兴业合金(00505) - 2020 - 中期财报

Company Information This section provides essential corporate details, including board members, legal advisors, auditors, and key operational locations Company Basic Information This section provides essential corporate details, including board members, legal advisors, auditors, and key operational locations - The company officially changed its name to "Xingye Alloy Materials Group Limited" on June 19, 2020, to better reflect its business development[33][121] - The company's principal places of business include Hong Kong, Ningbo City, Zhejiang Province, China (copper business), and Shenzhen City, Guangdong Province, China (online game business)[9] - The company's stock code is 00505[9] Consolidated Statement of Profit or Loss Profit or Loss Overview For the six months ended June 30, 2020, total revenue slightly increased, but operating profit and profit for the period decreased due to higher other expenses Consolidated Statement of Profit or Loss Key Data (For the six months ended June 30) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | Change (%) | | :----------- | :------------------ | :------------------ | :------- | | Revenue | 1,950,969 | 1,948,913 | +0.1% | | Gross profit | 202,448 | 186,461 | +8.6% | | Other income | 10,826 | 20,930 | -48.3% | | Distribution expenses | (19,104) | (22,813) | -16.3% | | Administrative expenses | (102,473) | (107,667) | -4.8% | | Other expenses | (37,952) | (2,798) | +1256.4% | | Operating profit | 53,745 | 74,113 | -27.5% | | Net finance costs | (3,214) | (11,426) | -71.9% | | Profit before tax | 50,531 | 62,687 | -19.4% | | Profit for the period | 42,881 | 54,933 | -22.0% | | Basic earnings per share | 5.10 (RMB cents) | 6.39 (RMB cents) | -20.2% | - Profit for the period attributable to equity holders of the Company was RMB 42,797 thousand, and to non-controlling interests was RMB 84 thousand[12] Consolidated Statement of Profit or Loss and Other Comprehensive Income Comprehensive Income Overview For the six months ended June 30, 2020, total comprehensive income decreased, primarily due to a reduction in profit for the period Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data (For the six months ended June 30) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Profit for the period | 42,881 | 54,933 | | Exchange differences | 1,048 | 46 | | Total comprehensive income for the period | 43,929 | 54,979 | - Exchange differences on translation of financial statements of overseas operations significantly increased from RMB 46 thousand in 2019 to RMB 1,048 thousand in 2020[14] Consolidated Statement of Financial Position Assets and Liabilities Overview As of June 30, 2020, non-current assets decreased, while current assets and liabilities increased, leading to growth in net current assets and total equity Consolidated Statement of Financial Position Key Data (As of June 30) | Indicator | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :------------------ | :-------------------------- | | Total non-current assets | 941,160 | 1,003,367 | | Total current assets | 1,690,881 | 1,549,482 | | Total current liabilities | 1,391,280 | 1,318,640 | | Net current assets | 299,601 | 230,842 | | Total assets less current liabilities | 1,240,761 | 1,234,209 | | Total non-current liabilities | 115,781 | 121,364 | | Net assets | 1,124,980 | 1,112,845 | | Total equity | 1,124,980 | 1,112,845 | - Assets held for sale increased from zero at the end of 2019 to RMB 30,411 thousand in mid-2020, with new liabilities directly associated with assets held for sale of RMB 161 thousand[17] Consolidated Statement of Changes in Equity Equity Changes Overview For the six months ended June 30, 2020, total equity increased due to profit and exchange reserves, despite share repurchases and cancellations Consolidated Statement of Changes in Equity Key Data (For the six months ended June 30) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Total equity at January 1 | 1,112,845 | 1,074,364 | | Profit for the period | 42,881 | 54,933 | | Other comprehensive income | 1,048 | 46 | | Share repurchase and cancellation | (31,794) | - | | Total equity at June 30 | 1,124,980 | 1,127,662 | - Repurchase and cancellation of contingent consideration shares resulted in a RMB 31,794 thousand reduction in equity during the period[22] Condensed Consolidated Statement of Cash Flows Cash Flow Overview For the six months ended June 30, 2020, net cash from operating activities significantly increased, while investing and financing outflows also rose Condensed Consolidated Statement of Cash Flows Key Data (For the six months ended June 30) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Net cash from operating activities | 268,128 | 22,077 | | Net cash used in investing activities | (182,514) | (87,511) | | Net cash (used in) / from financing activities | (41,861) | 77,434 | | Net increase in cash and cash equivalents | 43,753 | 12,000 | | Cash and cash equivalents at June 30 | 207,927 | 185,353 | - Net cash from operating activities significantly increased from RMB 22,077 thousand in 2019 to RMB 268,128 thousand in 2020[30] - Financing activities shifted from a net cash inflow of RMB 77,434 thousand in 2019 to a net cash outflow of RMB 41,861 thousand in 2020, primarily due to increased repayment of interest-bearing borrowings[30] Notes to the Unaudited Interim Financial Report 1 Reporting Entity and Background Information This note details the company's registration, listing, business scope, and recent name change to Xingye Alloy Materials Group Limited - The company was incorporated in the Cayman Islands on July 19, 2007, and listed on the Main Board of the Hong Kong Stock Exchange on December 27, 2007[32] - The Group's principal businesses include copper products (manufacturing and sales of high-precision copper strips, trading of raw materials, and providing processing services) and online games (developing, publishing, and operating online games and providing related services)[32] - The company's English name has changed from "Huan Yue Interactive Holdings Limited" to "Xingye Alloy Materials Group Limited," and its Chinese name from "歡悅互娛控股有限公司" to "興業合金材料集團有限公司"[33] 2 Basis of Preparation This interim financial report adheres to IAS 34, maintaining consistent accounting policies with the 2019 annual statements, except for assets held for sale - The interim financial report is prepared in accordance with IAS 34 and adopts the same accounting policies as the 2019 annual financial statements, except for the accounting policy for assets held for sale and expected changes to be reflected in the 2020 annual financial statements[34] 3 Significant Accounting Policies This note outlines new IFRS amendments and details the accounting treatment for non-current assets classified as held for sale - Changes to IFRS 3 (Revised) "Definition of a Business" and IFRS 16 (Revised) "COVID-19-Related Rent Concessions" had no significant impact on this period's financial report[36] - Non-current assets held for sale are stated at the lower of their carrying amount and fair value less costs to sell, and are not depreciated or amortized[38][39] 4 Revenue and Segment Reporting Revenue is primarily from copper products, with the online game segment showing a loss, while Mainland China remains the main market Revenue from Contracts with Customers by Major Product or Service Line (For the six months ended June 30) | Product/Service Line | 2020 (RMB thousand) | 2019 (RMB thousand) | Change (%) | | :---------- | :------------------ | :------------------ | :------- | | Total copper products | 1,942,527 | 1,932,975 | +0.5% | | - Sales of high-precision copper strips | 1,851,168 | 1,819,703 | +1.7% | | - Processing service fees | 72,403 | 90,827 | -20.3% | | - Trading of raw materials | 18,956 | 22,445 | -15.6% | | Total online games | 8,442 | 15,938 | -47.0% | | Total revenue | 1,950,969 | 1,948,913 | +0.1% | - By customer geographical location, Mainland China is the primary market, contributing RMB 1,771,832 thousand in revenue in 2020, followed by Taiwan, Thailand, and other regions[42] Reportable Segment Profit/(Loss) Before Tax (For the six months ended June 30) | Segment | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------- | :------------------ | :------------------ | | Copper products | 44,242 | 51,878 | | Online games | (1,940) | 8,644 | | Total | 42,302 | 60,522 | - The online game segment shifted from a profit of RMB 8,644 thousand in 2019 to a loss of RMB 1,940 thousand in 2020[49] 5 Other Expenses For the six months ended June 30, 2020, credit loss allowance for trade and other receivables slightly decreased Other Expenses (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Credit loss allowance for trade and other receivables | 2,379 | 2,542 | 6 Profit Before Tax This note details financial income, costs, and other items affecting profit before tax, highlighting reduced net finance costs but increased derivative financial instrument losses Net Finance Costs (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Finance income | 15,024 | 6,910 | | Finance costs | (18,238) | (18,336) | | Net finance costs | (3,214) | (11,426) | - Net finance costs significantly decreased from (RMB 11,426 thousand) in 2019 to (RMB 3,214 thousand) in 2020, mainly due to an increase in fair value changes of contingent consideration receivables and payables[58][145] Other Items (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Cost of inventories | 1,746,069 | 1,758,936 | | Research and development expenses | 59,395 | 61,860 | | Depreciation | 51,157 | 54,143 | | Impairment losses | 3,627 | 2,542 | | Amortization | 199 | 420 | | Government grants | 8,500 | 9,261 | - Impairment loss on property, plant and equipment was RMB 1,248 thousand in 2020, compared to zero in the prior year[60] 7 Income Tax For the six months ended June 30, 2020, income tax expense was RMB 7,650 thousand, with the effective tax rate rising to 15% due to unrecognized deferred tax assets Income Tax (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------- | :------------------ | :------------------ | | Current tax | (261) | 6,617 | | Deferred tax | 7,911 | 1,137 | | Total income tax | 7,650 | 7,754 | - The effective consolidated tax rate increased from 12% in 2019 to 15% in 2020, mainly due to an increase in tax losses not recognized as deferred tax assets[63] 8 Earnings Per Share For the six months ended June 30, 2020, both basic and diluted earnings per share decreased, reflecting reduced profit attributable to equity holders Earnings Per Share (For the six months ended June 30) | Indicator | 2020 (RMB cents) | 2019 (RMB cents) | | :----------- | :---------------- | :---------------- | | Basic earnings per share | 5.10 | 6.39 | | Diluted earnings per share | 5.10 | 6.39 | - Profit attributable to ordinary equity holders of the Company decreased from RMB 54,496 thousand in 2019 to RMB 42,797 thousand in 2020[64][65] - The weighted average number of ordinary shares outstanding decreased from 852,653,449 shares in 2019 to 838,887,843 shares in 2020[64] 9 Property, Plant and Equipment For the six months ended June 30, 2020, additions to property, plant and equipment decreased, and disposals resulted in a net loss - The cost of additions to property, plant and equipment for the period was RMB 21,823 thousand, compared to RMB 24,001 thousand in the prior year[67] - Disposals of property, plant and equipment resulted in a net loss of RMB 223 thousand (2019: loss of RMB 200 thousand)[67] 10 Inventories As of June 30, 2020, total inventories slightly decreased, and the provision for impairment of inventories significantly reduced Inventories Composition (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :----- | :------------------ | :-------------------------- | | Raw materials | 79,180 | 72,656 | | Work in progress | 446,793 | 480,754 | | Finished goods | 161,283 | 143,341 | | Others | 73 | 533 | | Total | 687,329 | 697,284 | - Provision for impairment of inventories significantly decreased from RMB 27,627 thousand as of December 31, 2019, to RMB 3,033 thousand as of June 30, 2020[68] 11 Trade and Other Receivables As of June 30, 2020, total trade and other receivables decreased, mainly due to a decline in net trade receivables and bills receivable Trade and Other Receivables Composition (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :------------------- | :------------------ | :-------------------------- | | Net trade receivables and bills receivable | 261,006 | 326,451 | | Deposits for metal futures contracts | 14,778 | 2,839 | | Net other receivables | 7,733 | 8,414 | | Recoverable VAT | 12,302 | 11,962 | | Prepayments | 11,503 | 10,445 | | Contingent consideration receivable | – | 26,764 | | Total | 307,322 | 386,875 | - Net trade receivables and bills receivable decreased from RMB 326,451 thousand at the end of 2019 to RMB 261,006 thousand in mid-2020[70] - As of June 30, 2020, the total carrying amount of bills receivable pledged to banks for bank acceptance bills issued was RMB 80,000 thousand, a decrease from RMB 107,070 thousand at the end of 2019[74] 12 Cash and Cash Equivalents As of June 30, 2020, total cash and cash equivalents increased, including amounts held for sale Cash and Cash Equivalents (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :------------------- | :------------------ | :-------------------------- | | Cash and cash equivalents in the consolidated statement of financial position | 207,579 | 163,150 | | Cash and cash equivalents held for sale | 348 | – | | Cash and cash equivalents in the consolidated statement of cash flows | 207,927 | 163,150 | 13 Disposal Group Held for Sale In June 2020, management committed to selling a subsidiary, classifying its assets and liabilities as held for sale, with the disposal completed before July - The company committed to selling its 100% equity interest in a subsidiary, whose assets and liabilities were classified as a disposal group held for sale[81] Assets and Liabilities of Disposal Group Held for Sale (As of June 30, 2020) | Item | Amount (RMB thousand) | | :--------------- | :---------------- | | Total assets | 30,411 | | Total liabilities | (161) | | Net assets | 30,250 | 14 Trade and Other Payables As of June 30, 2020, total trade and other payables