稀美资源(09936) - 2019 - 年度财报

Company Overview Company Profile and Information Ximei Resources, China's largest tantalum-niobium hydrometallurgical product producer from 2016-2018, listed on HKEX in March 2020, provides key corporate and board information - The Group is a leading producer of tantalum-niobium metallurgical products in China, primarily offering tantalum oxide, niobium oxide, and potassium fluotantalate, along with related processing services[2] - The Group was China's largest producer of tantalum-niobium hydrometallurgical products by total annual sales volume for fiscal years 2016, 2017, and 2018[2][19] - The company's shares were successfully listed on the Main Board of the Hong Kong Stock Exchange on March 12, 2020, with stock code 9936[19][12] - The company's Board of Directors comprises Executive Directors Mr. Wu Lijiao (Chairman) and Ms. Wu Shandan, Non-Executive Director Mr. Zeng Min, and three Independent Non-Executive Directors Mr. Liu Guohui, Mr. Zhong Hui, and Mr. Yin Fusheng[11] Financial Highlights Financial Highlights In FY2019, revenue grew 16.7% to RMB 601 million, but gross profit and net profit declined due to increased cost of sales and listing expenses, with net profit attributable to owners decreasing 9.6% to RMB 69.65 million, while liquidity and solvency ratios improved Key Financial Performance (RMB thousand) | Metric | 2019 (RMB thousand) | 2018 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue | 600,644 | 514,718 | 16.7% | | Gross Profit | 159,004 | 165,233 | (3.8)% | | Profit Before Tax | 83,941 | 90,094 | (6.8)% | | Profit Attributable to Owners of the Company | 69,652 | 77,071 | (9.6)% | | Basic Earnings Per Share (RMB) | 0.31 | 0.34 | (8.8)% | Key Financial Ratios | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Current Ratio | 2.45 | 2.20 | 11.4% | | Quick Ratio | 1.65 | 1.20 | 37.5% | | Gearing Ratio | 26.4% | 19.4% | Increase of 7.0 percentage points | Chairman's Statement Chairman's Statement Chairman Mr. Wu Lijiao highlighted the Group's strong operational performance in 2019 despite trade tensions and price declines, with record production and sales of key products driving 16.7% revenue growth, while profit decline was mainly due to listing expenses, and future strategy focuses on downstream expansion, R&D, and global market reach - The company's successful listing on the Main Board of the Stock Exchange on March 12, 2020, marks a new milestone for the Group's development[19] - In 2019, both production and sales volumes of niobium oxide and tantalum oxide reached historical highs, with production volumes increasing by 49.0% year-on-year, and sales volumes growing by approximately 42.7% and 138.7% respectively[19] - Revenue in 2019 reached approximately RMB 600.6 million, a 16.7% year-on-year increase, while profit was approximately RMB 69.7 million, a 9.6% year-on-year decrease, primarily due to a significant increase in listing expenses[19] - Future strategy aims to consolidate industry leadership, extend into downstream products, continuously invest in R&D, strengthen overseas sales networks, and ensure raw material supply[24] Management Discussion and Analysis Market and Industry Overview The tantalum-niobium hydrometallurgical product market benefits from growing demand in high-tech downstream industries, with continued growth in sales volume projected by Frost & Sullivan, driven by increased demand, technological upgrades, and stable raw material supply, despite a slight average price decrease in 2019 due to stable upstream supply, indicating a positive long-term outlook - Market growth is primarily driven by demand from downstream industries, including special alloys, chemical products, electronic ceramics, aerospace, high-end consumer electronics, defense, and cemented carbides[28] - Frost & Sullivan's report forecasts that the market size of China's cemented carbide, aerospace equipment manufacturing, and corrosion-resistant equipment industries will grow at CAGRs of 8.6%, 28.6%, and 9.8% respectively between 2018 and 2023, thereby driving demand for tantalum-niobium metallurgical products[28] - The average market price of tantalum-niobium hydrometallurgical products in China is expected to have decreased in 2019, primarily due to stable supply of upstream tantalum and niobium ores[27] Business Review In 2019, the company achieved significant milestones in production, sales, and R&D, including monthly product output exceeding 150 tonnes, 98.9% growth in electronic-grade tantalum-niobium metallurgical product sales, and the successful implementation of new extraction and water recycling technologies, reducing costs and environmental impact Production Volume by Product (tonnes) | Product | 2019 Production Volume (tonnes) | Year-on-Year Change | | :--- | :--- | :--- | | Industrial Grade Niobium Oxide | 176.6 | +49.0% | | Industrial