&type=section&id=Company%20Information) This section provides fundamental information about China Tianrui Group Cement Company Limited, including its listing details on the Hong Kong Stock Exchange, board committee members, principal bankers, registered office, headquarters address, legal advisors, and auditor | Item | Details | | :--- | :--- | | **Company Name** | China Tianrui Group Cement Company Limited | | **Listing Place** | The Stock Exchange of Hong Kong Limited | | **Stock Code** | 1252 | | **Chairman of the Board** | Mr. Li Liufa (Non-executive Director) | | **Auditor** | Deloitte Touche Tohmatsu | | **Headquarters Address** | No. 63 Guangcheng East Road, Ruzhou City, Henan Province, China | [Company Overview](index=6&type=section&id=Company%20Overview) This section outlines the company's core competencies, shareholding structure, production facility layout, and capacity, highlighting its market leadership in Henan and Liaoning provinces as a key state-supported large-scale cement group with advantages in technology, layout, resources, and management [Core Competencies](index=6&type=section&id=Core%20Competencies) The company has established its core competitiveness in the industry through advanced technological equipment, rational regional layout, abundant resource reserves, and standardized management and brand advantages, with all clinker production lines utilizing advanced NSP technology and waste heat power generation for energy saving and emission reduction, and being among the first Chinese cement companies accepted as a CSI member, committed to sustainable development - All of the Group's clinker production lines utilize advanced NSP technology and are equipped with waste heat recovery power generation technology, effectively saving electricity costs and reducing pollution[8](index=8&type=chunk) - The Group's main production facilities are strategically located at the intersection of limestone resources, end markets, and major transportation arteries, with a layout along the 'two vertical and three horizontal' expressways in Henan and along the 'Harbin-Dalian Expressway' and Bohai Rim Economic Zone in Liaoning[8](index=8&type=chunk) - Each clinker production line is supported by limestone mines with over 30 years of usable reserves[8](index=8&type=chunk) - The company is one of the first three cement companies in China accepted as a member of the Cement Sustainability Initiative (CSI) of the World Business Council for Sustainable Development[9](index=9&type=chunk) [Corporate Structure](index=7&type=section&id=Corporate%20Structure) As of the end of 2019, the company was indirectly controlled by founder Mr. Li Liufa and his spouse Ms. Li Fengluan through Tianrui Group, holding 69.58% of the shares as the controlling shareholder, with core subsidiaries including Zhongyuan Cement, Tianrui (Hong Kong), and Tianrui Cement managing 26 wholly-owned and 8 non-wholly-owned subsidiaries - As of December 31, 2019, Chairman Li Liufa and his spouse Ms. Li Fengluan indirectly controlled **69.58%** of the company's equity through Tianrui Group[11](index=11&type=chunk) - The Group manages **26 wholly-owned Chinese subsidiaries** and **8 non-wholly-owned Chinese subsidiaries** through its wholly-owned subsidiary, Tianrui Cement Group Co., Ltd[12](index=12&type=chunk)[15](index=15&type=chunk) [Production Facility Distribution and Capacity](index=10&type=section&id=Production%20Facility%20Distribution%20and%20Capacity) As of the end of 2019, the Group's production facilities were primarily located in Henan, Liaoning, Tianjin, and Anhui, maintaining stable total annual clinker capacity of approximately 28.4 million tonnes and cement capacity of 56.7 million tonnes, concentrated in Central China (Henan and Anhui) and Northeast China (Liaoning and Tianjin) | Item | Capacity (million tonnes) | Remarks | | :--- | :--- | :--- | | **Total Annual Clinker Capacity** | 28.4 | Consistent with 2018 | | **Total Annual Cement Capacity** | 56.7 | Consistent with 2018 | | **Henan Region Cement Capacity** | 37.6 | Including Anhui | | **Henan Region Clinker Capacity** | 20.0 | Including Anhui | | **Liaoning Region Cement Capacity** | 19.1 | Including Tianjin | | **Liaoning Region Clinker Capacity** | 8.4 | Including Tianjin | [Financial Highlights](index=11&type=section&id=Financial%20Highlights) In 2019, the company achieved robust financial growth with revenue increasing by 20.1% year-on-year, gross