significantly increased, primarily due to higher trade payables and bills payable Trade and Other Payables Composition (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :------------------- | :------------------ | :-------------------------- | | Trade payables and bills payable | 558,890 | 394,397 | | Employee benefits payable | 26,090 | 38,973 | | Payables for purchase of property, plant and equipment | 23,894 | 33,273 | | Accrued expenses and others | 17,501 | 24,388 | | Contract liabilities | 35,982 | 26,858 | | Contingent consideration payable | – | 3,626 | | Total | 662,357 | 521,515 | - Trade payables and bills payable increased from RMB 394,397 thousand at the end of 2019 to RMB 558,890 thousand in mid-2020[85] - The company completed the repurchase of 41,000,000 shares from Mobilefun on April 16, 2020, and settled the remaining repayment of HKD 2,195,779.80 on September 18, 2020, with a related gain of approximately RMB 8.2 million recognized[87][88] 15 Interest-Bearing Borrowings As of June 30, 2020, total interest-bearing borrowings were RMB 787,682 thousand, mostly short-term and secured by various assets Interest-Bearing Borrowings Repayment Schedule (As of June 30) | Repayment Period | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :------------------ | :-------------------------- | | Within one year | 710,682 | 768,941 | | More than one year but less than two years | 77,000 | 77,000 | | Total | 787,682 | 845,941 | - As of June 30, 2020, secured bank loans bore interest at 0.93% to 4.75% per annum, and unsecured bank loans bore interest at 1.27% to 1.33% per annum[92][93] - The total carrying amount of pledged assets was RMB 655,209 thousand, including inventories, property, plant and equipment, right-of-use assets, and pledged deposits for bank borrowings[92] 16 Capital, Reserves and Dividends No dividends were declared, share capital decreased due to repurchases, and the gearing ratio improved, indicating a better capital structure - For the period ended June 30, 2020, the Board of Directors decided not to declare or pay any dividends[95] Issued and Fully Paid Ordinary Shares (As of June 30) | Item | June 30, 2020 (thousand shares) | December 31, 2019 (thousand shares) | | :--------------- | :------------------- | :-------------------- | | At January 1 | 855,559 | 855,559 | | Repurchase and cancellation of contingent consideration shares | (41,000) | – | | At June 30 / December 31 | 814,559 | 855,559 | Gearing Ratio | Indicator | June 30, 2020 | December 31, 2019 | | :----------- | :------------ | :------------- | | Gearing ratio | 34.11% | 38.13% | 17 Fair Value Measurement of Financial Instruments This note discloses fair value measurements for financial instruments, including derivatives and contingent consideration, with no transfers between fair value hierarchy levels Financial Assets and Liabilities Measured at Fair Value (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :------------------ | :-------------------------- | | Derivative financial instruments (assets) | – | 565 | | Structured bank deposits | – | 20,118 | | Contingent consideration receivable | – | 26,764 | | Derivative financial instruments (liabilities) | (12,855) | (7,775) | | Contingent consideration payable | – | (3,626) | - Derivative financial instruments (liabilities) increased to RMB 12,855 thousand as of June 30, 2020, from RMB 7,775 thousand at the end of 2019[103] - Contingent consideration receivable and payable were both zero as of June 30, 2020, compared to RMB 26,764 thousand and RMB 3,626 thousand respectively at the end of 2019[105] 18 Share Award Scheme The 2016 share award scheme aims to reward employees; as of June 30, 2020, 9,477,000 shares were purchased by the trustee, with some vesting dates postponed - As of June 30, 2020, the trustee had purchased 9,477,000 shares of the company at a total cost of HKD 7,967,000 (approximately RMB 6,884,000)[109] - The vesting dates for some awarded shares have been postponed to December 13, 2020, and December 13, 2021, to incentivize and encourage grantees to maintain employment[109] 19 Commitments As of June 30, 2020, total capital commitments for property, plant and equipment were RMB 604,017 thousand, mainly for contracted but unprovided future capital expenditures Capital Commitments (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :----------- | :------------------ | :-------------------------- | | Contracted | 69,354 | 597,963 | | Authorized but not contracted | 534,663 | – | | Total | 604,017 | 597,963 | - Capital commitments authorized but not contracted increased from zero at the end of 2019 to RMB 534,663 thousand in mid-2020[111] 20 Key Management Personnel Compensation For the six months ended June 30, 2020, key management personnel