灵宝黄金(03330) - 2024 - 中期财报

Company Information Board of Directors and Supervisory Committee Lingbao Gold Group Co., Ltd. released its interim report as of June 30, 2024, disclosing the composition of its Board of Directors, Supervisory Committee, and their respective committees - The term of the Seventh Board of Directors and Supervisory Committee expired, and members of the Eighth Board of Directors and Supervisory Committee were officially elected at the Annual General Meeting on May 29, 2024[3] Company Basic Information This section provides fundamental company information including registration details, principal bankers, investor relations contacts, stock code, listing date, and total share capital - The H share registrar of the Company is Hong Kong Registrars Limited[4] - The Company's stock code is 3330, and its listing date was January 12, 2006[6] - As of June 30, 2024, the Company's total share capital was 1,243,476,055 shares, comprising 566,975,091 domestic shares and 676,500,964 H shares[31] Management Discussion and Analysis Business Review and Outlook In the first half of 2024, Lingbao Gold Group's gold ingot production decreased due to Henan Province's regulatory requirements and adjusted procurement, leading to a 26.67% year-on-year revenue reduction, yet net profit increased by 26.73% to RMB152,658 thousand due to higher gold prices, with all company-operated mines achieving profitability for the first time, and the Group boasts substantial gold reserves and resources of approximately 136.34 tonnes - Gold ingot production in the first half of 2024 was approximately 7,950 kg (255,580 oz), a year-on-year decrease of approximately 5,068 kg (162,935 oz), mainly due to Henan Province's mining regulations and adjustments in gold concentrate procurement[6] - Revenue for the period was approximately RMB4,281,228 thousand, a year-on-year decrease of 26.67%[6] - Net profit for the period was approximately RMB152,658 thousand, a year-on-year increase of 26.73% (2023: RMB120,467 thousand)[6] - As of June 30, 2024, the Group held 37 mining and exploration rights, with total gold reserves and resources of approximately 136.34 tonnes (4,383,013 oz)[7] Mining Segment The mining segment's total revenue decreased by 37.56% year-on-year to RMB778,098 thousand in the first half, primarily due to Henan Province's unified regulatory requirements impacting Nanshan Branch and Xingyuan Company's output, though Fujin, Jinchan, and Huatai companies saw increased output and revenue, and the Kyrgyzstan mining segment achieved profitability, reversing last year's losses - Total revenue for the mining segment was approximately RMB778,098 thousand, a year-on-year decrease of 37.56%[9] - Total profit for the mining segment was approximately RMB273,277 thousand, a year-on-year decrease of 32.38%[10] - The Kyrgyzstan mining segment recorded a profit of RMB5,900 thousand, compared to a loss of approximately RMB115,034 thousand in the same period of 2023, achieving a turnaround to profitability[10] Mining Segment Production and Sales Volume (Six Months Ended June 30) | Product Name | Unit | Approx. Production Volume 2024 | Approx. Sales Volume 2024 | Approx. Production Volume 2023 | Approx. Sales Volume 2023 | | :--------------- | :--- | :----------------- | :----------------- | :----------------- | :----------------- | | Gold concentrate (contained gold) | kg | 1,456 | 1,378 | 2,556 | 2,642 | | Gold alloy | kg | 348 | 347 | 368 | 350 | | Total | kg | 1,805 | 1,725 | 2,924 | 2,992 | | Total | oz | 58,022 | 55,465 | 94,007 | 96,193 | Smelting Segment The smelting segment's total revenue decreased by 26.81% year-on-year to RMB4,291,005 thousand in the first half, mainly due to reduced mining output and the Group's proactive reduction in gold concentrate procurement; despite lower revenue, the segment's loss decreased year-on-year due to rising prices of by-products silver, copper products, and sulfuric acid, coupled with cost reduction and efficiency improvements - Total revenue for the smelting segment was approximately RMB4,291,005 thousand, a year-on-year decrease of 26.81%[12] - The smelting segment recorded a loss of RMB24,444 thousand, a reduction from the loss of approximately RMB28,707 thousand in the same period of 2023[13] Smelting Segment Production and Sales Volume (Six Months Ended June 30) | Product Name | Unit | Approx. Production Volume 2024 | Approx. Sales Volume 2024 | Approx. Production Volume 2023 | Approx. Sales Volume 2023 | | :--------------- | :--- | :----------------- | :----------------- | :----------------- | :----------------- | | Gold ingots (from gold concentrate processing) | kg | 4,802 | 4,795 | 5,278 | 5,000 | | Gold ingots (from purchased gold alloy processing) | kg | 3,148 | 3,119 | 7,740 | 8,009 | | Silver | kg | 4,785 | 4,860 | 11,556 | 10,168 | | Copper products | ton | 775 | 792 | 2,259 | 2,404 | | Sulfuric acid | ton | 53,165 | 51,597 | 52,322 | 55,769 | Consolidated Operating Results The Group's total revenue in the first half decreased by 26.67% year-on-year to RMB4,281,228 thousand, primarily due to reduced procurement of gold concentrate and lower mining output; however, gross profit increased by 14.72% to RMB407,686 thousand, with gross margin rising to 9.52%, driven by improved gross profit at Fujin Company, Jinchan Company's turnaround to profitability, and reduced losses in the smelting segment - The Group's revenue for the period was approximately RMB4,281,228 thousand, a 26.67% decrease compared to the same period in 2023[13] - The Group's gross profit and gross profit margin for the period were RMB407,686 thousand and 9.52%, respectively, compared to RMB355,376 thousand and 6.09% in the same period last year[14] - The increase in gross profit margin was attributable to improved gross profit at Fujin Company, Jinchan Company's turnaround to profitability, and reduced losses in the smelting segment[14] Product Sales Analysis (Six Months Ended June 30) | Product Name | Amount 2024 (RMB thousand) | Sales Volume 2024 | Average Selling Price 2024 (RMB/kg or ton) | Amount 2023 (RMB thousand) | Sales Volume 2023 | Average Selling Price 2023 (RMB/kg or