汇力资源(01303) - 2024 - 中期财报

Company Information Board of Directors and Committees The company's board comprises executive, non-executive, and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure sound corporate governance - The Board of Directors includes Mr. Cui Yazhou (Chairman), Mr. Ye Xin, Ms. Wang Qian, Mr. Zhou Jianzhong (Executive Directors), Mr. Cao Ye (Non-executive Director), and Ms. Xiang Siying, Ms. Huang Mei, Mr. Chan Ping Kuen (Independent Non-executive Directors)[2] - The Audit Committee, Remuneration Committee, and Nomination Committee all include independent non-executive directors Ms. Xiang Siying and Ms. Huang Mei, ensuring independent oversight[2] Company Secretary, Auditor, and Legal Advisors The company has appointed Mr. Qiu Kangjun as Company Secretary and Authorized Representative, Zhonghui Anda Certified Public Accountants Co., Ltd. as independent auditor, with legal services provided by Li Zhicong Solicitors and King & Wood Mallesons - Mr. Qiu Kangjun serves as the Company Secretary and Authorized Representative[2] - The independent auditor is Zhonghui Anda Certified Public Accountants Co., Ltd[2] - Legal advisors include Li Zhicong Solicitors (Hong Kong and PRC law) and King & Wood Mallesons (PRC law)[2] Registered Office and Principal Place of Business The company is registered in the Cayman Islands, with principal places of business in Hami, Xinjiang, China, and Hong Kong, and share registrars in both locations - The registered office is located in the Cayman Islands[2] - Principal places of business are in Hami City, Xinjiang Uygur Autonomous Region, China, and Gloucester Road, Hong Kong[2] - Share registrars are Codan Trust Company (Cayman) Limited in the Cayman Islands and Tricor Investor Services Limited in Hong Kong[2] Mining Information Mineral Resources and Ore Reserves As of June 30, 2024, the Baiganhu project holds total lead-zinc mineral resources of 3,880 thousand tonnes, comprising 251,450 tonnes of zinc metal and 156,580 tonnes of lead metal, with a probable ore reserve category of 1,055 thousand tonnes Baiganhu Project Mineral Resources (As of June 30, 2024) | Project Name | Category | Quantity (thousand tonnes) | Zinc Metal (tonnes) | Zinc Grade (%) | Lead Metal (tonnes) | Lead Grade (%) | | :--------- | :--- | :----------- | :----------- | :------------ | :----------- | :------------ | | Baiganhu Project | Controlled | 1,730 | 113,540 | 6.57 | 71,440 | 4.13 | | | Inferred | 2,150 | 137,910 | 6.42 | 85,140 | 3.96 | | | Total | 3,880 | 251,450 | 6.49 | 156,580 | 4.03 | Baiganhu Project Ore Reserves (As of June 30, 2024) | Reserve Category | Ore Quantity (thousand tonnes) | Zinc Metal (tonnes) | Zinc Grade (%) | Lead Metal (tonnes) | Lead Grade (%) | | :------- | :--------------- | :----------- | :---------- | :----------- | :---------- | | Probable | 1,055 | 62,773 | 5.95 | 39,352 | 3.73 | - The mineral resources and ore reserves report was prepared by independent technical consultant Mining One Pty Ltd[4] Mining Permits The Baiganhu project's mining permit expired in September 2021, and the Group is currently processing its renewal application Baiganhu Project Mining Permit | Project Name | Exploration Ore Type | Mining Area (sq km) | Permit Expiry Date (Year/Month) | | :--------- | :----------- | :------------------- | :----------------------- | | Baiganhu Project | Lead, Zinc | 0.96 | September 2021 | - The Group is in the process of renewing these permits, with renewal applications submitted to the relevant government departments[6] Capital and Exploration Expenditures For the six months ended June 30, 2024 and 2023, the Group had no ore production, nor capital or exploration expenditures related to development and mining activities - For the six months ended June 30, 2024 and 2023, the Group did not engage in any ore production[7] - For the six months ended June 30, 2024 and 2023, there were no capital expenditures for development and mining activities[7] - For the six months ended June 30, 2024 and 2023, the Group did not deduct any exploration expenditures in the interim condensed consolidated statement of comprehensive income[7] Interim Condensed Consolidated Statement of Comprehensive Income Key Financial Performance The company achieved a 1.9% revenue growth and a 36.2% increase in gross profit, leading to a 42.2% rise in profit for the period Key Financial Performance for the Six Months Ended June 30 | Indicator | 2024 (RMB thousand) | 2023 (RMB thousand) | Year-on-year Change (%) | | :------------- | :------------------ | :------------------ | :----------- | | Revenue | 1,359,778 | 1,334,580 | 1.9 | | Cost of sales | (1,230,149) | (1,239,425) | -0.7 | | Gross profit | 129,629 | 95,155 | 36.2 | | Operating profit | 140,153 | 93,737 | 49.5 | | Profit before income tax | 138,213 | 96,170 | 43.7 | | Profit for the period | 116,983 | 82,286 | 42.2 | | Earnings per share (RMB cents) | 6.08 | 5.08 | 19.7 | - A bargain purchase gain of RMB 20,071 thousand from the acquisition of a subsidiary positively impacted operating profit[8] - Net finance costs shifted from income in 2023 to costs in 2024, primarily due to increased interest expenses[8] Interim Condensed Consolidated Statement of Financial Position Assets and Liabilities The company's total assets increased by 46.3% to RMB 2.31 billion, driven by significant growth in both current and non-current assets, with a corresponding rise in total liabilities Financial Position as of June 30, 2024 and December 31, 2023 | Indicator | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | Change (%) | | :------------- | :------------------------- | :-------------------------- | :------- | | Total non-current assets | 468,879 | 299,532 | 56.5 | | Total current assets | 1,838,953 | 1,278,258 | 43.9 | | Total assets | 2,307,832 | 1,577,780 | 46.3 | | Total current liabilities | 1,180,812 | 742,163 | 59.1 | | Total non-current liabilities | 174,894 | 43,551 | 301.6 | | Total liabilities | 1,355,706 | 785,714 | 72.6 | | Total equity | 952,126 | 792,076 | 20.2 | - Property, plant and equipment significantly increased from RMB 177,647 thousand to RMB 327,859 thousand[10] - Trade and bills receivables increased by 160% from RMB 238,525 thousand to RMB 621,745 thousand[10] - Trade payables increased by 50.8% from RMB 637,851 thousand to RMB 961,740 thousand[10] - New items "Loan from former shareholder of a subsidiary" and "Bills payable" in non-current liabilities led to a substantial increase in non-current liabilities[11] Interim Condensed Consolidated Statement of Changes in Equity Overview of Equity Changes Total equity attributable to owners increased from RMB 788.0 million on January 1, 2024, to RMB 948.1 million on June 30, 2024, primarily due to comprehensive income for the period and shares issued upon subsidiary acquisition Changes in Equity Attributable to