汇力资源(01303) - 2020 - 年度财报

Company Information Board of Directors and Committee Composition The company's Board of Directors comprises executive, non-executive, and independent non-executive directors, with established audit, remuneration, and nomination committees to ensure robust corporate governance - The Board members include Ms. Wang Qian, Mr. Zhou Jianzhong (Executive Directors), Mr. Cao Ye (Non-Executive Director), and Ms. Xiang Siying (Chairperson), Ms. Huang Mei, Mr. Chan Ping Kuen (Independent Non-Executive Directors)[6] - The company has an Audit Committee (chaired by Ms. Huang Mei), a Remuneration Committee (chaired by Ms. Xiang Siying), and a Nomination Committee (chaired by Ms. Wang Qian)[6] Company Basic Information The company is registered in the Cayman Islands, with principal places of business in Hami, Xinjiang, China, and Hong Kong, listed under stock code 1303, and key information regarding legal advisors, auditors, and share registrars is disclosed - The company's registered office is in the Cayman Islands, with principal places of business in Hami City, Xinjiang, China, and Wan Chai, Hong Kong[6] - The company's stock code is 1303, and its independent auditor is ZHONGHUI ANDA CPA Limited[6][8] Principal Subsidiaries of the Group Group Company Structure Huili Resources Group controls its principal subsidiaries through a multi-tiered equity structure, encompassing diversified businesses such as investment, commercial factoring, mineral resource development, financial leasing, engineering services, and trading - Huili Resources Group conducts investment holding through wholly-owned subsidiaries including Fulin Investment, Zhengyuan International, Jia Zhao Venture Capital Limited, and Runce Limited[11] - Core mineral resource development operations are managed by Hami Jin Hua Mineral Resources Development Co., Ltd. and Hami Jia Tai Mineral Resources Development Co., Ltd., operating a beneficiation plant and multiple mineral projects respectively[11] - The Group's business also includes commercial factoring, financial leasing, engineering services, and coal trading, carried out through Huili Investment (Group) Co., Ltd., Jiayi Financial Leasing Co., Ltd., Runxi Energy Technology Engineering Services (Shanghai) Co., Ltd., Changzhi Runce Trading Co., Ltd., Gujiao Runce Trading Co., Ltd., and Ningbo Runce Trading Co., Ltd.[11] Mine Information Mineral Resources and Reserves As of December 31, 2020, the company's main mineral projects (Project No. 20, H-989 Project, Baiganhu Project) hold nickel, copper, zinc, and lead metal resources and reserves, with the Baiganhu Project having the largest zinc metal resources 2020 Mineral Resources Overview as of December 31 | Project Name | Category | Quantity (thousand tonnes) | Nickel Metal (tonnes) | Nickel Grade (%) | Copper Metal (tonnes) | Copper Grade (%) | | :----------- | :------- | :------------------------- | :-------------------- | :--------------- | :-------------------- | :--------------- | | Project No. 20 | Measured | 1,330 | 9,430 | 0.71 | 3,150 | - | | | Indicated | 1,260 | 8,660 | 0.69 | 3,160 | - | | | Inferred | 2,590 | 18,090 | 0.70 | 6,310 | - | | H-989 Project | Measured | 3,390 | 16,540 | 0.49 | 7,750 | - | | | Inferred | 2,370 | 12,100 | 0.51 | 4,390 | - | | Baiganhu Project | Indicated | 1,730 | - | - | - | - | | | Inferred | 2,150 | - | - | - | - | | Project Name | Category | Quantity (thousand tonnes) | Zinc Metal (tonnes) | Zinc Grade (%) | Lead Metal (tonnes) | Lead Grade (%) | | :----------- | :------- | :------------------------- | :------------------ | :------------- | :------------------ | :------------- | | Baiganhu Project | Indicated | 1,730 | 113,540 | 6.57 | 71,440 | - | | | Inferred | 2,150 | 137,910 | 6.42 | 85,140 | - | 2020 Ore Reserves Overview as of December 31 | Project Name | Category | Quantity (thousand tonnes) | Nickel Metal (tonnes) | Nickel Grade (%) | Copper Metal (tonnes) | Copper Grade (%) | | :----------- | :------- | :------------------------- | :-------------------- | :--------------- | :-------------------- | :--------------- | | Project No. 20 | Probable | 1,099 | 7,071 | 0.64 | 2,362 | - | | Project Name | Category | Quantity (thousand tonnes) | Zinc Metal (tonnes) | Zinc Grade (%) | Lead Metal (tonnes) | Lead Grade (%) | | :----------- | :------- | :------------------------- | :------------------ | :------------- | :------------------ | :------------- | | Baiganhu Project | Probable | 1,055 | 62,773 | 5.95 | 39,352 | - | Exploration and Mining Licenses The company holds exploration licenses for Baiganhu Gold Mine, H-989 Project, and Huangshan Project, as well as mining licenses for Project No. 20 and Baiganhu Project, with some licenses currently undergoing renewal Exploration Licenses Overview | Project Name | Ore Type | Exploration Area (sq. km) | License Expiry Date (Year/Month) | | :----------- | :------- | :------------------------ | :------------------------------- | | Baiganhu Gold Mine Project | Gold | 0.64 | July 2018 (Note 1) | | H-989 Project | Copper-Nickel | 0.96 | July 2018 (Note 1) | | Huangshan Project | Copper-Nickel | 3.49 | March 2019 (Note 1) | Mining Licenses Overview | Project Name | Mining Ore Type | Mining Area (sq. km) | License Expiry Date (Year/Month) | | :----------- | :-------------- | :------------------- | :------------------------------- | | Project No. 20 | Copper-Nickel | 0.22 | October 2019 (Note 1) | | Baiganhu Project | Lead, Zinc | 0.96 | September 2021 | - Note 1 indicates that the Group is in the process of renewing these licenses, with renewal applications submitted to relevant government authorities[18] Capital Expenditure and Exploration Expenses For the year ended December 31, 2020, the Group did not engage in ore production, incurred no capital expenditure from development and mining activities, and did not deduct exploration expenses in the consolidated statement of comprehensive income - For the years ended December 31, 2019 and 2020, the Group did not conduct any ore production[19] - For the years ended December 31, 2019 and 2020, no capital expenditure was incurred from development and mining activities[20] - For the years ended December 31, 2019 and 2020, no exploration expenses were deducted in the consolidated statement of comprehensive income[21] Management Discussion