中国大冶有色金属(00661) - 2020 - 中期财报

Company Information The report provides basic company information including board members, principal bankers, registered office, legal advisors, and auditors - The report provides basic company information including board members, principal bankers, registered office, legal advisors, and auditors[9][10][11][24] Management Discussion and Analysis Business Review and Outlook In H1 2020, the group's main product output generally declined due to the pandemic, with mine copper production down 26.84%, yet Q2 copper prices saw a V-shaped rebound, and the company aims to meet annual production targets and reduce costs by 3% H1 2020 Major Product Output and Year-on-Year Change | Product Category | Output | Year-on-Year Change | | :--- | :--- | :--- | | Mine Copper | approx. 9,645 tons | -26.84% | | Cathode Copper | approx. 240,930 tons | -10.54% | | Precious Metals | approx. 286.58 tons | -56.15% | | Chemical Products | approx. 539,276 tons | -9.47% | | Iron Concentrate | approx. 71,700 tons | -16.14% | | Molybdenum Concentrate | approx. 31 tons | -21.58% | - Copper prices strongly rebounded in Q2, from a March low of USD 4,371/ton to a July high of USD 6,633/ton, with domestic "new infrastructure" expected to continue driving copper prices upward[28] - For H2, the company aims to ensure annual mine crude copper production reaches 300,000 tons, cathode copper production reaches 510,000 tons, and achieve a 3% year-on-year decrease in major product cash unit costs and a 5% decrease in administrative expenses[34] - The company maintained stable production and operations amidst the dual challenges of the pandemic and floods, actively advancing key projects like the 400,000-ton project[32][33] Exploration, Development, and Mining Activities During the reporting period, the group continued exploration, development, and mining activities at key mines, with total expenditures significantly reduced to approximately RMB 525 million from RMB 1.022 billion due to pandemic impacts H1 2020 Overview of Activities at Each Mine | Mine | Exploration Activities | Development Activities | Mining Production Activities | | :--- | :--- | :--- | :--- | | Tonglushan Mine | drilled 2,474.8 meters, tunneling 555 meters | -545 meters, -605 meters mid-level development | mining volume 354,000 tons, ore processing volume 446,000 tons | | Fengshan Mine | drilled 491 meters, tunneling 1,174.8 meters | -440 meters mid-level development | mining volume 328,000 tons, ore processing volume 333,000 tons | | Tongshankou Mine | drilled 919.7 meters | Not implemented | mining volume 630,000 tons, ore processing volume 630,000 tons | | Chimashan Mine | Not implemented | None | Suspended production | | Sareke Copper Mine | Not conducted | Not conducted | raw ore processing volume 114,700 tons, copper production 1,246 tons | H1 2020 Exploration, Development, and Mining Activities Expenditures (RMB in thousands) | Mine | Operating Expenses | Capital Expenditures | H1 2020 Total | H1 2019 Total | | :--- | :--- | :--- | :--- | :--- | | Tonglushan Mine | 204,992 | 19,410 | 224,402 | 522,103 | | Fengshan Mine | 85,262 | 1,851 | 87,113 | 137,173 | | Tongshankou Mine | 130,361 | 13,329 | 143,690 | 244,568 | | Sareke Copper Mine | 66,591 | 0 | 66,591 | 115,391 | | Total | 490,161 | 34,590 | 524,751 | 1,021,820 | Financial Review Group revenue decreased by 30.62% to RMB 12.056 billion in H1 due to pandemic impacts on sales, resulting in a 37.07% decline in gross profit, while financial costs decreased by 29.66% due to lower interest-bearing debt H1 2020 Financial Performance Summary (RMB) | Metric | H1 2020 | H1 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | RMB 12.056 billion | RMB 17.377 billion | -30.62% | | Gross Profit | RMB 278 million | RMB 442 million | -37.07% | | Financial Costs | RMB 180 million | RMB 255 million | -29.66% | - The company's key investment project is the 400,000-ton high-purity cathode copper clean production project, with a total investment of RMB 5.7 billion, utilizing world-leading "flash smelting + flash converting" technology, planned for completion by end of 2021[60] - During the period, joint venture Yangxin Hongsheng Copper Co Ltd twice acquired land use rights for a total consideration of approximately RMB 120 million to support project development[57] Capital Management and Risk As of June 30, 2020, the group's current ratio was 1.03, and its debt-to-asset ratio decreased to 336.36% primarily due to reduced net debt, while facing foreign exchange risks managed through derivative contracts