[Corporate Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) [Board of Directors Composition](index=3&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83) The Board comprises executive, non-executive, and independent non-executive directors, with several appointments and resignations during the reporting period - The Board of Directors underwent several changes during the reporting period, including the resignation of Executive Directors Liu Huijie, Li Xiaobin, and Jia Dai, and the appointment of Zhou Jianzhong; the appointment of Non-executive Director Cao Ye; and the appointment of Independent Non-executive Director Chen Bingquan, the resignation of Cao Shiping, and the appointment of Xiang Siying as Chairlady[3](index=3&type=chunk) [Audit Committee](index=3&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee consists of independent non-executive directors Huang Mei (Chairlady), Xiang Siying, and Chen Bingquan, with former member Cao Shiping having resigned - The Audit Committee comprises Ms Huang Mei (Chairlady), Ms Xiang Siying, and Mr Chen Bingquan (appointed on 11 March 2019), with Mr Cao Shiping resigning on the same day[3](index=3&type=chunk) [Remuneration Committee](index=3&type=section&id=%E8%96%AA%E9%85%AC%E5%A7%94%E5%93%A1%E6%9C%83) The Remuneration Committee is composed of Xiang Siying (Chairlady), Wang Qian, and Huang Mei - The Remuneration Committee is composed of Ms Xiang Siying (Chairlady), Ms Wang Qian, and Ms Huang Mei[3](index=3&type=chunk) [Nomination Committee](index=3&type=section&id=%E6%8F%90%E5%90%8D%E5%A7%94%E5%93%A1%E6%9C%83) The Nomination Committee is composed of Wang Qian (Chairlady), Xiang Siying, and Huang Mei - The Nomination Committee is composed of Ms Wang Qian (Chairlady), Ms Xiang Siying, and Ms Huang Mei[3](index=3&type=chunk) [Independent Auditor](index=3&type=section&id=%E7%8D%A8%E7%AB%8B%E6%A0%B8%E6%95%B8%E5%B8%AB) The company's independent auditor is BDO Limited - The independent auditor is BDO Limited[3](index=3&type=chunk) [Registered Office and Principal Place of Business](index=3&type=section&id=%E8%A8%BB%E5%86%8A%E8%BE%A6%E4%BA%8B%E8%99%95%E5%8F%8A%E4%B8%BB%E8%A6%81%E7%87%9F%E6%A5%AD%E5%9C%B0%E9%BB%9E) The company's registered office is in the Cayman Islands, with principal places of business in Xinjiang, China, and Hong Kong - The registered office is located in the Cayman Islands, with principal places of business in Hami City, Xinjiang Uygur Autonomous Region, China, and Room 2805, 28/F, Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong[3](index=3&type=chunk) [Share Registrar](index=4&type=section&id=%E8%82%A1%E4%BB%BD%E9%81%8E%E6%88%B6%E7%99%BB%E8%A8%98%E8%99%95) The company maintains share registrars in both the Cayman Islands and Hong Kong, with the latter being Tricor Investor Services Limited - The share registrar in Hong Kong is Tricor Investor Services Limited[5](index=5&type=chunk) [Principal Subsidiaries of the Group](index=5&type=section&id=%E6%9C%AC%E9%9B%86%E5%9C%98%E4%B9%8B%E4%B8%BB%E8%A6%81%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8) [Subsidiary Structure](index=5&type=section&id=%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E6%9E%B6%E6%A7%8B) The company holds entities in mineral resource development, trading, financial leasing, and engineering services in China through multi-layered investment holding companies - Huili Resources (Group) Limited indirectly holds key operating entities such as Hami Jiatia Mineral Resources Development Co, Ltd (90,9%) and Hami Jinhua Mineral Resources Development Co, Ltd through companies including Jiazhao Venture, Runce, Zhengyuan International, and Fulin Investment[7](index=7&type=chunk) - Shaanxi Jiahe Mining Development Co, Ltd was sold in March 2020[8](index=8&type=chunk) [Mine Information](index=6&type=section&id=%E7%A4%A6%E5%B1%B1%E8%B3%87%E6%96%99) [Mineral Resources](index=6&type=section&id=%E7%A4%A6%E7%94%A2%E8%B3%87%E6%BA%90) As of December 31, 2019, the company's main mineral resources include nickel-copper ore from Project 20 and Project H-989, and zinc-lead ore from the Baiganhu Project Mineral Resources Overview as of December 31, 2019 | Project Name | Category | Quantity (thousand tonnes) | Nickel Metal (tonnes) | Nickel Grade (%) | Copper Metal (tonnes) | Copper Grade (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Project 20 | Indicated | 1,330 | 9,430 | 0.71 | 3,150 | 0.24 | | | Inferred | 1,260 | 8,660 | 0.69 | 3,160 | 0.25 | | Project H-989 | Indicated | 3,390 | 16,540 | 0.49 | 7,750 | 0.23 | | | Inferred | 2,370 | 12,100 | 0.51 | 4,390 | 0.19 | | **Total** | **Indicated** | **4,720** | **25,970** | **0.55** | **10,900** | **0.23** | | | **Inferred** | **3,630** | **20,760** | **0.57** | **7,550** | **0.21** | | | **Total** | **8,350** | **46,730** | **0.56** | **18,450** | **0.22** | | Project Name | Category | Quantity (thousand tonnes) | Zinc Metal (tonnes) | Zinc Grade (%) | Lead Metal (tonnes) | Lead Grade (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Baiganhu Project | Indicated | 1,730 | 113,540 | 6.57 | 71,440 | 4.13 | | | Inferred | 2,150 | 137,910 | 6.42 | 85,140 | 3.96 | | **Total** | **Total** | **3,880** | **251,450** | **6.49** | **156,580** | **4.03** | | Project Name | Category | Quantity (thousand tonnes) | Gold Grade (g/t) | Gold Metal (tonnes) | | :--- | :--- | :--- | :--- | :--- | | Huangjinmei Project | Indicated | 430 | 3.61 | 1.5 | | | Inferred | 716 | 3.63 | 2.7 | | **Total** | **Total** | **1,146** | **3.62** | **4.2** | - The Huangjinmei Project (held by Shaanxi Jiahe Mining Development Co, Ltd) was sold in March 2020[14](index=14&type=chunk) [Ore Reserves](index=7&type=section&id=%E7%A4%A6%E7%9F%B3%E5%84%B2%E9%87%8F) As of December 31, 2019, probable reserves included 1,099 thousand tonnes of nickel-copper ore at Project 20 and 1,055 thousand tonnes of zinc-lead ore at the Baiganhu Project Ore Reserves Overview as of December 31, 2019 | Project Name | Category | Quantity (thousand tonnes) | Nickel Metal (tonnes) | Nickel Grade (%) | Copper Metal (tonnes) | Copper Grade (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Project 20 | Probable | 1,099 | 7,071 | 0.64 | 2,362 | 0.21 | | Project Name | Category | Quantity (thousand tonnes) | Zinc Metal (tonnes) | Zinc Grade (%) | Lead Metal (tonnes) | Lead Grade (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Baiganhu Project | Probable | 1,055 | 62,773 | 5.95 | 39,352 | 3.73 | [Exploration Permits](index=7&type=section&id=%E5%8B%98%E6%8E%A2%E8%A8%B1%E5%8F%AF%E8%AD%89) The company holds exploration permits for the Baiganhu Gold Mine, Project H-989, and the Huangshan Project, with some permits expired and renewal applications pending Exploration Permits Overview | Project Name | Exploration Ore Type | Exploration Area (sq. km.) | Permit Expiry Date (Year/Month) | | :--- | :--- | :--- | :--- | | Baiganhu Gold Mine Project | Gold | 0.64 | July 2018 | | H–989 Project | Copper, Nickel | 0.96 | July 2018 | | Huangshan Project | Copper, Nickel | 3.49 | March 2019 | - The Group is in the process of renewing these permits, and renewal applications have been submitted to the relevant government authorities[17](index=17&type=chunk) [Mining Permits](index=8&type=section&id=%E6%8E%A1%E7%A4%A6%E8%A8%B1%E5%8F%AF%E8%AD%89) The company holds mining permits for Project 20 (copper, nickel) and the Baiganhu Project (lead, zinc), with the Project 20 permit expired and renewal pending Mining Permits Overview | Project Name | Mining Ore Type | Mining Area (sq. km.) | Permit Expiry Date (Year/Month) | | :--- | :--- | :--- | :--- | | Project 20 | Copper, Nickel | 0.22 | October 2019 | | Baiganhu Project | Lead, Zinc | 0.96 | September 2021 | | Huangjinmei Project | Gold | 0.12 | February 2021 | - The Group is in the process of renewing the permit for Project 20, and the renewal application has been submitted to the relevant government authorities[17](index=17&type=chunk) - The Huangjinmei Project was sold in March 2020[18](index=18&type=chunk) [Capital and Exploration Expenditure](index=8&type=section&id=%E8%B3%87%E6%9C%AC%E9%96%8B%E6%94%AF%E5%8F%8A%E5%8B%98%E6%8E%A2%E9%96%8B%E6%94%AF) For the years ended December 31, 2018 and 2019, the Group did not engage in any ore production and incurred no capital or exploration expenditure - For the years ended December 31, 2018 and 2019, the Group did not engage in any ore production[19](index=19&type=chunk) - For the years ended December 31, 2018 and 2019, no capital expenditure was incurred for development and mining activities[20](index=20&type=chunk) - For the years ended December 31, 2018 and 2019, no exploration expenditure was charged to the consolidated statement of comprehensive income[21](index=21&type=chunk) [Management Discussion and Analysis](index=9&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) [Business Review](index=9&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group primarily engages in non-ferrous mineral mining and processing, but suspended mining activities in 2019 due to commodity price volatility and sold Shaanxi Jiahe - The Group is principally engaged in the mining and ore processing of non-ferrous minerals (nickel, copper, zinc, lead and gold)[23](index=23&type=chunk) - As commodity prices have not yet stabilized at a level high enough to make the business segment profitable, the Group continued to suspend mining activities and planned maintenance work during the year to extend the service life of the mines and reduce operating losses[24](index=24&type=chunk) - The Group entered into an agreement on December 24, 2019 to dispose of its entire equity interest in Shaanxi Jiahe, which was completed on March 23, 2020, to improve its business portfolio and risk management[25](index=25&type=chunk) [Mining Permits](index=10&type=section&id=%E6%8E%A1%E7%A4%A6%E8%A8%B1%E5%8F%AF%E8%AD%89) Hami Jinhua and Hami Jiatia hold mining permits for Mine 20 (copper-nickel) and Baiganhu Mine (lead-zinc), with Mine 20 requiring a hoisting system upgrade to resume production - Hami Jinhua and Hami Jiatia hold two mining permits for Mine 20 and Baiganhu Mine, with Mine 20 producing copper and nickel ore and Baiganhu Mine producing lead and zinc ore[28](index=28&type=chunk) - Mine 20 requires an upgrade of its hoisting system before production can be resumed[28](index=28&type=chunk) - The mining permit for the Huangjinmei Project was transferred upon the disposal of Shaanxi Jiahe[28](index=28&type=chunk) [Exploration Permits](index=10&type=section&id=%E5%8B%98%E6%8E%A2%E8%A8%B1%E5%8F%AF%E8%AD%89) Hami Jiatia holds three exploration permits for gold, nickel, and copper, with plans for further exploration when market conditions allow - Hami Jiatia holds three exploration permits in Xinjiang for the Baiganhu Gold Mine, Huangshan, and H–989, covering gold, nickel, and copper[29](index=29&type=chunk) - The Group will devote reasonable resources and/or cooperate with potential partners to carry out further exploration to enrich its resource and reserve base[29](index=29&type=chunk) - The exploration right for the Huangjinmei Project was transferred upon the disposal of Shaanxi Jiahe[29](index=29&type=chunk) [Ore Processing Plants](index=10&type=section&id=%E9%81%B8%E7%A4%A6%E5%BB%A0) Hami Jiatia and Hami Jinhua operate copper-nickel and lead-zinc ore processing plants, respectively, each with a capacity of 1,500 tonnes per day, though both were inactive this year - Hami Jiatia operates a copper-nickel ore processing plant, and Hami Jinhua owns a lead-zinc ore processing plant, each with a processing capacity of 1,500 tonnes per day[30](index=30&type=chunk) - During the year, neither Hami Jiatia nor Hami Jinhua conducted any mining and ore processing business[30](index=30&type=chunk) [Financial Services](index=10&type=section&id=%E8%B2%A1%E5%8B%99%E6%9C%8D%E5%8B%99) The Group's financial services segment generated revenue of approximately RMB 6,4 million in 2019, and three new loans totaling RMB 18 million were provided after the reporting period - The financial services segment generated revenue of approximately **RMB 6,4 million** for the year (2018: RMB 6,6 million)[31](index=31&type=chunk) - Subsequent to the year-end and up to the date of this report, the Group entered into three separate loan agreements with three different independent third parties to provide three loans of **RMB 6 million each** at an annual interest rate of 7%[31](index=31&type=chunk) - Loan II (RMB 65 million) was approved for a 31-month extension on February 28, 2020[31](index=31&type=chunk) [Engineering Services](index=11&type=section&id=%E5%B7%A5%E7%A8%8B%E6%9C%8D%E5%8B%99) The Group provides oil, gas, and coal-bed methane engineering services in Shanxi Province but has decided to temporarily suspend this segment to focus on the coal trading business - The Group, through Yonghe County Changshi Engineering Services Co, Ltd, provides oil, natural gas, and coal-bed methane engineering services, as well as pre-drilling engineering services in Shanxi Province, China[33](index=33&type=chunk) - The Group has decided to temporarily suspend this segment to concentrate its resources on the coal trading business[33](index=33&type=chunk) [Trading Business](index=11&type=section&id=%E8%B2%BF%E6%98%93%E6%A5%AD%E5%8B%99) During the year, the Group launched a coal trading business through two newly established subsidiaries, which contributed RMB 85,8 million in revenue - During the year, the Group commenced a coal trading business through two newly established indirect subsidiaries, Changzhi Runce Trading Co, Ltd and Gujiao Runce Trading Co, Ltd[34](index=34&type=chunk) - This segment contributed **RMB 85,8 million** to