中国秦发(00866) - 2022 - 年度业绩

Annual Results Overview In 2022, the company experienced significant declines across key financial and operational metrics, with no final dividend recommended - In 2022, the company's revenue, coal operation and trading volume, commercial coal production, gross profit margin, operating profit, profit after tax, and earnings per share all significantly decreased, and the Board does not recommend a final dividend[21] Key Financial and Operational Indicators for 2022 | Indicator | 2022 | 2021 | Change Rate | | :--- | :--- | :--- | :--- | | Revenue (RMB Billion) | 3.8 | 4.6 | -16.8% | | Coal Operation & Trading Volume (Tonnes) | approx. 4,530,000 | approx. 6,115,000 | -26.0% | | Commercial Coal Production (Tonnes) | approx. 4,520,000 | approx. 6,189,000 | -27.0% | | Gross Profit Margin (%) | 33.6 | 42.6 | -9.0 percentage points | | Operating Profit (RMB Billion) | 1.0 | 4.3 | -76.7% | | Profit After Tax for the Year (RMB Billion) | 0.49 | 3.2 | -84.7% | | Profit Attributable to Owners of the Company (RMB Billion) | 0.4565 | 2.8 | -83.7% | | Basic Earnings Per Share (RMB Fen) | 18.1 | 111.8 | -83.8% | | Diluted Earnings Per Share (RMB Fen) | 17.5 | 107.0 | -83.6% | - The Board does not recommend a final dividend for 2022[21] Consolidated Financial Statements This section presents the consolidated financial statements, including the statement of comprehensive income and statement of financial position Consolidated Statement of Comprehensive Income In 2022, the company's revenue decreased to RMB 3.794 billion, with gross profit, operating profit, and profit attributable to owners of the company all significantly declining Key Data from Consolidated Statement of Comprehensive Income | Indicator | 2022 (RMB Thousand) | 2021 (RMB Thousand) | Change Rate | | :--- | :------------------ | :------------------ | :----- | | Revenue | 3,794,039 | 4,559,180 | -16.8% | | Cost of Sales | (2,520,756) | (2,618,061) | -3.7% | | Gross Profit | 1,273,283 | 1,941,119 | -34.4% | | Operating Profit | 1,020,470 | 4,330,857 | -76.5% | | Profit After Tax | 490,036 | 3,187,910 | -84.6% | | Profit Attributable to Owners of the Company | 456,543 | 2,793,546 | -83.7% | | Basic Earnings Per Share (RMB Fen) | 18.1 | 111.8 | -83.8% | | Diluted Earnings Per Share (RMB Fen) | 17.5 | 107.0 | -83.6% | Consolidated Statement of Financial Position As of 2022 year-end, net current liabilities expanded to RMB 4.156 billion, leading to a significant decrease in net assets Key Data from Consolidated Statement of Financial Position | Indicator | 2022 (RMB Thousand) | 2021 (RMB Thousand) | Change Rate | | :--- | :------------------ | :------------------ | :----- | | Total Non-Current Assets | 5,845,437 | 6,024,659 | -2.97% | | Total Current Assets | 2,005,094 | 1,871,854 | +7.12% | | Total Current Liabilities | (6,160,933) | (4,580,923) | +34.48% | | Net Current Liabilities | (4,155,839) | (2,709,069) | +53.39% | | Net Assets | 813,211 | 316,515 | +156.9% | Notes to the Consolidated Financial Statements This section provides detailed notes and explanations supporting the consolidated financial statements 1. General Information China Qinfa Group Limited is registered in the Cayman Islands, primarily engaged in coal mining, trading, and transportation in China - The company is registered in the Cayman Islands[9] - Principal activities include coal mining, purchase and sale of coal, coal washing, storage, blending, and shipping transportation in China[28] - Functional currency is Hong Kong Dollars; presentation currency is RMB[10] - The ultimate controlling shareholder is Mr Xu Jihua[9] 2. Basis of Preparation of Consolidated Financial Statements The consolidated financial statements are prepared on a going concern basis, despite significant uncertainties including substantial net current liabilities, overdue borrowings, and pending litigations; management has implemented various measures to improve