Capital Structure and Liquidity (As of June 30, 2020) | Metric | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash and Bank Balances | RMB 2.762 billion | RMB 1.547 billion | | Current Ratio | 1.03 | 1.01 | | Debt-to-Asset Ratio | 336.36% | 380.75% | | Net Debt | RMB 7.974 billion | RMB 9.078 billion | - As of June 30, 2020, the group had 5,627 employees, with total staff costs for H1 approximately RMB 295 million[66] - The group faces foreign exchange risks primarily involving the US dollar, managed through derivative financial instruments such as currency forwards, swaps, and options[67] Corporate Governance and Other Information Board of Directors and Shareholding Structure The Board comprises four executive and three independent non-executive directors, with Zhongshi Development Co Ltd holding 66.85% as the controlling shareholder, ultimately controlled by China Nonferrous Metal Mining Group Co Ltd - As of June 30, 2020, the Board of Directors comprised four executive directors and three independent non-executive directors led by Chairman Mr. Wang Yan[73][74][77] Major Shareholder Holdings (As of June 30, 2020) | Shareholder Name | Capacity | Number of Shares Held | Approximate Percentage of Issued Shares (%) | | :--- | :--- | :--- | :--- | | Zhongshi Development Co Ltd | Beneficial owner | 11,962,999,080 | 66.85 | | Daye Nonferrous Metals Group Holding Co Ltd | Controlled corporation interest | 11,962,999,080 | 66.85 | | China Nonferrous Metal Mining Group Co Ltd | Controlled corporation interest | 11,962,999,080 | 66.85 | | China Cinda (HK) Asset Management Co Ltd | Beneficial owner | 936,953,542 | 5.24 | Corporate Governance Practices The Board resolved not to declare an interim dividend, and the company generally complied with corporate governance codes, with a noted deviation regarding non-executive directors' terms, and a change in auditors post-period - The Board resolved not to declare any interim dividend for the six months ended June 30, 2020[76] - The company complied with the Corporate Governance Code, except for the appointment of non-executive directors without specific terms, a deviation from Code Provision A.4.1, though the company believes the rotation requirement achieves a similar effect[96] - Post-reporting period event: ShineWing (HK) CPA Limited was appointed as the company's auditor on August 28, 2020, filling the vacancy left by Deloitte's resignation on August 18[97] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2020, the group reported revenue of RMB 12.056 billion, a 30.6% decrease, shifting from a profit of RMB 3.9 million to a loss of RMB 50.47 million, with a basic loss per share of RMB 0.08 cents Condensed Consolidated Statement of Profit or Loss Summary (RMB in thousands) | Metric | H1 2020 (Unaudited) | H1 2019 (Unaudited) | | :--- | :--- | :--- | | Revenue | 12,055,577 | 17,377,369 | | Gross Profit | 278,347 | 442,340 | | (Loss) / Profit Before Tax | (48,182) | 10,610 | | (Loss) / Profit for the Period | (50,469) | 3,901 | | (Loss) / Profit Attributable to Owners of the Company | (13,514) | 1,281 | | Basic (Loss) / Profit Per Share | RMB (0.08) cents | RMB 0.01 cents | Condensed Consolidated Statement of Financial Position As of June 30, 2020, total assets were RMB 16.763 billion, total liabilities RMB 13.903 billion, with net current assets increasing to RMB 279 million, while total equity slightly decreased to RMB 2.859 billion Condensed Consolidated Statement of Financial Position Summary (RMB in thousands) | Metric | June 30, 2020 (Unaudited) | December 31, 2019 (Audited) | | :--- | :--- | :--- | | Non-current Assets | 8,287,014 | 8,474,837 | | Current Assets | 8,475,645 | 8,324,527 | | Total Assets | 16,762,659 | 16,799,364 | | Current Liabilities | 8,196,180 | 8,247,770 | | Non-current Liabilities | 5,707,386 | 5,682,032 | | Total Liabilities | 13,903,566 | 13,929,802 | | Total Equity | 2,859,093 | 2,869,562 | Condensed Consolidated Statement of Changes in Equity As of June 30, 2020, equity attributable to owners decreased to RMB 2.371 billion due to a loss of RMB 13.51 million for the period, while non-controlling interests increased by RMB 40 million - During the period, equity attributable to owners decreased by a loss of RMB 13.514 million, with the period-end balance at RMB 2.371 billion[112] - Non-controlling interests increased by a capital injection of RMB 40 million, with the period-end balance at RMB 488 million[112] Condensed Consolidated Statement of Cash Flows During the reporting period, net cash generated from operating activities