compensation decreased due to reduced short-term employee benefits and equity-settled share-based payments Key Management Personnel Compensation (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Short-term employee benefits | 1,886 | 2,131 | | Equity-settled share-based payments | – | 179 | | Post-employment benefits | 4 | 27 | | Total | 1,890 | 2,337 | Management Discussion and Analysis Copper Processing Business In H1 2020, despite global economic impact, copper processing revenue slightly increased, but operating profit before tax declined due to derivative financial instrument losses - In the first half of 2020, the global economy was projected to decline significantly, while China's economic growth was estimated at 1.0%, making it the only major economy to grow globally[115] - LME copper prices showed a trend of initial decline followed by an increase in the first half of 2020, with average prices decreasing by 11.0% and 10.7% year-on-year[116] - The Group's total production of copper strips reached 57,379 tons, and total sales volume reached 56,938 tons[120] Copper Processing Business Sales Revenue and Operating Profit Before Tax (For the six months ended June 30) | Indicator | 2020 (RMB million) | 2019 (RMB million) | | :--------------- | :-------------------- | :-------------------- | | Sales revenue | 1,942.5 | 1,933.0 | | Operating profit before tax | 44.2 | 51.8 | - Operating profit before tax decreased by 14.8%, primarily due to the net effect of a RMB 24.6 million reversal of inventory impairment, a RMB 34.0 million net loss on derivative financial instruments, and a RMB 11.5 million reduction in distribution and administrative expenses[120] - The company actively expanded into markets such as electronics, integrated circuits, automotive electronics, rail transit, and military industries, while promoting new product R&D, technological transformation, and process innovation[122] Online Game Business In H1 2020, the online game business recorded a significant decline in revenue and turned to a loss, driven by shrinking existing game revenue and reduced government subsidies Online Game Business Financial Performance (For the six months ended June 30) | Indicator | 2020 (RMB million) | 2019 (RMB million) | | :------- | :-------------------- | :-------------------- | | Total revenue | 8.4 | 15.9 | | Net loss | (4.6) | 10.0 (Net profit) | - The decrease in revenue and net loss were attributed to shrinking revenue from existing games and reduced government subsidies for domestic game companies[127] - China's game market achieved actual sales revenue of RMB 139.5 billion in the first half of 2020, a year-on-year increase of 22.3%, with mobile game market growing by 35.8% while the web game market declined by 21.4%[132] - The operations center leveraged the competitive advantages of traditional web games and H5 mobile mini-games, and expanded multi-channel operations and overseas market投放 for its self-developed product "This is Cultivation"[133] - The R&D center initiated an H5 web game project, expected to be completed by the end of 2020, with gameplay leaning towards traditional RPGs and incorporating innovative activities and core cultivation systems[135] Financial Review This section reviews H1 2020 financial performance, noting slight revenue growth, improved copper business gross margin, increased other expenses from derivative losses, and reduced profit attributable to shareholders - The Group's total revenue was RMB 1,950.9 million, a 0.1% increase compared to the prior year[136] - The overall gross margin of the copper business increased from 9.0% in the prior year to 10.1% during the period, mainly due to the reversal of inventory impairment of RMB 24.6 million[138] - Total other income was RMB 10.8 million, a 48.3% decrease from the prior year, mainly due to a net gain on derivative financial instruments of RMB 11.2 million recorded in 2019[139] - Other expenses were RMB 38.0 million, compared to RMB 2.8 million in the prior year, primarily due to a net loss on derivative financial instruments of RMB 33.9 million recorded in 2020[140] - Administrative expenses decreased by 4.8% to RMB 102.5 million, and the ratio of distribution expenses to revenue decreased to 1.0%, mainly due to reductions in staff costs, R&D expenses, insurance premiums, and service fees[141][144] - Net finance costs were RMB 3.2 million, a decrease of RMB 8.2 million from the prior year, mainly due to an increase in fair value changes of contingent consideration receivables and payables of RMB 6.1 million[145] - Profit attributable to shareholders of the Company was RMB 42.8 million, a decrease of RMB 11.7 million from the prior year[147] Liquidity, Financial Resources and Capital Structure As of June 30, 2020, net