紫金矿业(02899) - 2020 - 中期财报

Business Review Company Business, Operating Model, and External Environment The company is a multinational mining group focused on global exploration and development of gold, copper, and zinc, extending to smelting and trading, utilizing a low-cost, high-tech model. Gold prices hit record highs, while copper and zinc recovered after initial pandemic impacts - The company's core business involves global exploration, development, smelting, and trading of gold, copper, and zinc minerals, with projects across 14 domestic provinces (regions) and 12 overseas countries[7] - During the reporting period, international gold prices significantly increased, with an average price of $1,645.42/ounce, up 25.94% year-on-year; domestic gold prices averaged 369.98 yuan/gram, up 28.48% year-on-year[15] - Copper and zinc prices, impacted by the pandemic, bottomed out in Q1 and steadily recovered in Q2 due to China's economic recovery and tight supply in South America. The average LME copper price was $5,500/ton, and LME zinc price was $2,047/ton during the reporting period[17] - The company ranked 778th in Forbes Global 2000 list, holding the No. 1 position among Chinese gold and non-ferrous metal enterprises[18] Core Competitiveness Analysis Core competitiveness is driven by innovative development, encompassing independent technology, unique engineering management, strong resource base, international operations, low-cost efficiency, and modern governance - The company possesses resource reserves of over 2,000 tons of gold, 62 million tons of copper, and approximately 10 million tons of zinc (lead), with copper resources exceeding half of China's total domestic volume[23] - The company established the "Ore Flow Five-Ring Unification" engineering management model, implementing full-process control over geological exploration, mining, mineral processing, smelting, and environmental protection to achieve green and efficient development[22] - Overseas projects contribute significantly, with overseas resource reserves and production of major products approaching or exceeding half of the company's total, and gross profit contribution exceeding one-third of the group's total[24] - The company achieves low-cost operations by acquiring mineral resources at lower costs through independent exploration and counter-cyclical mergers and acquisitions, and by optimizing construction plans using its proprietary design platform[25] Operating Performance Overview H1 2020 saw significant growth with RMB 83.142 billion sales revenue (+23.73%) and RMB 2.421 billion net profit (+30.64%), primarily from strong gold and copper segments contributing over 75% of gross profit Key Financial Indicators for H1 2020 | Indicator | H1 2020 (RMB billion) | Y-o-Y Growth (%) | | :--- | :--- | :--- | | Sales Revenue | 83.142 | +23.73 | | Net Profit Attributable to Parent | 2.421 | +30.64 | | Total Assets (Period-end) | 149.805 | +20.98 (vs. beginning of year) | - The gold segment achieved 20.24 tons of mined gold, a year-on-year increase of 5.93%, contributing 38.60% to the group's gross profit[28][29] - The copper segment achieved 230,700 tons of mined copper, a year-on-year increase of 34.85%, contributing 37.35% to the group's gross profit[28][31] - During the reporting period, the company completed the delivery of Continental Gold in Colombia and the acquisition of a 50.1% equity stake in Julong Copper, further enhancing its resource reserves[39] - Overseas projects' contribution continued to increase, with mined gold production accounting for 59.95% of the company's total and mined copper production accounting for 43.71%[42] Management Discussion and Analysis Operating Results and Sales Analysis Operating revenue reached RMB 83.142 billion (+23.73%), driven by increased mineral product sales volume (62%), higher prices (18%), and cost control (20%), with significant growth in gold sales Sales Performance of Major Products (H1 2020 vs H1 2019) | Product Name | H1 2020 Sales (RMB million) | H1 2019 Sales (RMB million) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Mined Gold | 6,693.30 | 5,043.14 | +32.72 | | Refined, Processed, and Traded Gold | 52,295.32 | 38,126.76 | +37.16 | | Mined Copper (Total) | 7,642.74 | 5,930.65 | +28.87 | | Refined Copper | 11,458.10 | 9,491.33 | +20.72 | | Mined Zinc | 1,271.76 | 2,219.80 | -42.71 | | Refined Zinc | 1,543.66 | 2,045.68 | -24.54 | - The primary driver for gross profit growth was the year-on-year increase in mineral product sales volume, contributing RMB 897 million to gross profit growth, accounting for 62%[48] Cost and Gross