Company Information This report provides fundamental company details for Power Mining Energy Co., Ltd. (Stock Code: 1277), including board members, principal place of business, auditor, and main banking relationship - This report provides basic company information for Power Mining Energy Co., Ltd. (Stock Code: 1277), including details on board members, principal place of business, registered office, auditor (KPMG), and main banking relationship (Ping An Bank) 6 Chairman's Report Despite the complex environment of COVID-19 in 2020, the company achieved robust development with increased revenue but a slight decrease in profit attributable to shareholders Chairman's Report Despite the complex environment of COVID-19 in 2020, the company achieved robust development with increased revenue but a slight decrease in profit attributable to shareholders, while maintaining a significantly higher gross profit margin than the industry average 2020 Annual Key Financial Performance | Indicator | 2020 | Year-on-year Change | | :--- | :--- | :--- | | Revenue | RMB 2,961.4 million | ▲ 8.2% | | Profit attributable to shareholders | RMB 814.8 million | ▼ 2.2% | | Gross profit margin | 43.3% | - | | Commercial coal sales volume | - | ▲ 7.4% | - In 2020, the company implemented multiple operational strategies to enhance efficiency, including: production automation, refined management across procurement, production, and inventory, and flexible sales strategies to consolidate and expand market presence 8 - For 2021, the company anticipates a tight supply-demand balance in the domestic coal market with a slight increase in average coal prices, planning to expand capacity through quality projects and strategic M&A 9 Management Discussion and Analysis This section provides an in-depth review of the company's operational and financial performance, market conditions, and risk management strategies in 2020 Market Review In 2020, China's economy recovered, but the coal market experienced supply-demand imbalances and a decline in overall industry profitability - China's GDP in 2020 was approximately RMB 101.6 trillion, growing by 2.3% year-on-year 21 - The average transaction price for 5,000 kcal coal at Qinhuangdao was RMB 503 per ton, a 1.2% year-on-year decrease 21 - The coal mining and washing industry's total profit was approximately RMB 222.7 billion, a 21.1% year-on-year decrease 21 Business Review The Group achieved high-quality development in 2020 through flexible sales strategies and refined cost control, despite market volatility 2020 Annual Business Review Key Indicators | Indicator | 2020 | Year-on-year Change | | :--- | :--- | :--- | | Total Revenue | Approx. RMB 2,961.4 million | ▲ 8.2% | | Gross Profit Margin | Approx. 43.3% | ▲ 4.3 percentage points | | Comprehensive Net Profit | Approx. RMB 814.8 million | ▼ 2.2% | | EBITDA | Approx. RMB 1,357.0 million | ▲ 16.3% | - The company's Dafenpu Coal Mine was among the first to resume operations in Inner Mongolia and has consistently received national safety and green mine recognitions 23 Major Risks and Uncertainties The company addresses operational concentration, coal price volatility, and production safety risks through stable operations, flexible market strategies, and robust safety management - Major risks include single mine concentration risk (Dafenpu Coal Mine), coal price volatility, and production safety risks inherent in the high-risk coal mining industry 252627 - Mitigation measures involve ensuring stable operations, implementing flexible marketing strategies and leveraging the "Power 2" brand, and maintaining a zero serious injury or fatality rate in 2020 through strengthened safety management 252627 Exploration, Development and Mining Activities As of end-2020, Dafenpu Coal Mine held estimated coal resources of 389.77 million tons and total coal reserves of 183.72 million tons, with capital expenditure primarily on equipment and mine construction Coal Resources as of December 31, 2020 (Million Tons) | Coal Seam | Proved | Indicated | Inferred | Total | | :--- | :--- | :--- | :--- | :--- | | 5 | 9.73 | 14.62 | 0.56 | 24.91 | | 6U | 9.64 | 20.45 | 0.47 | 30.56 | | 6 | 135.42 | 176.14 | 0.65 | 312.21 | | 8 | — | — | 4.05 | 4.05 | | 9 | — | 5.13 | 12.91 | 18.04 | | Total | 154.79 | 216.34 | 18.64 | 389.77 | Coal Reserves as of December 31, 2020 (Million Tons) | Coal Seam | Proved Coal Reserves | Probable Coal Reserves | Total Coal Reserves | | :--- | :--- | :--- | :--- | | 6U +6 | 83.13 | 100.59 | 183.72 | | Total | 83.13 | 100.59 | 183.72 | - Capital expenditure for the year ended December 31, 2020, was approximately RMB 40.6 million, primarily for development and mining activities at Dafenpu Coal Mine 30 Future Outlook The company anticipates a strong recovery in China's economy and a tight supply-demand balance in the coal market in 2021, planning to pursue refined operations and strategic M&A for capacity expansion - The coal market is expected to maintain a tight supply-demand balance in 2021, with a slight