financial conditions and ensure continued operations - As of December 31, 2022, net current liabilities were approximately RMB 4,155,839 thousand, an increase of 53.39% from 2021[11] - Borrowings of approximately RMB 1,330,634 thousand and accrued interest of approximately RMB 219,718 thousand were due and immediately payable[11] - Significant uncertainties exist that may cast substantial doubt on the ability to continue as a going concern[13] - Management has taken measures including actively negotiating loan renewals, securing new financing, accelerating coal production, controlling costs, and addressing pending litigations[14][15][31][33] - Net cash inflow from operating activities was approximately RMB 984,432 thousand in 2022, compared to RMB 1,887,867 thousand in 2021[15] 3. Application of New and Revised International Financial Reporting Standards The Group first applied several revised International Financial Reporting Standards this year, with amendments to IAS 16 "Property, Plant and Equipment – Proceeds before Intended Use" impacting financial statement items, resulting in an increase of RMB 31,923 thousand in property, plant, and equipment - The Group first applied revised International Financial Reporting Standards, including amendments to the Conceptual Framework, Property, Plant and Equipment, and Onerous Contracts[16][54] - Amendments to IAS 16 resulted in an increase of RMB 31,923 thousand in property, plant and equipment and a decrease of RMB 31,923 thousand in accumulated losses[17][37][55] - New and revised IFRSs issued but not yet effective include IFRS 17, and amendments to IAS 1, IAS 8, and IAS 12[19][56] - Amendments to IAS 1 clarify that liability classification as current or non-current should be based on rights existing at the end of the reporting period, irrespective of management's intentions[20][39][57] 4. Segment Reporting The Group primarily operates two reportable segments: coal business and shipping transportation; in 2022, coal business revenue was RMB 3.794 billion, while shipping transportation revenue was zero, reflecting the sale of all vessels - Two operating and reportable segments: coal business (coal mining, purchase and sale, washing, storage, blending) and shipping transportation (vessel time charter and voyage charter)[43][61] Segment Revenue and Profit Before Tax | Indicator | Coal Business 2022 (RMB Thousand) | Coal Business 2021 (RMB Thousand) | Shipping Transportation 2022 (RMB Thousand) | Shipping Transportation 2021 (RMB Thousand) | | :--- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue from External Customers | 3,794,039 | 4,498,980 | – | 60,200 | | Reportable Segment Profit/(Loss) Before Tax | 1,021,808 | 4,323,732 | (990) | 19,875 | - All coal mining investments and assets are almost entirely located in China, with geographical segment information presented only by customer location revenue[48][69] Revenue from Major Customers | Customer | 2022 (RMB Thousand) | 2021 (RMB Thousand) | | :--- | :------------------ | :------------------ | | Customer A | 970,472 | 1,706,523 | | Customer B | 650,161 | 1,097,486 | | Customer C | 752,991 | 360,685 * | | Customer D | 625,983 | 401,229 * | 5. Revenue Total revenue in 2022 was RMB 3.794 billion, entirely from coal sales, as shipping transportation operations have ceased Revenue from Contracts with Customers by Service Type | Service Type | 2022 (RMB Thousand) | 2021 (RMB Thousand) | | :--- | :------------------ | :------------------ | | Coal Sales | 3,794,039 | 4,498,980 | | Rental Income | – | 60,200 | | Total | 3,794,039 | 4,559,180 | - Revenue from commodity sales is recognized when goods are transferred to customers; revenue from time charter services is recognized on a straight-line basis, and revenue from voyage charter services is recognized over time[71] 6. Other Income, Gains and Losses Net other income, gains, and losses in 2022 amounted to RMB 85.53 million, a significant