ton) | | :------- | :---------------------- | :------------- | :--------------------------------- | :---------------------- | :------------- | :--------------------------------- | | Gold ingots | 4,063,064 | 7,914 kg | 513,402 | 5,546,828 | 13,018 kg | 426,089 | | Silver | 29,642 | 4,860 kg | 6,099 | 48,324 | 10,168 kg | 4,753 | | Copper products | 51,456 | 792 ton | 64,970 | 143,051 | 2,404 ton | 59,507 | | Sulfuric acid | 2,419 | 51,597 ton | 47 | 1,787 | 55,769 ton | 32 | | Gold concentrate | 169,476 | 332 kg | 510,470 | 91,883 | 253 kg | 363,174 | | Others | 4,463 | | | 38,352 | | | | Revenue before tax | 4,320,520 | | | 5,870,225 | | | | Less: Sales tax and surcharges | (39,292) | | | (31,642) | | | | Total Revenue | 4,281,228 | | | 5,838,583 | | | Outlook and Plans for the Second Half of 2024 The Group plans to leverage favorable rising gold prices to consolidate its development in the second half, aiming for increased production, efficiency, and sustainable growth by boosting mine investment, advancing digital transformation, strengthening headquarters' technical and management platforms, implementing talent strategies, expanding overseas markets, and continuously enhancing safety and environmental protection - Since the beginning of this year, gold prices have continued to rise, providing favorable conditions for the Group's steady development[15] - In the second half, the Group will capitalize on favorable market conditions to optimize production organization, strengthen cost control, and accelerate the upgrade of mining equipment and related engineering construction[15] - The Group will continue to advance its production's "digital and intelligent" transformation with the goal of full-process digitalization and intelligence, promoting efficiency and speed in production operations, and achieving management upgrades[16] - The Group will actively promote an equity incentive plan for eligible individuals to reward contributions, retain, and attract key talent[18] - The Group will resolutely implement its "going out" strategy, focusing on achieving effective progress in resource mergers and acquisitions, exploration, and management to ensure the strategic goal of increasing resource reserves[19] - In the second half, the Group will continue to strengthen safety and environmental risk supervision, organize special inspections and rectifications for safety and environmental protection, and intensify supervision and assessment efforts[20] Consolidate Development Momentum, Organize Production and Operations, and Increase Exploration and Reserves In the first half, the Group invested RMB95 million in key mining enterprises for resource exploration, safety, environmental protection, and technological innovation, significantly improving resource development and utilization efficiency; in the second half, it will leverage favorable market conditions to optimize production, strengthen cost control, and plans to invest approximately RMB200 million over three years for exploration at Lingjin No. 1 Mine, Nanshan Branch's main production base, to increase reserves and output - In the first half, a cumulative investment of RMB95 million was made in mining enterprises for resource exploration, safety and environmental protection, technological innovation, and the promotion of new technologies[15] - Huatai Company and Nanshan Branch increased their monthly single-face tunneling distance from 50m and 80m to 150m, respectively; Xingyuan Company's ore dressing recovery rate improved to 92.8%[15] - In the second half, the Group will strengthen comprehensive research on the metallogenic potential of existing mining rights, intensify exploration of high-quality mining rights, and plans to invest approximately RMB200 million in exploration funds over three years for Lingjin No. 1 Mine, Nanshan Branch's main production base[15] Accelerate Digital and Intelligent Transformation of Production, Expedite Green Mine (ESG) Construction The Group steadily advanced intelligent mining, investing RMB21 million to upgrade its dispatch command center and six system integrations, enabling unattended operation and remote control; in the first half, transaction and contract management systems were launched, and the mine "MES" system began trial operation at Nanshan Branch and Xingyuan Company, with nearly RMB7 million invested in ecological restoration, actively responding to "dual carbon" goals - A cumulative investment of RMB21 million was made to upgrade the dispatch command centers and integrate six systems (hoisting, transportation, ventilation, compressed air, drainage, and power supply) at Nanshan Branch, Xingyuan Company, Jinchan Company, and Huatai Company[16] - In the first half, the transaction management system and contract management system were launched, and the mine "MES" system began trial operation at Nanshan Branch and Xingyuan Company[16] - In the first half, a cumulative investment of nearly RMB7 million was made, restoring 470 mu of vegetation, 27 mu of ecological land, and planting 7,530 trees[17] Strengthen Headquarters Platform Construction, Resolve Key Technical and Management Issues The Group continuously strengthened its technical platform, with experts providing over 50 on-site services in the first half to resolve technical and management challenges; Huatai Company improved ore grade by 17% through mining method adjustments, Xingyuan Company established the nation's first intelligent gold ore sorting system, and the Smelting Branch enhanced gold mud quality and silver leaching rates while reducing production costs through technical upgrades, further engaging consulting firms like Deloitte to refine its management system - In the first half, experts in mining, beneficiation, mechanical and electrical engineering, safety and environmental protection, finance, and auditing were deployed to the front lines, providing over 50 on-site services to help enterprises resolve technical and management challenges[17] - Huatai Company, by adjusting its mining methods and utilizing cemented backfill mining, increased the ore grade by 17% compared to the average mining grade in the same period[17] - Xingyuan Company established the nation's first intelligent gold ore sorting system, increasing the feed grade by 0.2 grams and the