profit by 37.7%, and profit attributable to owners of the company surging by 50.0% to RMB 1.819 billion, alongside steady growth in total assets and total equity [Key Financial Data](index=11&type=section&id=Financial%20Highlights) For the 2019 fiscal year, the company recorded significant growth across all key financial metrics, with revenue reaching RMB 12.088 billion, a 20.1% year-on-year increase, gross profit rising 37.7% to RMB 4.507 billion, and profit attributable to owners surging 50.0% to RMB 1.819 billion, with basic earnings per share increasing from RMB 0.41 to RMB 0.62, while total assets grew 13.2% to RMB 32.324 billion and total equity increased 17.1% | Metric (Year Ended December 31) | 2019 (RMB '000) | 2018 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | **Revenue** | 12,087,532 | 10,060,647 | 20.1% | | **Gross Profit** | 4,507,370 | 3,273,488 | 37.7% | | **EBITDA** | 4,867,561 | 3,844,697 | 26.6% | | **Profit Attributable to Owners of the Company** | 1,819,423 | 1,212,547 | 50.0% | | **Basic Earnings Per Share (RMB)** | 0.62 | 0.41 | 50.0% | | Metric (As of December 31) | 2019 (RMB '000) | 2018 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Assets** | 32,324,304 | 28,553,706 | 13.2% | | **Total Liabilities** | 19,348,713 | 17,474,586 | 10.7% | | **Total Equity** | 12,975,591 | 11,079,120 | 17.1% | [Management Discussion and Analysis](index=12&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth review of 2019 business operations, macroeconomic and industry environment, and financial performance, along with an outlook, where the company achieved dual growth in sales volume and average selling price and significantly enhanced profitability through optimized management and market strategies amidst supply-side reform and stable infrastructure investment, maintaining an optimistic view on future infrastructure demand despite COVID-19 uncertainties, and continuing to advance its intelligent and green development strategies [Business Review](index=12&type=section&id=Business%20Review) In 2019, the Group capitalized on opportunities from supply-side reform, achieving both volume and price increases for its products, with cement sales growing 7.0% year-on-year to 31.5 million tonnes and average selling price increasing 14.6% to RMB 354.5 per tonne, while high-grade cement (42.5 grade and above) sales proportion rose to 85.6%, even as clinker sales declined and aggregate sales surged 39.4% | Product | 2019 Sales Volume (million tonnes) | Year-on-Year Change | | :--- | :--- | :--- | | Cement | 31.5 | +7.0% | | Clinker | 2.5 | -12.4% | | Aggregate | 4.4 | +39.4% | | Product | 2019 Average Selling Price (RMB/tonne) | Year-on-Year Change | | :--- | :--- | :--- | | Cement | 354.5 | +14.6% | | Clinker | 275.1 | -4.9% | | Aggregate | 56.8 | +22.3% | - Product structure was further optimized, with the sales proportion of 42.5 grade and above cement increasing from **81.1%** to **85.6%**[21](index=21&type=chunk) [Operating Environment and Industry Overview](index=13&type=section&id=Operating%20Environment) In 2019, China's macroeconomic environment strongly supported the cement industry, with national fixed asset investment growing 5.4% and real estate development investment increasing 9.9%, leading to improved supply-demand dynamics and a record-high industry profit of approximately RMB 180 billion driven by supply-side reform and environmental policies, while national cement output grew 6.1% year-on-year, with Northeast China experiencing the fastest growth at 13.12% - In 2019, national fixed asset investment grew **5.4%** year-on-year, infrastructure investment increased **3.8%**, and real estate development investment rose **9.9%**[24](index=24&type=chunk) - The cement industry benefited from supply-side reform, staggered production, and environmental rectification, achieving a record-high industry profit of approximately **RMB 180 billion**[25](index=25&type=chunk) - National cement output was **2.33 billion tonnes**, a **6.1%** year-on-year increase, the fastest growth in nearly five years; cement output in Northeast China grew **13.12%** year-on-year, the fastest growth rate[25](index=25&type=chunk)[27](index=27&type=chunk) [Financial Review](index=16&type=section&id=Financial%20Review) This section provides a detailed analysis of the 2019 financial performance, where the company's revenue increased 20.1% year-on-year to RMB 12.088 billion, gross