the Group's revenue for the year[34](index=34&type=chunk) [Update on Shaanxi Jiahe](index=11&type=section&id=%E6%9C%89%E9%97%9C%E9%99%9D%E8%A5%BF%E4%BD%B3%E5%90%88%E7%9A%84%E6%9C%80%E6%96%B0%E8%B3%87%E6%96%99) The equity of Shaanxi Jiahe was transferred back to Hami Jiatia in May 2018, and the Group subsequently entered into an agreement to sell its entire stake, completing the transaction in March 2020 - The equity interest in Shaanxi Jiahe was transferred back to Hami Jiatia on May 22, 2018[35](index=35&type=chunk) - The Group entered into an agreement with an independent third party for the disposal of Jiahe on December 24, 2019, which has been completed as of the date of this report[36](index=36&type=chunk) - The non-operating receivables and payables of Shaanxi Jiahe were fully recovered and settled through an offsetting arrangement in April 2019[36](index=36&type=chunk) [Performance Review](index=12&type=section&id=%E6%A5%AD%E7%B8%BE%E5%9B%9E%E9%A1%A7) Revenue nearly tripled to RMB 93,6 million due to the new coal trading business, while gross profit decreased by 63% as the business focus shifted to lower-margin trading Performance Comparison for 2019 and 2018 | Metric | 2019 (RMB million) | 2018 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 93.6 | 32.8 | +185% | | Cost of Sales | 90.3 | 24.0 | +276% | | Gross Profit | 3.3 | 8.8 | -63% | | Administrative Expenses | 21.1 | 28.3 | -25.5% | | Other Income — Net | 4.5 | 14.4 | -68.8% | | Other Operating Income/(Losses) | 4.5 | (27.4) | From Loss to Gain | | Finance Income — Net | 1.9 | 1.3 | +46.2% | | Income Tax (Expense)/Credit | (10.3) | 4.7 | From Credit to Expense | | Operating Loss | (6.9) | (49.5) | -86.1% | - The increase in revenue was mainly due to the revenue of approximately **RMB 85,8 million** generated from the new coal trading business segment during the year[38](index=38&type=chunk) - The decrease in gross profit was mainly due to the Group's business focus shifting to the lower-margin coal trading business during the year[38](index=38&type=chunk) [Operating Loss by Segment](index=13&type=section&id=%E7%B6%93%E7%87%9F%E8%99%A7%E6%90%8D) In 2019, the coal trading business contributed RMB 85,8 million in revenue, while the mining segment recorded an operating profit of RMB 22,0 million despite having no revenue Segment Operating Performance Comparison for 2019 and 2018 | Segment | 2019 Revenue (RMB thousand) | 2019 Segment Results (RMB thousand) | 2019 Operating Margin (%) | 2018 Revenue (RMB thousand) | 2018 Segment Results (RMB thousand) | 2018 Operating Margin (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Coal Trading | 85,823 | 585 | 0.7% | – | – | N/A | | Financial Services Interest Income | 6,369 | 6,258 | 98.3% | 6,636 | 3,589 | 54.1% | | Engineering and Other Related Services | 1,380 | (2,590) | (187.7%) | 26,140 | 329 | 1.3% | | Mining | – | 22,039 | N/A | 52 | (51,170) | (98,403.8%) | | **Total** | **93,572** | **26,292** | **28.1%** | **32,828** | **(47,252)** | **(143.9%)** | [Liquidity and Financial Review](index=13&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group had total current assets of RMB 340,6 million, current liabilities of RMB 43,8 million, a current ratio of 7,8, and no outstanding interest-bearing bank loans Liquidity Metrics Comparison for 2019 and 2018 | Metric | 2019 (RMB million) | 2018 (RMB million) | | :--- | :--- | :--- | | Current Assets | 340.6 | 351.8 | | Current Liabilities | 43.8 | 58.9 | | Current Ratio | 7.8 | 6.0 | | Bank and Cash Balances | 218.2 | 167.9 | | Restricted Cash Deposits | 0.2 | 2.7 | | Outstanding Interest-bearing Bank Loans | 0 | 2.2 | - The Group primarily conducts its continuing business transactions in RMB and HKD and has not entered into any forward currency contracts for hedging purposes[51](index=51&type=chunk) [Foreign Exchange Risk](index=14&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA) The Group's business is mainly conducted in RMB and has not experienced significant difficulties due to exchange rate fluctuations, thus no hedging activities are currently undertaken - The Group's business is primarily conducted in RMB and has not experienced any material difficulties in its operations and liquidity due to exchange rate fluctuations[53](index=53&type=chunk) - The Group believes that the costs associated with hedging arrangements would outweigh their benefits, and therefore, no hedging activities for foreign exchange risk are currently undertaken[53](index=53&type=chunk) [Gearing Ratio](index=14&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E6%AF%94%E7%8E%87) As of December 31, 2019, the Group's gearing ratio was 0%, consistent with 2018 - As at 31 December 2019, the gearing ratio was **0%** (2018: 0%)[54](index=54&type=chunk) [Pledge of Assets, Commitments and Contingent Liabilities of the Company](index=14&type=section&id=%E6%9C%AC%E5%85%AC%E5%8F%B8%E7%9A%84%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC%E3%80%81%E6%89%BF%E6%93%94%E5%8F%8A%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) As of December 31, 2019, the Group had no contracted capital expenditures or pledged assets, but faces potential contingent liabilities from new environmental laws and insufficient employee insurance - As at 31 December 2019 and 2018, the Group had no contracted capital expenditures[55](index=55&type=chunk) - As at 31 December 2019 and 2018, the Company had no pledge of assets[56](index=56&type=chunk) - The Group may face contingent liabilities from new environmental laws and regulations in the future, as well as the impact of insufficient insurance coverage for future employee accidents[56](index=56&type=chunk) [Human Resources and Share Option Scheme](index=14&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B3%87%E6%BA%90%E5%8F%8A%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) As of December 31, 2019, the Group employed 32 staff with total employee costs of RMB 8,9 million, and no share options were granted, exercised, or outstanding during the year - As at 31 December 2019, the Group employed **32 employees** (2018: 39)[58](index=58&type=chunk) - Total staff costs (including directors' remuneration) for the year were approximately **RMB 8,9 million** (2018: RMB 9,6 million)[58](index=58&type=chunk) - As at 31 December 2019, there were no share options granted, exercised, lapsed or outstanding[58](index=58&type=chunk) [Future Prospects and Outlook](index=15&type=section&id=%E6%9C%AA%E4%BE%86%E5%B1%95%E6%9C%9B%E5%8F%8A%E5%89%8D%E6%99%AF) The Group will continue to study mine restart plans and develop its new coal trading business while actively exploring business diversification and potential acquisitions to mitigate risks - The Group will continue to study the feasibility of restarting production at its mines and will devote reasonable resources to its existing business segments, especially the new coal trading business[60](index=60&type=chunk) - The Group will continue to seek other opportunities to diversify its business (including business segments and geographical regions) to reduce business risks arising from commodity market fluctuations[60](index=60&type=chunk) - The Company will make its best efforts to operate more actively and explore potential acquisition opportunities to capture market opportunities in China and other countries[60](index=60&type=chunk) [Significant Events After the Reporting Period](index=15&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E9%87%8D%E5%A4%A7%E4%BA%8B%E4%BB%B6) Post-reporting period, the Group provided three new loans, extended a loan to Beijing Fengwo, completed the sale of Shaanxi Jiahe, and is monitoring the impact of COVID-19 - In January 2020, the Group entered into three loan agreements with independent third parties to provide loans totaling **RMB 18 million** at an annual interest rate of 7%[61](index=61&type=chunk) - On February 28, 2020, Loan II (RMB 65 million) was approved for a 31-month extension[62](index=62&type=chunk) - On March 23, 2020, the disposal of Shaanxi Jiahe was completed[63](index=63&type=chunk) - The outbreak of the Novel Coronavirus (COVID-19) has affected the global business environment, and the Group will continue to monitor its impact on its financial position and operating results[63](index=63&type=chunk) [Biographies of Directors and Senior Management](index=16&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E5%B1%A4%E4%B9%8B%E5%B1%A5%E6%AD%B7) [Executive Directors](index=16&type=section&id=%E5%9F%B7%E8%A1%8C%E8%91%A3%E4%BA%8B) Ms Wang Qian has over 15 years of experience in finance and investment, while Mr Zhou Jianzhong has over 20 years of experience in construction and engineering management - Ms Wang Qian has over 15 years of experience in finance, investment, and management, and was appointed as an Executive Director on January 26, 2016[65](index=65&type=chunk)[66](index=66&type=chunk) - Mr Zhou Jianzhong has over 20 years of experience in construction and engineering management and was appointed as an Executive Director on March 11, 2019, responsible for the general operations of the mines in China[67](index=67&type=chunk)[68](index=68&type=chunk) [Non-executive Director](index=17&type=section&id=%E9%9D%9E%E5%9F%B7%E8%A1%8C%E8%91%A3%E4%BA%8B) Mr Cao Ye has extensive experience in investment and coal trading and was appointed as a Non-executive Director on June 14, 2019 - Mr Cao Ye has extensive experience in investment and the coal trading business and was appointed as a Non-executive Director on June 14, 2019[70](index=70&type=chunk)[71](index=71&type=chunk) [Independent Non-executive Directors](index=17&type=section&id=%E7%8D%A8%E7%AB%8B%E9%9D%9E%E5%9F%B7%E8%A1%8C%E8%91%A3%E4%BA%8B) The independent non-executive directors bring extensive experience in investment, finance, accounting, and the mining industry - Ms Xiang Siying has extensive experience in investment, banking, and financial advisory and was appointed as Chairlady of the Board on March 11, 2019[72](index=72&type=chunk)[73](index=73&type=chunk) - Ms Huang Mei has over 15 years of experience in accounting, auditing, and corporate management and was appointed as an Independent Non-executive Director on October 19, 2018[75](index=75&type=chunk)[76](index=76&type=chunk) - Mr Chen Bingquan has over 10 years of experience in the mining and materials trading industry and was appointed as an Independent Non-executive Director on March 11, 2019[77](index=77&type=chunk)[78](index=78&type=chunk) [Senior Management](index=18&type=section&id=%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E5%B1%A4) Mr Huang Kenian serves as Vice President, responsible for direct investment and corporate finance, while Mr Yau Hong Kuen is the Company Secretary and Chief Financial Officer - Mr Huang Kenian is the Vice President of the Company, responsible for direct investment and corporate finance, with over 20 years of experience[79](index=79&type=chunk) - Mr Yau Hong Kuen was appointed as the Company Secretary and Chief Financial Officer on February 13, 2019, and has over 10 years of experience in accounting, auditing, and corporate fields[81](index=81&type=chunk) [Report of the Directors](index=20&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%A0%B1%E5%91%8A) [Corporate Information](index=20&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) Huili Resources (Group) Limited was incorporated in the Cayman Islands in February 2010 and listed on the Main Board of the Hong Kong Stock Exchange in January 2012 - The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands on February 19, 2010[83](index=83&type=chunk) - The Company's shares were listed on the Main Board of the Stock Exchange on January 12, 2012[83](index=83&type=chunk) [Principal Activities](index=20&type=section&id=%E4%B8%BB%E8%A6%81%E6%A5%AD%E5%8B%99) The Company is an investment holding company whose subsidiaries are engaged in mining, mineral processing, trading, and financial services in China, with coal trading added this year - The Company's principal activity is investment holding, Its subsidiaries are principally engaged in the mining, processing and sale of gold, nickel, copper, lead and zinc products, trading of oil and gas exploration materials and coal, and financial services in the PRC[84](index=84&type=chunk) - Apart from the commencement of the coal trading business, there were no significant changes in the nature of the Group's principal activities during the year[84](index=84&type=chunk) [Directors' Opinion on the Qualified Opinion](index=20&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%B0%8D%E4%BF%9D%E7%95%99%E6%84%8F%E8%A6%8B%E4%B9%8B%E6%84%8F%E8%A6%8B) The Board notes the auditor's qualified opinion on assumptions used for the 2018 mining rights valuation and believes it will not carry forward to 2020 as Shaanxi Jiahe has been sold - The auditor has issued a qualified opinion on the Company's consolidated financial statements for the year, primarily related to the assumptions used in assessing the carrying amount of mining rights as at 31 December 2018[86](index=86&type=chunk) - As the disposal of Shaanxi Jiahe was completed on 23 March 2020, the Board considers that the assumption is no longer applicable as at 31 December 2019[86](index=86&type=chunk) - The Board is of the view that, except for the comparability of the figures for the year ending 31 December 2020 and the related figures, any resulting audit qualification is not expected to be carried forward to the year ending 31 December 2020[89](index=89&type=chunk) [Principal Risks and Uncertainties](index=21&type=section&id=%E4%B8%BB%E8%A6%81%E9%A2%A8%E9%9A%AA%E5%8F%8A%E4%B8%8D%E6%98%8E%E6%9C%97%E5%9B%A0%E7%B4%A0) The