and Analysis Business Review The Group, primarily engaged in non-ferrous mineral mining and beneficiation, was impacted by the COVID-19 pandemic, leading to the suspension of mine activities; to optimize its business portfolio, the Group divested its entire equity in Shaanxi Jiahe and ceased engineering service activities, focusing resources on mining, financial services, and trading businesses - The Group is primarily involved in the mining and beneficiation of non-ferrous minerals (nickel, copper, zinc, lead, etc.), with main operations located in Xinjiang Uygur Autonomous Region, China[24] - Due to the COVID-19 pandemic, the Group was forced to suspend all activities and planned maintenance work in the first half of 2020, maintaining only minimum business operations[25] - To improve its business portfolio and risk management, the Group completed the disposal of its entire equity in Shaanxi Jiahe on March 23, 2020[26] - This year, the Group decided to cease activities in the engineering services segment, concentrating resources on mining, financial services, and trading businesses[27] Mining Licenses Hami Jinhua and Hami Jiatai hold mining licenses for Mine No. 20 and Baiganhu Mine, but Mine No. 20 requires a system upgrade to restart production; the Group is evaluating the feasibility of production and seeking cooperation - Hami Jinhua and Hami Jiatai hold two mining licenses for Mine No. 20 (producing copper and nickel ore) and Baiganhu Mine (producing lead and zinc ore)[28] - Mine No. 20 requires an upgrade of its hoisting system to comply with new safety production regulations before production can restart[28] - The Group is evaluating the feasibility of commencing production at Baiganhu Mine and seeking potential partners for joint mine development[28] Exploration Licenses Hami Jiatai holds three exploration licenses for Baiganhu Gold Mine, Huangshan, and H-989, covering gold, nickel, and copper; the Group has conducted preliminary exploration and plans further exploration or cooperative development when market conditions permit - Hami Jiatai holds three exploration licenses for Baiganhu Gold Mine, Huangshan, and H-989, covering minerals including gold, nickel, and copper[31] - Hami Jiatai has conducted some exploration in the Baiganhu Gold Mine area and identified preliminary mineral types and deposits[31] - The Group plans to invest reasonable resources or collaborate with potential partners for further exploration to enrich its resource and reserve base[31] Beneficiation Plants Hami Jiatai and Hami Jinhua operate copper-nickel and lead-zinc beneficiation plants, respectively, each with a daily processing capacity of 1,500 tonnes; neither plant conducted mining or beneficiation operations this year - Hami Jiatai operates a copper-nickel ore beneficiation plant, and Hami Jinhua owns a lead-zinc beneficiation plant[32] - Each beneficiation plant has a processing capacity of 1,500 tonnes per day, used for separating and recovering nickel, copper, lead, and zinc concentrates[32] - This year, Hami Jiatai and Hami Jinhua did not conduct any mining or beneficiation operations[32] Financial Services Revenue from the financial services segment this year was approximately RMB5.6 million, a decrease from RMB6.4 million in 2019, primarily due to a reduction in average outstanding loans - This year, the financial services segment generated revenue of approximately RMB5.6 million[35] - In the same period of 2019, financial services revenue was RMB6.4 million, a year-on-year decrease of RMB0.8 million[35][40] - The decrease in revenue was mainly due to a reduction in the average outstanding loans to the Group's borrowers this year[40] Trading Business The trading business segment contributed RMB135.6 million in revenue to the Group this year, a significant increase from RMB85.8 million in 2019, despite the impact of the COVID-19 pandemic and declining commodity demand - This year, the trading business segment contributed RMB135.6 million to the Group's revenue[37] - In the same period of 2019, trading business revenue was RMB85.8 million, a year-on-year increase of approximately 58%[37][40] - The trading business is primarily conducted through Changzhi Runce Trading Co., Ltd., Gujiao Runce Trading Co., Ltd., and Ningbo Runce Trading Co., Ltd., focusing on coal trading[36] - Business activities slowed due to nationwide lockdowns caused by the COVID-19 pandemic and a decline in commodity demand[36] Performance Review This year, the Group's revenue increased by 50.9% to RMB141.2 million, primarily driven by significant growth in coal trading; gross profit rose by 29.4% to RMB4.2 million, but operating loss expanded to RMB12.57 million, mainly due to increased administrative expenses, exchange losses, and expected credit losses on financial assets 2020 vs. 2019 Performance Comparison | Indicator | 2020 (RMB million) | 2019 (RMB million) | Year-on-Year Change (%) | | :-------- | :----------------- | :----------------- | :---------------------- | | Revenue | 141.2 | 93.6 | 50.9% | | Cost of Sales | 137.0 | 90.3 | 51.7% | | Gross Profit | 4.2 | 3.3 | 29.4% | | Administrative Expenses | 24.4 | 21.1 | 15.6% | | Other (Losses)/Gains - Net | (4.9) | 4.5 | - | | Other Operating Income | 12.4 | 6.4 | 93.8% | | Operating Loss | (12.57) | (6.9) | 82.2% | | Income Tax Expense | 3.6 | 10.3 | -65.1% | | Loss for the Year | (15.35) | (15.24) | 0.7% | - The increase in revenue was primarily due to an increase of RMB49.8 million from coal trading, offset by a decrease of RMB0.8 million in financial services segment revenue[40] - Other losses of approximately RMB4.9 million were mainly exchange losses on financial assets denominated in currencies other than RMB, compared to exchange gains of RMB4.5 million in 2019[42] - Other operating income of approximately RMB12.4 million was mainly due to a reversal of impairment loss on mining buildings and mining rights of approximately RMB14.9 million resulting from increased commodity prices, offset by expected credit losses on financial assets of approximately RMB2.5 million[43] - Income tax expense for the year was approximately RMB3.6 million, a significant decrease from RMB10.3 million in 2019, primarily representing tax provisions for China operations[48] Operating Loss by Segment In 2020, the trading business segment