margin improved from 32.5% to 37.3%, and profit attributable to owners surged 50.0% to RMB 1.819 billion, driven by higher cement sales volume and prices, while also analyzing changes in costs, expenses, asset and liability positions, and key financial ratios [Revenue Analysis](index=16&type=section&id=Revenue%20Analysis) Total revenue in 2019 was RMB 12.088 billion, a 20.1% year-on-year increase, primarily driven by cement sales which reached RMB 11.159 billion, up 22.6%, while clinker sales revenue decreased 16.7% due to declines in both volume and price, and by region, Central China and Northeast China revenues grew 21.0% and 17.3% respectively | Revenue Source | 2019 (RMB million) | Year-on-Year Growth | | :--- | :--- | :--- | | **Total Revenue** | 12,087.5 | 20.1% | | Cement Sales | 11,159.0 | 22.6% | | Clinker Sales | 677.4 | -16.7% | | Central China Region | 9,299.3 | 21.0% | | Northeast China Region | 2,788.2 | 17.3% | [Cost of Sales Analysis](index=16&type=section&id=Cost%20of%20Sales%20Analysis) Cost of sales in 2019 was RMB 7.580 billion, an 11.7% year-on-year increase, mainly due to increased cement production and higher prices for some raw materials, with raw materials, coal, and electricity accounting for 37.8%, 33.3%, and 13.0% of the cost structure respectively, and unit cement production costs showing increases in raw material and electricity costs, while coal costs decreased | Cost Composition Per Tonne of Cement | 2019 (RMB) | Change vs. 2018 (RMB) | | :--- | :--- | :--- | | Raw Materials | 74.6 | +10.2 | | Coal | 65.9 | -2.2 | | Electricity | 25.7 | +0.6 | [Gross Profit and Profitability Analysis](index=17&type=section&id=Gross%20Profit%E3%80%81Gross%20Margin%20and%20Segment%20Profit) Gross profit increased 37.7% year-on-year to RMB 4.507 billion in 2019, with gross margin improving from 32.5% to 37.3%, primarily because the increase in cement selling prices outpaced cost increases, while profit attributable to owners surged 50.0% year-on-year to RMB 1.819 billion, and net margin rose from 12.1% to 15.1% - Gross margin increased from **32.5%** in 2018 to **37.3%** in 2019, primarily due to the increase in cement selling prices exceeding the increase in unit cost of sales[30](index=30&type=chunk) - Profit attributable to owners of the company was approximately **RMB 1.819 billion**, a **50.0%** year-on-year increase; net margin increased from **12.1%** to **15.1%**[37](index=37&type=chunk) [Financial and Liquidity Position](index=19&type=section&id=Financial%20and%20Liquidity%20Position) As of the end of 2019, the company's financial position was robust, with total borrowings and debt financing instruments increasing to RMB 12.315 billion, while the gearing ratio decreased from 61.2% to 59.9% and net gearing ratio from 57.9% to 52.0%, indicating an optimized capital structure, and both current and quick ratios improved - Trade and other receivables increased from **RMB 4.424 billion** to **RMB 7.306 billion**, mainly due to increased sales and purchases leading to higher bills receivable and prepayments[38](index=38&type=chunk) - Total borrowings and debt financing instruments amounted to approximately **RMB 12.315 billion**, an **18.5%** increase from the previous year[38](index=38&type=chunk) | Financial Ratio | End of 2019 | End of 2018 | | :--- | :--- | :--- | | Gearing Ratio | 59.9% | 61.2% | | Current Ratio | 1.2 | 1.0 | | Quick Ratio | 1.1 | 0.9 | | Net Gearing Ratio | 52.0% | 57.9% | [Outlook](index=23&type=section&id=Outlook) Looking ahead to 2020, despite uncertainties from the early COVID-19 pandemic, the nation is expected to increase infrastructure investment to stabilize the economy, thereby stimulating cement demand, while strict environmental policies will continue to support stable supply and high prices, and the Group will further advance its 'smart factory', ultra-low emission, and 'green mine' initiatives, and develop its aggregate business to maintain regional competitive advantages - Infrastructure investment growth is expected to rebound in 2020, and real estate investment will remain resilient, providing support for cement demand[51](index=51&type=chunk) - The early COVID-19 pandemic brought uncertainties, but government policies to stimulate the economy are expected to offset initial impacts and even stimulate greater demand for building materials[51](index=51&type=chunk) - The Group will continue to advance 'smart