Grade Tantalum Oxide | 944.4 | +19.3% | | High Purity Tantalum Oxide | 240.3 | +19.2% | | Potassium Fluotantalate | 100.9 | -49.4% | Sales Volume by Product (tonnes) | Product | 2019 Sales Volume (tonnes) | Year-on-Year Change | | :--- | :--- | :--- | | Industrial Grade Niobium Oxide | 194.8 | +42.7% | | High Purity Niobium Oxide | 6.2 | +138.7% | | Industrial Grade Tantalum Oxide | 1,072.4 | -4.6% | | High Purity Tantalum Oxide | 228.4 | -47.5% | - Significant progress was made in R&D, with the successful application of industry-leading new extraction processes and achieving a wash water recycling rate of 75%, a first in the industry[37] Financial Review This section details the company's financial performance, with 16.7% total revenue growth in 2019 driven by a 38.7% increase in pentoxide product sales, but gross margin declined from 32.1% to 26.5% due to lower average selling prices and higher-cost inventory, with increased expenses, particularly R&D and listing-related legal fees, leading to a 9.6% year-on-year profit decrease Future Outlook The company is optimistic about future growth driven by industry upgrades, increased demand for high-purity products, and expanding downstream applications, planning to extend its value chain, boost R&D in new processes and products like high-purity tantalum powder for semiconductor targets, and implement a global strategy with new offices in the UK and Brazil for market expansion and raw material sourcing - Plans to commence construction of a tantalum powder production line with an annual capacity of 100 tonnes in 2020 to meet the growing demand for tantalum powder and tantalum bar products from downstream customers[128] - Accelerate R&D for new processes and products, focusing on high-purity tantalum powder for semiconductor sputtering targets and niobium oxide production processes for lithium battery materials[128] - Plans to establish offices in the UK to strengthen sales efforts in the European market and in Brazil to enhance cooperation with local mineral suppliers, ensuring raw material supply[128] Human Resources and Training As of end-2019, the Group had 220 employees, emphasizing staff development through regular training, with total employee costs significantly increasing to RMB 39.1 million in 2019 from RMB 24.9 million in 2018, and statutory social insurance and housing provident fund contributions made for Chinese employees Human Resources Metrics | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Total Employees (Year-end) | 220 | - | | Total Employee Costs (RMB million) | 39.1 | 24.9 | Dividends The Board of Directors did not propose any final dividend for the year ended December 31, 2019 - The Board of Directors did not propose a final dividend for the 2019 fiscal year[132] Comparison of Business Objectives and Actual Progress Comparison of Business Objectives and Actual Progress The company outlined four key business objectives: downstream expansion into tantalum powder and bars, continuous R&D investment, strengthening overseas sales, and securing raw material supply, with approximately RMB 109.5 million in net proceeds from its March 2020 listing remaining unused as of end-2019, primarily earmarked for new production facilities and working capital to support these goals - The company's core business objectives are: (1) expanding production to downstream products such as tantalum powder and tantalum bars; (2) continuous investment in R&D; (3) strengthening overseas sales networks; and (4) ensuring raw material supply[134][135][136][140] - The company was listed on March 12, 2020, with net proceeds of approximately RMB 109.5 million, which remained unutilized during 2019[141] Planned Use of Proceeds | Planned Use of Proceeds | Allocation Ratio | Amount (approx. RMB million) | | :--- | :--- | :--- | | Construction of new production facilities (tantalum powder and bars) | 68.3% | 74.8 | | Working capital for new production facilities | 18.4% | 20.1 | | Strengthening European sales network and Brazilian procurement channels | 3.5% | 3.8 | | General working capital and corporate purposes | 9.8% | 10.7 | Profiles of Directors and Senior Management Profiles of Directors and Senior Management This section provides detailed profiles of the company's Board of Directors and senior management team, including Group founder, Chairman, and CEO Mr. Wu Lijiao with over 30 years of experience in tantalum-niobium metallurgy, Executive Director and CFO Ms. Wu Shandan with over 10 years of financial management experience, and other key non-executive, independent non-executive directors, and senior executives with extensive professional backgrounds - Mr. Wu Lijiao, 56 years old, is the Group's founder, Chairman of the Board, Executive Director, Chief Executive Officer, and a controlling shareholder, possessing over 30 years of experience in the