Owners of the Company (RMB thousand) | Item | January 1, 2024 | Total Comprehensive Income for the Period | Shares Issued upon Acquisition of a Subsidiary | Appropriation to Statutory Reserve | June 30, 2024 | | :--------------------------------- | :----------- | :--------------- | :--------------------- | :------------- | :------------ | | Share capital | 152,933 | - | 14,303 | - | 167,236 | | Share premium | 703,804 | - | 28,606 | - | 732,410 | | Other reserves (Safety fund, Maintenance fund, Capital reserve, Exchange reserve, Statutory reserve) | 21,056 | 158 | - | 3,951 | 25,165 | | Retained profits / (Accumulated losses) | (89,750) | 117,032 | - | (3,951) | 23,331 | | Subtotal | 788,043 | 117,190 | 42,909 | - | 948,142 | | Non-controlling interests | 4,033 | (49) | - | - | 3,984 | | Total equity | 792,076 | 117,141 | 42,909 | - | 952,126 | - Total comprehensive income for the period was RMB 117,141 thousand, of which RMB 117,190 thousand was attributable to owners of the Company[14] - Shares issued upon acquisition of a subsidiary resulted in an increase of RMB 14,303 thousand in share capital and RMB 28,606 thousand in share premium, totaling RMB 42,909 thousand[14] Interim Condensed Consolidated Statement of Cash Flows Cash Flow Overview Net cash from operating activities shifted from inflow to an outflow of RMB 213.5 million, leading to a net decrease in cash and cash equivalents for the period Cash Flows for the Six Months Ended June 30 (RMB thousand) | Indicator | 2024 (RMB thousand) | 2023 (RMB thousand) | Change | | :------------------------- | :------------------ | :------------------ | :--- | | Net cash (used in) / from operating activities | (213,530) | 69,496 | Shifted to outflow | | Net cash used in investing activities | (17,761) | (1,027) | Increased outflow | | Net cash used in financing activities | (1,987) | (1,367) | Increased outflow | | Net (decrease) / increase in cash and cash equivalents | (233,278) | 67,102 | Shifted to decrease | | Cash and cash equivalents at end of period | 241,786 | 435,100 | Decreased | | Cash and cash equivalents at beginning of period | 474,597 | 369,309 | Increased | - Operating cash outflow was primarily due to an increase in cash used in operating activities to RMB (199,191) thousand[15] - Net cash used in investing activities significantly increased, reflecting higher capital expenditures[15] Notes to the Interim Condensed Consolidated Financial Information 1 General Information Huili Resources (Group) Limited is incorporated in the Cayman Islands and listed on the Hong Kong Stock Exchange, primarily engaged in lead-zinc mining, ore processing, and coal trading, processing, storage, and supply chain management services in China - The Company was incorporated in the Cayman Islands on February 19, 2010, and listed on the Main Board of the Hong Kong Stock Exchange on January 12, 2012[17] - The Group's principal activities include the mining, ore processing, and sale of lead and zinc products, as well as trading of coal, provision of coal processing services, coal storage services, and supply chain management services[17] - The interim condensed consolidated financial statements are presented in RMB and were approved for issue by the Board of Directors on August 29, 2024[17] 2 Basis of Preparation The interim condensed consolidated financial statements are prepared in accordance with HKAS 34 and the Listing Rules, and should be read in conjunction with the 2023 annual consolidated financial statements, prepared on a historical cost basis except for financial assets measured at fair value - The statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure provisions of the Listing Rules of the Stock Exchange[18] - The statements should be read in conjunction with the 2023 annual consolidated financial statements prepared in accordance with Hong Kong Financial Reporting Standards[18] - The statements are prepared on the historical cost basis, except for financial assets at fair value through other comprehensive income and derivative financial assets which are measured at fair value[19] 3 Changes in Accounting Policies The Group has adopted several new and amended HKFRSs, deeming them to have no significant impact on the interim condensed consolidated financial statements for the current period, and anticipates no material impact from future effective standards 3.1 New and Amended Standards Adopted by the Group The Group has initially adopted new and amended standards such as HK(IFRIC)-Int 5 (Revised), HKAS 1 (Amendments), and HKFRS 16 (Amendments), but considers them to have no material impact on the financial statements for the current period New and Amended Standards Adopted by the Group | Standard Name | Content | | :------------------------- | :------------------------- | | HK(IFRIC)-Int 5 (Revised) | Amendments to HKAS 1 | | HKAS 1 (Amendments) | Classification of Liabilities as Current or Non-current | | HKAS 1 (Amendments) | Non-current Liabilities with Covenants | | HKFRS 16 (Amendments) | Lease Liability in a Sale and Leaseback | | HKFRS 7 and HKAS 7 (Amendments) | Supplier Finance Arrangements | - The Group considers that the adoption of these new and amended HKFRSs has had no material impact on the amounts reported and/or disclosures contained in these interim condensed consolidated financial statements for the current period[21] 3.2 New and Amended Standards Issued But Not Yet Effective and Not Early Adopted by the Group for the Accounting Period Beginning 1 January 2024 The Group is evaluating several new and amended standards issued but not yet effective, including HKAS 21 (Amendments) and HKFRS 7 & 9 (Amendments), with preliminary expectations of no significant impact on financial performance and position New and Amended Standards Issued But Not Yet Effective | Standard Name | Content | Effective Date | | :------------------------- | :------------------------- | :------------------------- | | HKAS 21 (Amendments) | Lack of Exchangeability | January 1, 2025 | | HKFRS 7 and 9 (Amendments) | Classification and Measurement of Financial Instruments | January 1, 2026 | | HKFRS 18 | Presentation and Disclosure in Financial Statements | January 1, 2027 | | HKFRS 19 | Subsidiaries without Public Accountability: Disclosures | January 1, 2027 | | HKFRS 10 and HKAS 28 (Amendments) | Sale or Contribution of Assets between an Investor and its Associate or Joint Venture | To be determined | - The Group is assessing the impact of these new and amended standards, and preliminary results indicate that their application is not expected to have a significant impact on the Group's financial performance and financial position[23] 4 Estimates Management's significant judgments and key sources of estimation uncertainty in preparing the interim condensed consolidated financial statements are consistent with those