waste rock rejection rate by 13.76%[17] - The Smelting Branch implemented several technical modifications, including replacement plate-and-frame gold mud washing and zinc powder precious liquid purification, improving gold mud quality and smelting silver leaching rates, and reducing refining production costs[17] Advance Internal Reforms, Implement Talent-Strengthening Strategy Adhering to a "talent-first" philosophy, the Group successfully recruited dozens of senior and high-potential industry talents in the first half, alongside management, finance, investment, and technology professionals from specialized agencies and tech firms; aiming for a younger leadership, the Group appointed over 10 young middle-level cadres to key positions and plans to implement an equity incentive scheme to attract and retain critical talent, continuously optimizing staffing and refining its compensation system - In the first half, dozens of senior and high-potential talents from benchmark enterprises in the industry and related fields were successfully recruited, while management, finance, and investment professionals were introduced from firms like Deloitte and PwC, and technology talents from companies such as Accenture and Tencent[18] - With the goal of rejuvenating leadership, over 10 young middle-level cadres were selected to hold key positions in major mining enterprises[18] - The Group will actively promote an equity incentive plan for eligible individuals to reward contributions, retain, and attract key talent[18] Unwavering Implementation of the "Going Out" Strategy The Group is steadfastly implementing its "going out" strategy, having established an overseas business unit in the first half to oversee the entire process of international project screening, inspection, due diligence, negotiation, and operational team formation; the unit has conducted 7 on-site due diligence visits and inspections in regions such as the South Pacific and Southern Africa, with plans to continue explorations in the second half to secure new overseas resource development bases - The Group is resolutely implementing its "going out" strategy, focusing on achieving effective progress in resource mergers and acquisitions, exploration, and management[19] - In the first half, an overseas business unit was established, fully responsible for the entire process of overseas project collection and screening, preliminary inspection, intermediary selection, on-site due diligence, business negotiation, and signing and closing[19] - The overseas business unit has organized teams to conduct 7 on-site due diligence visits and inspections for projects in regions such as the South Pacific and Southern Africa[19] Continuously Strengthen Safety and Environmental Protection Work In the first half, the Group strictly adhered to safety and environmental regulations, investing RMB41.82 million to enhance safety protection, address hazards, and promote new technologies and equipment, ensuring a stable and controllable safety and environmental situation; the Smelting Branch continuously managed sulfur dioxide and nitrogen oxide emissions, initiating a cyanide-containing wastewater desalination project for in-depth treatment, and increased investment in its solid waste disposal company to ensure efficient and environmentally friendly disposal of smelting tailings - In the first half, a total of RMB41.82 million was invested in improving safety protection, addressing hazards, promoting new equipment, assessing and monitoring hazardous sources, obtaining safety licenses, maintaining tailings pond closures, and environmental protection projects[20] - The Smelting Branch maintained regular control over sulfur dioxide and nitrogen oxide emissions, ensuring minimal exhaust emissions and stable monitoring data, and initiated a cyanide-containing wastewater desalination project for in-depth treatment[20] - The Group continuously increased investment in the production and construction of Lingbao Xinan Solid Waste Disposal Co., Ltd., to ensure efficient and environmentally friendly disposal of smelting tailings[20] Financial Review As of June 30, 2024, the Group's cash and cash equivalents increased to RMB331,854 thousand, and total equity rose to RMB2,612,111 thousand; while net current liabilities improved, they remained negative, and the gearing ratio increased to 48.7%; the Group faces gold price volatility, interest rate, and exchange rate risks, planning to reduce its gearing ratio by enhancing profitability, strengthening equity financing, and diversifying funding channels, with capital expenditure for the period at approximately RMB288,056 thousand and a total workforce of 3,646 employees - As of June 30, 2024, cash and cash equivalents were RMB331,854 thousand (December 31, 2023: RMB256,724 thousand)[21] - As of June 30, 2024, the Company's total equity was RMB2,612,111 thousand (December 31, 2023: RMB2,436,554 thousand)[21] - Current ratio was 87.2% (December 31, 2023: 80.0%)[21] - Gearing ratio was 48.7% (December 31, 2023: 41.7%), calculated as total borrowings divided by total assets[22] - The Group's capital expenditure for the period was approximately RMB288,056 thousand, an increase of approximately 42.9% compared to approximately RMB201,619 thousand in the same period of 2023[28] - As of June 30, 2024, the Group had 3,646 employees (December 31, 2023: 4,103 employees)[28] Liquidity and Financial Resources The Group primarily funds its operations through internal capital and loans from banks and other financial institutions; as of June 30, 2024, cash and cash equivalents increased, but net current liabilities remained negative, and the gearing ratio rose; the Group plans to effectively reduce its gearing ratio by enhancing profitability, strengthening equity financing, and diversifying funding channels - As of June 30, 2024, cash and cash equivalents were RMB331,854 thousand (December 31, 2023: RMB256,724 thousand)[21] - Current assets were RMB3,898,174 thousand, current liabilities were RMB4,470,488 thousand, and the current ratio was 87.2% (December 31, 2023: 80.0%)[21] - Outstanding bank and other borrowings were approximately RMB3,844,529 thousand, of which approximately RMB3,544,224 thousand