shifted from profit to loss, while the mining and financial services segments continued to contribute to profit, but overall operating profit margin significantly declined 2020 vs. 2019 Operating Segment Performance Comparison | Segment | 2020 Operating Revenue (RMB thousand) | 2020 Operating Profit/(Loss) (RMB thousand) | 2020 Operating Profit/(Loss) Margin (%) | 2019 Operating Revenue (RMB thousand) | 2019 Operating Profit/(Loss) (RMB thousand) | 2019 Operating Profit/(Loss) Margin (%) | | :------ | :---------------------------------- | :---------------------------------------- | :-------------------------------------- | :---------------------------------- | :---------------------------------------- | :-------------------------------------- | | Coal Trading | 135,625 | (2,470) | (1.8)% | 85,823 | 585 | 0.7% | | Financial Services Interest Income | 5,591 | 3,928 | 70.3% | 6,369 | 6,258 | 98.3% | | Engineering Services | - | - | Not Applicable | 1,380 | (2,590) | (187.7%) | | Mining | - | 10,423 | Not Applicable | - | 22,039 | Not Applicable | | Total | 141,216 | 11,881 | 8.4% | 93,572 | 26,292 | 28.1% | - This year, the company decided to concentrate resources on mining, financial services, and trading businesses, and ceased activities in the engineering services segment[50] Significant Acquisitions and Disposals This year, the Group completed the disposal of its entire equity in Shaanxi Jiahe on March 23, 2020, and Shaanxi Jiahe is no longer a subsidiary of the company - This year, the Group completed the disposal of its entire equity in Shaanxi Jiahe to an independent third party on March 23, 2020[52] - Apart from the Jiahe disposal, there were no other significant acquisitions or disposals this year[52] Liquidity and Financial Review As of December 31, 2020, the Group's current assets and cash balances both decreased, but the current ratio remained healthy, and there were no outstanding interest-bearing bank loans, indicating a stable financial position 2020 vs. 2019 Liquidity Indicators Comparison | Indicator | December 31, 2020 (RMB million) | December 31, 2019 (RMB million) | Change | | :-------- | :------------------------------ | :------------------------------ | :----- | | Current Assets | 209.8 | 340.6 | ↓ | | Current Liabilities | 31.0 | 43.8 | ↓ | | Current Ratio | 6.8 | 7.8 | ↓ | | Bank and Cash Balances | 169.1 | 218.2 | ↓ | | Gearing Ratio | 0% | 0% | - | - The Group primarily conducts its ongoing business transactions in RMB and HKD, and currently does not engage in foreign exchange hedging[56][57] - As of December 31, 2020 and 2019, there were no outstanding interest-bearing bank loans or other borrowings[53] - Total staff costs (including directors' emoluments) for the year were approximately RMB7.6 million, a decrease from RMB8.9 million in 2019[61] Future Outlook and Prospects Facing uncertainties from the COVID-19 pandemic and Sino-US disputes, the Group will continue to monitor the pandemic's development, actively respond to its impacts, and study plans for restarting mine production; the Group will continuously strengthen business diversification by expanding its coal trading scope and exploring other quality projects to optimize its business structure for sustainable development - The COVID-19 pandemic has impacted the global business environment, but as of the reporting date, it has not caused significant financial difficulties for the Group[64] - The Group will continue to study the feasibility of restarting production at its mines and actively respond to external economic and business risks[64] - The financial services segment continues to provide a stable revenue source for the Group, demonstrating the effectiveness of its diversified business strategy[64] - The Group is actively exploring the potential to leverage its industry expertise and network by expanding the scope of its coal trading business to optimize its business structure and open up new profit growth points[65] - Looking ahead, the Group will continue to deepen its mining business while developing its trading and financial services businesses, and explore the possibility of developing other quality projects to achieve business diversification[65] Material Events After Reporting Period As of the reporting date, the COVID-19 pandemic has not caused significant financial difficulties for the Group, but its future development may impact financial performance to an extent that cannot yet be estimated - Since January 2020, the COVID-19 pandemic has impacted the global business environment[66] - As of the reporting date, COVID-19 has not caused significant financial difficulties for the Group[66] - Depending on the development and spread of the pandemic after the reporting date, further changes in the Group's economic conditions may impact its financial performance, the extent of which cannot be estimated as of the reporting date[66] Biographies of Directors and Senior Management Executive Directors Ms. Wang Qian and Mr. Zhou Jianzhong serve as Executive Directors; Ms. Wang Qian has over 15 years of experience in finance, investment, and management, while Mr. Zhou Jianzhong has over 20 years of experience in construction and engineering management, responsible for the general operations of the mines in China - Ms. Wang Qian (45 years old) joined the Group in January 2016, possessing over 15 years of experience in finance, investment, and management, having served as a consultant at PwC, a senior manager at Goodyear, and president of Huaqin Investment[68] - Mr. Zhou Jianzhong (47 years old) joined the Group in May 2017, possessing over 20 years of experience in construction and engineering management, and currently serves as the legal representative of Hami Jinhua, Hami Jiatai, and Shaanxi Jiahe, responsible for the general operations of the mines in China[70] Non-Executive Directors Mr. Cao Ye serves as a Non-Executive Director, with extensive experience in investment and coal trading businesses, and currently holds the position of General Manager at Botong Energy Sales (Ningbo) Co., Ltd - Mr. Cao Ye (25 years old) was appointed as a Non-Executive Director on June 14, 2019, with experience in investment and coal trading businesses[74][75] - Mr. Cao previously served as a partner at Beijing Zhenglve Caicheng Asset Management Co., Ltd. and Deputy General Manager at Shanxi Changsheng Xinlong Supply Chain Management Service Co., Ltd., and is currently the General Manager of Botong Energy Sales (Ningbo) Co., Ltd.