Resource and Production - The company reported a resource amount of 55.24 million tons of ordinary magnetite as of January 1, 2021, with an average grade of 22.79% TFe[5]. - The Maoling Processing Plant has a capacity of 150,000 tons per annum for high-grade iron concentrates[5]. - The exploration area for the Maoling-Yanglongshan Mine is 11.6 square kilometers, including a mining area of 1.9 square kilometers[5]. - The Shigou Gypsum Mine has a resource amount of 10.37 million tons, with a gypsum grade of 90.64%[5]. - The Maoling Mine is producing iron concentrates with high Fe contents ranging from 65% TFe to 72%[36]. Market and Economic Environment - The company is focused on expanding its market presence in regions such as Yunnan, Guizhou, Sichuan, and Chongqing[4]. - The company aims to enhance its adaptability and inclusiveness in operations to align with market trends[2]. - China's GDP grew by 18.3% year-on-year in Q1 2021, but only 0.6% compared to Q4 2020, indicating slowed domestic consumption and peaked manufacturing activities[16]. - Domestic crude iron ore production reached a historic high of 87.6 million tons in May 2021, with month-on-month growth in the first half of the year[19]. - Crude steel production broke previous records, reaching 97.9 million tons in April 2021 and 99.5 million tons in May 2021, with Q1 2021 output up 17.3% and 15.6% compared to 2019 and 2020 respectively[19]. - The China Iron Ore Price Index rose from just over 600 in December 2020 to a peak of 774.5 in mid-June 2021, while the China 62% TFe Iron Ore Price Index more than doubled year-on-year, reaching 233 in May 2021[19]. - Chinese steel exports surged by 26.2% year-on-year in the first four months of 2021, totaling 25.7 million tons[19]. - In May 2021, the State Council of the PRC canceled steel export tax rebates and imposed higher tariffs on some steel products to boost domestic supply[22]. - The NDRC announced new rules in June 2021 to stabilize soaring commodity prices, including iron ore and steel[22]. - The NDRC and the Ministry of Industry and Information Technology called for a review of capacity reduction in the steel industry in April 2021 to monitor supply-side structural reforms[22]. Financial Performance - The Group reported a revenue increase of 57.0% to approximately RMB 284.4 million for 1H2021 despite a production suspension due to a landslide[27]. - Production volume fell by approximately 12.5% primarily due to the production suspension[28]. - The average selling price for high-grade iron concentrates increased by approximately 23.5% driven by demand recovery[29]. - Trading activities increased with overall purchase and sales volumes of approximately 46.9 Kt, representing a rise of 26.1% compared to 1H2020[29]. - The Group recorded a higher gross profit of approximately RMB 14.8 million compared to RMB 14.0 million for 1H2020, although the gross profit margin fell to 5.2%[30]. - Revenue increased to approximately RMB246.3 million for 1H2021, up 70% from RMB144.9 million in 1H2020, driven by higher trading activities and increased average selling prices of high-grade iron concentrates and steel[47]. - Cost of sales rose significantly to approximately RMB236.0 million for 1H2021, compared to RMB135.4 million in 1H2020, primarily due to a nearly 50% increase in average steel prices and changes in delivery arrangements[48]. - Gross profit for 1H2021 was approximately RMB10.3 million, an increase from RMB9.5 million in 1H2020, while gross profit margin decreased to approximately 4.2% from 6.6%[49]. - The Group recorded a net loss of approximately RMB6.8 million for 1H2021, significantly lower than the net loss of RMB19.1 million in 1H2020[56]. Operational Efficiency and Cost Management - Administrative expenses remained largely unchanged at approximately RMB 19.9 million compared to 1H2020[30]. - Administrative expenses decreased by 30% to RMB8.9 million in 1H2021 from RMB12.7 million in 1H2020, indicating improved cost management[44]. - Selling and distribution expenses decreased to approximately RMB0.2 million for 1H2021, down from RMB2.7 million in 1H2020, due to a change in delivery arrangements[56]. - The operating loss before tax from the remaining group was reduced to RMB145 for 1H2021, a significant improvement from RMB9,342 in 1H2020, reflecting operational efficiencies[44]. Cash Flow and Financing - Net cash flows used in operating activities were approximately RMB38.8 million during 1H2021, compared to RMB17.1 million in 1H2020, reflecting increased working capital requirements[62]. - Cash and cash equivalents at the end of the period were approximately RMB4.3 million for 1H2021, down from RMB7.2 million in 1H2020[61]. - The Group incurred finance costs of approximately RMB2.4 million for 1H2021, relatively unchanged from RMB2.5 million in 1H2020[56]. - The Group recorded an income tax expense of approximately RMB1.3 million for 1H2021, compared to an income tax credit of RMB2.6 million in 1H2020[56]. - The Group's net cash flows used in investing activities were approximately RMB9.8 million for 1H2021, an increase from RMB1.9 million in 1H2020, primarily due to capital expenditures for the Maoling Mine expansion[65]. - The Group's net cash flows from financing activities were approximately RMB4.4 million for 1H2021, compared to RMB0.6 million used in financing activities in 1H2020, mainly from working capital loans[65]. Strategic Initiatives and Future Outlook - The company plans to continue focusing on trading activities and optimizing operations to mitigate the impact of market fluctuations and enhance profitability[42]. - The Group plans to increase the output of iron concentrates with at least 70% TFe, compared to the current range of 62% to 65% TFe, in response to demand trends from China's anti-pollution measures[97]. - An initial capital investment of at least RMB30.0 million is estimated for the expansion of the Maoling Mine and related operational adjustments[97]. - The outlook for iron-related products, including steel, remains positive for the second half of 2021, despite market volatility and regulatory interventions[97]. - Following the disposal of its Specialized Mining Services in Australia in July 2021, the Group will focus on expanding its HighFe Mining Operations and trading business[98]. - The long-term fundamentals of Chinese economic growth are expected to drive the Group's strategic plans, including potential business diversification strategies[98]. Corporate Governance and Compliance - The audit committee has confirmed that the interim report for the reporting period was prepared in accordance with applicable accounting standards and appropriate disclosures were made[140]. - The Company has adopted the Model Code for securities dealings by Directors, and all relevant Directors confirmed compliance during the reporting period[143]. - The Board believes the Company complied with the Corporate Governance Code during the reporting period, except for code provision A.4.1 regarding non-executive directors' terms[144]. Share Capital and Employee Information - As of June 30, 2021, a total of 15,600,000 share options were held, with 6,000,000 options having lapsed during the reporting period[118]. - The exercise price for the share options ranges from $1.00 to $3.60 per share option[118]. - The company had not been notified of any other interests or short positions in shares as of June 30, 2021, apart from those disclosed[128]. - The total number of share options held as of June 30, 2021, was 9,600,000 after accounting for lapsed options[118]. - As of June 30, 2021, the Group had 180 employees, a decrease from 191 employees as of December 31, 2020[140]. - Employee benefit expenses for the first half of 2021 were approximately RMB 15.2 million, compared to approximately RMB 11.7 million in the first half of 2020, representing an increase of about 29.9%[140].
中国铁钛(00893) - 2021 - 中期财报