tantalum-niobium metallurgical industry[146][147] - Ms. Wu Shandan, 37 years old, is an Executive Director and Chief Financial Officer, primarily responsible for the Group's financial matters, with over 10 years of financial management experience[149][151] - Independent Non-Executive Directors Mr. Liu Guohui, Mr. Zhong Hui, and Mr. Yin Fusheng possess extensive professional experience in accounting, materials engineering, and financial investment, respectively[153][158][159] - Senior management includes Vice President Mr. Zhong Tielian and R&D Technology Center Director Mr. Shi Bo, among others, all with over 20 years of extensive experience in the industry[162][163] Corporate Governance Report Corporate Governance Report The company maintains high corporate governance standards, adhering to listing rules since its March 2020 listing, with the sole deviation being the combined roles of Chairman and CEO held by Mr. Wu Lijiao, deemed in the Group's best interest, and the report details board composition, responsibilities, committee functions, diversity policy, internal controls, shareholder rights, and investor relations practices - The company has complied with the Corporate Governance Code since its listing, with the only deviation being the combined roles of Chairman and Chief Executive Officer held by Mr. Wu Lijiao[171][172] - The Board of Directors comprises six directors, including two Executive Directors, one Non-Executive Director, and three Independent Non-Executive Directors, meeting the Listing Rules' requirements[177] - The company has established an Audit Committee, Remuneration Committee, and Nomination Committee, with clearly defined terms of reference and membership for each[183][184][189][190] - The Board confirmed that it has reviewed the effectiveness of the Group's internal control and risk management systems, deeming them effective and adequate in all material aspects[214] Directors' Report Directors' Report This report outlines the company's principal activities, performance, and financial position for FY2019, primarily engaged in non-ferrous metal product manufacturing and sales, with no final dividend proposed, and discloses key risks, post-listing shareholding structure, adopted share option scheme, customer and supplier concentration, related party transactions, share capital movements, and post-reporting period events - The Board of Directors did not propose a final dividend for the year ended December 31, 2019[238] - On February 19, 2020, the company conditionally adopted a share option scheme, with a maximum number of 30,000,000 shares that may be granted, representing 10% of the total issued shares at the time of listing[272][279] - As of the listing date, controlling shareholder Mr. Wu Lijiao held 52.5% of the company's shares through his wholly-owned Jiawei Resources Seychelles[298][301] - In 2019, sales to the top five customers accounted for 51.9% of total revenue, with the largest customer accounting for 25.2%; purchases from the top five suppliers accounted for 65.3% of total cost of sales, with the largest supplier accounting for 22.5%[317] - Post-reporting period events include the company's successful listing on March 12, 2020, and an assessment of the potential impact of the COVID-19 pandemic, with directors confirming no material adverse changes as of the report date[326][669] Independent Auditor's Report Independent Auditor's Report Independent auditor Ernst & Young issued an unmodified opinion on Ximei Resources' 2019 consolidated financial statements, affirming their fair presentation of the Group's financial position, performance, and cash flows in compliance with HKFRS and the Companies Ordinance, highlighting key audit matters regarding inventory net realizable value and trade receivables expected credit loss provisions - Auditor Ernst & Young issued an unmodified opinion on the consolidated financial statements, deeming them to present fairly the Group's financial position and performance[330] - Key audit matters include: 1. Net Realizable Value of Inventories: Significant management judgment and estimation are involved in determining provisions for excess and obsolete inventories 2. Expected Credit Loss Provision for Trade Receivables: Significant judgment is required in measuring expected credit losses (ECL), and the amounts involved are material[332][338][343] Consolidated Financial Statements Consolidated Statement of Profit or Loss In FY2019, the company's revenue increased 16.7% to RMB 600.6 million from RMB 514.7 million in 2018, but gross profit slightly decreased to RMB 159.0 million from RMB 165.2 million due to a rise in cost of sales from RMB 349.5 million to RMB 441.6 million, resulting in an annual profit of RMB 69.65 million, down from RMB 77.07 million in 2018, after accounting for selling, administrative, and listing expenses