are repayable within one year[22] - Gearing ratio was 48.7% (December 31, 2023: 41.7%)[22] - The Group had unutilized bank facilities of approximately RMB626,970 thousand, available for drawdown to fund operations[22] - To reduce the gearing ratio, the Group will strengthen management to optimize production, enhance equity financing capabilities, and diversify financing channels to lower financing costs[22] Pledges and Guarantees Details of the Group's pledges and guarantees primarily pertain to bank and other borrowings, with specific information available in Note 13 to the financial statements of this report - For details of the Group's pledges and guarantees as of June 30, 2024, please refer to Note 13 — Bank and other borrowings in the financial statements of this report[23] Market Risks The Group is exposed to various market risks, including fluctuations in gold and other commodity prices, interest rate changes, foreign currency exchange rate movements, and inflation; the Group does not engage in speculative commodity derivatives or futures, using all derivative instruments solely to hedge against potential volatility in gold and other commodity prices - The Group is exposed to various market risks, including gold price and other commodity value fluctuations, as well as changes in interest rates, foreign currency exchange rates, and inflation[24] - The Group does not and strictly prohibits the use of commodity derivatives or futures for speculative purposes; all commodity derivatives are used to hedge against any potential fluctuations in gold and other commodity prices[25] - The interest rates on the Group's bank loans may be adjusted by lenders in accordance with changes in relevant People's Bank of China regulations, and an increase in interest rates would raise financing costs[26] - The Group's transactions are primarily conducted in RMB, but certain bank deposits, trade and other receivables, trade and other payables, and bank loans denominated in foreign currencies are exposed to exchange rate risk, primarily from the US dollar[27] Contractual Obligations As of June 30, 2024, the Group's total capital commitments not provided for in the financial statements amounted to approximately RMB344,032 thousand, a decrease of approximately RMB32,011 thousand from the end of 2023 - As of June 30, 2024, the Group's total capital commitments for contracted costs not provided for in the financial statements amounted to approximately RMB344,032 thousand (December 31, 2023: RMB376,043 thousand), a decrease of approximately RMB32,011 thousand[28] Capital Expenditure The Group's capital expenditure for the period was approximately RMB288,056 thousand, an increase of approximately 42.9% year-on-year, primarily allocated to mine construction projects, renewal of subsidiaries' mining rights, expansion project equipment, and production equipment upgrades - The Group's capital expenditure for the period was approximately RMB288,056 thousand, an increase of approximately 42.9% compared to approximately RMB201,619 thousand in the same period of 2023[28] - The Group's capital expenditure primarily involved mine construction projects, renewal of mining rights for other related subsidiaries, equipment for expansion projects, and upgrades to production equipment[28] Contingent Liabilities As of June 30, 2024, the Group had no significant contingent liabilities - As of June 30, 2024, the Group had no significant contingent liabilities[28] Human Resources As of June 30, 2024, the Group had 3,646 employees, a decrease of 457 from the end of 2023; the Group determines its remuneration policy based on merit, seniority, and competence, offering training opportunities and incentive schemes - As of June 30, 2024, the Group had 3,646 employees (December 31, 2023: 4,103 employees)[28] - The Group recruits and promotes employees based on individual capabilities and development potential, and determines remuneration for all employees with reference to individual performance and prevailing market salary levels[28] - The Group is committed to training and developing its employees, providing ample training opportunities and diverse training programs, and formulating remuneration incentive policies[28] Funding and Treasury Policy The Group maintains a prudent funding and treasury policy, depositing surplus funds with licensed banks and financial institutions; the Board closely monitors the Group's liquidity position to ensure that the liquidity structure of its assets, liabilities, and other commitments can meet funding requirements - The Group maintains a prudent funding and treasury policy, with surplus funds held as cash deposits with licensed banks and financial institutions[29] - The Board closely monitors the Group's liquidity position to ensure that the liquidity structure of its assets, liabilities, and other commitments can meet its funding requirements from time to time[29] Significant Investments As of June 30, 2024, the Group held no significant investments - As of June 30, 2024, the Group held no significant investments[30] Significant Acquisitions and Disposals of Subsidiaries, Associates, and Joint Ventures During the period, there were no significant acquisitions or disposals of subsidiaries, associates, or joint ventures by the Group - During the period, there were no significant acquisitions or disposals of subsidiaries, associates, or joint ventures[30] Future Plans for Material Investments or Capital Assets Except as disclosed elsewhere in this report, as of the date of this report, the Group had no other future plans for material acquisitions, investments, or capital assets - Except as disclosed elsewhere in this report, as of the date of this report, the Group had no other future plans for material acquisitions, investments, or capital assets[30] Other Information Share Capital As of June 30, 2024, the Company's total share capital was 1,243,476,055 shares, comprising domestic and H shares, with H shares accounting for 54.40% of the total Share Capital Structure (As of June 30, 2024) | Share Type | Number of Shares | Approx. Percentage of Total Share Capital | | :------- | :------------ | :--------------------- | | Domestic Shares | 566,975,091 | 