中广核矿业(01164) - 2020 - 年度财报

Financial Highlights Financial Highlights The company's 2020 revenue grew 37.8% to HKD 2.86 billion, but profit for the year slightly decreased to HKD 155 million, while total assets expanded 35.3% to HKD 4.19 billion, largely due to increased liabilities Operating Results (Continuing Operations) | Metric | 2020 (Thousand HKD) | 2019 (Thousand HKD) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 2,862,226 | 2,076,688 | +37.8% | | Operating Profit | 220,855 | 196,638 | +12.3% | | Profit Before Tax | 179,966 | 176,172 | +2.2% | | Profit for the Year | 155,217 | 160,009 | -3.0% | | Profit Attributable to Owners of the Company | 155,217 | 160,009 | -3.0% | Financial Position | Metric | 2020 (Thousand HKD) | 2019 (Thousand HKD) | YoY Change | | :--- | :--- | :--- | :--- | | Total Assets | 4,187,787 | 3,095,366 | +35.3% | | Total Liabilities | 2,160,727 | 1,151,125 | +87.7% | | Equity Attributable to Owners of the Company | 2,027,060 | 1,944,241 | +4.3% | Chairman's Statement The Chairman noted that despite the pandemic's impact in 2020, the downstream power market's rigid demand showed resilience in the uranium industry, leading to an overall increase in natural uranium prices, while the company made substantial progress on a new uranium mining project in Kazakhstan and achieved significant profit growth in natural uranium sales - In 2020, the pandemic led to a contraction in global uranium production capacity and reduced supply, resulting in an overall upward trend in natural uranium prices and increased international trade activity[14] - The company made substantial progress in advancing a new uranium mining project in Kazakhstan, reaching a framework agreement by the end of 2020 to lock in the project's closing timeline[14] - Over the past five years, the company achieved "three expansions": expanded equity assets (acquiring 49% of Semizbay-U and 19.99% of Fission), expanded business scale (acquiring CGN Global), and expanded capital scale (introducing Fosun Group as a strategic investor), with total assets nearly doubling to over HKD 4 billion[15][16][18] - Looking ahead to the "14th Five-Year Plan," the company will pursue an "investment, financing, production, and sales" strategy, aiming to steadily control more high-quality global uranium resources, form a rational project pipeline, and enhance international trade profitability[19] Chief Executive Officer's Statement The CEO reviewed the main achievements of 2020, noting that despite pandemic challenges, the company completed all operational tasks, with natural uranium sales volume, revenue, and average delivery price all increasing, though profit attributable to owners of the company slightly decreased 2020 Key Performance Indicators | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Natural Uranium Sales Volume | 4,756 tU | 3,696 tU | | Revenue | HKD 2.862 billion | HKD 2.077 billion | | Weighted Average Delivery Price | USD 29.8/lb | USD 27.8/lb | | Profit Attributable to Owners of the Company | HKD 155 million | HKD 160 million | | Basic Earnings Per Share | 2.35 HK cents | 2.42 HK cents | - The operating uranium mining project (Semizbay-U) saw a 24% decrease in annual production to 733 tU due to the pandemic and production cuts, but gross profit increased due to rising uranium prices and cost control[28][29] - The exploration uranium mining project (Fission) completed two rounds of financing, raising approximately CAD 24.07 million, providing funding for its PLS project's feasibility study[30] - The natural uranium trading business (CGN Global) seized market opportunities, with delivery volume increasing by 34% year-on-year, achieving sales revenue of USD 313.9 million, a 44% increase year-on-year, becoming a new driver for annual performance growth[30] - Progress was made on the new uranium mining acquisition project in Kazakhstan, with an agreement in principle reached with Kazatomprom, planning to complete the closing by June 30, 2021, which will significantly increase the company's attributable sales volume[30] Management Discussion and Analysis Business Review This section reviews the operating environment in 2020, analyzing global and Chinese nuclear power market trends and natural uranium supply-demand dynamics, noting steady progress in global nuclear power construction and a significant decrease in global natural uranium production due to the pandemic, leading to rising spot prices - As of the end of 2020, there were 443 operational nuclear power units globally, with 5 new units connected to the grid, 4 new units starting construction, and 6 units shut down in 2020[32][34] - In 2020, China had 49 operational nuclear power units, with nuclear power generation reaching 366.243 billion kWh, accounting for 4.94% of the national total power generation, a 5.02% increase year-on-year[39][40] - Affected by the pandemic, global natural uranium production in 2020 was approximately 47,000 tU, a 17% decrease from 2019, marking the lowest point since 2008, accounting for only 69% of global demand[43] - Global natural uranium spot trading volume in 2020 was 35,503 tU, a 43% increase year-on-year, with spot prices rising from USD 24-26/lb at the beginning of the year to USD 30/lb by year-end, while long-term trade volume was