Group faces business risks from finite mine life and price volatility, operational risks from policy changes in China, and various financial risks - Business risks include limited mine life of projects, uncertainties in new mining projects, commodity price volatility, and the cyclical nature of the economy[90](index=90&type=chunk) - Operational risks include political, economic, and legal developments in China, changes in government policies, stricter environmental regulations, and uncertainty in the renewal of mining and exploration permits[90](index=90&type=chunk) - Financial risks include market risk (foreign exchange risk, interest rate risk), credit risk, and liquidity risk[90](index=90&type=chunk) [Environmental Policies and Performance](index=22&type=section&id=%E7%92%B0%E5%A2%83%E6%94%BF%E7%AD%96%E5%8F%8A%E8%A1%A8%E7%8F%BE) The Group complies with all relevant environmental laws in China, faced no environmental claims or penalties this year, and has a provision of RMB 2,8 million for environmental costs - The Group has complied in all material respects with all relevant PRC laws and regulations regarding environmental protection and was not subject to any environmental claims, lawsuits, penalties or administrative sanctions during the year[93](index=93&type=chunk) - As at 31 December 2019, the provision for closure, reclamation and environmental costs was approximately **RMB 2,8 million** (2018: RMB 5,3 million)[93](index=93&type=chunk) [Compliance with Relevant Laws and Regulations](index=22&type=section&id=%E9%81%B5%E5%AE%88%E7%9B%B8%E9%97%9C%E6%B3%95%E5%BE%8B%E5%8F%8A%E6%B3%95%E8%A6%8F) The Group has complied in all material respects with the relevant laws and regulations that have a significant impact on its business and operations during the year - The Group has complied in all material respects with the relevant laws and regulations that have a significant impact on the Group's business and operations during the year[94](index=94&type=chunk) - The Group did not have any material breach of or non-compliance with applicable laws and regulations during the year[94](index=94&type=chunk) [Results and Dividends](index=23&type=section&id=%E6%A5%AD%E7%B8%BE%E5%8F%8A%E8%82%A1%E6%81%AF) The Group recorded a loss for the year, and the Directors do not recommend the payment of any dividend - The Directors do not recommend the payment of any dividend for the year[100](index=100&type=chunk) [Distributable Reserves](index=23&type=section&id=%E5%8F%AF%E4%BE%9B%E5%88%86%E6%B4%BE%E5%84%B2%E5%82%99) As of December 31, 2019, the Company's reserves available for distribution to shareholders amounted to approximately RMB 261,6 million - As at 31 December 2019, the Company's reserves available for distribution to shareholders amounted to approximately **RMB 261,6 million**, representing the share premium of approximately RMB 668,8 million less accumulated losses of approximately RMB 407,2 million[101](index=101&type=chunk) [Major Customers and Suppliers](index=24&type=section&id=%E4%B8%BB%E8%A6%81%E5%AE%A2%E6%88%B6%E5%8F%8A%E4%BE%9B%E6%87%89%E5%95%86) Sales to the top five customers accounted for 60,4% of total sales, while purchases from the top five suppliers, primarily for the new coal trading business, accounted for 100% Sales/Purchases Percentage from Major Customers and Suppliers in 2019 | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Sales to top five customers as % of total sales | 60.4% | 97.6% | | Sales to largest customer as % of total sales | 19.4% | 41.4% | | Purchases from top five suppliers as % of total purchases | 100.0% | 96.6% | | Purchases from largest supplier as % of total purchases | 33.3% | 31.1% | - The data for major customers and suppliers in 2019 primarily came from the Group's newly commenced coal trading business[108](index=108&type=chunk) [Changes and Re-election of Directors](index=24&type=section&id=%E8%91%A3%E4%BA%8B) The Board saw multiple changes, including resignations and new appointments, with Ms Wang Qian, Mr Cao Ye, and Ms Huang Mei retiring by rotation and being eligible for re-election - The Board of Directors underwent several changes during the year, including the resignation of Executive Directors Liu Huijie, Li Xiaobin, and Jia Dai, and the appointment of Zhou Jianzhong; the appointment of Non-executive Director Cao Ye; and the appointment of Independent Non-executive Director Chen Bingquan, the resignation of Cao Shiping, and the appointment of Xiang Siying as Chairlady[109](index=109&type=chunk) - Ms Wang Qian, Mr Cao Ye and Ms Huang Mei will retire by rotation and, being eligible, offer themselves for re-election at the forthcoming annual general meeting[109](index=109&type=chunk) [Equity-Linked Agreements (Share Option Scheme)](index=26&type=section&id=%E6%AC%8A%E7%9B%8A%E6%8E%9B%E9%89%A4%E5%8D%94%E8%AD%B0) The Company has a share option scheme to incentivize participants, effective for 10 years from December 2011, with no options granted or outstanding in 2019 - The Company has a share option scheme to incentivise eligible participants to contribute to the overall value of the Company and its shareholders[119](index=119&type=chunk) - The Share Option Scheme became effective on 16 December 2011 and will remain in force for a period of 10 years[119](index=119&type=chunk) - The maximum number of shares that may be issued under the Share Option Scheme shall not exceed **10% of the issued shares**, and the maximum number of shares granted to any one participant in any 12-month period shall not exceed 1%[119](index=119&type=chunk)[120](index=120&type=chunk) - The Company did not grant any share options under the Share Option Scheme during the year, and there were no outstanding share options as at 31 December 2019[121](index=121&type=chunk) [Persons with Disclosable Interests in Shares and Underlying Shares](index=27&type=section&id=%E6%96%BC%E8%82%A1%E4%BB%BD%E5%8F%8A%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E4%B8%AD%E6%93%81%E6%9C%89%E6%A0%B9%E6%93%9A%E8%AD%89%E5%88%B8%E5%8F%8A%E6%9C%9F%E8%B2%A8%E6%A2%9D%E4%BE%8B%E7%AC%ACXV%E9%83%A8%E7%AC%AC2%E5%8F%8A3%E5%88%86%E9%83%A8%E9%A0%88%E4%BA%88%E6%8A%AB%E9%9C%B2%E6%AC%8A%E7%9B%8A%E4%B9%8B%E4%BA%BA%E5%A3%AB) As of December 31, 2019, major shareholders included Mr Guo Jianzhong (28,08%), China Huarong Asset Management Co, Ltd (19,75%), and Mr Li Guangrong and associates (11,64%) Major Shareholders' Holdings as of December 31, 2019 | Name | Nature of Interest | Total Interest in Shares (L) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Tian Yuan International Limited | Beneficial Owner | 412,592,702 | 25.47% | | Mr Guo Jianzhong | Interest of Controlled Corporation & Beneficial Owner | 454,958,702 | 28.08% | | Affinitiv Mobile Ventures Ltd. | Beneficial Owner | 320,000,000 | 19.75% | | China Huarong Asset Management Co., Ltd. | Interest of Controlled Corporation | 320,000,000 | 19.75% | | China Huarong Overseas Investment Holdings Co., Limited | Interest of Controlled Corporation | 320,000,000 | 19.75% | | Ministry of Finance of the PRC | Interest of Controlled Corporation | 320,000,000 | 19.75% | | Sun Shaojie | Interest of Controlled Corporation | 320,000,000 | 19.75% | | Huarong Zhiyuan Investment & Management Co., Ltd. | Interest of Controlled Corporation | 320,000,000 | 19.75% | | Huarong Overseas Chinese Asset Management Co., Ltd. | Interest of Controlled Corporation | 320,000,000 | 19.75% | | Guangdong Jinfeng Group Co., Ltd. | Interest of Controlled Corporation | 320,000,000 | 19.75% | | Legend Vantage Limited | Beneficial Owner | 188,638,883 | 11.64% | | Mr Li Guangrong | Interest of Controlled Corporation | 188,638,883 | 11.64% | | Ms Gao Miaomiao | Interest of Controlled Corporation | 188,638,883 | 11.64% | [Sufficient Public Float](index=29&type=section&id=%E5%85%85%E8%B6%B3%E5%85%AC%E7%9C%BE%E6%8C%81%E8%82%A1%E9%87%8F) Based on available information, at least 25% of the Company's total issued share capital is held by the public - At least **25%** of the Company's total issued share capital is held by the public[131](index=131&type=chunk) [Auditor](index=29&type=section&id=%E6%A0%B8%E6%95%B8%E5%B8%AB) BDO Limited was appointed as the Company's auditor effective January 30, 2019, and will be proposed for re-appointment at the upcoming annual general meeting - BDO Limited has been appointed as the auditor of the Company since the conclusion of the annual general meeting on 30 January 2019[133](index=133&type=chunk) [Corporate Governance Report](index=30&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%A0%B1%E5%91%8A) [Introduction](index=30&type=section&id=%E7%B7%92%E8%A8%80) The Company is committed to maintaining high standards of corporate governance and has complied with the Corporate Governance Code, with deviations from provisions A,2,1, A,4,1, and A,6,7 - The Company is committed to maintaining high standards of corporate governance and has adopted and complied with the provisions of the Corporate Governance Code as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, with the exception of code provisions A,2,1, A,4,1 and A,6,7[134](index=134&type=chunk) [Directors' Securities Transactions](index=30&type=section&id=%E8%91%A3%E4%BA%8B%E7%9A%84%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93) The Company has adopted the Model Code for Securities Transactions by Directors, and all Directors have confirmed their compliance with the code during the year - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules, and upon specific enquiry of all Directors, the Directors have confirmed that they have complied with the required standard set out in the Model Code during the year[135](index=135&type=chunk) [Board of Directors](index=30&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83) As of December 31, 2019, the Board consisted of six directors, responsible for leading the Group, setting strategy, and overseeing senior management performance - As at 31 December 2019, the Board comprised six Directors, including two executive Directors, one non-executive Director and three independent non-executive Directors[137](index=137&type=chunk) - The Board is primarily accountable to the shareholders and is responsible for leading and governing the Company and its subsidiaries, including overseeing the Group's business, strategic direction, financial performance, setting objectives and business development plans, and monitoring the performance of senior management[137](index=137&type=chunk) - During the year, the Company considered all independent non-executive Directors (namely Ms Xiang Siying, Ms Huang Mei and Mr Chen Bingquan) to be independent of the Company[138](index=138&type=chunk) [Directors' Attendance at Meetings](index=31&type=section&id=%E8%91%A3%E4%BA%8B%E5%87%BA%E5%B8%AD%E6%9C%83%E8%AD%B0) The Board holds at least four regular meetings annually; some independent non-executive directors were unable to attend the AGM in 2019 due to other business commitments - The Board holds at least four regular meetings a year[142](index=142&type=chunk) - Mr Cao Shiping and Ms Xiang Siying (both independent non-executive Directors) were absent from the Company's annual general meeting on 30 January 2019 due to other business commitments[142](index=142&type=chunk) Attendance at Board and Committee Meetings in 2019 | Director's Name | Board Meetings | Audit Committee Meetings | Remuneration Committee Meetings | Nomination Committee Meetings | General Meetings | | :--- | :--- | :--- | :--- | :--- | :--- | | Ms Wang Qian | 22/23 | N/A | 4/4 | 4/4 | 2/2 | | Mr Zhou Jianzhong | 21/21 | N/A | N/A | N/A | 1/1 | | Mr Liu Huijie | 10/10 | N/A | N/A | N/A | 1/2 | | Mr Li Xiaobin | 1/1 | N/A | N/A | N/A | 1/1 | | Ms Jia Dai | 1/1 | N/A | N/A | N/A | 1/1 | | Mr Cao Ye | 12/13 | N/A | N/A | N/A | N/A | | Ms Xiang Siying | 23/23 | 3/3 | 4/4 | 4/4 | 1/2 | | Ms Huang Mei | 22/23 | 3/3 | 4/4 | 4/4 | 2/2 | | Mr Chen Bingquan | 20/21 | 2/2 | N/A | N/A | 1/1 | | Mr Cao Shiping | 1/1 | 1/1 | N/A | N/A | 0/1 | [Roles and Responsibilities of Chairman and Chief Executive Officer](index=32&type=section&id=%E4%B8%BB%E5%B8%AD%E5%8F%8A%E8%A1%8C%E6%94%BF%E7%B8%BD%E8%A3%81%E4%B9%8B%E8%A7%92%E8%89%B2%E5%8F%8A%E8%81%B7%E8%B2%AC) The roles of Chairman and CEO are separate; following Mr Li Xiaobin's resignation, independent non-executive director Ms Xiang Siying was appointed as Chairlady - Code provision A,2,1 stipulates that the roles of chairman and chief executive officer should be separate and should not be performed by the same individual[145](index=145&type=chunk) - On 11 March 2019, Mr Li Xiaobin resigned as an executive Director and the Chairman, and Ms Xiang Siying, an independent non-executive Director, was subsequently appointed as the Chairlady of the Company[145](index=145&type=chunk) [Term of Non-executive Directors](index=32&type=section&id=%E9%9D%9E%E5%9F%B7%E8%A1%8C%E8%91%A3%E4%BA%8B%E7%9A%84%E4%BB%BB%E6%9C%9F) All non-executive directors, except for Ms Huang Mei, have a three-year term and are subject to retirement by rotation in accordance with the Company's articles - With the exception of Ms Huang Mei who does not have a specific term of appointment, all other non-executive Directors are appointed for a term of three years[146](index=146&type=chunk) - All Directors (including non-executive Directors) are subject to retirement by rotation in accordance with the Company's articles of association[146](index=146&type=chunk) [Senior Management Remuneration](index=32&type=section&id=%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E5%B1%A4%E8%96%AA%E9%85%AC) During the year, three members of senior management had