applied in the 2023 annual financial statements - Management is required to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income, and expenses that are not readily apparent from other sources[24] - Actual results may differ from these estimates[24] 5 Financial Risk Management The Group's business is exposed to market risks (foreign exchange, interest rate, price), credit risk, and liquidity risk, with no significant changes in risk management policies since December 31, 2023, and fair value measurements of financial instruments primarily use Level 2 inputs, with no Level 3 instruments 5.1 Financial Risk Factors The Group's business is exposed to various financial risks: market risk (including foreign exchange risk, interest rate risk, and price risk), credit risk, and liquidity risk, with no significant changes in risk management policies since December 31, 2023 - The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk, and price risk), credit risk, and liquidity risk[25] - There have been no significant changes in risk management policies since December 31, 2023[25] 5.2 Fair Value Estimation The Group's financial instruments are primarily measured at fair value using Level 2 inputs, including derivative financial assets and financial assets at fair value through other comprehensive income, with no transfers between Level 1 and Level 2 or into or out of Level 3 as of June 30, 2024 Fair Value Hierarchy of Financial Instruments (RMB thousand) | Item | Level 1 | Level 2 | Level 3 | Total | | :----------------------------- | :---- | :---- | :---- | :--- | | As of June 30, 2024 | | | | | | – Derivative financial assets | – | 368 | – | 368 | | – Financial assets at fair value through other comprehensive income | – | 9,383 | – | 9,383 | | As of December 31, 2023 | | | | | | – Financial assets at fair value through other comprehensive income | – | 8,868 | – | 8,868 | - The fair value of financial assets at fair value through other comprehensive income is measured based on the transaction prices of similar debt instruments in the over-the-counter market[29] - Derivative financial assets are foreign currency forward contracts, and their fair value is determined by exchange rates quoted by financial institutions[30] - For the six months ended June 30, 2024 and 2023, there were no fair value measurement transfers between Level 1 and Level 2, nor any transfers into or out of Level 3[30] 6 Segment Information The Group has minimized its mining segment activities and plans for disposal, currently operating its coal supply chain business as a single operating segment, with revenue primarily derived from coal trading, processing, storage, and supply chain management services in the China market Operating Segments The Group's chief operating decision-maker has decided to focus resources on the coal supply chain business, minimize mining segment activities, and plans to dispose of the mining business after the reporting period, thus treating the coal supply chain business as a single operating segment - The chief operating decision-maker believes that focusing resources on the coal supply chain business is in the best interest of the Company and has decided to minimize mining segment activities and dispose of the mining business after the reporting period[32] - The Group's coal supply chain business is considered a single operating segment, and therefore, no separate segment analysis is presented in the interim condensed consolidated financial report[32] (A) Disaggregation of Revenue from Contracts with Customers For the six months ended June 30, 2024, the Group's revenue from contracts with customers was RMB 1,359,778 thousand, primarily from coal trading and processing services in the China market Disaggregation of Revenue from Contracts with Customers (For the six months ended June 30, RMB thousand) | Item | 2024 | 2023 | | :--------------------------- | :----- | :----- | | Major geographical markets | | | | – China | 1,359,778 | 1,334,580 | | Major products and services | | | | – Trading of coal and provision of coal processing services | 1,329,032 | 1,304,219 | | – Coal storage services | 13,371 | – | | – Coal supply chain management services | 17,375 | 30,361 | | Timing of revenue recognition | | | | – At a point in time | 1,359,778 | 1,334,580 | - Coal storage services contributed RMB 13,371 thousand in revenue in 2024, with no such revenue in 2023[33] - Revenue from coal supply chain management services decreased from RMB 30,361 thousand in 2023 to RMB 17,375 thousand in 2024[33][34] (B) Geographical Information The Group's revenue and specific non-current assets are primarily concentrated in China, with revenue of RMB 1,359,778 thousand and specific non-current assets of RMB 463,519 thousand as of June 30, 2024 Geographical Information (RMB thousand) | Region | Revenue from Customers (2024) | Revenue from Customers (2023) | Specific Non-current Assets (June 30, 2024) | Specific Non-current Assets (December 31, 2023) | | :--- | :----------------------- | :----------------------- | :------------------------------- | :------------------------------- | | China | 1,359,778 | 1,334,580 | 463,519 | 292,386 | | Hong Kong | – | – | 1,016 | 1,340 | | Total | 1,359,778 | 1,334,580 | 464,535 | 293,726 | - Specific non-current assets in China increased by 58.5% from RMB 292,386 thousand at the end of 2023 to RMB 463,519 thousand as of June 30, 2024[36] 7 Other Income – Net For the six months ended June 30, 2024, net other income was RMB 9,479 thousand, a decrease from RMB 15,401 thousand in the prior period, mainly due to lower net exchange gains and penalty income from customers Other Income – Net (RMB thousand) | Item | 2024 | 2023 | | :--------------------------------- | :----- | :----- | | Net exchange gains | 4,138 | 6,787 | | Government grants | 4,737 | 5,280 | | Penalty income from customers | 119 | 2,100 | | Interest income from financial assets at fair value through other comprehensive income | 241 | 422 | | Dividend income from financial assets at fair value through profit or loss | – | 589 | | Others | 244 | 223 | | Total | 9,479 | 15,401 | - Net exchange gains decreased from RMB 6,787 thousand in 2023 to RMB 4,138 thousand in 2024[37] - Penalty income from customers significantly decreased from RMB 2,100 thousand in 2023 to RMB 119 thousand in 2024[37] 8 Finance (Costs) / Income – Net For the six months ended June 30, 2024, the Group recorded net finance costs of RMB 1,940 thousand, compared to net finance income of RMB 2,433 thousand in the prior period, primarily due to a significant increase in interest expenses Finance (Costs) / Income – Net (RMB thousand) | Item | 2024 | 2023 | | :--------------------------------- | :----- | :----- | | Finance income – Interest income | 1,141 | 2,873 | | Finance costs – Interest expense | (3,081) | (440) | | Finance (costs) / income – Net | (1,940) | 2,433 | - Interest expense significantly increased from RMB 440 thousand in 2023 to RMB 3,081 thousand in 2024, mainly including interest on loans from a former director of a subsidiary and bills payable[38] 9 Profit Before Income Tax For the six months ended June 30, 2024, profit before income tax was RMB 138,213 thousand, a 43.7% increase from RMB 96,170 thousand in the prior period, mainly influenced by changes in cost of inventories, depreciation, and employee costs Profit Before Income Tax Deductions (RMB thousand) | Item | 2024 | 2023 | | :------------------------- | :----- | :----- | | Cost of inventories | 1,157,369 | 1,007,987 | | Depreciation of right-of-use assets | 2,496 | 1,950 | | Depreciation of property, plant and equipment charged to profit or loss | 4,761 | 4,009 | | Employee costs | 41,787 | 25,680 | - Cost of inventories increased from RMB 1,007,987 thousand in 2023 to RMB 1,157,369 thousand in 2024[39] - Employee costs increased from RMB 25,680 thousand in 2023 to RMB 41,787 thousand in 2024[39] 10 Income Tax Expense For the six months ended June 30, 2024, income tax expense was RMB 21,230 thousand, a 53% increase from RMB 13,884 thousand in the prior period, primarily due to increased PRC corporate income tax and deferred tax expense Income Tax Expense (RMB thousand) | Item | 2024 | 2023 | | :------------------------- | :----- | :----- | | Current tax – PRC corporate income tax | 18,844 | 14,100 | | Deferred tax | 2,386 | (216) | | Income tax expense | 21,230 | 13,884 | - PRC subsidiaries are subject to corporate income tax at a rate of 25%, with some qualifying for preferential tax rates as small low-profit enterprises[41][43] - Hainan Runce and Shenzhen Runce enjoy a preferential tax rate of 15% under free trade port and Qianhai policies[43] 11 Earnings Per Share For the six months ended June 30, 2024, basic and diluted earnings per share were RMB 6.08 cents, a 19.7% increase from RMB 5.08 cents in the prior period, mainly due to increased profit attributable to owners of the Company Earnings Per Share Calculation | Indicator | 2024 | 2023 | | :--------------------------------- | :----- | :----- | | Profit attributable to owners of the Company (RMB thousand) | 117,032 | 82,352 | | Weighted average number of ordinary shares in issue (thousand shares) | 1,924,198 | 1,620,000 | | Basic and diluted earnings per share (RMB cents) | 6.08 | 5.08 | - Diluted earnings per share are equal to basic earnings per share as there were no potential dilutive ordinary shares outstanding during the period[45] 12 Dividends The directors do not recommend the payment of an interim dividend for the six months ended June 30, 2024 - The directors do not recommend the payment of an interim dividend for the six months ended June 30, 2024 (2023: nil)[46] 13 Property, Plant and Equipment For the six months ended June 30, 2024, the Group's capital expenditure on property, plant and equipment was approximately RMB 23,215 thousand, a significant increase from the prior period Capital Expenditure on Property, Plant and Equipment (RMB thousand) | Item | 2024 | 2023 | | :--------- | :----- | :----- | | Capital expenditure | 23,215 | 4,388 | | Loss on write-off | 0 | 86 | - For the six months ended June 30, 2024 and 2023, there were no disposals of property, plant and equipment[47] 14 Trade and Bills Receivables As of June 30, 2024, net trade and bills receivables significantly increased to RMB 621,745 thousand, a 160% rise from the end of 2023, primarily due to an increase in trade receivables Net Trade and Bills Receivables (RMB thousand) | Item | June 30, 2024 | December 31, 2023 | | :------------------------- | :------------ | :------------- | | Net trade receivables | 575,772 | 188,303 | | Net bills receivables | 45,973 | 50,222 | | Total net trade and bills receivables | 621,745 | 238,525 | Ageing Analysis of Trade and Bills Receivables (RMB thousand) | Ageing | June 30, 2024 | December 31, 2023 | | :--------- | :------------ | :------------- | | Up to 3 months | 600,019 | 229,887 | | 3 to 6 months | 21,726 | 8,638 | | Total | 621,745 | 238,525 | - The carrying amounts of trade and bills receivables approximate their fair values, with approximately RMB 605,215 thousand denominated in RMB and RMB 16,530 thousand in USD[51] 15 Other Receivables and Prepayments As of June 30, 2024, net other receivables and prepayments increased to RMB 118,851 thousand, an 83% rise from the end of 2023, mainly due to a significant increase in prepayments to suppliers and other recoverable taxes Net Other Receivables and Prepayments (RMB thousand) | Item | June 30, 2024 | December 31, 2023 | | :------------------------- | :------------ | :------------- | | Net other receivables | 2,339 | 2,669 | | Deposits paid to suppliers – third parties | 11,050 | 9,890 | | Prepayments to suppliers – third parties | 72,067 | 49,805 | | Other recoverable taxes | 33,395 | 2,577 | | Total net other receivables and prepayments | 118,851 | 64,941 | - Other recoverable taxes significantly increased from RMB 2,577 thousand at the end of 2023 to RMB 33,395 thousand as of June 30, 2024[52] 16 Trade Payables As of June 30, 2024, total trade payables increased to RMB 961,740 thousand, a 50.8% rise from the end of 2023, primarily concentrated within the 3-month ageing period Ageing Analysis of Trade Payables (RMB thousand) | Ageing | June 30, 2024 | December 31, 2023 | | :--------- | :------------ | :------------- | | Up to 3 months | 770,094 | 586,651 | | 3 to 6 months | 181,339 | 49,662 | | 6 to 12 months | 5,527 | 823 | | Over 12 months | 4,780 | 715 | | Total | 961,740 | 637,851 | - Trade payables are short-term in nature, their carrying amounts approximate their fair values, and the balances are denominated in RMB[53] 17 Other Payables and Accruals As of June 30, 2024, total other payables and accruals were RMB 68,798 thousand, a 16.6% increase from the end of 2023, mainly due to an increase in other payables Other Payables and Accruals (RMB thousand) | Item | June 30, 2024 | December 31, 2023 | | :--------------------- | :------------ | :------------- | | Other payables | 43,147 | 27,424 | | Accrued salaries and welfare | 19,528 | 19,738 | | Accrued taxes (excluding income tax) | 6,123 | 11,865 | | Total | 68,798 | 59,027 | - Other payables primarily include deposits received from customers, equipment purchase costs payable, service fees payable, and third-party advances[54] 18 Share Capital and Share Premium As of June 30, 2024, the Company's issued shares increased to 1,943,988 thousand shares, with share capital and share premium increasing due to shares issued upon subsidiary acquisition Changes in Share Capital and Share Premium (RMB thousand) | Item | Number of Shares (thousand shares) | Share Capital | Share Premium | Total | | :--------------------------------- | :--------------- | :----- | :------- | :----- | | As of January 1, 2023 | 1,620,000 | 137,361 | 668,768 | 806,129 | | Shares issued upon acquisition of a subsidiary | 167,388 | 15,572 | 35,036 | 50,608 | | As of December 31, 2023 and January 1, 2024 | 1,787,388 | 152,933 | 703,804 | 856,737 | | Shares issued upon acquisition of a subsidiary (Note 19) | 156,600 | 14,303 | 28,606 | 42,909 | | As of June 30, 2024 | 1,943,988 | 167,236 | 732,410 | 899,646 | - The authorized share capital is 5,000,000,000 shares of HKD 0.1 each[56][57] 19 Acquisition of CC Bong Logistics Limited The Group completed the acquisition of 100% equity in CC Bong Logistics Limited in January 2024 for a consideration of RMB 77,558 thousand, primarily paid through share issuance and bills payable, resulting in a bargain purchase gain of RMB 20,071 thousand aimed at strengthening coal supply chain management services - The Group entered into an agreement on December 29, 2023, to acquire 100% equity in CC Bong Logistics Limited for RMB 77,558 thousand, completed on January 24, 2024[59] Fair Value of Assets and Liabilities Acquired in CC Bong Logistics Limited Acquisition (RMB thousand) | Item | Amount | | :--------------------- | :----- | | Net identifiable assets acquired | 97,629 | | Bargain purchase gain on acquisition of a subsidiary | (20,071) | | Consideration | 77,558 | | Consideration paid by | | | – Issue of shares | 42,909 | | – Issue of bills payable | 34,649 | | Total | 77,558 | - The acquisition resulted in a bargain purchase gain of approximately RMB 20,071 thousand, mainly due to a decrease in the fair value of consideration shares[59][61] - CC Bong Logistics Limited and its subsidiaries are engaged in coal supply chain management services, and this acquisition helps strengthen the Group's existing coal trading business and supply chain management service capabilities[59] 20 Related Party Transactions The Group's related parties include Tianyuan International Limited, holding 26.8% of the Company's shares, and its legal beneficial owner Mr. Cui Yazhou, with key management personnel compensation significantly increasing in the first half of 2024 (a) Related Parties Tianyuan International Limited, holding 26.8% of the Company's shares, and its legal beneficial owner Mr. Cui Yazhou, are considered related parties of the Group Related Party Information | Related Party Name | Relationship with the Group | | :--------------- | :------------- | | Tianyuan International Limited | Shareholder of the Company holding 26.8% equity in the Company | | Mr. Cui Yazhou | Legal beneficial owner of Tianyuan International Limited | (b) Key Management Personnel Compensation For the six months ended June 30, 2024, total key management personnel compensation was RMB 3,476 thousand, a significant increase from RMB 1,520 thousand in the prior period Key Management Personnel Compensation (RMB thousand) | Item | 2024 | 2023 | | :----------------- | :----- | :----- | | Basic salaries, allowances and other benefits | 3,387 | 1,505 | | Contributions to retirement benefit schemes | 89 | 15 | | Total | 3,476 | 1,520 | 21 Capital Commitments As of June 30, 2024, the Group's contracted but unprovided capital expenditures in the consolidated financial statements amounted to RMB 3,814 thousand, primarily for the acquisition of property and equipment Capital Commitments (RMB thousand) | Item | June 30, 2024 | December 31, 2023 | | :----------------- | :------------ | :------------- | | Acquisition of property and equipment | 3,814 | 4,173 | | Construction of new production plant | – | 136 | | Total | 3,814 | 4,309 | 22 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[65] 23 Events After the Reporting Period After the reporting date, the Group entered into an agreement to dispose of 95% equity in Hami Jin Hua Mineral Resources Development Co., Ltd. and acquired the entire issued share capital of Mouton Investment Limited to further adjust its business portfolio (a) Disposal of Hami Jin Hua Mineral Resources Development Co., Ltd. On July 19, 2024, the Group entered into an agreement to dispose of 95% equity in Hami Jin Hua Mineral Resources Development Co., Ltd., which holds a non-ferrous metal mining right, for RMB 94,000 thousand - On July 19, 2024, the Group entered into a sale and purchase agreement to dispose of 95% equity in Hami Jin Hua Mineral Resources Development Co., Ltd. for a consideration of RMB 94,000,000[66] - Hami Jin Hua holds a non-ferrous metal mining right and is engaged in the mining, processing, and sale of lead and zinc products in China[66] (b) Acquisition of Mouton Investment Limited On June 25, 2024, the Group entered into an agreement to acquire the entire issued share capital of Mouton Investment Limited for HKD 40,333,333, a company engaged in supply chain management services and general cargo warehousing services - On June 25, 2024, the Group entered into an agreement to acquire the entire issued share capital of Mouton Investment Limited for a consideration of HKD 40,333,333[66] - The consideration will be settled by the allotment and issue of 73,333,333 consideration shares[66] - Mouton and its subsidiaries are engaged in supply chain management services and general cargo warehousing services[66] Management Discussion and Analysis Business Review The Group is transitioning from lead-zinc mining to strategically focusing on its coal supply chain business, actively expanding into international markets and green energy projects, and enhancing competitiveness through warehouse acquisitions and diversified services despite domestic coal market challenges Coal Business China's coal industry remains dominant in the energy mix, with slowing domestic production but surging imports; the Group's coal supply chain business serves local traders, steel mills, and energy companies, expanding warehousing and blending capabilities through acquisitions of CC Bong Logistics and Mouton Investment Limited, while also developing international supply chain trade and photovoltaic projects - China's coal consumption accounts for 55.3% of national energy consumption, significantly higher than the global average[68] - In the first half of 2024, raw coal output from industrial enterprises above designated size decreased by 1.7% year-on-year, but coal and lignite imports significantly increased by 12.5% year-on-year to 250 million tonnes[68] - The Group engages in coal trading and washing through Changzhi Runce, Hainan Runce, and Shanxi Fanpo, and provides coal supply chain management, warehousing, and blending services through Shenzhen Runce, Shanxi Magao, and the newly acquired Changzhi Desheng[71] - The acquisition of CC Bong Logistics Limited was completed, which indirectly owns two coal sheds with a total storage capacity of 1 million tonnes, strategically located in a logistics park in