approximately 21,560 tU, a decrease of about 42% year-on-year[44][45] Business Performance and Analysis This section details the operating performance of each business segment, including the operating uranium mine Semizbay-U's production reduction, Fission's successful financing, the natural uranium trading business's revenue growth, and the ongoing acquisition of the new Kazakhstan uranium mining project - The operating uranium mine Semizbay-U (Semizbay-U) saw a 24% reduction in total production due to the pandemic, but the company still secured a committed natural uranium sales volume of 588 tU, consistent with 2019[49][50] - The undeveloped uranium mine Fission completed two rounds of financing in 2020, raising CAD 24.07 million, providing funding for the feasibility study of its PLS project[52] Key Data for Natural Uranium Trading Business | Metric | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Total Natural Uranium Trading Revenue | HKD 2.859 billion | HKD 2.073 billion | +38% | | Sales from Semizbay-U | HKD 425 million | HKD 377 million | +12.5% | | CGN Global Sales Volume | 4,168 tU | - | - | | CGN Global Sales Revenue | Approx. HKD 2.434 billion | - | - | - As of the end of 2020, the Group held natural uranium inventory of 3,142 tU, with a weighted average cost of USD 27.90/lb; contracted but undelivered sales volume was 5,096 tU, with a weighted average selling price of USD 32.28/lb[54] Business Prospects Looking ahead, the nuclear power market has broad prospects under the global carbon neutrality goal, especially in China, which plans to steadily advance the construction of 6 to 8 nuclear power units annually during the "14th Five-Year Plan" period, while the natural uranium market is expected to continue experiencing demand exceeding production, leading to further inventory depletion - China's government work report used the term "actively" to describe nuclear power development for the first time in ten years, expecting 6 to 8 units to be built annually during the "14th Five-Year Plan" period, reaching 70 GW of operational nuclear power capacity by 2025[64][65] - Global natural uranium supply is expected to rebound in 2021 but will likely not return to pre-pandemic levels, with demand continuing to exceed production, leading to further inventory depletion[67] - The company's key operational development priorities for 2021 include: ensuring Semizbay-U completes its annual production plan; supporting Fission in completing its exploration plan; and strengthening engagement with end-customers to actively expand trading business[67][71][72] - The company considers investment and acquisition of high-quality uranium resources as a lifeline for development, planning to complete the closing of the new Kazakhstan uranium mining project in the first half of 2021, while simultaneously seeking new investment opportunities in Central Asia, Africa, and other regions[70][73] Risk Identification and Management The company's comprehensive risk management system operated normally in 2020, with no major risk events, but it faces two main risks in 2021: international natural uranium trade risk due to pandemic challenges in obtaining contracts, and Semizbay-U's production and operation risk due to the uncontrolled pandemic in Kazakhstan - The company's main risks for 2021 include international natural uranium trade risk and Semizbay-U's production and operation risk[74] - To address trade risks, the company will optimize its exposure authorization mechanism, expand business in regions like Europe, and explore new business models such as UF6[75][77] - To address production and operation risks, the company will assist Kazatomprom in epidemic prevention at the mine site and monitor daily production progress to ensure completion of production targets[76][78] Financial Performance and Analysis This section provides an in-depth analysis of the company's financial performance, noting that in 2020, the Group's revenue increased by 38% to HKD 2.86 billion, primarily driven by the natural uranium trading business, but profit for the year decreased by 3% to HKD 155 million due to a doubling of finance costs and a shift from profit to loss from associates, leading to a significant increase in the gearing ratio 2020 Key Financial Indicators | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Gross Profit Margin (%) | 7.08 | 6.93 | | Net Profit Margin (%) | 5.42 | 7.71 | | Profit Attributable to Owners of the Company to Revenue Ratio (%) | 5.42 | 7.71 | | Gearing Ratio (%) | 106.59 | 59.21 | - Revenue increased by 38% to HKD 2.86 billion, primarily due to CGN Global's vigorous expansion into international markets, leading to significant growth in natural uranium sales volume and revenue[86][87] - Finance costs were HKD 41 million, a 100% increase from HKD 20 million in 2019, mainly because CGN Global increased external borrowings to expand its business[99][104] - Total assets increased by 35% to HKD 4.19 billion, and total liabilities increased by 88% to HKD 2.16 billion, primarily due to new bank borrowings for business expansion[106] - As of the end of 2020, the Group had undrawn credit facilities of USD 857 million, providing ample cash support for operations[128][130] Corporate Governance Report Biographies of Directors and Senior