南方锰业(01091) - 2024 - 中期财报

Financial Performance This section provides an overview of the company's financial results, including income, balance sheet, and cash flow statements, along with detailed notes Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2024, the company turned from profit to loss, with total revenue decreasing by 25.9% to 5.73 billion HKD and gross profit significantly declining by 56.9% to 282 million HKD Key Financial Performance for H1 2024 (Thousand HKD) | Indicator | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 5,733,287 | 7,732,538 | -25.9% | | Gross Profit | 282,068 | 654,960 | -56.9% | | (Loss)/Profit Before Tax | (135,675) | 177,373 | Turned from profit to loss | | (Loss)/Profit for the Period | (177,534) | 133,552 | Turned from profit to loss | | (Loss)/Profit Attributable to Owners of the Company | (162,783) | 134,903 | Turned from profit to loss | | Basic (Loss)/Earnings Per Share (HKD) | (0.0475) | 0.0393 | Turned from profit to loss | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2024, the company's total assets were 11.33 billion HKD, total liabilities were 8.69 billion HKD, and net assets were 2.63 billion HKD, a decrease from 2.83 billion HKD at the end of 2023, indicating liquidity pressure due to net current liabilities Financial Position Summary (Thousand HKD) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Non-current Assets | 5,006,501 | 5,025,589 | | Total Current Assets | 6,319,002 | 6,340,431 | | Total Current Liabilities | 7,164,223 | 7,231,694 | | Net Current Liabilities | (845,221) | (891,263) | | Total Non-current Liabilities | 1,529,064 | 1,305,964 | | Net Assets | 2,632,216 | 2,828,362 | - The company's current liabilities exceeded its current assets by 845 million HKD at the end of the reporting period, but the directors believe the Group has sufficient working capital for the next twelve months, thus the financial statements are prepared on a going concern basis[10] Interim Condensed Consolidated Statement of Cash Flows In the first half of 2024, the company generated 911 million HKD in net cash from operating activities, a significant year-on-year increase, while net cash used in investing activities also increased substantially to 575 million HKD, with cash and cash equivalents at period-end rising to 1.061 billion HKD Cash Flow Summary (Thousand HKD) | Indicator | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 911,171 | 517,739 | | Net Cash Used in Investing Activities | (575,312) | (271,448) | | Net Cash Used in Financing Activities | (247,736) | (414,574) | | Cash and Cash Equivalents at End of Period | 1,061,232 | 950,014 | Notes to the Interim Condensed Consolidated Financial Statements The notes to the financial statements provide detailed disclosures on accounting policies, segment operations, asset and liability breakdowns, and related party transactions, highlighting that declining revenue from electrolytic manganese metal and trading businesses was a primary driver of overall revenue decrease, while the battery materials business contributed the main profit, and a significant impairment provision for an associate was a key factor in the current period's loss - The Group's principal businesses are divided into four reportable operating segments: manganese ore mining, electrolytic manganese metal and alloy materials production, battery materials production, and other businesses (primarily trading)[13] - Due to the Group undertaking guarantee liabilities for associate Dushan Jinmeng and repaying related bank loans, an expected credit loss provision of 108 million HKD was recognized for the secured amounts receivable from Dushan Jinmeng[33] - In the first half of 2024, the Group undertook guarantee liabilities for an associate, repaying a total of approximately 322 million HKD in loan principal and interest to banks, with the guarantee settled by period-end[59] Management Discussion and Analysis This section analyzes the company's financial performance and business operations, discussing key drivers of results, segment-specific performance, liquidity, and future outlook Financial Review and Business Overview In the first half of 2024, the company's performance faced challenges due to global economic uncertainties and weak demand in the domestic steel industry, resulting in a 25.9% revenue decrease and a decline in gross profit margin from 8.5% to 4.9%, primarily driven by falling electrolytic manganese metal prices, gross loss in trading business, and a significant 109 million HKD impairment loss related to an associate guarantee settlement Financial Summary for H1 2024 (Million HKD) | Indicator | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | 5,733.3 | 7,732.5 | -25.9% | | Gross Profit | 282.1 | 655.0 | -56.9% | | Gross Profit Margin | 4.9% | 8.5% | -3.6pp | | (Loss)/Profit Attributable to Owners of the Company | (162.8) | 134.9 | Turned from profit to loss | - Core reasons for the performance decline include: electrolytic manganese metal product average selling price decrease of 15.8%; gross loss recorded in the trading business; and an impairment loss of 108.7 million HKD recognized on receivables from associate Dushan Jinmeng[74][75] Segment Performance Analysis Business segment performance diverged, with manganese ore mining revenue increasing due to higher sales volume but gross profit declining, while electrolytic manganese metal and alloy materials saw significant drops in both revenue and gross profit, recording an operating loss, and the battery materials segment, despite a revenue decrease, remained the primary profit contributor, demonstrating strong resilience, as other businesses (trading) experienced a sharp revenue decline and turned to gross loss - Manganese Ore Mining: Revenue increased by 12.4% to 654 million HKD, primarily due to higher sales volume of Gabon ore, but gross profit decreased by 13.4%[79] - Electrolytic Manganese Metal and Alloy Materials: Revenue decreased by 28.2% to 1.161 billion HKD, mainly due to a 15.8% drop in average selling price of electrolytic manganese metal products and a 75.0% sharp decline in alloy product sales volume, with this segment recording a loss of 50.7 million HKD[82][83] - Battery Materials Production: Revenue decreased by 13.9% to 798 million HKD, but segment profit increased by 12.2% to 194 million HKD, making it the Group's most significant profit contributor[84][85] - Other Businesses (Trading): Revenue decreased by 32.3% to 3.12 billion HKD and recorded a gross loss of 