[74] Independent Non-Executive Directors Ms. Xiang Siying, Ms. Huang Mei, and Mr. Chan Ping Kuen serve as Independent Non-Executive Directors, each bringing rich professional backgrounds and experience in investment, banking, financial advisory, accounting, auditing, mining, and materials trading - Ms. Xiang Siying (58 years old) was appointed as an Independent Non-Executive Director on September 6, 2017, and as Chairperson of the Board on March 11, 2019, with extensive experience in investment, banking, and financial advisory[76][77] - Ms. Huang Mei (41 years old) was appointed as an Independent Non-Executive Director on October 19, 2018, is a member of the Chinese Institute of Certified Public Accountants, and has over 15 years of experience in accounting, auditing, and corporate management[79][80] - Mr. Chan Ping Kuen (35 years old) was appointed as an Independent Non-Executive Director on March 11, 2019, has over 10 years of experience in the mining and materials trading industry, and currently serves as the Head of Trading at Asia Energy Logistics Group Limited[81][82] Senior Management Mr. Qiu Kangjun serves as the Company Secretary and Financial Controller, with over 10 years of experience in accounting, auditing, and corporate fields - Mr. Qiu Kangjun (35 years old) joined the Group on January 14, 2019, and was appointed as Company Secretary and Financial Controller on February 13, 2019[83] - Mr. Qiu holds a Bachelor's degree in Business Administration (Accounting) from The Chinese University of Hong Kong, is a Fellow of the Hong Kong Institute of Certified Public Accountants and a Fellow of The Chartered Governance Institute, with over 10 years of experience in accounting, auditing, and corporate fields[83] Directors' Report Company Information Huili Resources (Group) Limited was incorporated in the Cayman Islands on February 19, 2010, and listed on the Main Board of the Hong Kong Stock Exchange on January 12, 2012 - The Company was incorporated in the Cayman Islands as an exempted company under the Companies Law on February 19, 2010[87] - The Company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on January 12, 2012[87] Principal Activities The Company's principal activity is investment holding, with its subsidiaries primarily engaged in mining, beneficiation, and sale of non-ferrous metal products, trading of oil and gas exploration materials and coal, and financial services in China; this year, the Group decided to cease activities in the engineering services segment - The Company's principal activity is investment holding[88] - Its subsidiaries are primarily engaged in mining, beneficiation, and sale of gold, nickel, copper, lead, and zinc products, trading of oil and gas exploration materials and coal, and financial services in China[88] - During the year, the Group determined that concentrating resources on mining, financial services, and trading businesses was in the best interest of the Company, and decided to cease activities in the engineering services segment[89] Business Review Details of the Group's business review, financial performance, and future development are provided in the "Management Discussion and Analysis" section - Details of the Group's business review, financial performance, and future development are set out in "Management Discussion and Analysis" on pages 7 to 12[91] Directors' Opinion on Qualified Opinion The Board noted the auditor's qualified opinion on the consolidated financial statements, primarily concerning the fair value loss on the disposal group classified as held for sale for Shaanxi Jiahe and the reversal of impairment loss on mining rights, due to the auditor's inability to obtain sufficient evidence - The Board noted that the auditor has issued a qualified opinion on the Company's consolidated financial statements for the year[92] - The qualified opinion matters relate to the fair value loss on the disposal group classified as held for sale for Shaanxi Jiahe Mining Development Co., Ltd. and the reversal of impairment loss on mining rights[92] - The auditor was unable to obtain sufficient and appropriate evidence to determine the amounts of the qualified opinion items[95] Key Risks and Uncertainties The Group faces business, operational, and financial risks, including limited mine life, commodity price fluctuations, changes in China's political, economic, and legal policies, stricter environmental regulations, and market, credit, and liquidity risks - Certain projects of the Group have limited and relatively short estimated mine lives, and there are uncertainties in obtaining new mining projects[96] - Business and operating results are susceptible to commodity price fluctuations and economic cyclicality[96] - The Group's business, financial condition, operating results, and prospects are significantly affected by political, economic, and legal developments in China and changes in government policies[96] - The Group also faces market risks (including foreign exchange risk, interest rate risk), credit risk, and liquidity risk[96] Environmental Policy and Performance The Group is committed to sustainable development, complies with various environmental laws and regulations in China, and received no environmental claims or penalties this year; as of December 31, 2020, the provision for environmental costs was approximately RMB2.9 million - The Group is committed to the long-term sustainable development of its operations' environment and communities, complying with China's environmental laws and regulations[98] - This year, the Group complied in all material respects with all relevant Chinese laws and regulations concerning environmental protection and was not subject to any environmental claims, lawsuits, penalties, or administrative sanctions[101] - As of December 31, 2020, the provision for closure, reclamation, and environmental costs was approximately RMB2.9 million (2019: RMB2.8 million)[101] Compliance with Relevant Laws and Regulations The Group complied in all material respects with relevant laws and regulations in China, Hong Kong, and the Cayman Islands, as well as the Listing Rules; however, due to COVID-19 travel