factory', ultra-low emission, and 'green mine' construction, and develop its aggregate business to increase revenue and gross margin[51](index=51&type=chunk) [Directors and Senior Management](index=24&type=section&id=Directors%20and%20Senior%20Management) This section introduces the background and resumes of the company's Board of Directors and senior management team, with the Board comprising eight members including four executive directors, one non-executive director (Chairman), and three independent non-executive directors, and the senior management possessing extensive experience in cement industry production, sales, finance, and capital operations [Board of Directors](index=24&type=section&id=Board%20of%20Directors) The Board of Directors is led by Mr. Li Liufa, Chairman and Non-executive Director, who is the Group's founder, with executive directors including Ms. Li Fengluan, Mr. Ding Jifeng, Mr. Xu Wuxue (Chief Financial Officer), and Mr. Li Jiangming, and three independent non-executive directors, Mr. Kong Xiangzhong, Mr. Wang Ping, and Mr. Du Xiaotang, who possess expertise in industry, finance, and law | Name | Position | | :--- | :--- | | Li Liufa | Non-executive Director and Chairman of the Board | | Li Fengluan | Executive Director | | Ding Jifeng | Executive Director | | Xu Wuxue | Executive Director and Chief Financial Officer | | Li Jiangming | Executive Director and Joint Company Secretary | | Kong Xiangzhong | Independent Non-executive Director | | Wang Ping | Independent Non-executive Director | | Du Xiaotang | Independent Non-executive Director | - Mr. Li Liufa is the Group's founder, with extensive experience in the cement industry, and serves as a representative to the 13th National People's Congress; Ms. Li Fengluan is his spouse[53](index=53&type=chunk) [Senior Management](index=28&type=section&id=Senior%20Management) The senior management team comprises experienced professionals in the cement industry, including Vice Chairman Yang Yongzheng, General Manager Ding Jifeng, Executive Vice General Manager Jing Xianyu, Chief Financial Officer Xu Wuxue, Vice General Manager Gao Yunhong, Vice General Manager of Capital Operations Li Jiangming, and Deputy Financial Controller Lu Xing, who are respectively responsible for the Group's daily operations, production, sales, finance, and capital market functions - Senior management members all possess extensive experience in the cement industry, covering key areas such as production, sales, finance, and capital operations[61](index=61&type=chunk)[62](index=62&type=chunk) [Directors' Report](index=31&type=section&id=Directors'%20Report) This report outlines the company's principal activities, annual results, dividend policy, share capital structure, shareholdings of directors and major shareholders, connected transactions, share option scheme, and compliance matters, noting stable business operations during the reporting period with no final dividend declared, and detailing continuing connected transactions with the controlling shareholder and its associates, confirming compliance with relevant regulations [Principal Activities, Results, and Dividends](index=31&type=section&id=Principal%20Activities%2C%20Results%2C%20and%20Dividends) The Group is primarily engaged in limestone quarrying, and the production and sale of clinker and cement; the 2019 annual results are detailed in the financial statements, and the Board did not recommend a final dividend for the year ended December 31, 2019 - The Group is principally engaged in limestone quarrying, and the production, sale, and distribution of clinker and cement[65](index=65&type=chunk) - The Board did not recommend the declaration of a final dividend for the year ended December 31, 2019[65](index=65&type=chunk) [Directors' and Major Shareholders' Interests in Shares, Underlying Shares, and Debentures](index=33&type=section&id=Directors'%20and%20Major%20Shareholders'%20Interests%20in%20Shares%2C%20Underlying%20Shares%2C%20and%20Debentures) As of the end of 2019, controlling shareholders Mr. Li Liufa and Ms. Li Fengluan jointly held 69.58% of the company's shares through controlled corporations; the report also disclosed shareholdings of other major shareholders, such as The Export-Import Bank of China and China Huarong Asset Management Co., Ltd., and noted that controlling shareholder Yukuo Limited pledged part of its shares (30.60% of total share capital) to financial