current assets were RMB 299.6 million, with strong liquidity and a reduced gearing ratio of 34.1% - The Group recorded net current assets of RMB 299.6 million, mainly due to an increase in bank deposits with maturities exceeding three months[148] - Short-term interest-bearing borrowings accounted for 90.2% of total interest-bearing borrowings[149] - The Group had available unutilized bank facilities of RMB 799.0 million and bank cash of RMB 665.8 million[149] - The gearing ratio (calculated as net debt divided by total capital) was 34.1%, a decrease from 38.1% at the end of 2019[151] Pledged Assets As of June 30, 2020, the Group pledged assets with a total carrying amount of RMB 655.2 million as security for bank loans and credit facilities - The Group pledged assets with a total carrying amount of RMB 655.2 million as security for bank loans and credit facilities, compared to RMB 733.6 million at the end of 2019[152] Capital Expenditure For the six months ended June 30, 2020, the Group invested approximately RMB 31.1 million in property, plant and equipment, funded by internal resources and bank borrowings - The Group invested approximately RMB 31.1 million in the acquisition of property, plant and equipment, primarily funded by internal resources and bank borrowings[153] Capital Commitments As of June 30, 2020, contracted but unprovided future capital expenditures amounted to RMB 604.0 million, primarily for copper processing business expansion - The Group's contracted but unprovided future capital expenditures amounted to RMB 604.0 million, mainly for plant construction and capacity expansion in the copper processing business[154] Contingent Liabilities As of June 30, 2020, the Group had no significant contingent liabilities - As of June 30, 2020, the Group had no significant contingent liabilities[155] Market Risks The Group faces price, interest rate, and foreign exchange risks, recording losses on futures contracts and net foreign exchange losses during the period - The Group is exposed to raw material price fluctuation risk and uses copper futures contracts to hedge against copper price volatility, but recorded a futures contract loss of approximately RMB 33.9 million during the period[157][160] - The Group faces interest rate fluctuation risk on bank borrowings but has not entered into any interest rate swaps to hedge this risk[161] - The Group is exposed to foreign currency exchange rate risk, recording a net foreign exchange loss of RMB 2.6 million during the period, and has not entered into any foreign exchange contracts for hedging[162] Employees As of June 30, 2020, the Group employed 1,358 employees, with total salaries and related costs of approximately RMB 67.8 million - As of June 30, 2020, the Group employed a total of 1,358 employees (December 31, 2019: 1,334 employees)[163] - Total salaries and related costs paid to employees were approximately RMB 67.8 million (June 30, 2019: RMB 68.5 million)[163] - The Group has a share award scheme and a share option scheme, and provides annual training programs for employees[163] Other Information Directors' and Chief Executive's Interests in Shares, Underlying Shares and Debentures This section discloses directors' and chief executive's long positions in company shares and underlying shares as of June 30, 2020 Directors' Long Positions in Shares and Underlying Shares of the Company (As of June 30, 2020) | Director's Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding | | :------- | :----------------------- | :----------- | :------------- | | Hu Changyuan | Founder of discretionary trust/Other interests | 265,200,000 | 32.56% | | | Interest in controlled corporation/Corporate interest | 13,213,000 | 1.62% | | | Beneficial owner/Personal interest | 500,000 | 0.06% | | Hu Minglie | Beneficial owner/Personal interest | 3,603,000 | 0.44% | | Chai Chaoming | Beneficial owner/Personal interest | 334,000 | 0.04% | | Lu Hong | Beneficial owner/Personal interest | 400,000 | 0.05% | | Zhu Wenjun | Beneficial owner/Personal interest | 500,000 | 0.06% | | Lou Dong | Beneficial owner/Personal interest | 200,000 | 0.02% | - Mr. Hu Changyuan holds company shares through a family trust and controlled corporations, totaling 34.18% of the total issued shares[165][167] - The underlying shares held by directors are awarded shares under the share award scheme, with the vesting dates for some shares postponed[168] Arrangements to Purchase Shares or Debentures Excluding share option and award schemes, no arrangements enabled directors to benefit from acquiring company shares or debentures during the review period - Save for the share option scheme and share award scheme, neither the company nor its subsidiaries participated in any arrangements that would enable