restrictions, the company failed to publish its 2019 audited annual results on time, constituting a breach of Listing Rule 13.49 - The Group has complied in all material respects with relevant laws and regulations that have a significant impact on the Group's business and operations during the year[102] - Due to travel restrictions caused by the COVID-19 pandemic, the Company was unable to publish its 2019 audited annual results on or before March 31, 2020, as required by the Listing Rules, constituting a breach of Listing Rule 13.49[103] - The Company published its preliminary results announcement on March 31, 2020, without auditor's agreement, and obtained auditor's agreement on April 9, 2020, in accordance with further guidance[103] Results and Dividends The Group recorded a loss for the year, and the Board does not recommend the payment of any dividends; as of December 31, 2020, the company's distributable reserves balance to shareholders was approximately RMB228.4 million - The Group's loss for the year is set out in the consolidated statement of comprehensive income[108] - The Directors do not recommend the payment of any dividend for the year[109] - As of December 31, 2020, the Company's distributable reserves balance to shareholders was approximately RMB228.4 million[110] Share Capital There was no change in the company's share capital during the year, and no pre-emptive rights provisions exist in the company's articles of association or Cayman Islands law - Details of changes in the Company's share capital are set out in Note 31 to the consolidated financial statements[112] - There was no change in the Company's share capital during the year[112] - There are no pre-emptive rights provisions in the Company's articles of association or the laws of the Cayman Islands that would require the Company to offer new shares pro rata to existing shareholders[113] Major Customers and Suppliers This year, sales to the Group's five largest customers accounted for 78.2% of total sales, with the largest customer accounting for 27.9%; purchases from the five largest suppliers accounted for 94.5% of total purchases, with the largest supplier accounting for 27.1% - For the year, sales to the Group's five largest customers accounted for 78.2% of total sales (2019: 60.4%)[117] - Sales to the largest customer accounted for 27.9% of total sales (2019: 19.4%)[117] - For the year, purchases from the Group's five largest suppliers and the largest supplier accounted for 94.5% (2019: 100.0%) and 27.1% (2019: 33.3%) of total purchases, respectively[117] Directors As of the reporting date, the Board of Directors includes Ms. Wang Qian, Mr. Zhou Jianzhong (Executive Directors), Mr. Cao Ye (Non-Executive Director), and Ms. Xiang Siying (Chairperson), Ms. Huang Mei, Mr. Chan Ping Kuen (Independent Non-Executive Directors); some directors will retire by rotation and are eligible for re-election - As of the reporting date, the Board of Directors includes Ms. Wang Qian, Mr. Zhou Jianzhong (Executive Directors), Mr. Cao Ye (Non-Executive Director), Ms. Xiang Siying (Chairperson), Ms. Huang Mei, and Mr. Chan Ping Kuen (Independent Non-Executive Directors)[118] - Mr. Zhou Jianzhong, Ms. Xiang Siying, and Mr. Chan Ping Kuen will retire by rotation and are eligible and willing to offer themselves for re-election at the upcoming Annual General Meeting[118] Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares, and Debentures of the Company or its Associated Corporations As of December 31, 2020, no director or chief executive of the Company had any disclosable interests or short positions in the shares, underlying shares, or debentures of the Company or its associated corporations - As of December 31, 2020, no director or chief executive of the Company had, or was deemed to have, any interests or short positions in the shares, underlying shares, or debentures of the Company or its associated corporations that were required to be notified to the Company and the Stock Exchange under Divisions 7 and 8 of Part XV of the Securities and Futures Ordinance[124] Equity-Linked Agreements The Company has an share option scheme designed to encourage eligible participants to enhance company and shareholder value; as of December 31, 2020, no share options were granted, exercised, lapsed, or outstanding - The Company has an share option scheme designed to encourage eligible participants to strive to enhance the overall value of the Company and its shareholders[126] - The share option scheme became effective on December 16, 2011, and will remain valid for 10 years (i.e., until December 15, 2021)[126] - As of December 31, 2020, no share options were granted, exercised, lapsed, or outstanding[61][131] Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares As of December 31, 2020, Mr. Guo Jianzhong and his controlled entity, Tianyuan International Limited, collectively held 28.08% of the company's equity; China Huarong Asset Management Co., Ltd. and its affiliates collectively held 19.75%; and Legend Vantage Limited and its affiliates collectively held 11.64% 2020 Major Shareholder Holdings as of December 31 | Name/Entity | Nature of Interest | Total Interest in Shares (L) | Approximate Percentage of Company's Issued Share Capital | | :---------- | :----------------- | :--------------------------- | :--------------------------------------- | | Tianyuan International Limited | Beneficial Owner | 412,592,702 | 25.47% | | Mr. Guo Jianzhong | Controlled Corporation Interest and Beneficial Owner | 454,958,702 | 28.08% | | Affinitiv Mobile Ventures Ltd. | Beneficial Owner | 320,000,000 | 19.75% | | China Huarong Asset Management Co., Ltd. | Controlled Corporation Interest | 320,000,000 | 19.75% | | Legend Vantage Limited | Beneficial Owner | 188,638,883 | 11.64% | - Mr. Guo Jianzhong is the legal and beneficial owner of the entire issued share capital of Tianyuan International Limited and holds 42,366,000 shares[138] - Affinitiv Mobile Ventures Ltd. is wholly owned by China Huarong Overseas Investment Holding Co., Ltd., which is wholly owned by China Huarong Asset Management Co., Ltd.