decrease from RMB 377.51 million in 2021, primarily due to a reduction in net gains from loan restructuring Other Income, Gains and Losses | Indicator | 2022 (RMB Thousand) | 2021 (RMB Thousand) | | :--- | :------------------ | :------------------ | | Net Exchange Gain/(Loss) | 20,656 | (7,909) | | Net Gain/(Loss) on Disposal of Property, Plant and Equipment | (210) | 27,121 | | Gain on Major Modification of Loans | 11,321 | 238,673 | | Net Gain on Non-Major Modification of Loans | 31,203 | – | | Government Grants | 17,488 | 115,673 | | Fair Value Gain on Financial Assets at FVTPL | 438 | – | | Others | 4,637 | 3,948 | | Total | 85,533 | 377,506 | - Government grants: RMB 17,488 thousand in 2022 and RMB 115,673 thousand in 2021, used for business development[52] 7. Net Finance Costs Net finance costs in 2022 were RMB 0.254 billion, a 29.7% decrease from RMB 0.361 billion in 2021, mainly attributable to lower interest expenses on borrowings and derecognition of discounted interest Net Finance Costs | Indicator | 2022 (RMB Thousand) | 2021 (RMB Thousand) | | :--- | :------------------ | :------------------ | | Interest Income | (16,197) | (7,038) | | Interest on Borrowings | 123,197 | 154,550 | | Interest Expense on Derecognition of Discounted Interest | 158,454 | 213,249 | | Net Finance Costs | 253,689 | 360,761 | - Finance costs were capitalized at an annual interest rate of 6.69% in 2022[73] 8. Profit Before Tax Profit before tax in 2022 was RMB 0.767 billion, a significant decrease from RMB 3.970 billion in 2021, primarily impacted by increased inventory costs, depreciation and amortization, and reduced reversal of impairment losses Items Deducted from Profit Before Tax | Indicator | 2022 (RMB Thousand) | 2021 (RMB Thousand) | | :--- | :------------------ | :------------------ | | Cost of Inventories | 1,840,799 | 1,534,600 | | Depreciation of Property, Plant and Equipment | 324,711 | 304,340 | | Amortization of Coal Mining Rights | 622,739 | 427,722 | | Staff Welfare Expenses | 540,260 | 450,818 | - Cost of inventories includes staff welfare expenses, depreciation, and amortization of approximately RMB 1,416,740 thousand (2021: RMB 1,096,567 thousand)[75] 9. Income Tax Expense Income tax expense in 2022 was RMB 0.277 billion, a substantial decrease from RMB 0.782 billion in 2021, mainly due to a reduction in China corporate income tax Income Tax Expense | Indicator | 2022 (RMB Thousand) | 2021 (RMB Thousand) | | :--- | :------------------ | :------------------ | | Current Tax Expense | 286,089 | 440,001 | | Deferred Tax | (9,344) | 342,185 | | Income Tax Expense | 276,745 | 782,186 | - China corporate income tax is provided at the statutory rate of 25%[78] - Hong Kong profits tax is provided at the statutory rate of 16.5%[98] - Indonesian corporate income tax is provided at the statutory rate of 22%, but no provision was made in 2022 and 2021 due to no taxable profit[99] 10. Earnings Per Share Basic earnings per share in 2022 were RMB 18.1 fen, and diluted earnings per share were RMB 17.5 fen, both significantly lower than in 2021 Earnings Per Share | Indicator | 2022 (RMB) | 2021 (RMB) | | :--- | :-------------- | :-------------- | | Basic Earnings Per Share | 18.1 fen | 111.8 fen | | Diluted Earnings Per Share | 17.5 fen | 107.0 fen | - Weighted average number of ordinary shares used for basic earnings per share calculation: 2,493,413,985 shares[101] - Adjusted weighted average number of shares used for diluted earnings per share calculation: 2,611,413,985 shares[82] 11. Dividends The Board does not recommend the payment of any dividend for the year ended December 31, 2022 - No final dividend is recommended for 2022[104] 12. Coal Mining Rights The Group holds multiple coal mining rights in China and Indonesia, with some Chinese mining rights expired or nearing expiration, though management expects successful renewal; certain mining rights are pledged for borrowings - Key coal mining rights include Fengxi Coal Mine, Hongyuan Coal Mine, Xingtao Coal Mine, Xinglong Coal Mine, SDE Coal Mine, and Chong Sheng Coal Mine[86][87][106][107][108][135] - The Xinglong Coal Mine mining right expired on November 29, 2019, but management expects to renew it at minimal cost[107][108] - As of December 31, 2022, China coal mining rights with a net carrying value of approximately RMB 2,333,653 thousand were pledged for borrowings[136] 13. Property, Plant and Equipment As of December 31, 2022, the carrying value of mining-related property, plant, and equipment in China was RMB 2.713 billion - Carrying value of mining-related property, plant and equipment in China: RMB 2,712,910 thousand (2021: RMB 2,864,588 thousand)[109] 14. Trade Receivables As of the end of 2022, net trade receivables amounted to RMB 0.179 billion, with RMB 59.32 million overdue for more than two years, for which management believes no impairment provision is necessary Trade Receivables | Indicator | 2022 (RMB Thousand) | 2021 (RMB Thousand) | | :--- | :------------------ | :------------------ | | Trade Receivables | 215,169 | 218,723 | | Less: Provision for Credit Losses | (36,302) | (36,302) | | Net Amount | 178,867 | 182,421 | - Trade receivables overdue for more than two years: RMB 59,317 thousand, from customers with outstanding trade and other payables balances[89][137] - Credit period mainly ranges from 0 to 60 days[112] 15. Trade Payables As of the end of 2022, total trade payables were RMB 0.388 billion, an increase from 2021 Ageing Analysis of Trade Payables | Ageing | 2022 (RMB Thousand) | 2021 (RMB Thousand) | | :--- | :------------------ | :------------------ | | Within 1 year | 187,906 | 126,026 | | Over 1 year but not exceeding 2 years | 79,814 | 96,357 | | Over 2 years | 119,844 | 98,081 | | Total | 387,564 | 320,464 | 16. Borrowings As of the end of 2022, the Group's total borrowings were RMB 3.521 billion, with most classified as current liabilities and some subject to immediate repayment due to covenant breaches or default events; the company has entered into multiple settlement agreements with asset management companies to restructure borrowings Total Borrowings | Indicator | 2022 (RMB Thousand) | 2021 (RMB Thousand) | | :--- | :------------------ | :------------------ | | Bank Loans | 665,666 | 638,000 | | Other Borrowings | 2,855,094 | 3,054,632 | | Total Borrowings | 3,520,760 | 3,692,632 | Borrowing Repayment Schedule | Term | 2022 (RMB Thousand) | 2021 (RMB Thousand) | | :--- | :------------------ | :------------------ | | Within 1 year or on demand | 3,447,453 | 1,475,850 | | Over 1 year but not exceeding 2 years | 1,370 | 2,216,782 | | Over 2 years but not exceeding 5 years | 71,937 | – | | Total | 3,520,760 | 3,692,632 | - Approximately RMB 1,330,634 thousand of bank and other borrowings were due and immediately repayable, of which RMB 739,644 thousand were overdue[116] - Pledged borrowings are secured by coal mining rights and property, plant and equipment with carrying values of RMB 2,333,653 thousand and RMB 255,348 thousand, respectively[117][131] - Loan I, II, III, IV Settlement Agreements: The company reached multiple agreements with asset management companies to restructure and reduce the principal and interest of bank-transferred loans, with some agreements resulting in gain recognition[145][146][147][149][150][152][181] - As of December 31, 2022, total borrowings of approximately RMB 3,446,084 thousand were guaranteed by the company, subsidiaries, related parties, and/or Mr Xu[184] 17. Contingent Liabilities The Group faces several pending litigations, including non-controlling shareholder profit distribution claims, former shareholder claims, contract performance disputes, and overdue accounts payable claims, but management believes there are reasonable grounds for defense or sufficient provisions have been made - Non-controlling shareholder claim: Demands 20% profit distribution from Huameiao Energy subsidiary's coal production from 2013-2020, totaling approximately RMB 705,860 thousand[185] - Former shareholder claim: Demands payment of unsettled consideration of RMB 30,469 thousand and related compensation of RMB 3,000 thousand for business transfer[158] - Yulin Zhongkuang contract performance litigation: Demands reimbursement for economic losses related to the suspended mining infrastructure construction project, with a court order of approximately RMB 10,121 thousand[186] - Shanxi Yunxin contract performance litigation: Demands immediate repayment of overdue accounts payable of approximately RMB 54,124 thousand and penalties of approximately RMB 23,306 thousand[187] - Financial guarantees issued: Maximum liability for outstanding borrowings of approximately RMB 259,000 thousand for associate Tongmei Qinfa[163][189] Management Discussion and Analysis This section provides an overview of the Group's business, operational performance, financial review, and future outlook Business Review In 2022, China Qinfa Group, a leading non-state-owned thermal coal supplier, continued to focus on its integrated coal supply chain and expand overseas operations; international coal prices remained high due to the Russia-Ukraine war, while China increased domestic coal production to reduce import reliance; the company actively advanced construction and equipment procurement for the SDE coal mine in Indonesia - The company is a leading non-state-owned thermal coal supplier in China, operating an integrated coal supply chain and expanding overseas operations[192] - In 2022, international coal prices remained high due to the Russia-Ukraine war, while China's domestic raw coal output increased by 9% year-on-year, and coal imports decreased by 9.2%[166][192] - The Indonesian SDE coal mine is a key development focus, with construction of the main inclined shaft, auxiliary vertical shaft, return air shaft, coal transportation road, and wharf underway[167][193] - SDE signed a procurement contract with Jiangsu Sumec Complete Equipment Engineering Co, Ltd to purchase 10 sets of diesel generators and supporting equipment, totaling approximately RMB 39,000 thousand[168] - Qingdao Qinfa signed a procurement contract with Zhengzhou Coal Mining Machinery Group Co, Ltd to purchase coal shearers, scraper conveyors, and hydraulic supports, totaling approximately RMB 156,000 thousand[169] - As of December 31, 2022, the Group owned 5 coal mines in China and 1 coal mine in Indonesia[170][171] Coal Characteristics The commercial coal produced from the Group's operating coal mines exhibits varying coal quality characteristics, including moisture, ash, sulfur content, and gross calorific value Coal Quality Characteristics | Coal Quality Characteristic | Huameiao Energy – Xingtao Coal | Huameiao Energy – Fengxi Coal | Huameiao Energy – Chong Sheng Coal | Shenda Energy – Xinglong Coal | Shenda Energy – Hongyuan Coal | Sumber Daya Energi – SDE Coal | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Coal Seam | 4, 8, 9, 10, 11 | 4, 9, 11 | 4, 9, 11 | 2, 5 | 2, 5, 6 | B, D | | Moisture (%) | 7–10 | 8–12 | 8–12 | 8.5 | 8.5 | 8–11 | | Ash Content (db, %) | 20–28 | 20–28 | 20–28 | 21.45 | 30–72 | 22–25 | | Sulfur Content (db, %) | 1.4–1.9 | 1.2–1.6 | 1.6–2.5 | 1.52 | 1.45 | 0.18–1.2 | | Gross Calorific Value (Avg, kcal/kg, Net, ar) | 4,650–5,200 | 4,600–5,150 | 4,600–5,150 | 4,838 | 4,187 | 5,300 | - SDE coal mine has the highest gross calorific value and lowest sulfur content, indicating its potential for high-quality coal[197] Reserves and Resources As of December 31, 2022, the Group's total reserves were 334.48 million tonnes and total resources were 718.49 million tonnes, with the SDE coal mine in Indonesia contributing the majority of both Reserves and Resources | Indicator | December 31, 2022 (Million Tonnes) | January 1, 2022 (Million Tonnes) | Total Raw Coal