Consolidated Statement of Profit or Loss (RMB thousand) | Item (RMB thousand) | 2019 | 2018 | | :--- | :--- | :--- | | Revenue | 600,644 | 514,718 | | Cost of sales | (441,640) | (349,485) | | Gross Profit | 159,004 | 165,233 | | Profit Before Tax | 83,941 | 90,094 | | Income tax expense | (14,289) | (13,023) | | Profit for the Year | 69,652 | 77,071 | Consolidated Statement of Financial Position As of December 31, 2019, the company reported total assets of RMB 527.2 million, total liabilities of RMB 206.6 million, and total equity of RMB 320.6 million, with net current assets of RMB 236.6 million and a current ratio of 2.45, while key assets included trade and bills receivables (RMB 169.2 million), inventories (RMB 129.9 million), and property, plant and equipment (RMB 89.53 million), and the primary liability was interest-bearing bank borrowings (RMB 143.3 million) Consolidated Statement of Financial Position (RMB thousand) | Item (RMB thousand) | December 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Non-current assets | 127,514 | 107,819 | | Current assets | 399,710 | 365,263 | | Of which: Inventories | 129,879 | 162,722 | | Of which: Trade and bills receivables | 169,158 | 68,684 | | Of which: Cash and cash equivalents | 58,475 | 99,224 | | Current liabilities | 163,080 | 169,341 | | Non-current liabilities | 43,544 | 52,219 | | Net Assets | 320,600 | 251,522 | | Total Equity | 320,600 | 251,522 | Consolidated Statement of Cash Flows In FY2019, the company's cash and cash equivalents decreased by RMB 40.75 million, with net cash outflow from operating activities of RMB 4.73 million primarily due to a significant increase in trade receivables, net cash outflow from investing activities of RMB 24.99 million mainly for property, plant, and equipment purchases, and net cash outflow from financing activities of RMB 10.30 million reflecting slightly higher loan repayments than new borrowings, ending the year with RMB 58.48 million in cash and cash equivalents Consolidated Statement of Cash Flows (RMB thousand) | Item (RMB thousand) | 2019 | 2018 | | :--- | :--- | :--- | | Net cash (used in)/from operating activities | (4,731) | 50,001 | | Net cash used in investing activities | (24,993) | (32,916) | | Net cash (used in)/from financing activities | (10,296) | 42,508 | | Net (decrease)/increase in cash and cash equivalents | (40,020) | 59,593 | | Cash and cash equivalents at beginning of year | 99,224 | 37,570 | | Cash and cash equivalents at end of year | 58,475 | 99,224 | Notes to the Consolidated Financial Statements (Selected) The notes provide detailed explanations and supplementary information for financial statement items, highlighting that the company primarily operates through its Chinese subsidiary Guangdong Zhiyuan New Material Co., Ltd., revenue recognition follows HKFRS 15, total director and executive remuneration increased, trade receivables significantly grew, most bank borrowings were personally guaranteed by shareholders (released pre-listing), and financial risk management policies are detailed - Note 5: Revenue in 2019 primarily derived from sales of products (RMB 595.8 million) and provision of processing services (RMB 4.84 million)[506] - Note 10: Total remuneration for directors and key executives in 2019 was RMB 1.068 million, higher than RMB 0.91 million in 2018[533] - Note 21: As of end-2019, total interest-bearing bank borrowings amounted to RMB 143.3 million, with some loans personally guaranteed by controlling shareholder Mr. Wu Lijiao and his spouse, which guarantees were released prior to the listing in March 2020[582][586] - Note 27: Related party transactions during the year primarily involved a loan guarantee fee of RMB 0.095 million paid to shareholder Xinhua Lian Holdings Co., Ltd., which guarantee was released during the year[606] Financial Summary Financial Summary This section provides a summary of the Group's key financial data for four consecutive fiscal years from 2016 to 2019, showing a consistent growth trend in revenue, gross profit, profit before tax, and total assets, reflecting the company's steady business expansion Consolidated Results (RMB thousand) | Consolidated Results (RMB thousand) | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 600,644 | 514,718 | 307,360 | 217,441 | | Gross Profit | 159,004 | 165,233 | 87,344 | 51,757 | | Profit Before Tax | 83,941 | 90,094 | 46,634 | 28,920 | | Profit Attributable to Owners of the Company | 69,652 | 77,071 | 38,584 | 23,877 | Consolidated Assets and Liabilities (RMB thousand) | Consolidated Assets and Liabilities (RMB thousand) | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | | Total Assets | 527,224 | 473,082 | 329,667 | 232,317 | | Total Liabilities | (206,624) | (221,560) | (154,703) | (96,291) | | Equity Attributable to Owners of the Company | 320,600 | 251,522 | 174,964 | 136,026 |