[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 |

Financial Performance - Revenue for the first half of 2019 reached RMB 5,494.7 million, an increase of 27.6% compared to RMB 4,306.6 million in the same period of 2018[8] - Gross profit for the first half of 2019 was RMB 1,833.2 million, up 33.5% from RMB 1,373.2 million year-on-year[8] - Profit attributable to owners of the company was RMB 887.0 million, representing a 61.0% increase from RMB 550.8 million in the first half of 2018[8] - Revenue from cement sales was approximately RMB 5,138.8 million, up 23.0% from RMB 4,177.6 million in the same period of 2018, with sales volume increasing by 9.8% to approximately 14.6 million tons[14] - The company's gross profit for the first half of 2019 was approximately RMB 1,833.2 million, an increase of RMB 460.0 million or 33.5% from RMB 1,373.2 million in the same period of 2018[16] - The company's operating profit before tax was approximately RMB 1,243.9 million, a growth of RMB 494.6 million or 66.0% compared to RMB 749.3 million in the same period of 2018[21] - The company reported a pre-tax profit of RMB 1,243.94 million for the six months ended June 30, 2019, compared to RMB 749.31 million in the previous year[59] - The profit before tax for the same period was RMB 1,243,943,000, up from RMB 749,313,000 in 2018, representing a growth of 66.1%[88] - The company reported a net profit attributable to shareholders of RMB 887,005,000, which is a 60.9% increase from RMB 550,816,000 in the previous year[96] Sales and Market Demand - Cement sales volume increased by 9.8% to 14.6 million tons, with an average price of RMB 351.0 per ton, up RMB 37.0 or 11.8% year-on-year[9] - The overall demand for cement remained stable, supported by infrastructure investment and real estate development[10] - The company anticipates steady growth in fixed asset investment, infrastructure investment, and real estate investment, which will support cement demand in the future[40] Assets and Liabilities - Total assets as of June 30, 2019, were RMB 28,333.9 million, a slight decrease of 0.8% from RMB 28,553.7 million at the end of 2018[8] - Total liabilities decreased by 4.8% to RMB 16,368.5 million from RMB 17,474.6 million at the end of 2018[8] - As of June 30, 2019, total borrowings and bonds amounted to approximately RMB 9,623.0 million, a decrease of about RMB 771.5 million from RMB 10,394.5 million as of December 31, 2018[27] - The current ratio improved to 1.1 as of June 30, 2019, from 1.0 as of December 31, 2018, representing a 10.1% increase[29] - The net debt ratio decreased to 45.3% as of June 30, 2019, down 12.6 percentage points from 57.9% as of December 31, 2018[30] - Trade and other payables increased from RMB 3,684.4 million as of December 31, 2018, to RMB 3,847.5 million as of June 30, 2019, primarily due to an increase in accounts payable[26] Cash Flow and Investments - Cash and cash equivalents increased from RMB 711.8 million at the end of 2018 to RMB 817.1 million by June 30, 2019, primarily due to increased cash inflows from operating activities[25] - For the six months ended June 30, 2019, the net cash generated from operating activities was RMB 1,113,417,000, a decrease of 13.6% compared to RMB 1,288,834,000 for the same period in 2018[64] - The net cash used in investing activities was RMB 1,296,780,000, compared to a net cash outflow of RMB 81,255,000 in the same period of 2018[64] - The company incurred interest expenses of RMB 563,174,000 for the financing activities, slightly down from RMB 571,667,000 in the previous year[64] Corporate Governance and Shareholder Information - The company has established appropriate liquidity risk management systems to monitor and maintain adequate cash levels[38] - As of June 30, 2019, the company has a total of 1,986,984,822 shares held by major shareholders, representing 67.62% of the issued share capital[45] - Major shareholders include entities such as 神鷹有限公司 and 煜祺有限公司, which hold 51.25% and 48.75% of the equity in 煜闊 respectively[42] - The company has adhered to the corporate governance code and has maintained high levels of corporate governance practices during the reporting period[52] - The company has established an executive committee to manage daily operations following the resignation of the CEO in December 2015, ensuring that power is not concentrated in one individual[52] Financial Reporting Standards - The group has adopted the new International Financial Reporting Standards (IFRS) effective from January 1, 2019, which did not have a significant impact on the financial performance and disclosures for the current and prior periods[69] - The application of IFRS 16 on leases has resulted in changes to accounting policies, particularly in defining leases and recognizing right-of-use assets[70] - The group recognizes right-of-use assets at the commencement date of the lease, measured at cost, which includes initial direct costs and any lease payments made before the commencement date[72] - Lease liabilities are recognized at the present value of unpaid lease payments at the lease commencement date, including fixed payments and variable lease payments based on indices[74] Other Financial Metrics - The company’s selling and distribution expenses increased to RMB 155.03 million from RMB 139.97 million year-on-year[59] - The company’s financial expenses decreased slightly to RMB 563.17 million from RMB 571.67 million in the previous year[59] - The effective corporate income tax rate for the company was 25%, with total income tax expenses amounting to RMB 317,640,000 for the period[93][94] - The company did not declare or propose any dividends during the interim period[97]

Company Overview - China Tianrui Group Cement Company Limited is one of the key national cement groups supported by the government, designated for industry consolidation in Central China[8]. - The company has a robust resource reserve, with limestone resources and mixed material supply sufficient for over 30 years of production at each clinker production line[8]. - The company has been recognized as one of the few cement companies in China with ISO quality, environmental, and occupational health safety management systems[8]. - The company maintains a strong market leadership position in Henan and Liaoning provinces, benefiting from strategic regional layouts[8]. - The company is a member of the Cement Sustainability Initiative (CSI), reflecting its commitment to sustainable practices in the cement industry[9]. Environmental Commitment - The company is committed to environmental protection and sustainable development, investing in advanced environmental technologies and waste recycling initiatives[9]. - The company has implemented significant