remuneration falling within the band of not more than HK$1,000,000 Senior Management Remuneration Bands for 2019 | Remuneration Band | Number of Individuals | | :--- | :--- | | Not more than HK$1,000,000 (equivalent to not more than RMB 881,135) | 3 | [Audit Committee](index=32&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee, comprising three independent non-executive directors, met three times during the year to review financial results, internal controls, and auditor independence - The Audit Committee comprises three independent non-executive Directors, namely Ms Huang Mei (Chairlady), Ms Xiang Siying and Mr Chen Bingquan[147](index=147&type=chunk) - The Audit Committee meets at least twice a year to review the annual and interim results reports and other information to be reported to shareholders, and to review the effectiveness and objectivity of the audit process[147](index=147&type=chunk) - During the year, the Audit Committee held three meetings[147](index=147&type=chunk) - The Audit Committee has reviewed the Group's audited results for the year and recommended their adoption by the Board[150](index=150&type=chunk) [Audit Committee's Opinion on the Qualified Opinion](index=33&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83%E5%B0%8D%E4%BF%9D%E7%95%99%E6%84%8F%E8%A6%8B%E4%B9%8B%E6%84%8F%E8%A6%8B) The Audit Committee concurs with the Board's view on the auditor's qualified opinion and believes the matter will not carry forward to 2020, except for comparability purposes - The Audit Committee concurs with the opinion on the assumptions and qualified opinion discussed in the Report of the Directors[151](index=151&type=chunk) - The Audit Committee considers the measures sufficient to address the matters that may give rise to the qualified opinion and that, except for the comparability of the figures for the year ending 31 December 2020 and the related figures, any resulting audit qualification is not expected to be carried forward to the year ending 31 December 2020[151](index=151&type=chunk) [Remuneration Committee](index=34&type=section&id=%E8%96%AA%E9%85%AC%E5%A7%94%E5%93%A1%E6%9C%83) The Remuneration Committee, comprising two independent non-executive directors and one executive director, is responsible for the Group's remuneration policy and structure - The Remuneration Committee currently comprises two independent non-executive Directors, Ms Xiang Siying (Chairlady) and Ms Huang Mei, and one executive Director, Ms Wang Qian[153](index=153&type=chunk) - The duties of the Remuneration Committee include considering and making recommendations to the Board on the Group's remuneration policy and structure, and reviewing and determining the remuneration packages of the Directors and senior management[153](index=153&type=chunk) - During the year, the Remuneration Committee held four meetings[153](index=153&type=chunk) [Nomination Committee](index=34&type=section&id=%E6%8F%90%E5%90%8D%E5%A7%94%E5%93%A1%E6%9C%83) The Nomination Committee, comprising one executive director and two independent non-executive directors, reviews the Board's structure and nominates candidates for directorship - The Nomination Committee currently comprises one executive Director, Ms Wang Qian (Chairlady), and two independent non-executive Directors, Ms Xiang Siying and Ms Huang Mei[155](index=155&type=chunk) - Its principal duties include reviewing the structure, size, composition and skills of the Board at least annually and making recommendations; identifying and nominating candidates to fill casual vacancies on the Board; assessing the independence of independent non-executive Directors; and making recommendations to the Board on matters relating to the appointment and re-appointment of Directors and succession planning for Directors, in particular the Chairman and the Chief Executive Officer[154](index=154&type=chunk) - During the year, the Nomination Committee held four meetings[155](index=155&type=chunk) [Accountability and Audit](index=35&type=section&id=%E5%95%8F%E8%B2%AC%E5%8F%8A%E5%AF%A9%E6%A0%B8) The Directors are responsible for preparing true and fair financial statements, with auditor's remuneration for the year including RMB 1,260 thousand for audit services - The Directors are responsible for preparing consolidated financial statements for each financial period which give a true and fair view of the state of affairs and of the results and cash flows of the Group for that period[159](index=159&type=chunk) Auditor's Remuneration | Service Category | Amount (RMB thousand) | | :--- | :--- | | Audit Services | 1,260 | | Other Non-audit Services | 200 | [Risk Management and Internal Control](index=35&type=section&id=%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86%E5%8F%8A%E5%85%A7%E9%83%A8%E7%9B%A3%E6%8E%A7) The Board is responsible for the Company's risk management and internal control systems and has implemented measures including an internal compliance officer and annual reviews - The Board is responsible for the Company's risk management and internal control systems and for reviewing their effectiveness[164](index=164&type=chunk) - The Group has established an internal compliance officer position, engaged legal advisers in the PRC, the Cayman Islands and Hong Kong, and engaged an internal control consultant to conduct an annual review[169](index=169&type=chunk) - The results of the internal control consultant's review revealed no material internal control deficiencies[169](index=169&type=chunk) [Directors' Training](index=37&type=section&id=%E8%91%A3%E4%BA%8B%E5%9F%B9%E8%A8%93) Newly appointed directors receive comprehensive induction training, and all directors are provided with continuous professional development and regulatory updates - Each newly appointed Director receives a comprehensive, formal and tailored induction on first appointment[171](index=171&type=chunk) - The Company Secretary provides regular updates on the Listing Rules, and Directors are provided with materials and attend seminars to keep abreast of the latest regulatory developments[171](index=171&type=chunk) [Board Diversity Policy](index=37&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E6%88%90%E5%93%A1%E5%A4%9A%E5%85%83%E5%8C%96%E6%94%BF%E7%AD%96) The Company has adopted a board diversity policy that considers factors such as gender, age, cultural background, professional experience, and skills to achieve board diversity - The Company has adopted a board diversity policy which aims to achieve diversity on the Board by taking into account a number of factors, including but not limited to gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge and other qualities[172](index=172&type=chunk) [Dividend Policy](index=37&type=section&id=%E8%82%A1%E6%81%AF%E6%94%BF%E7%AD%96) The Company has established a dividend policy, but the Board does not recommend the payment of any dividend for the current year - The Company has established a dividend policy setting out the factors for determining the payment of dividends by the Company, the long-term profitability and expected cash inflows and outflows of the Company, the frequency and form of dividend payments[174](index=174&type=chunk) - The Board does not recommend the payment of any dividend for the year (2018: Nil)[175](index=175&type=chunk) [Company Secretary](index=37&type=section&id=%E5%85%AC%E5%8F%B8%E7%A7%98%E6%9B%B8) Mr Yau Hong Kuen was appointed as Company Secretary on February 13, 2019, and has undertaken no less than 15 hours of relevant professional training during the year - Mr Yau Hong Kuen was appointed as the Company Secretary on 13 February 2019[176](index=176&type=chunk) - During the year, Mr Yau has undertaken no less than 15 hours of relevant professional training[176](index=176&type=chunk) [Shareholders' Rights](index=38&type=section&id=%E8%82%A1%E6%9D%B1%E6%AC%8A%E7%9B%8A) The Board is committed to maintaining ongoing communication with shareholders and encourages their attendance at general meetings - The Board is committed to maintaining ongoing communication with shareholders, and the Company encourages shareholders to attend general meetings[179](index=179&type=chunk) - Shareholders may make written enquiries to the Company by email to enquiry@huili,hk, by fax to (852) 2840 0470 or by post to Room 2805, 28/F, Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong, for the attention of the Company Secretary[179](index=179&type=chunk) [Independent Auditor's Report](index=39&type=section&id=%E7%8D%A8%E7%AB%8B%E6%A0%B8%E6%95%B8%E5%B8%AB%E5%A0%B1%E5%91%8A) [Qualified Opinion](index=39&type=section&id=%E4%BF%9D%E7%95%99%E6%84%8F%E8%A6%8B) The auditor has issued a qualified opinion on the consolidated financial statements for the year ended December 31, 2019, concerning the validity of assumptions used in the 2018 mining rights valuation - The auditor has audited the consolidated financial statements of the Group for the year ended 31 December 2019 and has issued a qualified opinion[185](index=185&type=chunk) - The qualified opinion relates primarily to the validity of the assumptions used in assessing the carrying amount of the mining rights as at 31 December 2018[185](index=185&type=chunk) [Basis for Qualified Opinion](index=39&type=section&id=%E4%BF%9D%E7%95%99%E6%84%8F%E8%A6%8B%E4%B9%8B%E5%9F%BA%E7%A4%8E) The qualified opinion stems from the inability to obtain sufficient evidence regarding the 2018 valuation assumptions for Shaanxi Jiahe's assets, impacting goodwill and subsequent impairment reversals - The auditor was unable to satisfy themselves that the impairment provision for the amount due from Xiaoyi Dajieshan at the acquisition date (May 2018) was not materially misstated and whether any additional provision or reversal of provision was necessary for the year ended 31 December 2018, due to the inability to obtain relevant documents and explanations to support the assumptions used in estimating the fair value of the 100% equity interest[187](index=187&type=chunk) - The auditor was unable to satisfy themselves that the fair values of the mining rights and other receivables at the acquisition date were not materially misstated and that the goodwill arising from the acquisition was appropriately presented[187](index=187&type=chunk)[189](index=189&type=chunk) - Due to the scope limitation, the auditor was unable to satisfy themselves that the impairment losses on other receivables and goodwill recognised for the year ended 31 December 2018 were not materially misstated and that the carrying amount and impairment provision for the mining rights were fairly presented[189](index=189&type=chunk) - The above audit limitations remained unresolved in the audit of the 2019 consolidated financial statements, affecting the assessment of the reversal of impairment loss on mining rights and the fair value loss on the disposal group in 2019, and resulting in a limitation on the audit work on the comparability of the current period's figures and the corresponding figures[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) [Key Audit Matters](index=41&type=section&id=%E9%97%9C%E9%8D%B5%E5%AF%A9%E8%A8%88%E4%BA%8B%E9%A0%85) Key audit matters include the impairment of mining rights and buildings due to significant management judgment, and provisions for receivables due to estimation uncertainty - Impairment of mining rights and mining buildings was considered a key audit matter due to the significant management judgement involved in key assumptions such as pre-tax discount rates, estimated metal prices, production lines and inflation rates[197](index=197&type=chunk)[199](index=199&type=chunk) - Impairment provision for trade receivables, loans receivable and other receivables was considered a key audit matter because the estimation of expected credit losses involves significant inherent uncertainty and judgement by management, including identifying risks of significant deterioration in credit quality and the assumptions used in the expected credit loss model[200](index=200&type=chunk)[201](index=201&type=chunk) [Directors' Responsibilities for the Consolidated Financial Statements](index=43&type=section&id=%E8%91%A3%E4%BA%8B%E5%B0%B1%E5%90%88%E4%BD%B5%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%A0%88%E6%89%BF%E6%93%94%E7%9A%84%E8%B2%AC%E4%BB%BB) The Directors are responsible for preparing true and fair consolidated financial statements in accordance with HKFRSs and the Hong Kong Companies Ordinance - The Directors are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance[204](index=204&type=chunk) - The Directors are responsible for such internal control as they determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error[204](index=204&type=chunk) [Auditor's Responsibilities for the Audit of the Consolidated Financial Statements](index=44&type=section&id=%E6%A0%B8%E6%95%B8%E5%B8%AB%E5%B0%B1%E5%AF%A9%E8%A8%88%E5%90%88%E4%BD%B5%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E6%89%BF%E6%93%94%E7%9A%84%E8%B2%AC%E4%BB%BB) The auditor's objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement and to issue an opinion - The auditor's objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion[207](index=207&type=chunk) - The auditor exercises professional judgement and maintains professional scepticism, identifies and assesses the risks of material misstatement, understands internal control, and evaluates the appropriateness of accounting policies and the going concern basis[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) - The auditor communicates with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control[213](index=213&type=chunk) [Consolidated Statement of Comprehensive