institutions for loans - Mr. Li Liufa and Ms. Li Fengluan are deemed to be interested in **2,044,484,822 shares** held by Yukuo Limited, representing **69.58%** of the share capital[69](index=69&type=chunk)[70](index=70&type=chunk) - Controlling shareholder Yukuo Limited has pledged **899,247,000 shares** (representing **30.60%** of total share capital) to obtain loans[70](index=70&type=chunk)[82](index=82&type=chunk) - Other major shareholders include The Export-Import Bank of China (**10.72%**) and China Huarong Asset Management Co., Ltd. (**14.32%**)[80](index=80&type=chunk) [Connected Transactions](index=40&type=section&id=Connected%20and%20Continuing%20Connected%20Transactions) During the reporting period, the company engaged in several continuing connected transactions, primarily including the purchase of clinker from associate Ruiping Shilong (annual cap RMB 800 million, actual transaction RMB 610 million), mutual guarantees with controlling shareholder Tianrui Group, and deposit and financial services agreements with Tianrui Finance, covering deposits (daily maximum balance RMB 940 million) and credit facilities (daily maximum balance RMB 1.65 billion), with all transactions having complied with regulatory procedures - Purchases of clinker from associate Pingdingshan Ruiping Shilong Cement Co., Ltd. amounted to **RMB 610.4 million** in 2019, not exceeding the annual cap of **RMB 800 million**[89](index=89&type=chunk)[90](index=90&type=chunk) - Mutual guarantees with controlling shareholder Tianrui Group; as of the end of 2019, the company provided guarantees of **RMB 1.582 billion** to Tianrui Group, and Tianrui Group provided guarantees of **RMB 2.263 billion** to the company[91](index=91&type=chunk)[94](index=94&type=chunk) - Deposit and financial services with associate Tianrui Finance; in 2019, the daily maximum deposit balance with Tianrui Finance was **RMB 942 million**, and the daily maximum unsecured loan balance obtained from Tianrui Finance was **RMB 1.65 billion**[95](index=95&type=chunk)[101](index=101&type=chunk) [Corporate Governance Report](index=48&type=section&id=Corporate%20Governance%20Report) This report outlines the company's corporate governance framework and practices, confirming adoption and compliance with the Listing Rules' Corporate Governance Code, and detailing the Board's responsibilities and composition, the operations of its specialized committees (Audit, Nomination, Remuneration), risk management and internal control systems, and shareholder rights and investor relations policies, with all committees holding meetings and fulfilling their duties during the reporting period, indicating a well-functioning governance structure [Board Operations](index=49&type=section&id=Board%20Operations) The Board of Directors is responsible for formulating the Group's strategy and overseeing management; in 2019, the Board comprised 8 directors with a diverse structure, holding 7 meetings during the year to deliberate on significant matters such as annual budgets and operating results, with all directors achieving 100% attendance, and the company also adopted a Board Diversity Policy and provided continuous professional training to directors - As of December 31, 2019, the Board of Directors comprised **8 directors**, including **4 executive directors**, **1 non-executive director**, and **3 independent non-executive directors**[110](index=110&type=chunk) - In 2019, the Board of Directors held **7 meetings**, with all directors achieving **100%** attendance[113](index=113&type=chunk)[114](index=114&type=chunk) [Board Committees](index=53&type=section&id=Board%20Committees) The company established three Board committees: Audit, Nomination, and Remuneration; the Audit Committee, composed of three independent non-executive directors, held two meetings during the year to review financial statements and internal controls; the Nomination Committee, responsible for director nominations and evaluations, held one meeting; and the Remuneration Committee, tasked with formulating remuneration policies, also held one meeting, with all committees effectively fulfilling their responsibilities - The Audit Committee, composed of **three independent non-executive directors** with Mr. Wang Ping as Chairman, held **two meetings** during the year, with all members attending[121](index=121&type=chunk) - The Nomination Committee, composed of **two independent non-executive directors