Management This section details the backgrounds and qualifications of the company's board members and senior management team, highlighting their extensive experience in company management, nuclear fuel systems, nuclear power operations, finance, law, and corporate management - Mr. Yu Zhiping, Chairman and Non-executive Director, joined the Group in 2011 and has over 30 years of experience in company management and nuclear fuel system operations[135][137] - Mr. An Junjing, Executive Director and Chief Executive Officer, joined the Group in 2018 and has extensive experience in nuclear power operation and management[138][139] Corporate Governance Structure The company is committed to maintaining a high level of corporate governance, complying with all provisions of the Corporate Governance Code during the reporting period, with a Board of Directors comprising 8 members, including 3 independent non-executive directors, and established Audit, Remuneration, and Nomination committees, along with robust risk management and internal control systems - The Board of Directors comprises 8 directors, including 2 executive directors, 3 non-executive directors, and 3 independent non-executive directors, complying with listing rules[154][156] - The Board has established an Audit Committee, a Remuneration Committee, and a Nomination Committee, with clear membership and responsibilities[183] - The company has established a comprehensive risk management system, referencing ISO31000:2009 standards, for effective risk identification, tracking, and control[204][206] - As of the end of 2020, the Group had 15 employees, with 73% holding intermediate or higher professional qualifications, and the company offers dual career development paths: management and professional technical[211][212][219] Directors' Report Principal Activities and Dividend The company primarily engages in natural uranium trading, property investment, and other investments, with the Board recommending a final cash dividend of 0.5 HK cents per share for 2020, a decrease from 1 HK cent in 2019, in line with its policy to allow shareholders to share in profits while retaining sufficient reserves for future growth - The company primarily engages in natural uranium resource investment and trading[227][228] - The Board recommends a final cash dividend of 0.5 HK cents per share for 2020, compared to 1 HK cent per share in 2019[229] - The company's dividend policy stipulates that the final dividend distribution ratio shall not be less than 20% of the distributable profit from continuing operations for the year[230] Disclosure of Interests This section discloses the shareholdings of major shareholders, noting that as of December 31, 2020, controlling shareholder CGNPC, through its subsidiaries, collectively held approximately 67.69% of the company's shares, while the company's directors and chief executive did not hold any disclosable interests Major Shareholder Holdings (As of December 31, 2020) | Major Shareholder Name | Capacity | Number of Shares Held (Long Position) | Approximate Shareholding Percentage (Long Position) | | :--- | :--- | :--- | :--- | | CGNPC | Interest in controlled corporation | 4,467,887,558 | 67.69% | | China Uranium Development | Beneficial owner | 4,288,695,652 | 64.97% | | Hong Kong Xinmao | Beneficial owner | 659,400,000 | 9.99% | - As of December 31, 2020, the company's directors and chief executive did not hold any disclosable interests or short positions in the shares, underlying shares, and debentures of the company or its associated corporations[263] Connected Transactions During the reporting period, the company engaged in several continuing connected transactions, all reviewed and confirmed by independent non-executive directors and external auditors as compliant with relevant regulations and conducted within their annual caps, including natural uranium sales with controlling shareholder CGN Uranium Development Group, financial services with CGN Finance and Huasheng, and property leasing with CGN Uranium Development 2020 Key Continuing Connected Transactions | Counterparty | Nature of Transaction | Annual Cap | Actual Transaction Amount | | :--- | :--- | :--- | :--- | | CGN Uranium Development | Sale of Natural Uranium | HKD 1.96 billion | HKD 425 million | | CGN Finance and Huasheng | Deposit Services | USD 500 million | Max. daily deposit USD 159 million | | CGN Uranium Development | Property Leasing | RMB 3 million | RMB 3 million | - Independent non-executive directors and external auditors have reviewed and confirmed that all continuing connected transactions were conducted on normal commercial terms, were in the overall interest of the company and its shareholders, and did not exceed the annual caps[276] Environmental, Social and Governance Report Environmental Aspects The company is committed to environmental protection and sustainable development, strictly adhering to environmental regulations through measures such as equipment upgrades, using natural gas instead of diesel to reduce emissions, implementing energy and water-saving initiatives at mine sites, and promoting green office practices to minimize environmental impact 2020 Greenhouse Gas Emissions (tonnes CO2e) | Emission Category | UK and Hong Kong Offices | Mine Site | | :--- | :--- | :--- | | Total