Income](index=46&type=section&id=%E5%90%88%E4%BD%B5%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) [Loss and Total Comprehensive Loss for the Year](index=46&type=section&id=%E5%B9%B4%E5%85%A7%E8%99%A7%E6%90%8D%E5%8F%8A%E5%85%A8%E9%9D%A2%E8%99%A7%E6%90%8D%E7%B8%BD%E9%A1%8D) For the year ended December 31, 2019, the Group recorded a total comprehensive loss of RMB 15,236 thousand, a significant reduction from RMB 43,530 thousand in 2018 Key Data from the Consolidated Statement of Comprehensive Income | Metric | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 93,572 | 32,828 | | Cost of sales | (90,289) | (24,012) | | Gross profit | 3,283 | 8,816 | | Administrative expenses | (21,088) | (28,306) | | Expected credit losses on financial assets | (25,595) | (16,955) | | Reversal of expected credit losses on financial assets | 27,532 | – | | Other operating income/(losses) | 4,498 | (27,386) | | Other income — net | 4,472 | 14,350 | | Operating loss | (6,898) | (49,481) | | Finance income — net | 1,945 | 1,256 | | Loss before income tax | (4,953) | (48,225) | | Income tax (expense)/credit | (10,283) | 4,695 | | Loss and total comprehensive loss for the year | (15,236) | (43,530) | | Loss for the year attributable to equity holders of the Company | (16,013) | (41,269) | | Loss for the year attributable to non-controlling interests | 777 | (2,261) | [Consolidated Statement of Financial Position](index=47&type=section&id=%E5%90%88%E4%BD%B5%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8) [Total Assets](index=47&type=section&id=%E8%B3%87%E7%94%A2%E7%B8%BD%E5%80%BC) As of December 31, 2019, the Group's total assets were RMB 494,170 thousand, a decrease from RMB 522,964 thousand in 2018 Key Asset Data from the Consolidated Statement of Financial Position | Metric | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Property, plant and equipment | 51,611 | 68,171 | | Mining and exploration rights | 90,752 | 88,867 | | Right-of-use assets | 10,997 | – | | Land use rights | – | 8,613 | | Total non-current assets | 153,607 | 171,127 | | Trade and bills receivables | 5,943 | 11,358 | | Loans receivable | 64,535 | 98,856 | | Other receivables and prepayments | 36,178 | 68,381 | | Cash and cash equivalents | 218,238 | 167,923 | | Assets of a disposal group classified as held for sale | 15,669 | – | | Total current assets | 340,563 | 351,837 | | **Total assets** | **494,170** | **522,964** | [Total Liabilities](index=47&type=section&id=%E8%B2%A0%E5%82%B5%E7%B8%BD%E5%80%BC) As of December 31, 2019, the Group's total liabilities were RMB 68,856 thousand, a decrease from RMB 82,223 thousand in 2018 Key Liability Data from the Consolidated Statement of Financial Position | Metric | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Trade payables | 1,803 | 7,610 | | Other payables and accrued charges | 17,948 | 43,890 | | Contract liabilities | 11,654 | – | | Lease liabilities | 2,075 | – | | Borrowings | – | 2,200 | | Total current liabilities | 43,752 | 58,924 | | Provision for closure, reclamation and environmental costs | 2,770 | 5,307 | | Deferred tax liabilities | 21,626 | 17,992 | | Total non-current liabilities | 25,104 | 23,299 | | **Total liabilities** | **68,856** | **82,223** | [Total Equity](index=48&type=section&id=%E7%B8%BD%E6%AC%8A%E7%9B%8A) As of December 31, 2019, the Group's total equity was RMB 425,314 thousand, a decrease from RMB 440,741 thousand in 2018 Key Equity Data from the Consolidated Statement of Financial Position | Metric | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Share capital | 137,361 | 137,361 | | Share premium | 668,768 | 668,768 | | Other reserves | (11,291) | (12,168) | | Accumulated losses | (366,937) | (349,856) | | Non-controlling interests | (2,587) | (3,364) | | **Total equity** | **425,314** | **440,741** | [Consolidated Statement of Changes in Equity](index=49&type=section&id=%E5%90%88%E4%BD%B5%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) [Changes in Equity](index=49&type=section&id=%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95) For the year ended December 31, 2019, total equity attributable to owners of the Company decreased to RMB 427,901 thousand, mainly due to the loss for the year Overview of Consolidated Changes in Equity for 2019 | Metric | Share Capital (RMB thousand) | Share Premium (RMB thousand) | Other Reserves (RMB thousand) | Statutory Reserve (RMB thousand) | Accumulated Losses (RMB thousand) | Total attributable to equity holders of the Company (RMB thousand) | Non-controlling Interests (RMB thousand) | Total Equity (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | At 1 January 2019 (restated) | 137,361 | 668,768 | (12,168) | – | (350,047) | 443,914 | (3,364) | 440,550 | | (Loss)/profit for the year | – | – | – | – | (16,013) | (16,013) | 777 | (15,236) | | Appropriation to statutory reserve | – | – | – | 877 | (877) | – | – | – | | At 31 December 2019 | 137,361 | 668,768 | (12,168) | 877 | (366,937) | 427,901 | (2,587) | 425,314 | - The initial application of HKFRS 16 had an impact of **RMB 191 thousand** on accumulated losses[223](index=223&type=chunk) [Consolidated Statement of Cash Flows](index=50&type=section&id=%E5%90%88%E4%BD%B5%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) [Net Cash from Operating Activities](index=50&type=section&id=%E7%B6%93%E7%87%9F%E6%B4%BB%E5%8B%95%E6%89%80%E5%BE%97%E7%8F%BE%E9%87%91%E6%B7%A8%E9%A1%8D) For the year ended December 31, 2019, net cash from operating activities was RMB 16,313 thousand, a significant decrease from RMB 103,270 thousand in 2018 Net Cash from Operating Activities | Metric | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Loss before income tax | (4,953) | (48,225) | | Cash used in operations before working capital changes | (4,969) | (1,574) | | Cash generated from operations | 18,300 | 103,535 | | Income tax paid | (1,892) | (265) | | Interest paid | (95) | – | | **Net cash from operating activities** | **16,313** | **103,270** | [Net Cash from Investing Activities](index=50&type=section&id=%E6%8A%95%E8%B3%87%E6%B4%BB%E5%8B%95%E6%89%80%E5%BE%97%E7%8F%BE%E9%87%91%E6%B7%A8%E9%A1%8D) For the year ended December 31, 2019, net cash from investing activities was RMB 3,116 thousand, an increase from RMB 585 thousand in 2018 Net Cash from Investing Activities | Metric | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Purchase of property, plant and equipment | (361) | (2,865) | | Proceeds from disposal of property, plant and equipment | 1,097 | 1,904 | | Interest received | 2,380 | 1,544 | | **Net cash from investing activities** | **3,116** | **585** | [Net Cash from Financing Activities](index=51&type=section&id=%E8%9E%8D%E8%B3%87%E6%B4%BB%E5%8B%95%E6%89%80%E5%BE%97%E7%8F%BE%E9%87%91%E6%B7%A8%E9%A1%8D) For the year ended December 31, 2019, net cash from financing activities was RMB 30,662 thousand, a significant increase from RMB 1,025 thousand in 2018 Net Cash from Financing Activities | Metric | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Loans to third parties | (65,000) | (100,000) | | Repayment from third parties | 100,000 | 100,000 | | Repayment of borrowings | (2,200) | – | | Principal portion of lease liabilities repaid | (2,007) | – | | Interest paid | (131) | (175) | | **Net cash from financing activities** | **30,662** | **1,025** | [Net Increase in Cash and Cash Equivalents](index=51&type=section&id=%E7%8F%BE%E9%87%91%E5%8F%8A%E7%8F%BE%E9%87%91%E7%AD%89%E5%83%B9%E7%89%A9%E5%A2%9E%E5%8A%A0%E6%B7%A8%E9%A1%8D) For the year ended December 31, 2019, the net increase in cash and cash equivalents was RMB 50,091 thousand, resulting in a year-end balance of RMB 218,630 thousand Change in Cash and Cash Equivalents | Metric | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Net increase in cash and cash equivalents | 50,091 | 104,880 | | Cash and cash equivalents at beginning of financial year | 167,923 | 54,410 | | Exchange difference on cash and cash equivalents | 616 | 8,633 | | **Cash and cash equivalents at end of financial year** | **218,630** | **167,923** | [Notes to the Consolidated Financial Statements](index=52&type=section&id=%E5%90%88%E4%BD%B5%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) [1. General Information](index=52&type=section&id=1.%20%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99) The Group is primarily engaged in mining, mineral processing, financial services, engineering services, and coal trading in China, having commenced the coal trading business in 2019 - The Company was incorporated in the Cayman Islands on 19 February 2010 under the Companies Law of the Cayman Islands and was listed on the Main Board of The Stock Exchange of Hong

Company Overview [Company Information](index=2&type=section&id=Company%20Information) This section outlines basic information about Huili Resources (Group) Limited, including board members, authorized representatives, auditors, and stock details - The company is incorporated in the Cayman Islands, listed on the Main Board of the Hong Kong Stock Exchange, with principal places of business in Hong Kong and Xinjiang, China[27](index=27&type=chunk) - The Board of Directors includes executive, non-executive, and independent non-executive directors, with Ms. Xiang Siying serving as Chairperson[2](index=2&type=chunk) - The independent auditor is BDO Limited, Hong Kong, and the company's stock code is 1303, with its website at www.huili.hk[2](index=2&type=chunk)[3](index=3&type=chunk) [Mine Information](index=4&type=section&id=Mine%20Information) This section provides mineral resources and ore reserves data for the company's key mining projects as of June 30, 2019, along with details on exploration and mining permits 2019 Mineral Resources Overview as of June 30 | Project Name | Category | Quantity (thousand tons) | Copper Metal (tons) | Copper Grade (%) | Lead Metal (tons) | Lead Grade (%) | Zinc Metal (tons) | Zinc Grade (%) | Gold Metal (tons) | Gold Grade (grams/ton) | | :----------- | :------- | :----------------------- | :------------------ | :--------------- | :---------------- | :--------------- | :---------------- | :--------------- | :---------------- | :--------------------- | | Project 20 | Measured | 1,330 | 9,430 | 0.71 | 3,150 | 0.24 | - | - | - | - | | | Inferred | 1,260 | 8,660 | 0.69 | 3,160 | 0.25 | - | - | - | - | | H-989 Project| Measured | 3,390 | 16,540 | 0.49 | 7,750 | 0.23 | - | - | - | - | | | Inferred | 2,370 | 12,100 | 0.51 | 4,390 | 0.19 | - | - | - | - | | Ziganhu Project| Measured | 1,730 | - | - | 71,440 | 4.13 | 113,540 | 6.57 | - | - | | | Inferred | 2,150 | - | - | 85,140 | 3.96 | 137,910 | 6.42 | - | - | | Huangjinmei Project| Measured | 430 | - | - | - | - | - | - | 1.5 | 3.61 | | | Inferred | 716 | - | - | - | - | - | - | 2.7 | 3.63 | 2019 Ore Reserves Overview as of June 30 | Project Name | Reserve Category | Ore Quantity (thousand tons) | Copper Metal (tons) | Copper Grade (%) | Lead Metal (tons) | Lead Grade (%) | Zinc Metal (tons) | Zinc Grade (%) | | :----------- | :--------------- | :--------------------------- | :------------------ | :--------------- | :---------------- | :--------------- | :---------------- | :--------------- | | Project 20 | Probable | 1,099 | 7,071 | 0.64 | 2,362 | 0.21 | - | - | | Ziganhu Project| Probable | 1,055 | - | - | 39,352 | 3.73 | 62,773 | 5.95 | - Exploration permits include the Ziganhu Gold Mine Project, H-989 Project, and Huangshan Project, with some permits expired in 2018 and currently under renewal; mining permits include Project 20, Baiganhu Project, and Huangjinmei Project, with Project 20's permit expiring in October 2019 and a renewal application submitted[8](index=8&type=chunk)[10](index=10&type=chunk) - For the six months ended June 30, 2019 and 2018, the Group incurred no capital expenditures on ore production, development, or mining activities, nor did it deduct exploration expenses[11](index=11&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk) Financial Statements [Interim Condensed Consolidated Statement of Comprehensive Income](index=7&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) This section presents the consolidated comprehensive income for the six months ended June 30, 2019, showing a turnaround from loss to profit, primarily due to a significant increase in other income Key Data from Interim Condensed Consolidated Statement of Comprehensive Income (Six Months Ended June 30) | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | YoY Change (%) | | :-------- | :------------------- | :------------------- | :------------- | | Revenue | 11,801 | 14,610 | -19.23 | | Cost of sales | (8,255) | (10,333) | -20.11 | | Gross profit | 3,546 | 4,277 | -17.10 | | Administrative expenses | (11,703) | (10,752) | 8.84 | | Other income - net | 20,599 | 1,762 | 1069.18 | | Operating profit/(loss) | 12,442 | (4,816) | 358.38 | | Finance income - net | 843 | 431 | 95.59 | | Profit/(loss) before income tax expense | 13,285 | (4,385) | 403.08 | | Income tax expense | (734) | (718) | 2.23 | | Profit/(loss) and total comprehensive income for the period | 12,551 | (5,103) | 346.00 | | Profit/(loss) attributable to owners of the Company | 11,421 | (4,904) | 332.90 | | Basic and diluted earnings/(loss) per share (RMB cents) | 0.71 | (0.30) | 336.67 | - Revenue for the period decreased by **19.23% year-on-year to RMB 11.8 million**, primarily due to a reduction in selling and marketing costs[14](index=14&type=chunk) - The company successfully turned a loss into a profit, with **profit and total comprehensive income for the period at RMB 12.55 million**, compared to a loss of RMB 5.10 million in the prior period, mainly driven by a