奥威控股(01370) - 2024 - 中期财报

Company Information Company Overview and Principal Businesses Aowei Holdings Limited, formerly Hengshi Mining Investment Limited, listed on the HKEX in 2013, primarily engages in iron ore mining and green building materials production and sales in Hebei, China - The company was listed on the Main Board of The Stock Exchange of Hong Kong Limited on November 28, 2013, with stock code 1370[13] - The Group's core businesses are divided into two segments: (i) iron ore business, including iron ore, rich powder, and iron concentrate; and (ii) green building materials business, primarily producing and selling construction sand and aggregate[13] - The Group owns and operates three iron mines, all located in Hebei Province, China, which has the highest steel production and iron ore consumption[13] Financial Highlights Key Financial Indicators for H1 2024 For the six months ended June 30, 2024, group revenue decreased 9.0% to RMB 323.7 million, gross profit significantly declined 44.4%, and loss attributable to equity holders narrowed to RMB 50.6 million | Indicator | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | RMB 323.7 million | RMB 355.8 million | -9.0% | | Gross Profit | RMB 46.7 million | RMB 83.9 million | -44.4% | | Gross Margin | 14.4% | 23.6% | -9.2 percentage points | | Loss Attributable to Equity Holders | RMB 50.6 million | RMB 65.7 million | -23.0% | | Basic Loss Per Share | RMB 0.03 | RMB 0.04 | -25.0% | - The Board resolved not to declare an interim dividend for the six months ended June 30, 2024[23][81] Management Discussion and Analysis Business Review In H1 2024, iron ore prices weakened due to real estate downturn and weak steel demand, leading to decreased production and sales in both iron ore and green building materials segments, resulting in an overall loss despite cost controls Iron Ore Business Iron ore prices were pressured by China's real estate market adjustments and shrinking steel demand, leading to a decline in the Group's iron concentrate production and sales, though average unit cash operating cost decreased due to cost control - In H1 2024, the Platts 62% iron ore price index fell from a high of US$143.95/ton at the beginning of the year to US$106.7/ton, with port inventories increasing 17.2% YoY, indicating an oversupply in the market[25] Iron Concentrate Production and Sales | Business Segment | Item | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Iron Concentrate | Production (thousand tons) | 337.53 | 381.93 | -11.6% | | | Sales (thousand tons) | 358.26 | 395.38 | -9.4% | | | Average Selling Price (RMB/ton) | 856.06 | 778.79 | +9.9% | - Jihang Mining temporarily ceased operations during the reporting period as its open-pit iron ore extractable portion was largely depleted, leading to zero production and sales, which is the main reason for the Group's overall production and sales decline[26][27] Wang'ergou Mine & Shuanmazhuang Mine Operating Data | Wang'ergou Mine & Shuanmazhuang Mine | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Ore Mined (thousand tons) | 6,054.37 | 5,078.36 | +19.2% | | Iron Concentrate Production (thousand tons) | 337.53 | 281.66 | +19.8% | | Average Unit Cash Operating Cost (RMB/ton) | 670.87 | 691.57 | -3.0% | Green Building Materials - Construction Sand and Aggregate Business During the reporting period, sand and aggregate business production and sales significantly declined due to heavy rain and road repairs, while average unit cash operating cost increased due to lower production and higher raw material costs Sand and Aggregate Operating Data | Business Segment | Item | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Total Sand & Aggregate | Production (thousand tons) | 466.21 | 1,775.71 | -73.7% | | | Sales (thousand tons) | 460.35 | 1,364.41 | -66.3% | | | Average Selling Price (RMB/ton) | 33.12 | 33.80 | -2.0% | | | Average Unit Cash Operating Cost (RMB/ton) | 22.10 | 18.60 | +18.9% | - The decline in production and sales is primarily attributed to: (1) contamination of Jingyuancheng Mining's finished goods inventory due to severe rainstorms in late July 2023; and (2) partial shutdown of Jihang Mining due to road facility damage and subsequent repairs[35] Safety and Environmental Protection The Group prioritizes safety and environmental protection, strictly adhering to relevant laws and regulations with a safety goal of "zero fatalities, zero serious injuries," and