Production During the Year (Million Tonnes) | | :--- | :---------------------- | :-------------------- | :---------------------- | | Total Reserves | 334.48 | 341.45 | (6.97) | | Total Resources | 718.49 | 725.46 | (6.97) | - The Indonesian SDE coal mine has estimated reserves of 293.00 million tonnes and resources of 589.22 million tonnes, making it the Group's largest source of coal reserves and resources[197] Operating Data In 2022, total raw coal production was 6,966 thousand tonnes, and total commercial coal production was 4,522 thousand tonnes, both decreasing from 2021 Raw Coal and Commercial Coal Production | Indicator | 2022 (Thousand Tonnes) | 2021 (Thousand Tonnes) | Change Rate | | :--- | :------------ | :------------ | :----- | | Total Raw Coal Production | 6,966 | 9,522 | -26.8% | | Total Commercial Coal Production | 4,522 | 6,189 | -27.0% | - Xingtao Coal, Fengxi Coal, and Chong Sheng Coal operations historically achieved an average of 65% blended saleable raw coal production[223] Exploration, Mining and Development Expenses Total exploration, mining, and development expenses in 2022 amounted to RMB 1.784 billion, a slight increase from 2021, primarily due to a significant rise in staff costs Exploration, Mining and Development Expenses | Indicator | 2022 (RMB Thousand) | 2021 (RMB Thousand) | Change Rate | | :--- | :------------------ | :------------------ | :----- | | Materials and Consumables | 115,022 | 105,913 | +8.6% | | Staff Costs | 455,921 | 340,642 | +33.8% | | Utilities | 59,951 | 56,850 | +5.5% | | Indirect Costs and Others | 1,152,120 | 1,180,525 | -2.4% | | Assessment Fees | 1,054 | 586 | +79.9% | | Total | 1,784,068 | 1,684,516 | +5.9% | Financial Review In 2022, the company's financial performance significantly declined, with substantial decreases in revenue, gross profit, and profit attributable to owners of the company, mainly due to reduced production, relatively flat cost of sales, lower impairment loss reversals, and decreased gains from loan restructuring Revenue Total revenue in 2022 was RMB 3.794 billion, entirely from China coal sales, with zero shipping transportation revenue; average coal selling price increased, but coal operation and trading volume decreased Revenue Sources | Source | 2022 (RMB Thousand) | 2021 (RMB Thousand) | | :--- | :------------------ | :------------------ | | Coal Business | 3,794,039 | 4,498,980 | | Shipping Transportation | – | 60,200 | | Total | 3,794,039 | 4,559,180 | - Coal operation and trading volume in 2022 was 4,528 thousand tonnes, a decrease from 6,115 thousand tonnes in 2021[224][230] Average Coal Selling Price and Trading Volume | Indicator | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Average Coal Selling Price (RMB per tonne) | 838 | 736 | 367 | | Average Monthly Coal Operation & Trading Volume (Thousand Tonnes) | 377 | 510 | 497 | Coal Business Revenue by Industry Segment | Industry Segment | 2022 Revenue (RMB Thousand) | 2022 Share (%) | 2021 Revenue (RMB Thousand) | 2021 Share (%) | | :--- | :---------------------- | :------------- | :---------------------- | :------------- | | Power Plants | 850,414 | 22.4 | 518,815 | 11.5 | | Coal Traders | 2,943,625 | 77.6 | 3,980,165 | 88.5 | | Total | 3,794,039 | 100 | 4,498,980 | 100.0 | - The Group sold all its vessels on December 31, 2021, resulting in zero shipping transportation revenue[229] Cost of Sales Cost of sales in 2022 was RMB 2.521 billion, a slight decrease from 2021, but remained relatively flat given the decline in revenue Cost of Sales for Coal Business Segment | Indicator | 2022 (RMB Million) | 2021 (RMB Million) | | :--- | :-------------------- | :-------------------- | | Purchase Costs | – | 9 | | Coal Transportation Costs | 737 | 890 | | Costs of Self-Produced Coal | 1,784 | 1,685 | | Raw Materials, Fuel, Power | 175 | 163 | | Staff Costs | 456 | 341 | | Depreciation and Amortization | 958 | 724 | | Others | 195 | 457 | | Total