was RMB 955.1 million, from investing activities RMB 254.5 million, and net cash used in financing activities was RMB 74.19 million, leading to a net increase in cash and cash equivalents of RMB 1.136 billion Condensed Consolidated Statement of Cash Flows Summary (RMB in thousands) | Metric | H1 2020 (Unaudited) | H1 2019 (Unaudited) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 955,155 | 419,507 | | Net Cash Generated from Investing Activities | 254,548 | 746,857 | | Net Cash Used in Financing Activities | (74,188) | (365,045) | | Net Increase in Cash and Cash Equivalents | 1,135,515 | 801,319 | | Cash and Cash Equivalents at Beginning of Period | 1,501,884 | 861,616 | | Cash and Cash Equivalents at End of Period | 2,637,419 | 1,663,796 | Notes to the Condensed Consolidated Financial Statements Key Accounting Policies and Revenue Analysis Financial statements are prepared under HKAS 34 with consistent accounting policies, with 99.9% of revenue from goods sales, primarily cathode copper, gold, and silver products, and almost all revenue from mainland China Revenue by Major Product (RMB in thousands) | Product | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Cathode Copper | 9,463,595 | 12,224,896 | | Gold and Other Gold Products | 1,084,667 | 2,032,100 | | Silver and Other Silver Products | 1,182,102 | 2,275,475 | | Other | 314,235 | 844,892 | | Total Sales of Goods | 12,044,499 | 17,355,593 | Revenue by Customer Location (RMB in thousands) | Region | H1 2020 | H1 2019 | | :--- | :--- | :--- | | China | 11,563,019 | 16,448,326 | | Hong Kong | 51,069 | 413,157 | | Other | 441,489 | 515,886 | | Total | 12,055,577 | 17,377,369 | Operating Expenses and Financial Costs Total financial costs for the period were RMB 180 million, a 29.7% decrease, mainly due to reduced interest on bank and other borrowings, while total staff costs decreased by 8.3% to RMB 295 million Financial Cost Details (RMB in thousands) | Item | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Interest on Bank and Other Borrowings | 129,714 | 211,594 | | Interest on Loans from Related Parties | 25,168 | 22,984 | | Interest on Acceptance Bills | 21,116 | 21,000 | | Other | 6,834 | 8,350 | | Total Borrowing Costs | 182,832 | 263,928 | | Less: Capitalized Borrowing Costs | (3,290) | (8,662) | | Net Financial Costs | 179,542 | 255,266 | - Total staff costs for the period were RMB 295 million, a decrease from RMB 322 million in the prior year period[176] Notes to Balance Sheet Items Trade and bills receivables significantly decreased to RMB 408 million from RMB 1.01 billion at 2019 year-end, while total bank and other borrowings remained stable at RMB 9.564 billion, with RMB 5.627 billion due within one year - Total trade and bills receivables decreased from RMB 1.01 billion at 2019 year-end to RMB 408 million[212] Summary of Bank and Other Borrowings (RMB in thousands) | Item | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Bank Borrowings | 6,623,019 | 6,636,991 | | Other Borrowings | 2,941,476 | 2,829,140 | | Total Borrowings | 9,564,495 | 9,466,131 | | Amount Due Within One Year | (5,627,246) | (5,567,350) | | Non-current Portion | 3,937,249 | 3,898,781 | - The group holds derivative financial instruments for hedging commodity price and currency risks, with fair values of derivative financial assets at RMB 404 million and derivative financial liabilities at RMB 38 million at period-end[273][275] Related Party Transactions The group engaged in extensive related party transactions with its ultimate holding company and its subsidiaries, including sales, purchases, financial services, and leases, with pricing based on government or market rates Significant Related Party Transactions (RMB in thousands) | Transaction Type | Related Party | H1 2020 | | :--- | :--- | :--- | | Sales of Non-ferrous Metals | Fellow subsidiaries | 1,126,643 | | Sales of Non-ferrous Metals | Daye Group | 185,159 | | Purchases of Non-ferrous Metals | Fellow subsidiaries | 351,827 | | Interest Income | Finance Company/Joint Venture | 5,596 | | Interest Expenses | Daye Group/Finance Company/Fellow subsidiaries | 25,168 | - The group leased certain land from Daye Group, with related right-of-use assets at RMB 141 million and lease liabilities at RMB 139 million as of June 30, 2020[321] Definitions This section defines specific terms used in the report such as "the Company," "the Group," "Listing Rules," and "RMB" - This section defines specific terms used in the report such as "the Company," "the Group," "Listing Rules," and "RMB"[325][326][327][328][329]