recorded no major incidents during the reporting period - During the reporting period, the Group's operations recorded no major safety or environmental incidents[37] Financial Review In H1 2024, group revenue decreased 9.0% and gross profit significantly declined 44.4%, while administrative expenses and finance costs increased; however, loss for the period narrowed due to the absence of large asset impairment losses from the prior period and current income tax credit, though the gearing ratio rose to 45.1% Revenue, Cost, and Gross Profit Revenue decreased 9.0% to RMB 323.7 million due to lower sales volume of iron concentrate and sand/aggregate, while gross profit significantly declined 44.4% to RMB 46.7 million, with gross margin falling to 14.4% - Revenue decreased 9.0% to RMB 323.7 million, primarily due to lower production and sales volume of iron concentrate and sand/aggregate, partially offset by higher iron concentrate selling prices[38] - Gross profit decreased 44.4% to RMB 46.7 million, with gross margin falling from 23.6% to 14.4% compared to the same period last year[40] Operating Expenses and Finance Costs Distribution expenses decreased to RMB 0.8 million, administrative expenses increased 21.3% to RMB 59.7 million due to higher idle capacity costs, and finance costs rose 16.1% to RMB 30.7 million due to increased average bank borrowings - Administrative expenses increased 21.3% YoY to RMB 59.7 million, primarily due to increased idle capacity costs recognized under management expenses[42] - Finance costs increased 16.1% YoY to RMB 30.7 million, mainly due to a higher average balance of bank borrowings compared to the prior period[43] Loss and Asset Position Loss after tax for the period narrowed to RMB 50.6 million, a reduction of RMB 15.1 million from the prior period, primarily due to the absence of significant asset impairment losses and an income tax credit in the current period, while inventories, trade receivables, and payables all decreased - Loss for the period narrowed to RMB 50.6 million, primarily due to no impairment loss on property, plant and equipment in the current period, compared to a significant impairment in the prior period[45] - An income tax credit of approximately RMB 1.7 million was recorded, compared to an income tax expense of RMB 25.7 million in the prior period, mainly due to the reversal of an over-provision for current tax in prior years of approximately RMB 21.0 million[44] - As of June 30, 2024, inventories, trade and other receivables, and trade and other payables all decreased compared to year-end 2023[50][51][52] Liquidity and Capital Resources As of June 30, 2024, cash and cash equivalents increased to RMB 53.8 million, but total bank and other borrowings reached RMB 954.5 million, with RMB 517.0 million as current liabilities, leading to an increased gearing ratio of 45.1% and indicating liquidity pressure Liquidity and Capital Resources Overview | Indicator | June 30, 2024 | Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | RMB 53.8 million | RMB 34.5 million | +RMB 19.3 million | | Bank and Other Borrowings | RMB 954.5 million | RMB 912.0 million | +RMB 42.5 million | | Gearing Ratio | 45.1% | 41.4% | +3.7 percentage points | - As of June 30, 2024, approximately RMB 517.0 million of the Group's bank and other borrowings were current liabilities, while cash and cash equivalents were only RMB 53.8 million, indicating liquidity pressure[54][98] Future Plans and Outlook The Group maintains a cautious outlook on the iron ore market, expecting continued oversupply, and plans to deepen cost reduction, improve and sell existing sand and aggregate inventory, potentially dispose of Jihang Mining's iron ore business, and focus on developing its green building materials segment to enhance profitability - The iron ore market is expected to remain in an oversupply situation in the second half, with price growth suppressed[60] - Strategic priorities include: deepening cost reduction and efficiency improvements, improving and selling affected sand and aggregate inventory, considering timely disposal of Jihang Mining's iron ore business, and vigorously developing the green building materials sand and aggregate business[60] Other Information Directors' and Shareholders' Interests As of June 30, 2024, Mr. Li Yanjun (Chairman) and Mr. Li Ziwei (CEO) jointly held 72.25% equity interest, while Huarong International Financial Holdings Co., Ltd. and