increase in the average coal price 33 - The company will continue to implement refined operational strategies focusing on safety, efficiency, environmental protection, and technological innovation 33 - The company plans to seize new market opportunities and pursue strategic mergers and acquisitions to expand production capacity 33 Financial Review This section details the company's 2020 financial performance, including increased revenue and gross profit margin, a slight net profit decrease due to higher income tax, and improved liquidity Operating Results In 2020, revenue increased by 8.2% to RMB 2.96 billion due to higher sales volume, but net profit attributable to shareholders slightly decreased by 2.2% to RMB 815 million due to a significant rise in income tax expense 2020 Annual Consolidated Statement of Profit or Loss Summary (RMB Thousand) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 2,961,404 | 2,736,109 | | Gross Profit | 1,282,217 | 1,067,828 | | Operating Profit | 1,218,091 | 1,022,510 | | Profit before tax | 1,228,156 | 1,019,795 | | Profit for the year attributable to shareholders | 814,796 | 833,303 | - Revenue growth was primarily driven by a 7.4% year-on-year increase in sales volume, while the average selling price per ton of 5,000 kcal coal products remained stable 36 - Income tax expense significantly increased, with the effective tax rate rising from 18.3% in 2019 to 33.7% in 2020, due to changes in subsidiary tax preferential policies and provisions for withholding tax for prior years 4243 - The Board recommended a final dividend of HKD 0.04 per share 43 Cash Flow In 2020, net cash from operating activities significantly increased to RMB 1.20 billion, while net cash used in investing activities rose, leading to a higher year-end cash balance 2020 Annual Consolidated Cash Flow Summary (RMB Thousand) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Net cash generated from operating activities | 1,195,970 | 862,316 | | Net cash used in investing activities | (540,805) | (147,376) | | Net cash used in financing activities | (275,197) | (490,743) | | Cash and cash equivalents at end of year | 877,745 | 497,192 | Liquidity and Financial Resources The company maintains a healthy financial position, with its net debt ratio significantly improving from -6.6% to -31.9% and reduced bank loans - The Group's net debt ratio improved from -6.6% at December 31, 2019, to -31.9% at December 31, 2020 49 - Bank loans decreased to RMB 210.4 million at December 31, 2020, from RMB 357.7 million in 2019 50 Financial Risk Management The company manages interest rate, foreign currency, and liquidity risks through monitoring and forecasting, with capital expenditures and commitments detailed - The Group's interest rate risk primarily arises from floating-rate bank loans 52 - Capital expenditure for the year ended December 31, 2020, was approximately RMB 40.6 million, with capital commitments of approximately RMB 6.1 million 53 Human Resources and Remuneration Policies As of end-2020, the Group employed 756 full-time staff with total annual employee costs of RMB 180.5 million, and remuneration policies are performance-based - As of December 31, 2020, the Group employed approximately 756 full-time employees in mainland China and Hong Kong 55 - Total employee costs (including directors' emoluments) for the year ended December 31, 2020, amounted to RMB 180.5 million 55 Environmental, Social and Governance Report This report details the company's commitment and practices in environmental protection, social responsibility, and corporate governance 1. Responsible Governance The Group has established a board-led ESG management structure, engaging stakeholders and prioritizing key issues like safety, ecological protection, and compliance - The Board assumes full responsibility for the Group's ESG strategy and reporting, supported by an established ESG working group 59 - Through materiality assessment, seven issues including "production safety," "ecological protection," and "compliant and legal operations" were identified as highly material 65 2. Compliant Operations The company upholds integrity and compliance, with no corruption lawsuits in 2020, and focuses on technological innovation, product quality, and responsible supply chain management - In 2020, the Group had no lawsuits related to corruption 68 - The company's "Power 2" clean coal product has a sulfur content below 0.6%, with zero product quality complaints or recalls in the year 70 - A supplier management system is in place, incorporating health, safety, environmental, and social responsibility performance into assessment criteria, with 222 trading suppliers in 2020 72 3. Safety Production Safety is paramount, with RMB 22.07 million invested in safety and occupational health in 2020, achieving zero major accidents and 100% hazard rectification - In 2020, the Group invested RMB 22.07 million in production safety and occupational health 73 - A total of 141 safety inspections were conducted, identifying 1,457 