significant increase in net other income[14](index=14&type=chunk) [Interim Condensed Consolidated Statement of Financial Position](index=8&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This section presents the consolidated statement of financial position as of June 30, 2019, reflecting minor changes in asset structure and a significant reduction in liabilities Key Data from Interim Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2019 (RMB thousands) | December 31, 2018 (RMB thousands) | Change (%) | | :-------- | :---------------------------- | :-------------------------------- | :--------- | | **Assets** | | | | | Total non-current assets | 171,875 | 171,127 | 0.44 | | Total current assets | 337,907 | 351,837 | -3.96 | | Total assets | 509,782 | 522,964 | -2.52 | | **Liabilities** | | | | | Total non-current liabilities | 25,057 | 23,299 | 7.55 | | Total current liabilities | 31,510 | 58,924 | -46.53 | | Total liabilities | 56,567 | 82,223 | -31.19 | | **Equity** | | | | | Total equity | 453,215 | 440,741 | 2.83 | - Total assets slightly decreased by **2.52% to RMB 509.78 million**, primarily due to a reduction in current assets[15](index=15&type=chunk) - Total current liabilities significantly decreased by **46.53% to RMB 31.51 million**, leading to a **31.19% reduction in total liabilities to RMB 56.57 million**[19](index=19&type=chunk) - Total equity increased by **2.83% to RMB 453.22 million**, reflecting the accumulation of profit during the period[19](index=19&type=chunk) [Interim Condensed Consolidated Statement of Changes in Equity](index=10&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This section presents the consolidated statement of changes in equity for the six months ended June 30, 2019, primarily reflecting the contribution of profit to equity and the initial application impact of HKFRS 16 Changes in Equity Attributable to Owners of the Company (Six Months Ended June 30) | Indicator | January 1, 2019 (Restated) (RMB thousands) | Profit for the Period (RMB thousands) | June 30, 2019 (RMB thousands) | | :-------- | :----------------------------------------- | :-------------------- | :---------------------------- | | Share capital | 137,361 | - | 137,361 | | Share premium | 668,768 | - | 668,768 | | Other reserves | 221 | - | 221 | | Accumulated losses | (349,933) | 11,421 | (338,512) | | Total equity attributable to owners of the Company | 444,028 | 11,421 | 455,449 | | Non-controlling interests | (3,364) | 1,130 | (2,234) | | Total equity | 440,664 | 12,551 | 453,215 | - As of June 30, 2019, equity attributable to owners of the Company increased from approximately **RMB 444.03 million** at the beginning of the year to approximately **RMB 455.45 million**, primarily due to a **profit of RMB 11.42 million** recorded during the period[23](index=23&type=chunk) - The initial application of HKFRS 16 resulted in an adjustment of **RMB 77 thousand** to accumulated losses at the beginning of the period, with a corresponding reduction in total equity[23](index=23&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=11&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This section presents the consolidated statement of cash flows for the six months ended June 30, 2019, showing a significant improvement in operating cash flow and a substantial increase in cash and cash equivalents at period-end Key Data from Interim Condensed Consolidated Statement of Cash Flows (Six Months Ended June 30) | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | YoY Change (%) | | :-------- | :------------------- | :------------------- | :------------- | | Net cash from/(used in) operating activities | 24,982 | (1,413) | 1867.52 | | Net cash from investing activities | 2,141 | 83,447 | -97.43 | | Net cash used in financing activities | (3,307) | - | Not Applicable | | Net increase in cash and cash equivalents | 23,816 | 82,034 | -70.97 | | Cash and cash equivalents at beginning of period | 167,923 | 54,410 | 208.62 | | Cash and cash equivalents at end of period | 191,392 | 137,209 | 39.49 | - Net cash from operating activities turned from a **net outflow of RMB 1.41 million** in the prior period to a **net inflow of RMB 24.98 million**, indicating a significant improvement in operating performance[26](index=26&type=chunk) - Net cash from investing activities significantly decreased by **97.43% to RMB 2.14 million**, primarily due to substantial cash inflows from investing activities in the prior period[26](index=26&type=chunk) - Cash and cash equivalents at the end of the period increased by **39.49% to RMB 191.39 million**[26](index=26&type=chunk) Notes to the Interim Condensed Consolidated Financial Information [General Information and Basis of Preparation](index=12&type=section&id=General%20Information%20and%20Basis%20of%20Preparation) This section provides the company's basic information, the basis for preparing the interim condensed consolidated financial statements, and their relationship to the annual financial statements - Huili Resources (Group) Limited is incorporated in the Cayman Islands, primarily engaged in mining, mineral processing, sales of gold, silver, copper, lead, and zinc products, financial services, engineering and other related services, and coal trading in China[27](index=27&type=chunk) - The interim condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, and should be read in conjunction with the 2018 annual consolidated financial statements[28](index=28&type=chunk) [Changes in Accounting Policies](index=13&type=section&id=Changes%20in%20Accounting%20Policies) This section details the Group's first-time adoption of new and revised Hong Kong Financial Reporting Standards, particularly the impact of HKFRS 16 "Leases" on the financial statements - The Group first adopted new and revised standards, including HKFRS 16 "Leases," and other standards had no significant financial impact on the interim condensed consolidated financial statements apart from HKFRS 16[32](index=32&type=chunk)[33](index=33&type=chunk) [Impact of Adopting HKFRS 16](index=14&type=section&id=Impact%20of%20Adopting%20HKFRS%2016) The adoption of HKFRS 16 significantly changed lease accounting, leading to the recognition of right-of-use assets and lease liabilities on the statement of financial position - HKFRS 16 requires lessees to recognize most leases on the statement of financial position as right-of-use assets and lease liabilities[35](index=35&type=chunk) - The Group applied HKFRS 16 using the cumulative effect method and recognized an adjustment to accumulated losses at the date of initial application[35](index=35&type=chunk) Impact of Adopting HKFRS 16 on the Statement of Financial Position as of January 1, 2019 | Indicator | Increase/(Decrease) (RMB thousands) | | :-------- | :-------------------------------- | | Right-of-use assets | 13,167 | | Land use rights | (8,613) | | Increase in total assets | 4,554 | | Lease liabilities | 4,631 | | Increase in total liabilities | 4,631 | | Accumulated losses | (77) | | Decrease in total equity | (77) | [New Definition and Accounting for Leases](index=17&type=section&id=New%20Definition%20and%20Accounting%20for%20Leases) This section explains the new definition of a lease under HKFRS 16 and the accounting treatment for right-of-use assets and lease liabilities as a lessee - Under HKFRS 16, a lease is defined as a contract or part of a contract that conveys the right to use an asset for a period of time in exchange for consideration[43](index=43&type=chunk) - The Group has elected not to separate non-lease components, accounting for all lease components and associated non-lease components as a single lease component[43](index=43&type=chunk) - All leases are capitalized on the statement of financial position as right-of-use assets and lease liabilities, except for low-value assets and short-term leases, which the Group has elected not to capitalize[44](index=44&type=chunk) - Right-of-use assets are recognized at cost, including the initial measurement of lease liabilities, lease payments, initial direct costs, and estimated dismantling and removal costs; lease liabilities are recognized at the present value of lease payments[47](index=47&type=chunk)[48](index=48&type=chunk) [Transition Arrangements](index=19&type=section&id=Transition%20Arrangements) This section describes the transition methods and practical expedients adopted by the Group upon initial application of HKFRS 16 - The Group applied HKFRS 16 using the cumulative effect method, with the cumulative effect recognized as an adjustment to accumulated losses at the date of initial application (January 1, 2019)[50](index=50&type=chunk) - The Group has elected to apply the exemption for leases with a term ending within 12 months from the date of initial application and has removed initial direct costs when measuring right-of-use assets[51](index=51&type=chunk) [Estimates and Financial Risk Management](index=20&type=section&id=Estimates%20and%20Financial%20Risk%20Management) This section describes the significant judgments and estimates made by management in preparing the financial statements, as well as the financial risks faced by the Group and its management strategies - The significant judgments and estimates made by management in preparing the interim condensed consolidated financial statements are the same as those applied in the 2018 annual financial statements[52](index=52&type=chunk) - The Group's business is exposed to market risk (including foreign exchange risk and interest rate risk), credit risk, and liquidity risk, but has not historically used derivative instruments for hedging or trading purposes[53](index=53&type=chunk) - There have been no changes in risk management policies since December 31, 2018; fair value estimates are categorized into three levels, and the Group had no financial assets or liabilities measured at fair value (other than financial assets at fair value through other comprehensive income) as of June 30, 2019, and December 31, 2018[54](index=54&type=chunk)[58](index=58&type=chunk) [Segment Information](index=21&type=section&id=Segment%20Information) This section provides operating segment information for the Group, categorized by business type and geography, including revenue, profit, assets, and liabilities for mining, financial services, engineering services, and trading businesses - The Group has four reportable segments: mining, financial services, engineering services, and trading business (newly added in 2019)[59](index=59&type=chunk)[60](index=60&type=chunk) [Reportable Segment Results](index=23&type=section&id=Reportable%20Segment%20Results) This section presents the performance of each reportable segment in terms of revenue, operating profit, finance income/costs, income tax expense, assets, and liabilities Reportable Segment Revenue (Six Months Ended June 30) | Segment | 2019 (RMB thousands) | 2018 (RMB thousands) | | :------ | :------------------- | :------------------- | | Financial services | 3,500 | 3,345 | | Engineering services | - | 11,265 | | Trading business | 8,301 | - | | Total | 11,801 | 14,610 | Reportable Segment Operating Profit/(Loss) (Six Months Ended June 30) | Segment | 2019 (RMB thousands) | 2018 (RMB thousands) | | :------ | :------------------- | :------------------- | | Mining | 21,154 | (3,901) | | Financial services | 2,997 | 1,732 | | Engineering services | (4,036) | (3,954) | | Trading business | 151 | - | | Unallocated | (7,668) | 1,307 | | Total | 12,442 | (4,816) | - In the first half of 2019, trading business contributed **RMB 8.3 million** in revenue, financial services revenue grew steadily to **RMB 3.5 million**, while engineering services revenue was zero (compared to RMB 11.27 million in the prior period)[63](index=63&type=chunk) - The mining segment achieved an operating profit of **RMB 21.15 million**, a significant improvement from a loss of **RMB 3.90 million** in the prior period[63](index=63&type=chunk) [Revenue Disaggregation and Geographical Information](index=25&type=section&id=Revenue%20Disaggregation%20and%20Geographical%20Information) This section disaggregates revenue by major geographical markets, principal product and service lines, and timing of revenue recognition, and provides geographical information based on customer location - All of the Group's revenue is derived from mainland China[69](index=69&type=chunk)[77](index=77&type=chunk)[82](index=82&type=chunk) - In the first half of 2019, revenue from major products and services came from financial services (**RMB 3.5 million**) and coal trading (**RMB 8.3 million**)[69](index=69&type=chunk) - As of June 30, 2019, specific non-current assets in mainland China amounted to **RMB 161.77 million**, and in Hong Kong to **RMB 4.63 million**[82](index=82&type=chunk) [Other Income and Finance Income](index=27&type=section&id=Other%20Income%20and%20Finance%20Income) This section details the composition and changes in the Group's net other income and net finance income Other Income — Net (Six Months Ended June 30) | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :------------------- | :------------------- | | Exchange gain | - | 1,585 | | Expected credit loss on trade receivables | (2,490) | - | | Expected credit loss on loans and other receivables | (1,553) | - | | Reversal of impairment loss on other receivables | 24,640 | - | | Others | 2 | 177 | | Total | 20,599 | 1,762 | - Net other income significantly increased to **RMB 20.60 million** in the first half of 2019 (2018: RMB 1.76 million), primarily due to a **reversal of impairment loss on other receivables of RMB 24.64 million**[83](index=83&type=chunk) Finance