Cost of Sales | 2,521 | 2,584 | Gross Profit The gross profit margin in 2022 was 33.6%, down from 42.6% in 2021, primarily due to reduced production and sales volume while cost of sales remained relatively flat - Gross profit margin in 2022: 33.6%[205] - Gross profit margin in 2021: 42.6%[205] - The decrease in gross profit margin was mainly due to reduced production and sales volume while cost of sales remained relatively flat[205] Other Income, Gains and Losses Net other income, gains, and losses in 2022 amounted to RMB 85.5 million, a significant decrease from RMB 377.5 million in 2021, mainly due to a reduction in net gains from loan restructuring - Net gains in 2022: RMB 85,500 thousand[233] - Net gains in 2021: RMB 377,500 thousand[233] - The decrease of approximately RMB 292,000 thousand was primarily due to a reduction in net gains from major/non-major modifications of loans from approximately RMB 238,700 thousand in 2021 to approximately RMB 42,500 thousand in 2022[233] Distribution Expenses Distribution expenses in 2022 were RMB 2.1 million, a 53.6% year-on-year decrease, primarily due to the absence of one-off commission expenses from vessel sales in 2022 - Distribution expenses in 2022: RMB 2,100 thousand[207] - Distribution expenses in 2021: RMB 4,500 thousand[207] - The 53.6% decrease was mainly due to the absence of one-off commission expenses from vessel sales in 2022[207] Administrative Expenses Administrative expenses in 2022 were RMB 0.305 billion, a 21.8% year-on-year increase, mainly attributable to higher staff costs - Administrative expenses in 2022: RMB 305,300 thousand[208] - Administrative expenses in 2021: RMB 250,700 thousand[208] - The 21.8% increase was mainly due to higher staff costs[208] Other Expenses Other expenses in 2022 were RMB 27.9 million, a 37.4% year-on-year decrease, mainly due to reduced fund utilization fees and surcharges on resource tax payments - Other expenses in 2022: RMB 27,900 thousand[209] - Other expenses in 2021: RMB 44,500 thousand[209] - The 37.4% decrease was mainly due to reduced fund utilization fees and surcharges on resource tax payments[209] Net Finance Costs Net finance costs in 2022 were RMB 0.254 billion, a 29.7% year-on-year decrease, primarily due to repayment of borrowings - Net finance costs in 2022: RMB 253,700 thousand[210] - Net finance costs in 2021: RMB 360,800 thousand[210] - The 29.7% decrease was mainly due to repayment of borrowings[210] Profit Attributable to Owners of the Company Profit attributable to owners of the company in 2022 was RMB 0.457 billion, a significant decrease from RMB 2.8 billion in 2021, primarily due to reduced impairment loss reversals, increased depreciation and amortization, and lower gains from loan restructuring - Profit attributable to owners of the company in 2022: RMB 456,500 thousand[236] - Profit attributable to owners of the company in 2021: RMB 2,800,000 thousand[236] - The decrease was mainly due to no reversal of impairment losses on property, plant and equipment and coal mining rights of RMB 2,300,000 thousand in 2022 (compared to a reversal in 2021)[212] - The decrease was mainly due to increased depreciation of property, plant and equipment and amortization of coal mining rights[236] - The decrease was mainly due to lower net gains from major/non-major modifications of loans[212] Liquidity, Financial Resources and Capital Structure In 2022, the Group's net current liabilities significantly increased and the current ratio deteriorated, but efforts are underway to improve financial conditions through diversified financing, loan renewals, and asset pledges Net Current Liabilities and Current Ratio Net current liabilities in 2022 were RMB 4.156 billion and the current ratio was 0.33, both deteriorating from 2021, mainly due to certain borrowings maturing within the next 12 months - Net current liabilities in 2022: RMB 4,155,800 thousand (2021: RMB 2,709,100 