hazards with a 100% rectification rate 76 - In 2020, the Group experienced no major safety accidents or work-related fatalities 76 - Employee occupational health examination rate reached 100% 79 4. Green and Environmental Protection The company adheres to green mining principles, achieving significant energy savings, 100% wastewater recycling, proper solid waste disposal, and extensive ecological restoration - The Dafenpu Coal Mine was among the first coal mines included in the 2019 National Green Mine selection list 79 - In 2020, 6,330,228 kWh of electricity was saved through various energy-saving initiatives 80 - In 2020, both production and domestic wastewater recycling rates reached 100%, achieving zero wastewater discharge 84 - Approximately 114 mu of gangue dump was reclaimed and greened, with 16,500 trees planted in 2020 90 5. Harmonious Development The company prioritizes employee welfare, ensuring 100% labor contract signing and training coverage, while actively contributing to community development and local employment - As of December 31, 2020, the company and coal mine employed 756 staff, with a 100% labor contract signing rate 95 - In 2020, 34 training sessions were organized, achieving 100% training coverage and over 97% overall employee satisfaction 105 - In 2020, the company donated RMB 10,000 to the Jungar Banner Red Cross Society and RMB 300,000 to the Inner Mongolia Ordos Poverty Alleviation Foundation for environmental remediation 108 Directors and Senior Management This section provides biographical details of the company's board members and senior management, highlighting their extensive experience in the industry Biographies of Directors and Senior Management This section details the backgrounds and professional experiences of the company's board members and senior management, including key executive appointments - Mr. Zhang Li, 68, is the Group's founder, Chairman, and Executive Director, also co-founder and co-chairman of Guangzhou R&F Properties Co., Ltd 116 - Mr. Zhang Liang, 39, is an Executive Director and Mr. Zhang Li's son; his wholly-owned King Lok Holdings Limited holds approximately 62.96% of the company's issued share capital 116140 - Mr. Ju Wenzhong, 52, appointed Executive Director and CEO on May 28, 2020, is fully responsible for the Group's production and sales leadership 116 Directors' Report This report outlines the company's principal activities, performance, and dividend distribution for 2020, along with details on major customers, suppliers, directors' interests, and corporate governance Directors' Report This report summarizes the company's 2020 business, performance, and dividend distribution, including key customer/supplier concentrations, directors' interests, related party transactions, and governance practices - The Board recommended a final dividend of HKD 0.04 per share, totaling approximately HKD 337.2 million 128 2020 Annual Major Customer and Supplier Concentration | Category | Percentage | | :--- | :--- | | Largest customer | 13.2% | | Top five customers combined | 41.0% | | Largest supplier | 7.1% | | Top five suppliers combined | 23.2% | - On June 22, 2020, the company provided a RMB 57.0 million loan to Guizhou Power Energy Co., Ltd., indirectly held by Chairman Mr. Zhang Li, constituting a connected transaction 137 - No share options were granted under the company's share option scheme for the year ended December 31, 2020 145152 Corporate Governance Report This report details the company's adherence to corporate governance standards, board structure, committee functions, risk management, and shareholder communication Corporate Governance Report The company maintained high corporate governance standards in 2020, complying with listing rules, with a clear board structure, distinct roles for Chairman and CEO, and effective internal controls - The Board believes the company complied with the Corporate Governance Code for the year ended December 31, 2020 170 - The Board comprises seven members, including three independent non-executive directors, meeting the listing rule requirement of at least one-third independent non-executive directors 173 - The roles of the Chairman (Mr. Zhang Li) and Chief Executive Officer (Mr. Ju Wenzhong) are held by separate individuals with clear responsibilities 182 - The Board, through its internal audit department, reviewed the Group's risk management and internal control systems, deeming them effective and adequately resourced for accounting, internal audit, and financial reporting functions 202206 Independent Auditor's Report This report presents KPMG's unqualified opinion on the company's 2020 consolidated financial statements, highlighting revenue recognition as a key audit matter Independent Auditor's Report KPMG issued an unqualified audit opinion on Power Mining Energy Co., Ltd.'s consolidated financial statements for the year ended December 31, 2020, identifying revenue recognition as a key audit matter - The auditor, KPMG, issued an unqualified audit opinion on