45.60% | | H Shares | 676,500,964 | 54.40% | | Total | 1,243,476,055 | 100.00% | Issue of Equity Securities for Cash For the six months ended June 30, 2024, the Company successfully raised funds through two H share placements, with net proceeds primarily used for purchasing gold concentrate for gold bar production - On February 28, 2024, a placement of 32,538,000 H shares was completed, raising approximately HK$42.4 million net, intended for purchasing gold concentrate for gold bar production[31] - On April 25, 2024, a placement of 26,916,800 H shares was completed, raising approximately HK$79.3 million net, intended for purchasing gold concentrate for gold bar production[32] Purchase, Sale or Redemption of the Company's Listed Securities For the six months ended June 30, 2024, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's shares, and the Company held no treasury shares - For the six months ended June 30, 2024, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's shares[33] - As of June 30, 2024, the Company held no treasury shares[33] Directors' and Chief Executive's Interests and Short Positions in the Company's Shares As of June 30, 2024, Mr. Wang Guanran, a non-executive director, held significant interests in the Company's domestic and H shares through controlled corporations; apart from this, no other directors or chief executives had disclosable interests or short positions in the Company's shares Shareholdings of Directors and Chief Executive (As of June 30, 2024) | Name and Position | Description of Shares | Nature of Interest | Number of Shares Held | Approx. Percentage of Total Issued Domestic Share Capital | Approx. Percentage of Total Issued H Share Capital | Approx. Percentage of Total Share Capital | | :------------------------ | :------- | :----------- | :-------------------------- | :--------------------------------- | :------------------------------ | :--------------------- | | Mr. Wang Guanran (Non-executive Director) | Domestic Shares | Interest in controlled corporation | 185,339,000 (L) | 32.69% | — | 14.90% | | Mr. Wang Guanran (Non-executive Director) | H Shares | Interest in controlled corporation | 319,772,164 (L) | — | 47.27% | 25.72% | - Mr. Wang Guanran indirectly controls the Company's shares through Jiesi Weiye and Jiesi Industrial[36] Substantial Shareholders' Interests and Short Positions in the Company's Shares As of June 30, 2024, Jiesi Weiye and Jiesi Industrial Development (Hong Kong) Co., Ltd. were substantial shareholders of the Company, holding significant interests in its domestic and H shares, respectively; Jiesi Weiye's total voting rights make it a substantial shareholder of the Company Substantial Shareholders' Domestic Shareholdings (As of June 30, 2024) | Name of Shareholder | Nature of Interest | Number of Shares Held | Approx. Percentage of Total Domestic Share Capital | Approx. Percentage of Total Share Capital | | :------------------------------- | :------- | :-------------- | :------------------------- | :--------------------- | | Jiesi Weiye | Beneficial owner | 185,339,000 (L) | 32.69% | 14.90% | | Lingbao City State-owned Assets Management Co., Ltd. | Beneficial owner | 73,540,620 (L) | 12.97% | 5.91% | | Shanghai Zhengxi Investment Management Partnership (Limited Partnership) | Beneficial owner | 57,000,000 (L) | 10.05% | 4.58% | Substantial Shareholders' H Shareholdings (As of June 30, 2024) | Name of Shareholder | Nature of Interest | Number of Shares Held | Approx. Percentage of Total Issued H Share Capital | Approx. Percentage of Total Share Capital | | :------------------------------------------- | :----------- | :-------------- | :------------------------------ | :--------------------- | | Jiesi Industrial Development (Hong Kong) Co., Ltd. ("Jiesi Industrial") | Beneficial owner | 319,772,164 (L) | 47.27% | 25.72% | | Shenzhen Jiesi Dingxin Holdings Co., Ltd. ("Jiesi Dingxin") | Interest in controlled corporation | 319,772,164 (L) | 47.27% | 25.72% | | Shenzhen Jiesi Weiye Holdings Co., Ltd. | Interest in controlled corporation | 319,772,164 (L) | 47.27% | 25.72% | - Jiesi Weiye's total voting rights (Domestic Shares + H Shares) amounted to 40.62%, making it a substantial shareholder of the Company[90] Changes in Information of Directors and Supervisors In accordance with the Articles of Association, the terms of the Seventh Board of Directors and Supervisory Committee expired on May 28, 2024; members of the Eighth Board of Directors and Supervisory Committee were elected at the Annual General Meeting held on May 29, 2024, with appointments and resignations/retirements of relevant directors and supervisors disclosed - The terms of the Seventh Board of Directors and Supervisory Committee expired on May 28, 2024[40] - Members of the Eighth Board of Directors and Supervisory Committee were officially elected at the Annual General Meeting held on May 29, 2024[40] - Mr. Chen Jianzheng was appointed as Chairman, Executive Director, and Chairman of the Strategy Committee[40] - Mr. Dai Weitao, Mr. Wang Guanghua, Mr. Wang Jiheng, and Mr. Xu Rong resigned/retired from their positions as executive directors or independent non-executive directors[41] Dividends The Company declared and approved the final dividend for the year ended December 31, 2023, at the Annual General Meeting on May 29, 2024, which was paid on July 31, 2024; the Board does not recommend an interim dividend for the six months ended June 30, 2024 - For the six months ended June 30, 2024, shareholders of the Company declared and approved a final dividend of RMB0.065 per share for the year ended December 31, 2023, at the Annual General Meeting held on May 29, 2024[42] - This final dividend was paid to the Company's shareholders on July 31, 2024[42] - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2024[42] Corporate Governance The Company is committed to maintaining a robust, transparent, and prudent corporate governance framework, having adopted the code provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules, and has complied with these provisions during the period - The Company has adopted the code provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules as its corporate governance code[43] - During