211 million HKD, primarily due to a decrease in manganese ore selling prices[86][87] Liquidity and Financial Resources As of June 30, 2024, the Group's total borrowings slightly increased to 5.21 billion HKD, with the net gearing ratio remaining stable at 121.2%, and while facing liquidity pressure from 845 million HKD in net current liabilities, management believes working capital is sufficient for the next 12 months due to successful renewal and new bank loans combined with operating cash flow, also disclosing significant credit risk with a specific customer Key Financial Ratios | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Current Ratio | 0.88 | 0.88 | | Quick Ratio | 0.67 | 0.64 | | Net Gearing Ratio | 121.2% | 121.9% | - The Group had net current liabilities of 845 million HKD, but the Board believes the Group can continue as a going concern, considering 221 million HKD in new loans obtained after the period-end and internal funds[110] - The Group faces significant credit risk with a single customer A, with accounts receivable of 232 million HKD fully overdue and a full bad debt provision made[111] Future Development and Outlook Looking ahead, the Group will cautiously implement investment plans due to economic recovery uncertainties, anticipating continued challenges in the traditional manganese product market, which the industry has addressed through production cuts and technological upgrades, while remaining optimistic about the battery materials production sector (e.g., electrolytic manganese dioxide, lithium manganese oxide), aiming to consolidate its market leadership and capitalize on opportunities from new energy vehicle development - The Group will invest cautiously, focusing on five major business segments: ore, traditional manganese products, new energy materials, alloy materials, supply chain logistics, and solid waste utilization, to enhance internal efficiency[116] - The outlook for the traditional electrolytic manganese metal market remains challenging, with industry participants advocating for production cuts, while the Group is optimistic about the battery materials production sector and will continue R&D to consolidate its leading position[116] Other Disclosure Information This section covers the company's ESG practices, updates on manganese ore resources and reserves, and corporate governance details Environmental, Social and Governance (ESG) Report This report outlines the company's sustainability philosophy and practices, focusing on four key areas: production safety, energy conservation and environmental protection, employee development, and social welfare, with no fatal accidents or work-related injuries reported during the period, and detailed disclosures on key performance indicators such as electricity and water consumption, exhaust gas, and greenhouse gas emissions, emphasizing the integration of ESG management into daily operations and commitment to exceeding regulatory requirements for green and harmonious development - The company categorizes significant ESG management matters into four aspects: production safety and labor protection, energy conservation and environmental protection, establishing an excellent operating system (employee training and growth), and social welfare[118] Key ESG Performance for H1 2024 | Key Area | Key Performance Indicator | H1 2024 | | :--- | :--- | :--- | | Production Safety | Fatalities | 0 | | | Work-related Injuries | 0 | | Energy Conservation & Environmental Protection | Total Electricity Consumption (Thousand kWh) | 769,696 | | | Total Water Consumption (Tons) | 2,865,271 | | | Greenhouse Gas Emissions (Tons) | 19,619 | | Social Welfare | Donation Amount (HKD) | 348,000 | - The company continuously invests in production safety, strictly implementing the "Six Major Systems" construction in Chinese mining areas and maintaining Level 2 safety production standardization for multiple production units[123] Manganese Ore Resources and Reserves Summary The report updates the company's manganese ore resources and reserves data for each mining area as of June 30, 2024, with total mineral resources of approximately 103.08 million tons and total ore reserves of approximately 79.20 million tons, slightly decreased from the end of 2023 due to mining depletion, while exploration activities focused on the Bembélé manganese mine in Gabon, and domestic Chinese mines concentrated on capacity expansion and equipment upgrades Manganese Ore Resources and Reserves Summary (Million Tons) | Category | As of June 30, 2024 | As of December 31, 2023 | | :--- | :--- | :--- | | Total Mineral Resources | 103.08 | 105.72 | | Total Ore Reserves | 79.20 | 81.84 | - Exploration activities are primarily conducted at the Bembélé manganese mine in Gabon to study deep mineralization patterns and provide data for further detailed exploration[151][156] - The Daxi manganese mine's 1 million tons/year underground mining expansion project continues to advance, and the Bembélé manganese mine completed infrastructure projects like the high-level water tank for the beneficiation plant to reduce costs and enhance transportation capacity[156][160] Corporate Governance and Other Information The company complied with most provisions of the Corporate Governance Code during the reporting period, with one deviation: the roles of Chairman and Chief Executive Officer are held by the same individual, Mr. Li Weijian, and the company has adopted securities dealing codes no less stringent than the standard code, with all directors confirming compliance, while the report also discloses major shareholder holdings, including Mr. Sun Mingwen and Guangxi Damang indirectly holding 29.00% and 22.64% of shares respectively, with no purchases, redemptions, or sales of listed securities during the period - The company deviated from Corporate Governance Code Provision C.2.1, where the roles of Chairman and Chief Executive Officer are combined and held by Mr. Li Weijian, an arrangement the Board considers optimal given the company's challenges[177][178] - All directors confirmed compliance with the company's securities dealing code during the reporting period[179] Major Shareholder Holdings (as of June 30, 2024) | Shareholder Name | Number of Shares Held (Long Position) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | | Sun Mingwen (through Youfu Investment) | 994,260,000 | 29.00% | | Guangxi Damang (through Guinan Damang) | 776,250,000 | 22.64% | | Ma Xuedong (through Fengxiang Investment) | 184,740,000 | 5.39% |