the consolidated financial statements 211 - Revenue recognition was identified as a key audit matter due to its significance as a key performance indicator and the inherent risk of management manipulating the timing of revenue recognition 212 Consolidated Financial Statements This section presents the full set of consolidated financial statements for 2020, including the income statement, balance sheet, statement of changes in equity, and cash flow statement Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended December 31, 2020, the company reported RMB 2.96 billion in revenue and RMB 815 million in profit attributable to shareholders, a slight decrease due to higher income tax Consolidated Statement of Profit or Loss Summary (For the year ended December 31) | Indicator (RMB Thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 2,961,404 | 2,736,109 | | Gross Profit | 1,282,217 | 1,067,828 | | Operating Profit | 1,218,091 | 1,022,510 | | Profit before tax | 1,228,156 | 1,019,795 | | Profit for the year attributable to shareholders | 814,796 | 833,303 | | Basic earnings per share (RMB cents) | 9.67 | 9.88 | Consolidated Statement of Financial Position As of December 31, 2020, total assets were RMB 3.67 billion, with total equity increasing to RMB 2.76 billion and a significant improvement in net current assets Consolidated Statement of Financial Position Summary (As of December 31) | Indicator (RMB Thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Total non-current assets | 1,964,612 | 2,125,816 | | Total current assets | 1,708,038 | 979,954 | | Total assets | 3,672,650 | 3,105,770 | | Total current liabilities | 854,650 | 796,047 | | Total non-current liabilities | 58,280 | 50,860 | | Total liabilities | 912,930 | 846,907 | | Total equity | 2,759,720 | 2,258,863 | Consolidated Statement of Changes in Equity Total equity increased from RMB 2.26 billion to RMB 2.76 billion in 2020, driven by profit for the year and exchange differences, partially offset by dividends paid - Total equity increased from RMB 2,258,863 thousand at end-2019 to RMB 2,759,720 thousand at end-2020 225 - Equity changes were primarily influenced by profit for the year (+RMB 814,796 thousand), other comprehensive income from exchange differences (+RMB 25,457 thousand), and dividends paid (-RMB 339,396 thousand) 225 Consolidated Statement of Cash Flows In 2020, the Group generated strong net cash from operating activities of RMB 1.20 billion, leading to a significant increase in year-end cash and cash equivalents Consolidated Statement of Cash Flows Summary (For the year ended December 31) | Indicator (RMB Thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Net cash generated from operating activities | 1,195,970 | 862,316 | | Net cash used in investing activities | (540,805) | (147,376) | | Net cash used in financing activities | (275,197) | (490,743) | | Net increase in cash and cash equivalents | 379,968 | 224,197 | | Cash and cash equivalents at end of year | 877,745 | 497,192 | Notes to the Consolidated Financial Statements These notes provide detailed explanations of accounting policies, key judgments, and supplementary disclosures for financial statement items, including segment information, customer concentration, tax changes, and related party transactions - The Group operates in one single operating segment: the mining and sale of coal products in China 283 - Revenue from the single largest customer (Customer A) was RMB 390,433 thousand, accounting for 13.2% of total revenue 285 - The significant increase in income tax expense was mainly due to changes in preferential tax policies for Chinese subsidiaries and a 10% withholding tax provision for dividend distribution (RMB 79,080 thousand for current year, RMB 21,000 thousand for prior years) 302303 - In 2020, the Group provided a loan of RMB 57,000 thousand to Guizhou Power Energy Co., Ltd., controlled by Chairman Mr. Zhang Li 355 Financial Summary This section presents a five-year summary of key financial data from 2016 to 2020, illustrating the Group's consistent growth in revenue and net assets Five-Year Financial Summary This section provides a five-year overview of the Group's key financial performance and position from 2016 to 2020, demonstrating sustained growth Five-Year Performance Summary (RMB Thousand) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 2,961,404 | 2,736,109 | 2,443,435 | 1,749,538 | 1,051,457 | | Profit before tax | 1,228,156 | 1,019,795 | 1,051,044 | 707,480 | 193,088 | | Profit for the year | 814,796 | 833,303 | 806,971 | 540,048 | 138,106 | Five-Year Assets and Liabilities Summary (RMB Thousand) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total non-current assets | 1,964,612 | 2,125,816 | 2,037,392 | 1,995,535 | 2,008,542 | | Total current assets | 1,708,038 | 979,954 | 717,610 | 676,356 | 211,894 | | Total current liabilities | 854,650 | 796,047 | 831,991 | 1,235,117 | 804,405 | | Net assets | 2,759,720 | 2,258,863 | 1,776,000 | 1,308,421 | 983,791 |
力量发展(01277) - 2020 - 年度财报