green transformation efforts, achieving emissions standards below national limits for various pollutants[20]. - The government aims to reduce sulfur dioxide and nitrogen oxide emissions by 3% in 2019, which will positively impact the cement industry by promoting the elimination of outdated production capacity[58]. - The implementation of strict environmental standards in Henan will lead to the exit of outdated production capacity and improve the supply-demand relationship in the cement market[59]. - The company is committed to supporting the government's environmental protection initiatives, which will help improve the overall industry landscape[58]. Financial Performance - The company's revenue for the year ended December 31, 2018, was RMB 10,060,647 thousand, representing a 19.5% increase from RMB 8,420,551 thousand in 2017[17]. - Gross profit for the same period was RMB 3,273,488 thousand, up 36.6% from RMB 2,396,894 thousand in 2017[17]. - Net profit attributable to the owners of the company was RMB 1,212,547 thousand, a 21.0% increase compared to RMB 1,001,764 thousand in 2017[17]. - Basic earnings per share increased by 10.8% to RMB 0.41 from RMB 0.37 in 2017[17]. - The gross profit margin for 2018 was approximately 32.5%, an increase of 4.0 percentage points from 2017[20]. Production Capacity and Sales - The company operates 20 clinker production lines and 59 cement grinding units, with total annual capacities of approximately 28.4 million tons of clinker and 56.7 million tons of cement[14]. - Cement production capacity in the Henan region (including Anhui) is 37.6 million tons, while the Liaoning region (including Tianjin) has a capacity of 19.1 million tons[14]. - In 2018, the group's cement sales volume was approximately 29.4 million tons, a slight increase of 0.1 million tons or 0.4% compared to 2017[19]. - The average selling price of cement rose from approximately RMB 268.7 per ton in 2017 to RMB 309.3 per ton in 2018, an increase of RMB 40.6 per ton or 15.1%[20]. - The group's clinker sales volume increased by 0.6 million tons or 26.3% to approximately 2.8 million tons in 2018 compared to 2017[20]. Strategic Initiatives - The company has successfully participated in major infrastructure projects in China, including the South-to-North Water Diversion Project and several high-speed rail projects[8]. - The company has strategically located its production facilities along major transportation routes to optimize access to limestone resources and end markets[14]. - The company plans to enhance production efficiency and optimize processes to maintain its leading market position in Henan and Liaoning[59]. - The company will focus on internal structural adjustments and regional market integration to capture new profit growth points[59]. - The company aims to leverage government policies and its own advantages to strengthen refined management and improve production processes[59]. Governance and Management - The company has a strong leadership team with members holding advanced degrees and professional qualifications in their respective fields[63][64]. - The board consists of eight members, including four executive directors and three independent non-executive directors, ensuring a diverse governance structure[126]. - The company is committed to maintaining high levels of corporate governance and has implemented effective internal control measures[122]. - The board is responsible for corporate governance policies, including compliance with legal and regulatory requirements[135]. - The company emphasizes board diversity in its appointments, considering factors such as gender, age, and professional experience[136]. Financial Position and Liabilities - Total assets as of December 31, 2018, were RMB 28,553,706 thousand, a 10.2% increase from RMB 25,904,081 thousand in 2017[18]. - Total liabilities were RMB 17,474,586 thousand, reflecting a 9.4% increase from RMB 15,968,310 thousand in 2017[18]. - The company's debt-to-asset ratio was approximately 61.2%, a decrease of 0.4 percentage points from 61.6% as of December 31, 2017[47]. - The current ratio improved to approximately 1.0, up 32.5% from about 0.7 as of December 31, 2017[47]. - The net debt-to-equity ratio decreased to approximately 57.9%, down 20.2 percentage points from 78.1% as of December 31, 2017[48]. Market Trends and Challenges - The cement industry achieved a profit of RMB 154.6 billion in 2018, a year-on-year increase of 114%, marking the highest profit in history[23]. - The cement industry concentration increased, with the top 10 cement companies accounting for 64% of total clinker capacity, a significant rise from the previous year[24]. - The government continued to enforce strict environmental regulations, impacting the cement industry and leading to the elimination of outdated production capacity, which positively affected sales prices[24]. - The board is aware of the major risks and uncertainties, particularly the global economic slowdown, which may lead to decreased demand for cement and clinker in the Chinese market[120]. - The company plans to adopt a prudent approach to capacity expansion and will focus on improving operational efficiency due to the anticipated decrease in demand[121]. Shareholder Information - The company did not declare a final dividend for the year ended December 31, 2018, consistent with the previous year[71]. - The group’s distributable reserves as of December 31, 2018, amounted to RMB 6,999.2 million, an increase from RMB 5,969.1 million as of December 31, 2017[74]. - The company has pledged 842,247,000 shares, accounting for 28.66% of the issued share capital, to financial institutions for loans[82]. - The independent non-executive directors confirmed their independence as of the report date, ensuring compliance with listing rules[79]. - The remuneration of directors is subject to shareholder approval at the annual general meeting[90]. Accounting and Financial Reporting - The financial statements for the year ended December 31, 2018, were prepared in accordance with the new and revised IFRS standards, impacting various financial metrics[184]. - The company has adopted new and revised International Financial Reporting Standards, which did not have a significant impact on its financial performance for the year[179]. - The adjustments made under IFRS 15 and IFRS 9 do not include the impact of IFRS 9 adjustments on the comparative figures[188]. - The company confirmed revenue from the manufacturing and sales of cement, clinker, and aggregates under customer contracts, reflecting its core business operations[179]. - The auditors aim to obtain reasonable assurance that the financial statements are free from material misstatement due to fraud or error[164].