and one non-executive director** with Mr. Kong Xiangzhong as Chairman, held **one meeting** during the year[122](index=122&type=chunk) - The Remuneration Committee, composed of **two independent non-executive directors and one executive director** with Mr. Du Xiaotang as Chairman, held **one meeting** during the year[126](index=126&type=chunk) [Risk Management and Internal Control](index=53&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board of Directors bears ultimate responsibility for the Group's risk management and internal control systems, having conducted an annual review of their effectiveness through the Audit Committee, and the Group has established a three-tier management system encompassing subsidiaries, headquarters functional departments, and the Board level to systematically identify, assess, and respond to various risks - The Group has established a **three-tier management system** to identify, collect, assess, respond to, evaluate, and improve risk management and internal controls[119](index=119&type=chunk) [Independent Auditor's Report](index=60&type=section&id=Independent%20Auditor's%20Report) This section presents the Independent Auditor's Report issued by Deloitte Touche Tohmatsu, where the auditor rendered an unmodified opinion on the company's 2019 consolidated financial statements, deeming them to fairly and truly reflect the Group's financial position and operating results, with the impairment assessment of property, plant, and equipment of a subsidiary specifically highlighted as a key audit matter [Audit Opinion and Key Audit Matters](index=60&type=section&id=Independent%20Auditor's%20Report) Deloitte, the auditor, issued a standard unmodified opinion on the Group's 2019 consolidated financial statements; during the audit, the impairment assessment of property, plant and equipment (PPE) of a subsidiary located in Northeast China was identified as a key audit matter due to the significance of these assets and the substantial management estimates involved, and the auditor performed audit procedures including evaluating valuation methodologies, key assumptions, and data comparisons - The auditor is of the opinion that the consolidated financial statements give a true and fair view of the Group's consolidated financial position as at December 31, 2019, and of its consolidated financial performance and cash flows for the year then ended in all material respects[135](index=135&type=chunk) - A key audit matter was the impairment assessment of property, plant and equipment of a subsidiary located in Northeast China, primarily due to the significance of these assets and the substantial management estimates involved in the impairment assessment[136](index=136&type=chunk)[137](index=137&type=chunk) [Consolidated Financial Statements and Notes](index=65&type=section&id=Consolidated%20Financial%20Statements) This section contains the company's four core consolidated financial statements for the year ended December 31, 2019: Statement of Profit or Loss and Other Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, and Statement of Cash Flows, along with detailed notes to these statements, which collectively present the company's detailed financial performance, asset and liability position, equity changes, and cash flow movements during the reporting period [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=65&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the year 2019, the Group achieved revenue of RMB 12.088 billion and gross profit of RMB 4.507 billion; after accounting for various incomes and expenses, profit before tax was RMB 2.668 billion, and total profit and comprehensive income for the year was RMB 1.935 billion, of which profit attributable to owners of the company was RMB 1.819 billion | Item (RMB '000) | 2019 | 2018 | | :--- | :--- | :--- | | Revenue | 12,087,532 | 10,060,647 | | Gross Profit | 4,507,370 | 3,273,488 | | Profit Before Tax | 2,667,671 | 1,742,572 | | Profit and Total Comprehensive Income for the Year | 1,934,505 | 1,251,810 | | Profit Attributable to Owners of the Company | 1,819,423 | 1,212,547 | [Consolidated Statement of Financial Position](index=66&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2019, the Group's total assets were RMB 32.324 billion, total liabilities were RMB 19.349 billion, and total equity was RMB 12.976 billion; non-current assets constituted a significant portion at RMB 17.596 