Shanxi Province[71] - The acquisition of Mouton Investment Limited was completed, which owns two coal sheds with a total storage capacity of 120,000 tonnes, conveniently located near the Group's existing coal washing plant[73] - The Company strategically expanded into international supply chain trade business, contributing approximately RMB 82.6 million in revenue during the period[74] - The Company has initiated photovoltaic projects aimed at promoting decarbonization and achieving integrated development of coal-based energy with multiple green energy sources[76] - During the period, the coal business segment contributed approximately RMB 1.36 billion in revenue to the Group (2023: RMB 1.33 billion)[76] Mining Business The Group's mining business primarily involves lead-zinc mines in Xinjiang, China, where zinc and lead prices fluctuated due to global economic slowdown; to maximize economic value, the Group decided to dispose of Hami Jin Hua and monetize the Baiganhu project, marking the termination of its mining operations - The Group's diversified non-ferrous mineral resources include various non-ferrous minerals such as nickel, copper, zinc, and lead in the Xinjiang Uygur Autonomous Region, China[77] - The commodity market performance remained relatively weak during the period, mainly due to the ongoing global economic slowdown[77] - Zinc prices during the period fell from approximately USD 2,640/tonne to approximately USD 2,300/tonne, then rebounded to approximately USD 3,100/tonne, finally closing at USD 2,920/tonne[77] - Lead prices during the period fluctuated from approximately USD 2,030/tonne to approximately USD 1,950/tonne, then peaked at approximately USD 2,300/tonne, finally closing at approximately USD 2,150/tonne[77] - The Group monetized the Baiganhu project through the disposal of Hami Jin Hua for a consideration of RMB 94,000,000, which will enhance capital returns and shareholder value[78] - During the period, Hami Jin Hua did not conduct any mining and beneficiation operations[78] Results Review The Group's revenue grew by 1.9% to RMB 1.36 billion, and gross profit surged by 36.2% to RMB 129.6 million, primarily driven by growth in coal supply chain services and strategic investments in warehousing facilities, while administrative expenses, finance costs, and income tax expense all increased Revenue and Gross Profit Revenue for the period increased by 1.9% to RMB 1.36 billion, with cost of sales decreasing by 0.7%, leading to a 36.2% surge in gross profit to RMB 129.6 million, primarily attributable to increased supply chain service revenue and high-margin warehousing services - The Group's revenue increased by approximately 1.9% from approximately RMB 1.33 billion in the prior period to approximately RMB 1.36 billion in the current period[81] - Cost of sales for the current period was approximately RMB 1.23 billion, a year-on-year decrease of approximately 0.7%[81] - Gross profit surged by approximately 36.2% from approximately RMB 95.2 million in the prior period to approximately RMB 129.6 million in the current period[81] - The significant growth in gross profit was mainly due to increased revenue from the Group's supply chain services business and the provision of high-margin warehousing services to external customers[81] - The Group completed the acquisitions of CC Bong Logistics and Mouton HK to expand its warehousing and coal blending service capabilities for the coal supply chain business[81][82] Administrative Expenses Administrative expenses for the period were approximately RMB 19.3 million, an increase from RMB 17.2 million in the prior period, mainly due to increased staff costs from business expansion Administrative Expenses (RMB million) | Indicator | 2024 | 2023 | | :------- | :----- | :----- | | Administrative expenses | 19.3 | 17.2 | - The increase in administrative expenses was mainly due to increased staff costs resulting from the expansion of business activities during the period[83] Other Income – Net Net other income for the period was approximately RMB 9.5 million, a decrease from RMB 15.4 million in the prior period, primarily due to lower net unrealized exchange gains and penalty income from customers Other Income – Net (RMB million) | Item | 2024 | 2023 | | :--------------- | :----- | :----- | | Other income – Net | 9.5 | 15.4 | | Net exchange gains | 4.1 | 6.8 | | Government grants | 4.7 | 5.3 | | Penalty income from customers | 0.1 | 2.1 | - Unrealized exchange gains primarily arose from financial assets denominated in USD and HKD, due to the appreciation of USD and HKD against RMB[85] Other Operating (Losses) / Gains The period recorded other operating losses of approximately RMB 0.1 million, mainly due to expected credit losses on trade and bills receivables, partially offset by a reversal of expected credit losses on other receivables - Other operating losses for the period were approximately RMB 0.1 million[86] - Expected credit losses on trade and bills receivables were approximately RMB 0.6 million, offset by a reversal of expected credit losses on other receivables of approximately RMB 0.5 million recorded during the period[86] Finance (Costs) / Income – Net Net finance costs for the period were approximately RMB 1.9 million, compared to net finance income of RMB 2.4 million in the prior period, mainly due to increased interest expenses on lease liabilities and interest-bearing borrowings Finance (Costs) / Income – Net (RMB million) | Indicator | 2024 | 2023 | | :--------------------- | :----- | :----- | | Finance (costs) / income – Net | (1.9) | 2.4 | - This primarily includes interest expenses of approximately RMB 3.1 million on lease liabilities and interest-bearing borrowings, net of interest income of approximately RMB 1.1 million earned from the Group's bank cash[87] Income Tax Expense Income tax expense for the period was approximately RMB 21.2 million, an increase from RMB 13.9 million in the prior period, mainly due to tax provisions for PRC operations and deferred tax expense Income Tax Expense (RMB million) | Indicator | 2024 | 2023 | | :--------- | :----- | :----- | | Income tax expense | 21.2 | 13.9 | - The increase was mainly due to deferred tax expense of approximately RMB 2.4 million during the period, compared to a deferred tax credit of approximately RMB 0.2 million in the prior period[88] Holdings of Significant Investments As of June 30, 2024, the Group's investments in debt securities were approximately RMB 9.4 million, which did not reach or exceed 5% of the Group's total assets Debt Securities Investments (RMB million) | Indicator | June 30, 2024 | December 31, 2023 | | :--------- | :------------ | :------------- | | Debt securities investments | 9.4 | 8.9 | - The Group's holdings of debt securities, individually and in aggregate, did not reach or exceed 5% of the Group's total