Income — Net (Six Months Ended June 30) | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :------------------- | :------------------- | | Interest income from bank deposits | 1,071 | 595 | | Interest expense | (228) | (164) | | Finance income — net | 843 | 431 | - Net finance income increased by **95.59% to RMB 0.84 million** (2018: RMB 0.43 million), mainly from interest income on bank deposits[86](index=86&type=chunk) [Income Tax Expense and Earnings Per Share](index=29&type=section&id=Income%20Tax%20Expense%20and%20Earnings%20Per%20Share) This section presents the composition of the Group's income tax expense, applicable tax rates, and the calculation of basic and diluted earnings per share Income Tax Expense (Six Months Ended June 30) | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :------------------- | :------------------- | | Current income tax | 761 | 745 | | Deferred income tax | (27) | (27) | | Income tax expense | 734 | 718 | - Income tax expense remained relatively stable compared to the prior period, at approximately **RMB 0.73 million**, primarily from taxes paid by PRC subsidiaries at a **25% corporate income tax rate**[91](index=91&type=chunk)[92](index=92&type=chunk) Earnings/(Loss) Per Share (Six Months Ended June 30) | Indicator | 2019 (Unaudited) | 2018 (Unaudited) | | :-------- | :--------------- | :--------------- | | Profit/(loss) attributable to owners of the Company (RMB thousands) | 11,421 | (4,904) | | Adjusted weighted average number of ordinary shares in issue (thousands) | 1,620,000 | 1,620,000 | | Basic and diluted earnings/(loss) per share (RMB cents) | 0.71 | (0.30) | - Basic and diluted earnings per share were **RMB 0.71 cents**, compared to a loss per share of **RMB 0.30 cents** in the prior period, reflecting a significant improvement in the company's profitability[97](index=97&type=chunk) [Dividends and Property, Plant and Equipment](index=31&type=section&id=Dividends%20and%20Property,%20Plant%20and%20Equipment) This section states that the Board does not recommend an interim dividend and reports on changes in property, plant and equipment - The directors do not recommend the payment of an interim dividend for the six months ended June 30, 2019 and 2018[98](index=98&type=chunk) - There were no additions to property, plant and equipment during the period, but approximately **RMB 1.299 million** of property, plant and equipment were disposed of[99](index=99&type=chunk) [Receivables and Prepayments](index=32&type=section&id=Receivables%20and%20Prepayments) This section provides a detailed analysis of the Group's trade receivables, loans receivable, other receivables, and prepayments, including their composition, aging, and impairment provisions [Trade Receivables](index=32&type=section&id=Trade%20Receivables) This section presents the aging analysis and expected credit loss provision for trade receivables Trade Receivables (RMB thousands) | Indicator | June 30, 2019 | December 31, 2018 | | :-------- | :------------ | :---------------- | | Third parties | - | 11,516 | | Less: Expected credit loss | - | (158) | | Total | - | 11,358 | - As of June 30, 2019, trade receivables were **zero**, compared to **RMB 11.36 million** as of December 31, 2018, indicating that trade receivables have been fully collected or settled[101](index=101&type=chunk) [Loans Receivable](index=33&type=section&id=Loans%20Receivable) This section describes the loans provided by the Group to third parties and their expected credit loss provisions Loans Receivable (RMB thousands) | Indicator | June 30, 2019 | December 31, 2018 | | :-------- | :------------ | :---------------- | | Loan to a third party | 100,000 | 100,000 | | Less: Expected credit loss on loans receivable | (1,169) | (1,144) | | Total | 98,831 | 98,856 | - The Group provided a **RMB 100 million** loan to Shenzhen Danfeng Bailu Hotel Apartment Co., Ltd. at an annual interest rate of **7%**, extended to September 11, 2019[102](index=102&type=chunk) [Other Receivables and Prepayments](index=34&type=section&id=Other%20Receivables%20and%20Prepayments) This section details the composition of other receivables and prepayments, including amounts due from Zhonghai Wobang, Merit Progress, Shaanxi Jiatai, Mr. Wei Xing, and Shaanxi Garner, along with related impairment provisions Other Receivables and Prepayments (RMB thousands) | Item | June 30, 2019 | December 31, 2018 | | :--- | :------------ | :---------------- | | Subtotal of other receivables | 67,181 | 159,200 | | Less: Impairment provision | (92,019) | (92,019) | | Advances to suppliers | 1,200 | 1,200 | | Total | 44,665 | 68,381 | - As of June 30, 2019, total other receivables and prepayments amounted to **RMB 44.67 million**, a decrease from **RMB 68.38 million** as of December 31, 2018[103](index=103&type=chunk) - Impairment provisions primarily target amounts due from Shaanxi Jiatai (**RMB 32.48 million**) and Mr. Wei Xing (**RMB 28.48 million**), both fully provided due to disputes with counterparties[116](index=116&type=chunk) - Amounts due from Merit Progress Investments Limited have been partially recovered, with the remaining **RMB 21.96 million** expected to be settled by the end of December 2019, secured by share pledges and personal guarantees[109](index=109&type=chunk) [Payables and Borrowings](index=37&type=section&id=Payables%20and%20Borrowings) This section analyzes the Group's trade payables, other payables and accruals, and the composition and changes in borrowings [Trade Payables](index=37&type=section&id=Trade%20Payables) This section presents the aging analysis of trade payables Trade Payables (RMB thousands) | Indicator | June 30, 2019 | December 31, 2018 | | :-------- | :------------ | :---------------- | | Third parties | 3,318 | 7,610 | - As of June 30, 2019, trade payables amounted to **RMB 3.32 million**, a decrease from **RMB 7.61 million** as of December 31, 2018[118](index=118&type=chunk) [Other Payables and Accruals](index=38&type=section&id=Other%20Payables%20and%20Accruals) This section details the composition of other payables and accruals, including salaries and welfare payable, accrued taxes, and others Other Payables and Accruals (RMB thousands) | Item | June 30, 2019 | December 31, 2018 | | :--- | :------------ | :---------------- | | Other payables | 5,958 | 30,196 | | Salaries and welfare payable | 5,286 | 5,805 | | Accrued taxes (excluding income tax) | 7,560 | 7,889 | | Total | 18,804 | 43,890 | - As of June 30, 2019, total other payables and accruals amounted to **RMB 18.80 million**, a significant decrease from **RMB 43.89 million** as of December 31, 2018[119](index=119&type=chunk) - The decrease in other payables was primarily due to a significant reduction in amounts payable to Mr. Wei Xing and Beijing Jiatai[119](index=119&type=chunk) [Borrowings](index=39&type=section&id=Borrowings) This section describes the Group's borrowing situation Borrowings (RMB thousands) | Item | June 30, 2019 | December 31, 2018 | | :--- | :------------ | :---------------- | | Loans from Dongzheng and other village committees | - | 2,200 | - As of June 30, 2019, the Group had no outstanding borrowings, compared to **RMB 2.2 million** in unsecured loans from Dongzheng and other village committees as of December 31, 2018[123](index=123&type=chunk) [Share Capital and Business Combination](index=39&type=section&id=Share%20Capital%20and%20Business%20Combination) This section presents the company's share capital structure and provides information on the 2018 business combination Share Capital and Share Premium (RMB thousands) | Indicator | Number of Shares (thousands) | Share Capital | Share Premium | Total | | :-------- | :--------------------------- | :------------ | :------------ | :------ | | As of June 30, 2019 | 1,620,000 | 137,361 | 668,768 | 806,129 | - As of June 30, 2019, the number of issued shares was **1,620,000 thousand**, with total share capital and share premium amounting to **RMB 806.13 million**[124](index=124&type=chunk) - On May 22, 2018, Shaanxi Jiahe became an indirectly 95%-owned subsidiary of the Company, with a total acquisition consideration of **RMB 13.16 million** and goodwill recognized at **RMB 1.12 million**[125](index=125&type=chunk)[126](index=126&type=chunk) [Related Party Transactions and Commitments](index=41&type=section&id=Related%20Party%20Transactions%20and%20Commitments) This section discloses the Group's related party transactions, as well as capital commitments and irrevocable operating lease commitments as of the end of the reporting period [Related Party Transactions](index=41&type=section&id=Related%20Party%20Transactions) This section lists the compensation of key management personnel Key Management Personnel Compensation (Six Months Ended June 30) | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :------------------- | :------------------- | | Basic salaries, allowances and other benefits | 1,223 | 2,226 | | Contributions to retirement benefit schemes | 18 | 8 | | Total | 1,241 | 2,234 | - Total key management personnel compensation for the first half of 2019 was approximately **RMB 1.24 million**, a decrease from **RMB 2.23 million** in the prior period[129](index=129&type=chunk) [Commitments](index=42&type=section&id=Commitments) This section describes the Group's capital commitments and irrevocable operating lease commitments - As of June 30, 2019, and December 31, 2018, the Group had no contracted capital expenditures[130](index=130&type=chunk) - Due to the application of HKFRS 16, future lease payments have been recognized as lease liabilities since January 1, 2019, and are no longer presented as operating lease commitments[131](index=131&type=chunk) Irrevocable Operating Lease Minimum Rent Receivable (RMB thousands) | Period | June 30, 2019 | December 31, 2018 | | :----- | :------------ | :---------------- | | Within one year | 1,267 | 1,267 | | After one year but not more than five years | 3,000 | 3,600 | | Total | 4,267 | 4,867 | [Comparative Figures](index=43&type=section&id=Comparative%20Figures) This section states that certain comparative figures have been reclassified to conform to the current period's presentation - Certain comparative figures have been reclassified to conform to the current period's presentation; accumulated losses and non-controlling interests as of January 1, 2018, have also been restated to conform to the audited results for the year ended December 31, 2018[135](index=135&type=chunk) Management Discussion and Analysis [Business Review](index=44&type=section&id=Business%20Review) This section reviews the Group's various businesses, including mining, financial services, engineering services, and the newly launched coal trading business, and provides an update on Shaanxi Jiahe - The Group is primarily involved in the mining and beneficiation of non-ferrous minerals, including copper, silver, zinc, and lead in Xinjiang, and gold in Shaanxi Province[136](index=136&type=chunk) - Due to volatile commodity prices not yet stabilizing at profitable highs, the Group continued to suspend mining activities and planned maintenance work during the period to extend mine service life and reduce operating losses[137](index=137&type=chunk) [Mining Business](index=45&type=section&id=Mining%20Business) This section details the Group's mining permits, exploration permits, and the operational status of its beneficiation plants - Project 20 mine requires an upgrade of its hoisting system to comply with new safety production regulations, while the Baiganhu mine's feasibility for production is being assessed; the Huangjinmei Project will engage a mining construction company or seek potential partners for development when appropriate[138](index=138&type=chunk) - Hami Jiahe holds three exploration permits for the Baiganhu Gold Mine, Huangshan, and H-989 projects, and has conducted preliminary exploration on the Baiganhu Gold Mine; the Group will invest reasonable resources for further exploration[139](index=139&type=chunk) - The beneficiation plants of Hami Jiahe and Hami Jinhua both have a processing capacity of **1,500 tons per day**, but no mining or beneficiation activities were conducted during the period[140](index=140&type=chunk) [Financial Services](index=45&type=section&id=Financial%20Services) This section introduces the Group's financial services business and its revenue contribution - Financial services are conducted by Jia Yi, a wholly-owned subsidiary, providing a **RMB 100 million** loan to an independent third party at an annual interest rate of **7%**, generating approximately **RMB 3.5 million** in revenue during the period (2018: RMB 3.3 million)[141](index=141&type=chunk) [Engineering Services](index=46&type=section&id=Engineering%20Services) This section describes the scope of the Group's engineering services business - Engineering services are carried out by Changshi, a wholly-owned subsidiary in Shanxi Province, China, primarily engaged in oil, natural gas, coalbed methane engineering services, pre-drilling engineering services, and trading of oil and gas exploration materials[142](index=142&type=chunk) [Trading Business](index=46&type=section&id=Trading%20Business) This section introduces the Group's newly launched coal trading business and its initial results - The coal trading business, launched through the newly established wholly-owned subsidiary Changzhi Runce, contributed **RMB 8.3 million** in revenue during the period[143](index=143&type=chunk) - After the reporting period, purchase orders for approximately **78,100 tons of coal** were received, with a contract value of approximately **RMB 32.8 