its ultimate controlling company held 50.73% due to security interests - Mr. Li Ziwei (Chief Executive Officer) and Mr. Li Yanjun (Chairman) are deemed to jointly hold interests in 1,181,480,000 shares, representing 72.25% of the issued shares[62][63] - Fresh Idea Ventures Limited, an indirect wholly-owned subsidiary of Huarong International Financial Holdings Co., Ltd., holds security interests in 829,630,000 shares, representing 50.73% of the issued shares[66][68] Employees and Remuneration Policy As of June 30, 2024, the Group had 797 employees, a decrease from the prior year, with total staff costs for the reporting period amounting to approximately RMB 39.1 million, down 13.1% YoY Employee and Staff Costs Overview | Indicator | June 30, 2024 | June 30, 2023 | Change | | :--- | :--- | :--- | :--- | | Total Employees | 797 | 988 | -19.3% | | Total Staff Costs | RMB 39.1 million | RMB 45.0 million | -13.1% | Corporate Governance During the reporting period, the company complied with the Listing Rules' Corporate Governance Code, with the Audit Committee reviewing the unaudited interim financial results, and maintained the required public float - The company adopted the Model Code, and all directors confirmed compliance throughout the reporting period[70] - The Audit Committee, comprising three independent non-executive directors, reviewed the interim financial results[79] Other Disclosures The company has not adopted any share option scheme, had no purchases, redemptions, or sales of listed securities, no significant legal proceedings, and no material post-balance sheet events during the reporting period, and the Board resolved not to declare an interim dividend - The Board resolved not to declare an interim dividend for the six months ended June 30, 2024[81] - The Group was not involved in any significant legal proceedings or arbitration during the reporting period[82] - Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the reporting period[74] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2024, the Group recorded revenue of RMB 323.7 million and gross profit of RMB 46.7 million, with loss before tax at RMB 52.3 million and loss for the period at RMB 50.6 million, narrowing from the prior period due to no significant asset impairment and an income tax credit Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Item (RMB '000) | H1 2024 (Unaudited) | H1 2023 (Unaudited, Restated) | | :--- | :--- | :--- | | Revenue | 323,731 | 355,846 | | Gross Profit | 46,672 | 83,928 | | Loss Before Tax | (52,316) | (39,661) | | Loss for the Period | (50,587) | (65,749) | | Basic Loss Per Share (RMB) | (0.03) | (0.04) | Condensed Consolidated Statement of Financial Position As of June 30, 2024, the Group's total assets were RMB 2.115 billion, total liabilities RMB 1.200 billion, and net assets RMB 914.9 million, with net current liabilities of RMB 323.6 million indicating short-term repayment pressure Condensed Consolidated Statement of Financial Position | Item (RMB '000) | June 30, 2024 (Unaudited) | Dec 31, 2023 (Audited) | | :--- | :--- | :--- | | Non-current Assets | 1,712,433 | 1,783,902 | | Current Assets | 402,547 | 417,109 | | Total Assets | 2,114,980 | 2,201,011 | | Current Liabilities | 726,177 | 757,886 | | Non-current Liabilities | 473,862 | 477,528 | | Total Liabilities | 1,200,039 | 1,235,414 | | Net Assets | 914,941 | 965,597 | | Net Current Liabilities | (323,630) | (340,777) | Condensed Consolidated Statement of Changes in Equity As of June 30, 2024, total equity decreased from RMB 965.6 million at year-start to RMB 914.9 million, primarily due to the RMB 50.6 million loss recorded during the period - As of January 1, 2024, total equity was RMB 965.6 million[88] - During the reporting period, total equity decreased to RMB 914.9 million due to a loss for the period of RMB 50.6 million and exchange differences[88][89] Condensed Consolidated Statement of Cash Flows In H1 2024, operating cash flow turned positive with a net inflow of RMB 26.2 million, while investing activities resulted in a net outflow of RMB 18.4 million and financing activities a net inflow of RMB 11.6 million, leading to a period-end cash and cash equivalents balance of RMB 53.8 million Condensed Consolidated Statement of Cash Flows | Item (RMB '000) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 26,158 | (98,181) | | Net Cash Used in Investing Activities | (18,393) | (26,053) | | Net Cash