assets[89] Material Acquisitions and Disposals During and after the reporting period, the Group completed the acquisitions of CC Bong Logistics Limited and Mouton Investment Limited to expand its coal supply chain business's warehousing and blending service capabilities, while also entering into an agreement to dispose of Hami Jin Hua Mineral Resources Development Co., Ltd. to terminate mining operations and reallocate resources (i) Acquisition of CC Bong Logistics Limited The Group completed the acquisition of CC Bong Logistics Limited in January 2024 for a consideration of HKD 100,000,000 (approximately RMB 77.6 million), primarily paid through share issuance and bills payable, aiming to leverage its two coal sheds with a total storage capacity of 1 million tonnes to enhance coal supply chain services - The Group entered into an agreement on December 29, 2023, to acquire the entire issued share capital of CC Bong Logistics Limited for HKD 100,000,000, completed in January 2024[90][92] - The consideration was paid by issuing 156,600,000 new shares (HKD 62,640,000) and issuing an unsecured bill payable with a principal amount of HKD 37,360,000[90] - The core assets of the CC Bong Logistics Group are two coal sheds with a total storage capacity of 1 million tonnes and related machinery, strategically located in a logistics park in Shanxi Province, China[92] (ii) Acquisition of Mouton Investments Limited The Group entered into an agreement on June 25, 2024, to acquire the entire issued share capital of Mouton Investment Limited for HKD 35,200,000 (final consideration approximately HKD 40.3 million), completed on July 24, 2024; the Mouton Group owns two coal sheds with a total storage capacity of 120,000 tonnes, aiming to enhance the Group's warehousing and blending service capabilities in Shanxi Province - The Group entered into an agreement on June 25, 2024, to acquire the entire issued share capital of Mouton Investment Limited for HKD 35,200,000, completed on July 24, 2024[93][94] - The consideration was paid by allotting and issuing 73,333,333 shares of the Company[93] - The core assets of the Mouton Group are two coal sheds with a total storage capacity of 120,000 tonnes and related machinery, located in Shanxi Province, China, near the Group's existing coal washing plant, with convenient transportation[94] - Both acquisitions align with the Group's development strategy to strengthen its existing coal trading business and coal supply chain management service capabilities[94] (iii) Disposal of Hami Jin Hua Mineral Resources Development Co., Ltd. On July 19, 2024, the Group entered into an agreement to dispose of 95% equity in Hami Jin Hua Mineral Resources Development Co., Ltd. for RMB 94,000,000, aiming to monetize valuable resources and reallocate them to strategic business units - On July 19, 2024, Huili Investment, a wholly-owned subsidiary of the Company, entered into a sale and purchase agreement with Changzhi Rongtong to dispose of 95% equity in Hami Jin Hua for a consideration of RMB 94,000,000[96] - Hami Jin Hua owns a non-ferrous metal mining permit in Xinjiang, China, namely the Baiganhu mine for producing lead and zinc ore, and a lead-zinc beneficiation plant[96] - The disposal will enable the Group to monetize its valuable resources and reallocate its constrained resources to its strategic business units[96] Capital Expenditures During the period, the Group incurred capital expenditures of approximately RMB 23.2 million for property, plant and equipment and approximately RMB 4.5 million for right-of-use assets, both showing significant changes from the prior period Capital Expenditures (RMB million) | Item | 2024 | 2023 | | :------------- | :----- | :----- | | Property, plant and equipment | 23.2 | 4.4 | | Right-of-use assets | 4.5 | 11.9 | - During the current and prior periods, there were no disposals of property, plant and equipment and right-of-use assets[97] Liquidity and Financial Resources As of June 30, 2024, equity attributable to owners of the Company increased by 20.3% to RMB 948.1 million, and total assets grew by 46.3% to RMB 2.31 billion, indicating a robust financial position with a net cash position of RMB 147.3 million and a gearing ratio of 0% - As of June 30, 2024, equity attributable to owners of the Company increased to approximately RMB 948.1 million, an increase of approximately 20.3% from approximately RMB 788.0 million as of December 31, 2023[98] - As of June 30, 2024, the Group's total assets increased to approximately RMB 2.31 billion, from approximately RMB 1.58 billion as of December 31, 2023[98] - The Group invests surplus cash in low-risk fixed deposits and high-quality debt securities to generate additional returns[98] - As of June 30, 2024, the Group held debt securities of approximately RMB 9.4 million (December 31, 2023: RMB 8.9 million)[98] - During the period, the Group funded its daily operations through internally generated cash flows[98] - As of June 30, 2024, the Group had unsecured bills payable with a principal amount of HKD 37,360,000, due on January 23, 2029, at an annual interest rate of 5%[100] - The Group obtained a loan from a former shareholder of a subsidiary of CC Bong Logistics, for a term of eight years, interest-free for the first year, and an annual interest rate of 4.2% thereafter[100] - As of June 30, 2024, the Group's bank and cash balances were approximately RMB 274.8 million (December 31, 2023: RMB 508.6 million)[100] Treasury Policy The Group maintains a conservative treasury policy to ensure ample liquidity, and to manage foreign currency risks from international supply chain trade, a dedicated task force monitors exchange rate fluctuations and implements foreign currency forward contract hedging strategies - The Group primarily conducts its ongoing business transactions in RMB and HKD, with surplus cash mostly invested in fixed deposits and high-quality debt securities denominated mainly in USD[101] - The Company has established a dedicated task force composed of industry experts to monitor foreign exchange fluctuations, assess risks, and formulate appropriate hedging strategies, utilizing leveraged foreign currency forward contracts to hedge foreign exchange risk[101] - As of June 30, 2024, the Group's outstanding foreign currency forward contracts were valued at approximately RMB 368,000[101] Gearing Ratio As of June 30, 2024, the Company's net cash position was RMB 147.3 million, with a gearing ratio of 0%, demonstrating a robust financial position - The Company signed a credit facility with Nanyang Commercial Bank in November 2023, allowing for borrowings of up to USD 90 million, with approximately RMB 33.0 million in letters of credit utilized[102] - As of June 30, 2024, the Company's net cash position was RMB 147.3 million[102] - As of June 30, 2024, the gearing ratio