the period, the Company complied with the code provisions of the Corporate Governance Code[43] Standard Code for Securities Transactions The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix C3 of the Listing Rules, as its code of conduct for securities transactions by directors and supervisors, and all directors and supervisors complied with this code during the period - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix C3 of the Listing Rules, as its code of conduct for securities transactions by directors and supervisors[44] - Based on specific inquiries made to all directors and supervisors, they have complied with the required standards set out in the Model Code during the period[44] Audit Committee The Audit Committee, comprising four independent non-executive directors and one non-executive director, convened on August 28, 2024, to review the unaudited interim financial report for the six months ended June 30, 2024 - The Audit Committee comprises four independent non-executive directors and one non-executive director, namely Mr. Yang Zhida (Chairman), Mr. Zhang Feihu, Mr. Chen Congfa, Mr. Bo Shaochuan, and Mr. Guo Xinsheng[45] - An Audit Committee meeting was held on August 28, 2024, to review the unaudited interim financial report for the six months ended June 30, 2024, and this interim report[45] Events After the Reporting Period No significant events occurred after the reporting period - No significant events occurred after the reporting period[45] Review Report Introduction BDO Limited has reviewed the condensed interim financial report of Lingbao Gold Group Co., Ltd. and its subsidiaries for the six months ended June 30, 2024, prepared in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 issued by the Hong Kong Institute of Certified Public Accountants - Our auditors have reviewed the condensed interim financial report of Lingbao Gold Group Co., Ltd. and its subsidiaries, presented on pages 24 to 50[45] - The interim financial report must comply with the relevant requirements under the Listing Rules and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[45] Scope of Review The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants, primarily involving inquiries of personnel responsible for financial and accounting matters, and performing analytical and other review procedures; as the scope of a review is less than that of an audit, no audit opinion is expressed - We have conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants[46] - A review consists principally of making inquiries of management and others responsible for financial and accounting matters and applying analytical and other review procedures[46] - Because the scope of a review is substantially less than that of an audit conducted in accordance with Hong Kong Standards on Auditing, it does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit; accordingly, we do not express an audit opinion[46] Conclusion Based on the review, the auditors have not become aware of any matter that causes them to believe that the interim financial report for the six months ended June 30, 2024, is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 - Based on our review, nothing has come to our attention that causes us to believe that the interim financial report as of June 30, 2024, is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[47] Condensed Consolidated Statement of Profit or Loss Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2024, the Group's revenue was RMB4,281,228 thousand, a 26.67% year-on-year decrease; despite lower revenue, gross profit increased by 14.72% to RMB407,686 thousand, and profit for the period grew by 26.73% to RMB152,658 thousand, with basic earnings per share at RMB0.13 Key Data from Condensed Consolidated Statement of Profit or Loss (Six Months Ended June 30) | Indicator | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | Y-o-Y Change (%) | | :----------- | :------------------------ | :------------------------ | :----------- | | Revenue | 4,281,228 | 5,838,583 | -26.67% | | Cost of sales | (3,873,542) | (5,483,207) | -29.35% | | Gross profit | 407,686 | 355,376 | +14.72% | | Operating profit | 256,570 | 282,644 | -9.22% | | Profit before tax | 182,511 | 194,846 | -6.49% | | Profit for the period | 152,658 | 120,467 | +26.73% | | Profit attributable to equity holders of the Company | 152,538 | 140,352 | +8.68% | | Basic earnings per share | 0.13 (RMB) | 0.16 (RMB) | -18.75% | Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2024, the Group's profit for the period was RMB152,658 thousand, with total comprehensive income of RMB145,136 thousand, which included an exchange difference loss of RMB7,522 thousand arising from the translation of financial statements of overseas subsidiaries Key Data from Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Six Months Ended June 30) | Indicator | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--------------- | :------------------------ | :------------------------ | | Profit for the period | 152,658 | 120,467 | | Exchange differences | (7,522) | (31,900) | | Total comprehensive income for the period | 145,136 | 88,567 | | Attributable to equity holders of the Company | 146,257 | 115,525 | | Attributable to non-controlling interests | (1,121) | (26,958) | Condensed Consolidated Statement of Financial Position Condensed Consolidated Statement of Financial Position As of June 30, 2024, the Group's total assets less current liabilities amounted to RMB3,430,978 thousand, with net assets of RMB2,612,111 thousand; non-current assets saw increases in construction in progress and right-of-use assets, while pledged deposits significantly rose among current assets; net current liabilities improved but remained negative Key Data from Condensed Consolidated Statement of Financial Position (As of June 30, 2024) | Indicator | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--------------- | :------------------------- | :-------------------------- | | Non-current assets | | | | Property, plant and equipment | 2,042,770 | 2,031,326 | | Construction in progress | 458,220 | 351,296 | | Intangible assets | 973,299 | 973,689 | | Current assets | | | | Inventories | 1,443,835 | 1,590,875 | | Trade and other receivables | 563,185 | 413,884 | | Pledged deposits | 1,559,300 | 699,880 | | Cash and cash equivalents | 331,854 | 256,724 | | Current liabilities | | | | Bank and other borrowings | 3,544,224 | 2,725,108 | | Trade and other payables | 844,532 | 880,158 | | Net current liabilities | (572,314) | (741,768) | | Net assets | 2,612,111 | 2,436,554 | Condensed Consolidated Statement of Changes in Equity Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2024, the Group's total equity increased from RMB2,436,554 thousand at the end of 2023 to RMB2,612,111 thousand; profit for the period was RMB152,538 thousand, alongside H share capital injection and the distribution of the 2023 final dividend - Total equity as of June 30, 2024, was RMB2,612,111 thousand, an increase from RMB2,436,554 thousand as of December 31, 2023[53] - Profit for the period attributable to equity holders of the Company was RMB152,538 thousand[53] - In the first half of 2024, RMB111,443 thousand was injected through the issuance of H shares[53] - Final dividends declared and approved amounted to RMB80,826 thousand[53] Condensed Consolidated Statement of Cash Flows Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2024, the Group's net cash generated from operating activities was RMB168,088 thousand; net cash used in investing activities significantly increased to RMB1,115,185 thousand, primarily due to a substantial increase in net pledged deposits for borrowings; net cash generated from financing activities was RMB1,027,061 thousand, mainly from bank and other borrowings and proceeds from H share issuance Key Data from Condensed Consolidated Statement of Cash Flows (Six Months Ended June 30) | Indicator | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :------------------- | :------------------------ | :------------------------ | | Net cash generated from operating activities | 168,088 | 214,868 | | Net cash used in investing activities | (1,115,185) | (178,127) | | Net cash generated from financing activities | 1,027,061 | 19,149 | | Net increase in cash and cash equivalents | 79,964 | 55,890 | | Cash and cash equivalents at end of period | 331,854 | 230,191 | - Net cash used in investing activities significantly increased, primarily due to a net increase of RMB848,000 thousand in pledged deposits for borrowings[55] - Net cash generated from financing activities primarily stemmed from proceeds from bank and other borrowings of RMB3,229,270 thousand and net proceeds from H share issuance of RMB111,443 thousand[55] Notes to the Unaudited Interim Financial Report Basis of Preparation This note outlines the basis of preparation for the interim financial report, which is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and complies with the disclosure requirements of the Listing Rules; the report has been reviewed and authorized for issue by the Audit Committee - This interim financial report has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and complies with the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[56] - The report has been reviewed by the Audit Committee of Lingbao Gold Group Co., Ltd. and was authorized for issue on August 28, 2024[56] Going Concern As of June 30, 2024, the Group had net current liabilities and capital commitments, with most bank facilities requiring renewal within one year; the directors have assessed and deemed the going concern assumption appropriate, planning to mitigate liquidity pressure by drawing on unutilized bank facilities and actively negotiating renewals or refinancing to ensure continued operations for the next 12 months - As of June 30, 2024, the Group had net current liabilities of RMB572,314,000 and capital commitments of RMB344,032,000[57] - Current liabilities included bank and other borrowings of RMB3,544,224,000 repayable within one year[57] - The Group had uncommitted unutilized bank facilities of RMB626,970,000 related to unsecured bank borrowings, which management will consider drawing upon to safeguard its financial position[57] - Management is actively negotiating with banks to renew or extend existing bank facilities to secure financing[57] Changes in Accounting Policies New and revised Hong Kong Financial Reporting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants, effective for the Group's current accounting period, have had no significant impact on how the Group presents its results and financial position for current or prior periods in this interim report - The Hong Kong Institute of Certified Public Accountants has issued the following new and revised Hong Kong Financial Reporting Standards and Interpretations, which are effective for the Group's current accounting period for the first time[59] - None of these developments have had a significant impact on how the Group presents its results and financial position for current or prior periods in this interim report[59] Segment Reporting The Group is organized and managed into four reportable segments based on business combinations (production processes, products, and services) and geographical areas: China gold mining and beneficiation, Kyrgyzstan gold mining and beneficiation, China gold and other metal smelting and refining, and China gold and other jewelry retail business - The Group is organized and managed into segments based on business combinations (production processes, products, and services) and geographical areas[60] - The Group identifies four reportable segments: China Mining, Kyrgyzstan Mining, Smelting, and Retail[61] Segment Results, Assets and Liabilities This section presents revenue, impairment, and other relevant financial information for each of the Group's reportable segments, used by the chief operating decision-maker for resource allocation and performance assessment - Information regarding the Group's reportable segments provided to the Group's chief operating decision-maker for the purpose of allocating resources and assessing segment performance for the period is set out below[61] Reconciliation of Reportable Segment Revenue and Profit or Loss This section provides a reconciliation of reportable segment revenue and profit or loss to consolidated revenue and profit before tax, illustrating the