from Financing Activities | 11,644 | 128,247 | | Net Increase in Cash and Cash Equivalents | 19,409 | 4,013 | | Cash and Cash Equivalents at Period-End | 53,822 | 60,085 | Notes to the Condensed Consolidated Financial Statements Basis of Preparation and Principal Accounting Policies Financial statements are prepared on a going concern basis despite significant uncertainties, including a loss for the period, current liabilities exceeding current assets, and substantial short-term borrowings, with confidence relying on expected loan renewals, asset realization, and financial support from major shareholders - During the reporting period, the Group incurred a loss of RMB 50.6 million, with current liabilities exceeding current assets by approximately RMB 323.6 million, and borrowings due within one year totaling approximately RMB 517.0 million while cash and cash equivalents were only approximately RMB 53.8 million, indicating significant uncertainties that may cast substantial doubt on its ability to continue as a going concern[98] - Directors believe preparing financial statements on a going concern basis is appropriate, primarily relying on: (1) successful renewal of maturing bank loans; (2) ability to realize non-current assets if necessary; and (3) commitment from executive directors and major shareholders Mr. Li Yanjun and Mr. Li Ziwei to provide sufficient financial support[98] Revenue and Segment Information All Group revenue is derived from the mining segment in China, primarily from iron concentrate sales, with the former medical segment having ceased operations in 2023 Revenue by Type of Goods | Type of Goods (RMB '000) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Iron Concentrate | 306,694 | 307,922 | | Sand and Aggregate | 17,037 | 47,924 | | Total | 323,731 | 355,846 | - All revenue is derived from the mining segment in China, and the medical segment, which provided hospital management services, ceased operations in 2023[102][103] Key Statement of Profit or Loss Items During the reporting period, finance costs, mainly bank borrowing interest, totaled RMB 30.7 million, an income tax credit of RMB 1.7 million was recorded due to prior year over-provision, basic loss per share was RMB 0.03, and no dividends were declared - Total finance costs were RMB 30.72 million, of which bank borrowing interest was RMB 29.79 million[105] - Income tax recorded a credit of RMB 1.73 million, mainly due to the reversal of an over-provision for China corporate income tax of RMB 21.04 million from prior years, partially offset by a current deferred tax expense of RMB 19.31 million[107] - The Board decided not to declare any dividend for the interim period[114] Statement of Financial Position Items As of period-end, the Group's net property, plant and equipment was RMB 1.10 billion, and construction in progress RMB 178.0 million; net trade receivables were RMB 101.0 million with 80% overdue, and total bank and other borrowings were RMB 954.5 million, including several renewed or new borrowings - Net trade receivables were RMB 100.6 million, of which receivables overdue by more than 180 days totaled RMB 80.6 million, accounting for 80.1% of the total, indicating high credit risk[123][124] - During the reporting period, the Group renewed three bank borrowings totaling RMB 327.0 million and obtained two new borrowings totaling RMB 80.0 million[129][130] - The Group still has buildings and plant with a total carrying amount of approximately RMB 224.0 million and leasehold land with a carrying amount of approximately RMB 52.97 million for which property ownership certificates have not yet been obtained[118][119] Commitments, Contingent Liabilities, and Related Party Transactions As of period-end, the Group had capital commitments of RMB 19.73 million and faces environmental regulatory uncertainties, while numerous material related party transactions, particularly bank borrowings secured by ultimate controllers, are crucial for the Group's financing - As of June 30, 2024, the Group had contracted but unprovided capital expenditure commitments of approximately RMB 19.73 million[133] - Multiple bank borrowings of the Group rely on related party guarantees; as of June 30, 2024, total bank borrowings secured by property mortgages or personal guarantees from ultimate controllers Mr. Li Yanjun, Mr. Li Ziwei, and their controlled companies (Hebei Aowei, Tongda) exceeded RMB 673.0 million[140]