directors to benefit from acquiring shares or debentures of the company or any other body corporate[169] Share Option Scheme The 2007 share option scheme was terminated in 2016, and no options were granted, exercised, or outstanding under the 2016 scheme during the period - The 2007 Share Option Scheme was terminated on May 27, 2016, and no further share options will be granted thereunder[170] - Shareholders adopted a new share option scheme (the "2016 Share Option Scheme") on May 27, 2016[171] - During the review period, no share options were granted, exercised, lapsed, cancelled, or remained outstanding under the 2016 Share Option Scheme[173] Share Award Scheme The 2016 share award scheme aims to reward employees; as of June 30, 2020, 3,497,000 shares were held in trust, with some vesting dates postponed - The Share Award Scheme aims to grant awards to selected employees to encourage their contributions and attract talent[175] - As of June 30, 2020, 3,497,000 shares were held in trust under the Share Award Scheme[177] - The vesting dates for some awarded shares have been postponed to December 13, 2020, and December 13, 2021[177] Major Shareholders This section discloses major shareholders with significant interests in the company's shares and underlying shares as of June 30, 2020 Major Shareholders' Long Positions in Shares of the Company (As of June 30, 2020) | Shareholder Name | Capacity/Nature of Interest | Number of Shares (L) | Approximate Percentage of Shareholding | | :------------------------- | :----------------------- | :----------- | :------------- | | Luckie Strike Limited | Beneficial owner/Beneficial interest | 110,000,000 | 13.50% | | Come Fortune International Limited | Beneficial owner/Beneficial interest | 155,200,000 | 19.05% | | Dynamic Empire Holdings Limited | Interest in controlled corporation/Corporate interest | 265,200,000 | 32.56% | | Nomura Holdings Inc. | Custodian (other than exempt custodian interest)/Other interests | 239,400,000 | 29.39% | | Zedra Trust Company (Singapore) Limited | Trustee (other than passive trustee)/Other interests | 265,200,000 | 32.56% | | Yu Yuesu | Spouse's interest/Family interest | 278,713,000 | 34.24% | | bostone Group Limited | Beneficial owner/Beneficial interest | 147,046,000 | 18.05% | | Xie Shicai | Interest in controlled corporation/Corporate interest | 147,046,000 | 18.05% | | Ma Jiafeng | Interest in controlled corporation/Corporate interest | 147,046,000 | 18.05% | - Ms. Yu Yuesu, spouse of Mr. Hu Changyuan, is deemed to have an interest in 278,713,000 shares and 200,000 underlying shares, representing 34.24%[181][187] - Bostone Group Limited is beneficially owned by Ms. Ma Jiafeng and Mr. Xie Shicai, holding 147,046,000 shares, representing 18.05%; Mr. Xie Shicai is the ultimate controlling shareholder of Ningbo Boway Alloy Material Co., Ltd., a direct competitor of the Group's copper processing business[181][187] Audit Committee The Audit Committee reviewed the Group's accounting principles and practices, and discussed financial reporting matters, including interim results and reports - The Audit Committee has reviewed the Group's accounting principles and practices and reviewed the interim results and interim report[190] Compliance with Corporate Governance Code During the review period, the company complied with the Corporate Governance Code set out in Appendix 14 to the Listing Rules - The company has complied with the Corporate Governance Code set out in Appendix 14 to the Listing Rules during the review period[191] Compliance with the Model Code for Securities Transactions All directors confirmed compliance with the Model Code for Securities Transactions for the six months ended June 30, 2020 - All directors confirmed compliance with the Model Code for Securities Transactions during the review period[192] Purchase, Sale or Redemption of the Company's Listed Securities The company completed an off-market share repurchase and cancellation of 41,000,000 shares for HKD 32.8 million on April 16, 2020 - The company completed an off-market share repurchase on April 16, 2020, and cancelled 41,000,000 shares on April 17, with a total consideration of HKD 32.8 million[193] Interim Dividend The Board of Directors did not declare an interim dividend for the six months ended June 30, 2020 - The Board of Directors did not declare an interim dividend for the six months ended June 30, 2020[194] Disclosure of Changes in Directors' Information under Rule 13.51B(1) of the Listing Rules No changes in directors' information requiring disclosure under Listing Rule 13.51B(1) occurred since the 2019 annual report - No changes in directors' information requiring disclosure under Rule 13.51B(1) of the Listing Rules since the 2019 annual report disclosure[195]