Emissions | 18.93 | 18,414.20 | | Direct Emissions (Scope 1) | 0 | 2,435.02 | | Energy Indirect Emissions (Scope 2) | 18.93 | 15,979.17 | 2020 Energy and Water Consumption | Resource Category | Unit | UK and Hong Kong Offices | Kazakhstan Mine Site | | :--- | :--- | :--- | :--- | | Total Energy Consumption | MWh | 21.54 | 31,886.81 | | Total Water Consumption | Cubic Meters | Not Applicable | 104,544.00 | - The mine site's large-scale wastewater recycling system saves 10% of industrial water annually[323] Social Aspects In terms of social responsibility, the company regards employees as its most valuable asset, implementing fair and open recruitment principles, strictly prohibiting child labor and forced labor, providing competitive compensation and development training, and focusing on employee well-being, while also establishing robust supplier screening processes, adhering to product quality standards, and actively participating in community investment - The company strictly complies with local labor laws, prohibiting child labor and forced labor, with no related violations reported during the period[349][352] - The company has established a comprehensive supplier screening process and ensures fair competition through open bidding, while encouraging suppliers to fulfill environmental and social responsibilities[353][356] - The company strictly adheres to product quality standards, and the mine site has obtained ISO 9001 quality management system certification, ensuring mining processes comply with international standards[360] - The company adheres to a strict anti-corruption policy, has formulated anti-corruption and anti-fraud policies, and regularly organizes anti-corruption training[364][366] Independent Auditor's Report Independent auditor BDO Limited issued an unmodified opinion on the company's consolidated financial statements for the year ended December 31, 2020, deeming them to present fairly and truly the Group's financial position, financial performance, and cash flows, and to have been properly prepared in accordance with regulations, with key audit matters including the impairment assessment of interests in an associate and a joint venture due to significant management judgment - The auditor issued an unmodified opinion on the 2020 consolidated financial statements[374] - Key audit matters include the impairment assessment of interests in an associate (Fission Uranium Corp.) and a joint venture (Semizbay-U), primarily because estimating their recoverable amounts involves significant management judgment[377][380][381] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the 2020 fiscal year, the Group's revenue was HKD 2.862 billion, a 37.8% increase year-on-year, and gross profit was HKD 203 million, a 40.9% increase year-on-year, but due to increased finance costs and a shift from profit to loss from associates, profit before tax only slightly increased by 2.2% to HKD 180 million, and profit for the year decreased by 3.0% year-on-year to HKD 155 million Consolidated Statement of Profit or Loss Summary | Item (Thousand HKD) | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 2,862,226 | 2,076,688 | +37.8% | | Gross Profit | 202,766 | 143,905 | +40.9% | | Profit Before Tax | 179,966 | 176,172 | +2.2% | | Profit Attributable to Owners of the Company for the Year | 155,217 | 160,009 | -3.0% | | Basic Earnings Per Share | 2.35 HK cents | 2.42 HK cents | -2.9% | Consolidated Statement of Financial Position As of the end of 2020, the Group's total assets were HKD 4.188 billion, a 35.3% increase from the previous year, primarily driven by increases in inventories, trade receivables, and bank balances and cash, while total liabilities were HKD 2.161 billion, a significant 87.7% increase year-on-year, mainly due to new bank borrowings to support business expansion Consolidated Statement of Financial Position Summary | Item (Thousand HKD) | December 31, 2020 | December 31, 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Non-current Assets | 873,748 | 844,275 | +3.5% | | Current Assets | 3,314,039 | 2,251,091 | +47.2% | | Total Assets | 4,187,787 | 3,095,366 | +35.3% | | Current Liabilities | 1,214,247 | 485,506 | +150.1% | | Non-current Liabilities | 946,480 | 665,619 | +42.2% | | Total Liabilities | 2,160,727 | 1,151,125 | +87.7% | | Total Equity | 2,027,060 | 1,944,241 | +4.3% | Consolidated Statement of Cash Flows In 2020, the Group's net cash used in operating activities was HKD 315 million, primarily due to increases in inventories and trade receivables, while investing activities generated net cash inflow of HKD 25.72 million, and financing activities generated net cash inflow of HKD 786 million, mainly from new bank borrowings, resulting in a net increase in cash and cash equivalents of HKD 497 million Consolidated Statement of Cash Flows Summary | Item (Thousand HKD) | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (315,089) | (686,729) | | Net Cash From/(Used in) Investing Activities | 25,718 | (26,622) | | Net Cash From Financing Activities | 785,980 | 268,091 | | Net Increase/(Decrease) in Cash and Cash Equivalents | 496,609 | (445,260) | | Cash and Cash Equivalents at Beginning of Year | 676,793 | 1,123,056 | | Cash and Cash Equivalents at End of Year | 1,174,508 | 676,793 |