[139][140] Auditor This year, the company's auditor changed from BDO Limited to ZHONGHUI ANDA CPA Limited, with the latter retiring and being eligible for re-appointment - On June 19, 2020, BDO Limited resigned as the Company's auditor[146] - ZHONGHUI ANDA CPA Limited was appointed as the Company's auditor and has audited the consolidated financial statements for the year ended December 31, 2020[146] - ZHONGHUI ANDA CPA Limited will retire at the conclusion of the upcoming Annual General Meeting and is eligible and willing to offer itself for re-appointment[146] Corporate Governance Report Board of Directors As of December 31, 2020, the Board comprised two executive directors, one non-executive director, and three independent non-executive directors, committed to maintaining high corporate governance standards and overseeing the Group's business, strategy, and financial performance; the roles of Board Chairman and Chief Executive Officer are separate, and non-executive directors serve a three-year term - As of December 31, 2020, the Board of Directors comprised six directors, including two executive directors, one non-executive director, and three independent non-executive directors[152] - The Board is primarily accountable to shareholders, responsible for leading and governing the Company and its subsidiaries, overseeing business, strategic direction, financial performance, and setting objectives and business development plans[152] - The Chairperson of the Board is Ms. Xiang Siying, and the company does not have a Chief Executive Officer position, with its functions performed by other executive directors and senior management, in compliance with code requirements[161] - Except for Ms. Huang Mei, who has no specific term, all other non-executive directors are appointed for a term of three years, and all directors are subject to retirement by rotation[162] Directors' Attendance at Meetings The Board regularly holds meetings to review the Group's financial and operating results and address significant matters, with good attendance by all directors ensuring effective corporate governance - The Board holds at least four regular meetings annually to review the Group's financial and operating results[156] Directors' Meeting Attendance (2020) | Director Name | Board Meetings | Audit Committee Meetings | Remuneration Committee Meetings | Nomination Committee Meetings | Investment Committee Meetings | Annual General Meeting | | :------------ | :------------- | :----------------------- | :------------------------------ | :---------------------------- | :---------------------------- | :--------------------- | | Ms. Wang Qian | 15/18 | Not Applicable | 1/1 | 1/1 | 1/1 | 1/1 | | Mr. Zhou Jianzhong | 18/18 | Not Applicable | Not Applicable | Not Applicable | Not Applicable | 1/1 | | Mr. Cao Ye | 15/18 | Not Applicable | Not Applicable | Not Applicable | Not Applicable | 1/1 | | Ms. Xiang Siying | 18/18 | 6/6 | 1/1 | 1/1 | 1/1 | 1/1 | | Ms. Huang Mei | 15/18 | 6/6 | 1/1 | 1/1 | 1/1 | 1/1 | | Mr. Chan Ping Kuen | 15/18 | 6/6 | Not Applicable | Not Applicable | Not Applicable | 1/1 | Audit Committee The Audit Committee, composed of three independent non-executive directors, held six meetings this year to review financial results, accounting policies, internal controls, and risk management, and communicated with the auditor regarding the qualified opinion - The Audit Committee comprises three independent non-executive directors: Ms. Huang Mei (Chairperson), Ms. Xiang Siying, and Mr. Chan Ping Kuen[163] - This year, the Audit Committee held six meetings to review the Company's corporate governance policies, compliance with legal and regulatory requirements, financial reporting system, risk management, and internal control system[163][166] - The Audit Committee met with the auditor regarding the qualified opinion (concerning the fair value loss on the disposal group for Shaanxi Jiahe and the reversal of impairment loss on mining rights) and agreed with the Board's opinion[168][169] Remuneration Committee The Remuneration Committee, comprising two independent non-executive directors and one executive director, held one meeting this year to review the Group's remuneration policy and the remuneration packages of directors and senior management - The Remuneration Committee comprises Ms. Xiang Siying (Chairperson), Ms. Huang Mei (Independent Non-Executive Director), and Ms. Wang Qian (Executive Director)[172] - This year, the Remuneration Committee held one meeting to review the Group's remuneration policy and structure, as well as the remuneration packages of directors and senior management[172] Nomination Committee The Nomination Committee, comprising one executive director and two independent non-executive directors, held one meeting this year to review the Board's structure, size, composition, and skills, and to assess the independence of independent non-executive directors - The Nomination Committee comprises Ms. Wang Qian (Chairperson), Ms. Xiang Siying, and Ms. Huang Mei[174] - This year, the Nomination Committee held one meeting to review capabilities and nominate candidates to fill casual vacancies on the Board for approval, and to review the Board's composition and Board diversity policy[174] - The primary responsibilities of the Nomination Committee include reviewing the Board's structure, identifying and nominating director candidates, assessing the independence of independent non-executive directors, and providing recommendations on director appointments[173] Investment Committee The Investment Committee was established on June 26, 2020, comprising an independent non-executive director (Chairperson), an executive director, and an independent non-executive director, responsible for reviewing and evaluating investment projects and providing recommendations to the Board - The Investment Committee was established on June 26, 2020[176] - The Investment Committee comprises Ms. Xiang Siying (Chairperson), Ms. Wang Qian, and Ms. Huang Mei[176] - This year, the Investment Committee held one meeting to review the Group's investment strategy and certain investment opportunities[176] Accountability and Audit The Board is responsible for preparing true and fair financial statements and ensuring effective internal controls; the auditor, ZHONGHUI ANDA CPA Limited, provides audit services, and its remuneration has been disclosed - Directors are responsible for preparing consolidated financial statements for each financial period that give a true and fair view of