million**[143](index=143&type=chunk) [Shaanxi Jiahe Update](index=46&type=section&id=Shaanxi%20Jiahe%20Update) This section provides an update on Shaanxi Jiahe after the equity transfer back, including asset protection measures and potential disposal matters - All equity interest in Shaanxi Jiahe was transferred back to Hami Jiahe on May 22, 2018, making it an indirectly 95%-owned subsidiary of the Company[144](index=144&type=chunk) - The Company is actively taking measures to protect Shaanxi Jiahe's assets, including resolving exploration right transfer issues, developing the Huangjinmei Project, and considering potential disposal offers[147](index=147&type=chunk) - The Company is in preliminary discussions with potential buyers regarding a possible disposal of Shaanxi Jiahe, but no binding terms or agreements have been entered into, and shareholders and potential investors are advised to exercise caution[146](index=146&type=chunk) [Results Review](index=48&type=section&id=Results%20Review) This section provides a detailed analysis of the Group's revenue, gross profit, selling and marketing costs, administrative expenses, other income, finance income, and income tax expense, along with their reasons for change [Revenue and Gross Profit Analysis](index=48&type=section&id=Revenue%20and%20Gross%20Profit%20Analysis) This section analyzes the revenue and gross profit contributions from each of the Group's business segments Revenue and Gross Profit (Six Months Ended June 30) | Segment | 2019 Revenue (RMB millions) | 2019 Cost of Sales (RMB millions) | 2019 Gross Margin | 2018 Revenue (RMB millions) | 2018 Cost of Sales (RMB millions) | 2018 Gross Margin | | :------ | :-------------------------- | :-------------------------------- | :---------------- | :-------------------------- | :-------------------------------- | :---------------- | | Coal trading | 8.3 | 8.3 | 0% | - | - | Not Applicable | | Financial services interest income | 3.5 | - | 100% | 3.3 | - | 100% | | Trading of oil and gas exploration materials | - | - | Not Applicable | 11.3 | 9.0 | 20% | | Mining | - | - | Not Applicable | - | 1.3 | Not Applicable | | Total | 11.8 | 8.3 | | 14.6 | 10.3 | | - Revenue for the period was approximately **RMB 11.8 million**, a year-on-year decrease of approximately **19%**, mainly due to the cessation of the oil and gas exploration materials trading business, but the new coal trading business contributed **RMB 8.3 million** in revenue[148](index=148&type=chunk)[150](index=150&type=chunk) - The gross margin for financial services interest income remained at **100%**, while the gross margin for coal trading business was **0%**[150](index=150&type=chunk) - The Group continued to suspend production plans for Project 20, Baiganhu, and Huangjinmei projects, awaiting commodity price stabilization[152](index=152&type=chunk) [Expenses and Other Income Analysis](index=49&type=section&id=Expenses%20and%20Other%20Income%20Analysis) This section analyzes the changes in selling and marketing costs, administrative expenses, net other income, and net finance income - There were no selling and marketing costs during the period; administrative expenses were approximately **RMB 11.7 million** (2018: RMB 10.8 million), mainly comprising depreciation, professional fees, staff costs, and office expenses[153](index=153&type=chunk) - Net other income was approximately **RMB 20.6 million**, primarily due to the reversal of impairment losses on other receivables from prior years[154](index=154&type=chunk) - Net finance income was approximately **RMB 0.8 million** (2018: RMB 0.4 million), mainly representing interest income (net of interest expenses)[155](index=155&type=chunk) [Income Tax Expense](index=49&type=section&id=Income%20Tax%20Expense) This section describes the composition of income tax expense - Income tax expense was approximately **RMB 0.7 million**, remaining relatively unchanged compared to the prior period, mainly comprising tax provisions for PRC operations and deferred tax, with no Hong Kong profits tax provision made during the period[156](index=156&type=chunk) [Investments and Liquidity](index=49&type=section&id=Investments%20and%20Liquidity) This section outlines the Group's significant investments, acquisition and disposal activities, liquidity position, gearing ratio, and pledged assets [Significant Investments and Acquisitions/Disposals](index=49&type=section&id=Significant%20Investments%20and%20Acquisitions/Disposals) This section describes the Group's significant investment and acquisition/disposal activities during the reporting period - As of June 30, 2019, and December 31, 2018, the Group held no significant investments, and there were no significant acquisitions or disposals during the period[157](index=157&type=chunk)[158](index=158&type=chunk) [Liquidity and Financial Position](index=50&type=section&id=Liquidity%20and%20Financial%20Position) This section analyzes the Group's current assets, current liabilities, current ratio, and cash balance - Current assets for the period were approximately **RMB 337.9 million** (December 31, 2018: RMB 351.8 million), and current liabilities were approximately **RMB 31.5 million** (December 31, 2018: RMB 58.9 million)[159](index=159&type=chunk) - The current ratio improved from **6.0** as of December 31, 2018, to **10.7** as of June 30, 2019, indicating a significant improvement in liquidity[159](index=159&type=chunk) - As of June 30, 2019, the Group had no outstanding interest-bearing bank loans or other borrowings[159](index=159&type=chunk) - Bank and cash balances were approximately **RMB 191.4 million** (December 31, 2018: RMB 167.9 million)[159](index=159&type=chunk) [Gearing Ratio and Pledged Assets](index=50&type=section&id=Gearing%20Ratio%20and%20Pledged%20Assets) This section describes the Group's gearing ratio and pledged assets - As of June 30, 2019, the gearing ratio was **0%** (December 31, 2018: 0%), indicating no net debt for the company[161](index=161&type=chunk) - As of June 30, 2019, and December 31, 2018, the Company had no pledged assets[164](index=164&type=chunk) [Dividends and Human Resources](index=51&type=section&id=Dividends%20and%20Human%20Resources) This section states that the Board does not recommend an interim dividend and provides information on the Group's human resources and share option scheme - The directors do not recommend the payment of any interim dividend for the period[166](index=166&type=chunk) - As of June 30, 2019, the Group employed **30 employees** (December 31, 2018: 39 employees), with total staff costs of approximately **RMB 4.1 million** (prior period: RMB 4.8 million)[167](index=167&type=chunk) - No share options were issued or outstanding during the period and as of June 30, 2019, and December 31, 2018[167](index=167&type=chunk) [Future Outlook and Prospects](index=52&type=section&id=Future%20Outlook%20and%20Prospects) This section outlines the Group's future development strategies in the current economic environment, including mine restart, diversification of existing businesses, and new business expansion - The Group will continue to study the feasibility of restarting mine production and closely monitor commodity markets to capture future economic growth in China[169](index=169&type=chunk) - The Group will continue to invest resources in its existing business segments (financial services and engineering services) and actively expand its coal trading business to broaden revenue streams and mitigate the impact of unfavorable commodity market conditions[169](index=169&type=chunk) - The Company will explore potential acquisition opportunities to capture business opportunities in the Chinese market and diversify the Group's business and broaden its revenue base[170](index=170&type=chunk) [Significant Events After Reporting Period](index=52&type=section&id=Significant%20Events%20After%20Reporting%20Period) This section states that there were no significant events affecting the Group after the reporting period - As of the date of this report, there were no significant events affecting the Group after the period[171](index=171&type=chunk) [Shareholder Interests and Securities Transactions](index=53&type=section&id=Shareholder%20Interests%20and%20Securities%20Transactions) This section discloses the interests of directors and chief executive, major shareholders in the company's shares, as well as the company's securities transactions and disclosures related to listing rules [Directors' and Chief Executive's Interests](index=53&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests) This section describes the interests of directors and the chief executive in the company's shares and related shares - As of June 30, 2019, no director or chief executive of the Company had any interests or short positions in the shares, underlying shares, or debentures of the Company or its associated corporations that were required to be disclosed[173](index=173&type=chunk) [Major Shareholders' Interests](index=53&type=section&id=Major%20Shareholders'%20Interests) This section lists major shareholders holding 5% or more of the company's share capital as of June 30, 2019 Major Shareholders' Interests (as of June 30, 2019) | Name | Nature of Interest | Total Interest in Shares (L) | Approximate Percentage of Share Capital | | :--- | :----------------- | :--------------------------- | :-------------------------------------- | | Tianyuan International Limited | Beneficial owner | 412,592,702 | 25.47% | | Mr. Guo Jianzhong | Controlled corporation interest and beneficial owner | 454,958,702 | 28.08% | | Affinitiv Mobile Ventures Ltd. | Beneficial owner | 320,000,000 | 19.75% | | China Huarong Asset Management Co., Ltd. | Controlled corporation interest | 320,000,000 | 19.75% | | Legend Vantage Limited | Beneficial owner | 188,638,883 | 11.64% | - Mr. Guo Jianzhong is the largest shareholder, holding **28.08%** of the equity, including his personal holdings and shares held through Tianyuan International Limited[174](index=174&type=chunk)[176](index=176&type=chunk) - China Huarong Asset Management Co., Ltd. and its associates hold **19.75%** of the equity through Affinitiv Mobile Ventures Ltd[174](index=174&type=chunk)[177](index=177&type=chunk) [Purchase, Redemption or Sale of Securities](index=55&type=section&id=Purchase,%20Redemption%20or%20Sale%20of%20Securities) This section states that the Company and its subsidiaries did not engage in any purchase, redemption, or sale of securities during the reporting period - Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the period[180](index=180&type=chunk) [Listing Rules Disclosure](index=56&type=section&id=Listing%20Rules%20Disclosure) This section discloses ongoing disclosure information regarding the Group's loan to Shenzhen Danfeng Bailu Hotel Apartment Co., Ltd. under Listing Rule 13.20 - The Group's **RMB 100 million** loan to Danfeng has been extended to September 11, 2019, with outstanding and accrued loan balances and interest of **RMB 100 million** and **RMB 2.2 million**, respectively[181](index=181&type=chunk) - The total loan amount exceeds **8%** of the asset ratio as defined in Listing Rule 14.07(1), thus triggering ongoing disclosure obligations[181](index=181&type=chunk) [Corporate Governance](index=56&type=section&id=Corporate%20Governance) This section describes the Company's corporate governance practices, including compliance with the Corporate Governance Code, the Model Code for Securities Transactions by Directors, and the Audit Committee's review [Compliance with Corporate Governance Code](index=56&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) This section describes the Company's compliance with the Corporate Governance Code and notes a deviation from Code Provision A.4.1 - The Company is committed to maintaining high standards of corporate governance and has taken appropriate steps to comply with the provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules[182](index=182&type=chunk) - Except for Mr. Chen Bingquan and Mr. Cao Ye who have three-year terms, all other non-executive directors are appointed without a specific term but are subject to retirement by rotation in accordance with the Company's articles of association, which deviates from Code Provision A.4.1[182](index=182&type=chunk) [Model Code for Securities Transactions by Directors](index=57&type=section&id=Model%20Code%20for%20Securities%20Transactions%20by%20Directors) This section describes the directors' compliance with the Model Code for Securities Transactions - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Listing Rules, and after inquiry, all directors have complied with the said code throughout the period[184](index=184&type=chunk) [Audit Committee Review](index=57&type=section&id=Audit%20Committee%20Review) This section describes the Audit Committee's review of the interim results - The Audit Committee, comprising three independent non-executive directors, has reviewed the interim results for the period, aiming to review and monitor the Group's financial reporting process, internal control, and risk management systems[185](index=185&type=chunk)

潍力集團 HUILI GROUP Huili Resources (Group) Limited 滙 力 資 源 （ 集 團 ） 有 限 公 司 ( 於爾曼群島註冊成立的有限公司) 2018 # 目錄 公司資料 2 | --- | --- | |------------------------|-------| | | | | | | | 本集團之主要附屬公司 | 3 | | 礦山資料 | 4 | | 管理層討論與分析 | 7 | | 董事及高級管理層之履歷 | 18 | | 董事會報告 | 22 | | 企業管治報告 | 33 | | 獨立核數師報告 | 44 | | 合併資產負債表 | 51 | | 合併收益表 | 52 | | 合併全面收益表 | 53 | | 合併權益變動表 | 55 | | 合併現金流量表 | 56 | | 合併財務報表附註 | 58 | | | | 五年財務概要 143 公司資料 董事會 執行董事 王茜女士 劉慧杰先生 周建忠先生（於二零一九年三月十一日獲委任） 李曉斌先生（於二零一九年三月十一日辭任） 賈岱女士（於二零一九年二月十三日辭任） 獨立非執行董事 項思英女士（主席） （ ...