Margin Analysis Overall gross margin slightly decreased to 10.98% due to lower-margin segments, but core mining gross margin rose to 45.13%, indicating enhanced profitability in key operations like mined gold and electrolytic copper Gross Margin and Unit Sales Cost Changes for Major Products (H1 2020) | Item | Gross Margin (%) | H1 2019 Gross Margin (%) | Unit Sales Cost | Y-o-Y Cost Change (%) | | :--- | :--- | :--- | :--- | :--- | | Mined Gold | 51.33 | 36.29 | 170.64 yuan/gram | -2.58 | | Mined Electrolytic Copper | 48.86 | 35.89 | 18,573 yuan/ton | -28.61 | | Mined Copper Concentrate | 43.35 | 50.19 | 18,092 yuan/ton | +6.78 | | Mined Zinc | 12.79 | 48.75 | 6,523 yuan/ton | +9.89 | | Overall Gross Margin of Mining Enterprises | 45.13 | 44.00 | - | - | | Overall Gross Margin | 10.98 | 11.24 | - | - | Expense, Profit, and Cash Flow Analysis Selling expenses decreased 47.51%, financial expenses rose 7.91%, and R&D surged 86.73%. Operating cash inflow was RMB 6.475 billion, while investing outflow increased to RMB 16.617 billion due to M&A, and financing inflow was RMB 13.219 billion - Selling expenses decreased by 47.51% year-on-year, primarily due to sales-related transportation costs being reclassified into operating costs[52] - Financial expenses increased by 7.91% year-on-year, mainly due to higher interest expenditures[54] - Research and development expenses significantly increased by 86.73% year-on-year, primarily due to increased R&D investment[61][62] Changes in Net Cash Flow (H1 2020) | Cash Flow Activity | Amount (RMB billion) | Prior Period (RMB billion) | Reason for Change | | :--- | :--- | :--- | :--- | | Net Inflow from Operating Activities | 6.475 | 4.406 | Increased sales volume, rising gold prices | | Net Outflow from Investing Activities | (16.617) | (4.656) | Increased M&A and project construction expenditures | | Net Inflow from Financing Activities | 13.219 | (0.462) | Significant increase in financing scale | Operating Plan and Outlook H2 outlook anticipates supportive gold prices, tight copper, and elastic zinc. The company will focus on epidemic control, production targets, especially gold capacity, and ensure copper/zinc profitability, while promoting convertible bonds and deepening reforms for global operations - Gold prices are expected to fluctuate widely in the second half, copper supply and demand will be in tight balance, and zinc fundamentals are improving[68] - The core operating strategy for the second half includes: focusing on epidemic prevention, achieving production targets, promoting convertible bond issuance, deepening reforms, continuous innovation, and fulfilling social responsibilities[69][71][72][73][74] - Key project advancements: ensuring high-potential major mines such as Tibet Julong Copper, Timok Copper-Gold Mine, and Kamoa-Kakula Copper Mine in the Democratic Republic of Congo (DRC) commence production as scheduled in 2021[70] Risk Analysis Major risks include metal price volatility, financial market fluctuations, country/community risks for overseas projects, and inherent safety/environmental challenges, all managed by specific strategies - Key risk areas: metal price fluctuations, financial markets (interest rates, exchange rates), country and community relations, and safety and environmental protection[86] Share Capital and Shareholder Information Shareholding Status of Shareholders As of June 30, 2020, the company had 590,152 shareholders, with Minxi Xinghang (23.97%) and HKSCC Nominees (22.51%) as top holders. Chairman Chen Jinghe held 0.50% of total shares Top Three Shareholders' Shareholding Status (as of June 30, 2020) | Shareholder Name | Share Class | Proportion of Total Share Capital (%) | | :--- | :--- | :--- | | Minxi Xinghang State-owned Assets Investment and Management Co., Ltd. | A-share | 23.97 | | Hong Kong Securities Clearing Company Nominees Limited | H-share | 22.51 | | China Securities Finance Co., Ltd. | A-share | 2.72 | - Chairman Mr. Chen Jinghe holds 112,050,000 A-shares and 15,000,000 H-shares in the company, totaling 0.50% of the total share capital[102] Other Matters Employees and Corporate Governance The company had 37,954 employees, with 49% foreign staff, highlighting internationalization. Governance adhered to listing rules, no interim dividend was declared, and the 2019 profit distribution was completed - Total number of employees was 37,954, of which 18,665 were foreign employees, accounting for approximately 49%[105] - The lock-up period for the company's first employee stock ownership plan expired on June 8, 2020, and its duration has been extended to June 6, 2023[110] - The company did not declare an interim dividend for 2020, but completed the 2019 profit distribution on July 17, 2020, distributing a cash dividend of RMB 1 (tax inclusive) per 10 shares[154][155] Environmental, Social, and Governance (ESG) The company invested over RMB 46 million in poverty alleviation and donated for COVID-19. 