the state of affairs, results, and cash flows of the Group for that period[177] - The auditor, ZHONGHUI ANDA CPA Limited, received remuneration for services, with audit services costing RMB978 thousand and other non-audit services costing RMB178 thousand[180][184] Risk Management and Internal Control The Board is responsible for the Group's risk management and internal control systems, reviewing their effectiveness annually; the Group has established an internal compliance officer position and engaged legal and internal control consultants to strengthen risk management and compliance - The Board is responsible for the Company's risk management and internal control systems and for reviewing their effectiveness[185] - The Group has established an internal compliance officer position, held by the Company Secretary and Financial Controller, Mr. Qiu Kangjun, to assist the Board in ensuring operations comply with laws and regulations[188] - The Group engaged legal advisors in China, the Cayman Islands, and Hong Kong, as well as internal control consultants for annual reviews, to strengthen its risk management and internal control systems[190] - The internal control consultants' review found no significant internal control deficiencies, and all recommendations were properly followed up[190] Directors' Training Newly appointed directors receive comprehensive induction training to ensure understanding of the Group's business and regulatory responsibilities; the Company Secretary regularly provides updates on Listing Rules, and directors are provided with materials and attend seminars to stay informed of the latest regulatory developments - Each newly appointed director received comprehensive, formal, and tailored induction training upon their initial appointment[191] - The Company Secretary provides updates on the Listing Rules from time to time, and directors are also provided with materials and attend seminars to understand the latest regulatory developments[191] Board Diversity Policy The Company has adopted a Board Diversity Policy, considering various factors such as gender, age, cultural and educational background, professional experience, skills, knowledge, and length of service to achieve Board diversity - The Company has adopted a Board Diversity Policy, aiming to achieve Board diversity by considering various factors, including but not limited to gender, age, cultural and educational background, race, professional experience, skills, knowledge, and other qualifications[192] - The Nomination Committee has considered measurable objectives across four key areas (gender, age, professional experience, and race) to implement the Board Diversity Policy[192] Board Diversity as of Reporting Date | Director Name | Age Group 25-35 | Age Group 35-45 | Age Group 45+ | Educational Background Science | Educational Background Accounting & Finance | Educational Background Other | Career Experience Science | Career Experience Accounting & Finance | Career Experience Management | | :------------ | :-------------- | :-------------- | :------------ | :--------------------- | :-------------------------- | :------------------- | :-------------------- | :-------------------------- | :------------------- | | Ms. Wang Qian | | ✓ | | | ✓ | | | ✓ | | | Mr. Zhou Jianzhong | | | ✓ | ✓ | | | ✓ | | | | Mr. Cao Ye | ✓ | | | | ✓ | | | ✓ | | | Ms. Xiang Siying | | | ✓ | | ✓ | | | ✓ | | | Ms. Huang Mei | | ✓ | | | ✓ | | | ✓ | | | Mr. Chan Ping Kuen | ✓ | | | | ✓ | | | | ✓ | Dividend Policy The Company has formulated a dividend payment policy, but the Board does not recommend the payment of any dividends for the current year - The Company has formulated a dividend payment policy, outlining the factors, frequency, and form for determining dividend payments[201] - The Board does not recommend the payment of any dividend for the current year (2019: nil)[202] Company Secretary Mr. Qiu Kangjun served as the Company Secretary throughout the year and participated in no less than 15 hours of relevant professional training - Mr. Qiu served as the Company Secretary throughout the year and participated in no less than 15 hours of relevant professional training during the year[203] Shareholders' Rights The Board is committed to maintaining continuous communication with shareholders and encourages their attendance at general meetings; shareholders can make inquiries or request extraordinary general meetings through various channels - The Board is committed to maintaining continuous communication with shareholders and encourages shareholders to attend general meetings[208] - Shareholders can send written inquiries to the Company Secretary via email, fax, or mail[208] - Shareholders holding not less than one-tenth of the paid-up share capital can request the Board to convene an extraordinary general meeting[209] Investor Relations The Company maintains a website (www.huili.hk) providing comprehensive information to facilitate effective communication with the public - The Company maintains a website (www.huili.hk) providing comprehensive information on its principal businesses, press releases, announcements, financial information, publications, annual and interim reports, and circulars to shareholders[210] Independent Auditor's Report Qualified Opinion The auditor issued a qualified opinion on the consolidated financial statements, stating that, except for the possible effects of the matters described in the Basis for Qualified Opinion, the financial statements present fairly the Group's financial position, performance, and cash flows - The auditor has audited the consolidated financial statements of Huili Resources (Group) Limited and its subsidiaries[213] - The auditor believes that, except for the possible effects of the matters described in the Basis for Qualified Opinion, the consolidated financial statements present fairly, in all material respects, the Group's financial position, performance, and cash flows in accordance with Hong Kong Financial Reporting Standards[213] Basis for Qualified Opinion The qualified opinion primarily stems from the auditor's inability to obtain sufficient evidence to determine the fair value loss on the disposal group classified as held for sale for Shaanxi Jiahe and the reversal of impairment loss on mining rights, which could significantly impact the 