billion, primarily comprising property, plant, and equipment, while current liabilities were RMB 12.358 billion, slightly lower than the previous year | Item (RMB '000) | December 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Non-current Assets** | 17,595,980 | 16,253,029 | | Of which: Property, Plant and Equipment | 11,112,916 | 11,295,763 | | **Current Assets** | 14,728,324 | 12,300,677 | | **Total Assets** | 32,324,304 | 28,553,706 | | **Current Liabilities** | 12,358,194 | 12,571,661 | | **Non-current Liabilities** | 6,990,519 | 4,902,925 | | **Total Liabilities** | 19,348,713 | 17,474,586 | | **Total Equity** | 12,975,591 | 11,079,120 | [Consolidated Statement of Cash Flows](index=70&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) In 2019, the Group's net cash generated from operating activities was RMB 2.518 billion, a decrease from RMB 4.104 billion in the previous year, mainly due to a significant increase in trade and other receivables; net cash used in investing activities was RMB 75 million, and net cash used in financing activities was RMB 1.327 billion, resulting in a net increase in cash and cash equivalents of RMB 1.117 billion at year-end | Item (RMB '000) | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 2,518,334 | 4,103,995 | | Net Cash Used in Investing Activities | (74,565) | (2,319,450) | | Net Cash Used in Financing Activities | (1,326,733) | (1,258,581) | | Net Increase in Cash and Cash Equivalents | 1,117,036 | 525,964 | | Cash and Cash Equivalents at Year-End | 1,828,833 | 1,356,708 | [Notes to the Consolidated Financial Statements (Selected)](index=72&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements%20(Selected)) The notes to the financial statements provide detailed explanations of accounting policies and specific financial items, with key points including the impact of the first-time application of IFRS 16 Leases on the financial statements, revenue primarily derived from sales of cement, clinker, and aggregates, details of impairment tests for goodwill and property, plant and equipment, and various transactions and guarantees with related parties - IFRS 16 'Leases' was applied for the first time this year, with retrospective adjustments made to right-of-use assets and lease liabilities at the beginning of the period, but comparative figures were not restated[151](index=151&type=chunk) - Notes 17 and 22 disclose that an impairment loss of **RMB 37.88 million** was recognized for certain property, plant and equipment during the year, and an impairment loss of **RMB 13.63 million** was recognized for goodwill arising from the acquisition of Liaoyang Tianrui[194](index=194&type=chunk)[234](index=234&type=chunk) - Note 50 provides detailed disclosures of transactions with related parties, including purchases of goods, office leases, and various loan guarantees provided by related parties to the Group[297](index=297&type=chunk)[299](index=299&type=chunk) - Note 55 discloses that as of year-end, the Group provided bank financing guarantees totaling **RMB 1.582 billion** for related parties[330](index=330&type=chunk) [Five-Year Financial Summary](index=170&type=section&id=Financial%20Summary) This section provides a summary of the Group's key performance and financial position data for the past five fiscal years (2015-2019), showing significant improvements in revenue and profitability over the last three years, particularly reaching new highs in 2019, with total assets and total equity also demonstrating a continuous upward trend [Five-Year Financial Data Trends](index=170&type=section&id=Financial%20Summary) From the five-year data, the Group's operating performance achieved leapfrog growth between 2017 and 2019, with revenue increasing from approximately RMB 6 billion in 2016 to RMB 12.088 billion in 2019, and profit attributable to owners soaring from RMB 296 million in 2016 to RMB 1.819 billion in 2019, while total assets and total equity also steadily expanded, demonstrating the company's strong development momentum | Item (RMB '000) | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 12,087,532 | 10,060,647 | 8,420,551 | 6,008,605 | 6,195,093 | | **Profit Attributable to Owners of the Company** | 1,819,423 | 1,212,547 | 1,001,764 | 295,812 | 313,079 | | **Total Assets** | 32,324,304 | 28,553,706 | 25,904,081 | 24,116,401 | 27,090,642 | | **Total Equity** | 12,975,591 | 11,079,120 | 9,935,771 | 7,639,690 | 7,418,061 |