was 0% (December 31, 2023: 0%)[102] Key Risks The Group's business involves foreign exchange and credit risks; hedging strategies are employed to manage foreign exchange fluctuations from international operations, while credit risk, primarily from coal business trade receivables, is managed through strict controls and regular evaluations Foreign Exchange Risk The Group's business is primarily conducted in RMB, but international supply chain trade involves USD transactions, posing potential foreign currency risks; the company has established a task force to monitor exchange rate fluctuations and use foreign currency forward contracts for hedging - The Group's business is primarily conducted in RMB, but international supply chain trade business mainly involves USD transactions, posing potential foreign currency risks[104] - The Company has established a dedicated task force responsible for monitoring foreign exchange fluctuations, assessing risks, and formulating appropriate hedging strategies, utilizing foreign currency forward contracts to hedge currency fluctuations[104] Credit Risk The Group faces credit risk in its coal business, mainly from trade and bills receivables; this risk is managed through strict controls, regular review of overdue balances, and provisions for expected credit losses - The Group faces credit risk in its coal business, primarily arising from trade and bills receivables in this business segment[106] - The Group is committed to strictly controlling its outstanding receivables, and management regularly reviews overdue balances[106] - As of June 30, 2024, a loss allowance of approximately RMB 6.2 million was made for the total trade and bills receivables[106] Pledge of the Company's Assets, Commitments and Contingent Liabilities As of June 30, 2024, the Group had no other significant contracted capital expenditures, commitments, or contingent liabilities, but approximately RMB 33.0 million in cash and cash equivalents were pledged to banks for letters of credit - As of June 30, 2024, approximately RMB 33.0 million (December 31, 2023: RMB 34.0 million) of cash and cash equivalents were pledged to banks for their letters of credit of approximately RMB 33.0 million (December 31, 2023: RMB 34.0 million)[107] - Save for those disclosed in Notes 21 and 22 to the interim condensed consolidated financial statements, as of June 30, 2024 and December 31, 2023, the Group had no other contracted capital expenditures, commitments, and significant contingent liabilities[107] Dividends The directors do not recommend the payment of any interim dividend for the current period - The directors do not recommend the payment of any interim dividend for the current period (prior period: nil)[108] Human Resources and Share Option Scheme As of June 30, 2024, the Group employed 895 employees, with total staff costs of approximately RMB 41.8 million, and no share options were granted, exercised, lapsed, or outstanding during the period Human Resources Overview | Indicator | June 30, 2024 | December 31, 2023 | | :--------- | :------------ | :------------- | | Number of employees | 895 | 820 | | Total staff costs (RMB million) | 41.8 | 25.7 | - Employee remuneration is primarily determined by their job nature, performance, and years of service with the Group, and includes discretionary bonuses, pensions, medical plans, and other social insurance[109] - As of June 30, 2024, and during the period, no share options were granted, exercised, lapsed, or outstanding[109] Future Outlook and Prospects Despite domestic coal market challenges, the Group remains committed to strategic adjustments and operational efficiency, achieving 1.9% revenue growth and 19.7% EPS growth; the Group has terminated its mining business to fully focus on coal supply chain operations, expanding warehousing capacity through acquisitions, and developing international markets and photovoltaic projects for sustainable growth and value creation - Total revenue for the period was RMB 1.36 billion, an increase of 1.9% from the prior period[110] - Earnings per share were RMB 6.08 cents per share, a year-on-year increase of 19.7% from the prior period[112] - The Group has monetized the Baiganhu project through the disposal of Hami Jin Hua, marking the end of its mining business and a full transition to the coal supply chain business[112] - Through the acquisitions of CC Bong Logistics and Mouton HK, the Group has expanded its coal supply chain management capabilities, which are expected to generate synergies and long-term growth opportunities[112] - The Group's expansion into international markets has significantly contributed approximately RMB 82.6 million in revenue[113] - To align with environmental goals and promote sustainable practices, the Group has commenced the development and construction of photovoltaic projects[113] - Looking ahead to the second half of 2024, the Chinese coal industry is expected to maintain profitability supported by peak demand and market stability[113] - The Board maintains a cautiously optimistic outlook for the core coal supply chain business, committed to exploring high-quality projects and opportunities to diversify business segments and locations[115] Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or any Associated Corporation As of June 30, 2024, directors and chief executives held interests in the Company's shares, with Mr. Cui Yazhou holding 26.80% through Tianyuan International Limited and Mr. Ye Xin holding 7.09% through Fulian Holdings Limited Directors' Interests in Shares | Name / Company Name | Nature of Interest | Total Interest in Shares | Approximate Percentage of the Company's Issued Share Capital | | :-------------------- | :----------- | :------------- | :--------------------------- | | Tianyuan International Limited | Beneficial owner | 521,000,000 (L) | 26.80% | | Mr. Cui Yazhou | Controlled corporation interest | 521,000,000 (L) | 26.80% | | Fulian Holdings Limited | Beneficial owner | 137,792,017 (L) | 7.09% | | Mr. Ye Xin | Controlled corporation interest | 137,792,017 (L) | 7.09% | - Mr. Cui Yazhou is the legal and beneficial owner of the entire issued share capital of Tianyuan International Limited[117] - Mr. Ye Xin is the legal and beneficial owner of the entire issued share capital of Fulian Holdings Limited[117] Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares As of June 30, 2024, excluding directors, Mr. Feng Yuantao was the largest shareholder, holding 15.77% equity, with other major shareholders including China Clean Energy Technology Co., Ltd., Mr. Bong Chin Chung, and Baicheng International Group Limited Substantial Shareholders' and Other Persons' Interests in Shares | Name / Company Name | Nature of Interest | Total Interest in Shares | Approximate Percentage of the Company's Issued Share Capital | | :--------------