Group's overall financial performance after inter-segment eliminations Reconciliation of Reportable Segment Revenue and Profit or Loss (Six Months Ended June 30) | Indicator | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :------------------- | :------------------------ | :------------------------ | | Reportable segment revenue | 5,074,098 | 7,115,844 | | Elimination of inter-segment revenue | (792,870) | (1,277,261) | | Consolidated revenue | 4,281,228 | 5,838,583 | | Reportable segment profit | 248,894 | 374,983 | | Elimination of inter-segment loss/(profit) | 49,810 | (114,645) | | Consolidated profit before tax | 182,511 | 194,846 | | Profit for the period | 152,658 | 120,467 | Revenue The Group's principal activities are the mining, beneficiation, smelting, and sale of gold and other metal products in China; revenue represents the sales value of goods sold to customers, net of sales tax and value-added tax; in the first half of 2024, gold sales revenue amounted to RMB4,232,540 thousand, constituting the vast majority of total revenue - The Group's principal activities are the mining, beneficiation, smelting, and sale of gold and other metal products in China[64] - Revenue represents the sales value of goods sold to customers, net of sales tax and value-added tax[64] Revenue Breakdown (By Major Product Line, Six Months Ended June 30) | Product Line | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :------------- | :------------------------ | :------------------------ | | Sales of gold | 4,232,540 | 5,639,239 | | Sales of other metals | 81,098 | 191,375 | | Sales of jewelry | 2,347 | 6,777 | | Others | 4,535 | 32,834 | | Less: Sales tax and levies | (39,292) | (31,642) | | Total Revenue | 4,281,228 | 5,838,583 | Profit Before Tax This section details the composition of the Group's profit before tax, including finance costs, net other (losses)/gains, and other items; in the first half of 2024, finance costs decreased, but realized and unrealized losses on financial instruments at fair value through profit or loss increased Finance Costs (Six Months Ended June 30) | Item | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :----------- | :------------------------ | :------------------------ | | Interest expense on bank loans | 28,546 | 66,286 | | Interest expense on lease liabilities | 392 | 814 | | Other borrowing costs | 45,121 | 19,186 | | Total | 74,059 | 86,286 | Net Other (Losses)/Gains (Six Months Ended June 30) | Item | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--------------------------------- | :------------------------ | :------------------------ | | Net realized and unrealized (losses)/gains on financial instruments at fair value through profit or loss | (20,324) | 908 | | Net foreign exchange gains | 5,732 | 49,793 | | Fines and penalties | (6,077) | — | | Gain on disposal of property, plant and equipment | 873 | — | | Others | (4,814) | (1,543) | | Total | (24,680) | 49,158 | Income Tax in Condensed Consolidated Statement of Profit or Loss This section discloses the Group's income tax components, including current tax and deferred tax; Chinese subsidiaries are subject to a statutory tax rate of 25%, with Habahe Huatai Gold Co., Ltd. enjoying a preferential tax rate of 15%; Hong Kong subsidiaries made no provision for Hong Kong profits tax due to accumulated tax losses, and the corporate income tax rate in Kyrgyzstan is 0% Income Tax (Six Months Ended June 30) | Item | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--------------- | :------------------------ | :------------------------ | | Current tax — PRC income tax | | | | Provision for the period | 43,449 | 88,402 | | Over-provision in prior years | (19,335) | (6,453) | | Deferred tax | 5,739 | (7,570) | | Total | 29,853 | 74,379 | - The Company and its PRC subsidiaries are subject to income tax at a statutory rate of 25%[66] - Habahe Huatai Gold Co., Ltd. enjoys a preferential income tax rate of 15% from January 1, 2023[67] - The corporate income tax rate in Kyrgyzstan for 2024 is 0%[67] Earnings Per Share This section provides the calculation methods for basic and diluted earnings per share; for the six months ended June 30, 2024, basic earnings per share were RMB0.1254, and diluted earnings per share were the same as basic earnings per share - Basic earnings per share for the six months ended June 30, 2024, were calculated based on profit attributable to equity holders of the Company of RMB152,538,000 and the weighted average number of ordinary shares outstanding of 1,216,246,829 shares, amounting to RMB0.1254[67] - As there were no dilutive potential ordinary shares for the six months ended June 30, 2024, and 2023, diluted earnings per share for both periods were the same as basic earnings per share[67] Property, Plant and Equipment and Construction in Progress For the six months ended June 30, 2024, the Group acquired property, plant and equipment of RMB10,099 thousand and added construction in progress of RMB207,136 thousand; the disposal of property, plant and equipment generated a gain of RMB873 thousand - For the six months ended June 30, 2024, the Group acquired property, plant and equipment of RMB10,099,000 and added construction in progress of RMB207,136,000, respectively[68] - The disposal of property, plant and equipment items with a total net book value of RMB766,000 resulted in a gain on disposal of RMB873,000[68] Intangible Assets For the six months ended June 30, 2024, the Group added exploration and evaluation assets of RMB25,706 thousand; no intangible assets were disposed of during the period - For the six months ended June 30, 2024, the Group added exploration and evaluation assets of RMB25,706,000[68] - No intangible assets were disposed of for the six months ended June 30, 2024[68] Inventories As of June 30, 2024, the Group's total inventories amounted to RMB1,443,835 thousand, primarily comprising raw materials, work in progress, and finished goods; the carrying amount of inventories sold recognized as an expense during the period was RMB3,872,711 thousand Inventories Composition (As of June 30, 2024) | Item | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :----------- | :------------------------- | :-------------------