2019 financial performance and related disclosures - The qualified opinion matters relate to the fair value loss on the disposal group classified as held for sale for Shaanxi Jiahe Mining Development Co., Ltd. and the reversal of impairment loss on mining rights[214] - The auditor was unable to obtain sufficient and appropriate audit evidence to determine the amount of the aforementioned reversal of impairment loss on mining rights for Shaanxi Jiahe and the carrying amount of mining rights[214] - Any adjustments to the aforementioned figures might have a significant impact on the Group's financial performance for the year ended December 31, 2019, and the disclosures in the consolidated financial statements[214] Key Audit Matters Key audit matters include the impairment testing of mining buildings and mining rights, as well as trade and bills receivables, loans receivable, and other receivables, all of which involve significant judgment, assumptions, and valuation - Impairment testing of mining buildings and mining rights is crucial to the audit due to their significant balances and the application of judgment, assumptions, and valuation[218] - Impairment testing of trade and bills receivables, loans receivable, and other receivables is also a key audit matter due to their significant balances and the involvement of judgment and valuation[220] - The auditor's audit procedures include assessing the accuracy, independence, and integrity of valuations, and reconciling key assumptions with supporting evidence[219][223] Other Information Directors are responsible for other information in the annual report, and the auditor's opinion on the consolidated financial statements does not cover other information; due to the matters described in the Basis for Qualified Opinion, the auditor cannot conclude whether other information contains a material misstatement - Directors are responsible for other information, which includes all information contained in the company's annual report, but excludes the consolidated financial statements and the auditor's report[224] - The auditor's opinion on the consolidated financial statements does not cover other information, and no form of assurance conclusion is expressed thereon[225] - Due to the inability to obtain sufficient evidence, the auditor cannot conclude whether other information related to the qualified opinion matters contains a material misstatement[225] Directors' Responsibilities for the Consolidated Financial Statements Directors are responsible for preparing true and fair consolidated financial statements in accordance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance, and for internal controls to prevent material misstatement - Directors are responsible for preparing consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance[228] - Directors are responsible for such internal control as they determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error[228] - Directors are responsible for assessing the Group's ability to continue as a going concern and for using the going concern basis of accounting[228] Auditor's Responsibilities for the Audit of the Consolidated Financial Statements The auditor's objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes an opinion - The auditor's objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error[229] - The auditor conducts the audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants and is independent of the Group[214][229] Consolidated Statement of Comprehensive Income Overview of 2020 Consolidated Comprehensive Income For the year ended December 31, 2020, the Group's revenue was RMB141,216 thousand, with a loss for the year of RMB15,351 thousand, of which RMB16,738 thousand was attributable to owners of the Company 2020 vs. 2019 Key Data from Consolidated Statement of Comprehensive Income | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :-------- | :------------------ | :------------------ | | Revenue | 141,216 | 93,572 | | Cost of Sales | (136,967) | (90,289) | | Gross Profit | 4,249 | 3,283 | | Administrative Expenses | (24,367) | (21,088) | | Other Operating Income | 12,448 | 6,435 | | Other (Losses)/Gains - Net | (4,896) | 4,472 | | Operating Loss | (12,566) | (6,898) | | Finance Income - Net | 808 | 1,945 | | Loss Before Income Tax | (11,758) | (4,953) | | Income Tax Expense | (3,593) | (10,283) | | Loss for the Year | (15,351) | (15,236) | | Loss for the Year Attributable to Owners of the Company | (16,738) | (16,013) | | Loss for the Year Attributable to Non-Controlling Interests | 1,387 | 777 | | Total Comprehensive Loss for the Year | (15,697) | (15,236) | | Loss Per Share Attributable to Owners of the Company (RMB cents) | (1.0) | (1.0) | - Revenue for the year increased by 50.9% to RMB141,216 thousand, primarily driven by growth in coal trading[40][233] - Loss for the year remained largely stable at RMB15,351 thousand, while loss attributable to owners of the Company slightly increased[233] Consolidated Statement of Financial Position Overview of 2020 Consolidated Financial Position As of December 31, 2020, the Group's total assets were RMB468,780 thousand, a decrease from 2019; non-current assets increased, while current assets and liabilities both decreased, resulting in total equity of RMB409,617 thousand 2020 vs. 2019 Key Data from Consolidated Statement of Financial Position | Indicator | December 31, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :-------- | :------------------------------- | :------------------------------- | | Assets | | | | Total Non-Current Assets | 258,994 | 153,607 | | Total Current Assets | 209,786 | 340,563 | | Total Assets | 468,780 | 494,170 | | Liabilities | | | | Total Current Liabilities | 30,975 | 43,752 | | Total Non-Current Liabilities | 28,188 | 25,104 | | Total Liabilities | 59,163 | 68,856 | | Equity | | | | Capital and Reserves Attributable to Owners of the Company | 410,817 | 427,901 | | Non-Controlling Interests | (1,200) | (2,587) | | Total Equity | 409,617 | 425,314 | - Total non-current assets increased from RMB153,607 thousand in 2019 to RMB258,994 thousand in 2020, primarily due to an increase in loans receivable and financial assets at fair value through other comprehensive income[234] - Total current assets decreased from RMB340,563 thousand in 2019 to **R