21 key polluting subsidiaries strictly complied with environmental regulations, achieving zero accidents, with RMB 361 million invested in ecological projects - In the first half of 2020, the company invested RMB 46.2171 million in targeted poverty alleviation funds[118][119] - During the pandemic, the company cumulatively donated approximately RMB 22.5 million in funds and about RMB 6.4873 million in materials domestically and internationally[118] - 21 of the company's subsidiaries were listed as key polluting units, all strictly adhering to emission standards during the reporting period with no instances of exceeding limits[125][126] - A total of RMB 361 million was invested in environmental and ecological engineering funds in the first half, including RMB 53.9236 million for ecological restoration[141] Consolidated Financial Statements Financial Statement Summary As of June 30, 2020, the company's total assets reached RMB 149.805 billion, a 20.98% increase from the beginning of the year; total liabilities were RMB 90.339 billion, with a debt-to-asset ratio of 60.3%. Operating revenue was RMB 83.142 billion, up 23.73% year-on-year; net profit was RMB 3.091 billion, up 38.04% year-on-year. Operating cash flow was strong, with a net inflow of RMB 6.475 billion, a 46.95% year-on-year increase Core Data from Consolidated Financial Statements | Indicator | June 30, 2020 (RMB billion) | December 31, 2019 (RMB billion) | | :--- | :--- | :--- | | Total Assets | 149.805 | 123.831 | | Total Liabilities | 90.339 | 66.751 | | Equity Attributable to Parent | 50.310 | 51.186 | | Indicator | Jan-Jun 2020 (RMB billion) | Jan-Jun 2019 (RMB billion) | | Operating Revenue | 83.142 | 67.198 | | Net Profit | 3.091 | 2.239 | | Net Profit Attributable to Parent | 2.421 | 1.853 | | Net Cash Flow from Operating Activities | 6.475 | 4.406 | Notes to Financial Statements Basis of Preparation and Significant Accounting Policies Financial statements are prepared on a going concern basis under Chinese accounting standards, despite net current liabilities, supported by strong cash flow and bank credit. Key policies include expected credit loss for financial instruments, weighted-average inventory, and units-of-production for mining asset depreciation/amortization - The financial statements are prepared on a going concern basis. Management believes that despite net current liabilities, the group has sufficient working capital and bank credit lines to sustain operations[185][186] - Impairment of financial instruments is assessed using the expected credit loss model[204] - Depreciation of mine structures and buildings uses the straight-line or units-of-production method, while mining rights amortization uses the units-of-production method[216][222] - Revenue is recognized when control over the related goods or services is transferred to the customer[232] Changes in Consolidation Scope The group's consolidation scope changed significantly, including the CAD 1.33 billion acquisition of 100% of Continental Gold Inc. on March 5, 2020, and the establishment of new subsidiaries like Tibet Zijin Industrial Co., Ltd - On March 5, 2020, the company completed the acquisition of a 100% equity stake in Continental Gold for approximately CAD 1.33 billion (equivalent to RMB 6.91 billion), and included it in the consolidated financial statements[506][507] - Several new subsidiaries were established, including Tibet Zijin Industrial Co., Ltd. (registered capital of RMB 2 billion) and Xiamen Logistics (registered capital of RMB 200 million)[510][511] Segment Reporting The company operates 9 reporting segments. H1 2020 saw processing, smelting, and trading gold as the highest revenue segment (RMB 52.295 billion), while gold ingots (RMB 1.465 billion) and copper concentrate (RMB 1.298 billion) were top profit contributors Performance of Major Reporting Segments (H1 2020) | Reporting Segment | External Transaction Revenue (RMB billion) | Segment Profit (RMB billion) | | :--- | :--- | :--- | | Gold Ingots | 4.731 | 1.465 | | Processed, Smelted, and Traded Gold | 52.295 | 0.175 | | Gold Concentrate | 1.962 | 1.321 | | Copper Cathodes | 2.378 | 0.375 | | Refined Copper | 11.458 | 0.633 | | Copper Concentrate | 5.265 | 1.298 | | Other Concentrates | 2.646 | 0.619 |