thousand)[213][260] - Current ratio in 2022: 0.33 (2021: 0.41)[213] - The deterioration in net current liabilities and current ratio was mainly due to certain borrowings maturing within the next 12 months[213] - Approximately RMB 3,447,500 thousand of bank and other borrowings were classified as current liabilities[216] - Approximately RMB 1,330,600 thousand of borrowings were due and immediately repayable[216] Capital Expenditure and Commitments Total capital expenditure in 2022 was RMB 0.780 billion, primarily for the purchase of plant and equipment, with capital commitments of RMB 0.264 billion - Total capital expenditure in 2022: RMB 780,300 thousand (2021: RMB 157,900 thousand), primarily related to the purchase of plant and equipment[237] - Capital commitments contracted but not yet incurred in 2022: RMB 264,400 thousand (2021: RMB 157,000 thousand), primarily related to the purchase of plant and equipment[237] Capital Structure The Group's capital structure primarily consists of ordinary shares and perpetual subordinated convertible securities, with stringent financial management policies in place to fund business activities through internal resources and borrowings - Capital structure primarily consists of ordinary shares and perpetual subordinated convertible securities[238] - Total bank and other borrowing facilities in 2022: RMB 3,520,800 thousand, fully utilized[261] - Cash and cash equivalents in 2022: RMB 856,600 thousand (2021: RMB 1,030,400 thousand)[239] Gearing Ratio The gearing ratio in 2022 was 32.1%, a decrease from 33.7% in 2021, mainly due to loan repayments during the year - Gearing ratio in 2022: 32.1% (2021: 33.7%)[262] - The decrease was mainly due to loan repayments during the year[262] Pledge of the Group's Assets As of the end of 2022, the Group pledged RMB 2.589 billion in assets as collateral for credit facilities from banks and asset management companies - Total pledged assets in 2022: RMB 2,589,000 thousand (2021: RMB 3,316,300 thousand), including property, plant and equipment, coal mining rights, prepaid lease payments, inventories, trade receivables, and bank deposits[242] Foreign Exchange Fluctuation Risk The Group primarily holds cash and receives revenue in RMB, with operating expenses also mainly denominated in RMB, thus facing no significant foreign exchange fluctuation risk - Cash and cash equivalents are primarily held in RMB, with some held in USD, HKD, IDR, EUR, and SGD[240] - Operating expenses of China subsidiaries are mainly denominated in RMB, while overseas purchases are denominated in USD and IDR[218] - Revenue is generally received in RMB[218] - The Directors believe the Group faces no significant foreign exchange fluctuation risk[218] Contingent Liabilities and Litigation As of December 31, 2022, the Group had no other significant contingent liabilities apart from the litigations disclosed in Note 17 to the financial statements - As of December 31, 2022, the Group had no other significant contingent liabilities, except for the litigation matters disclosed in Note 17[264] Final Dividend for the Year Ended December 31, 2022 The Board does not recommend the payment of any final dividend for the year ended December 31, 2022 - No final dividend is recommended for 2022[265] Employees and Remuneration As of the end of 2022, the Group employed 3,067 staff and implemented performance-based incentive schemes and share option plans to motivate employees - As of December 31, 2022, the Group employed 3,067 staff[243] - Performance-based incentive schemes and share option plans are adopted to motivate employees[243][267] - Employees of China subsidiaries participate in central retirement benefit schemes and pay social insurance contributions[244] - Employees of Hong Kong subsidiaries participate in the Mandatory Provident Fund Scheme[244] Business Outlook The Group will continue to prioritize the construction of the SDE coal mine in Indonesia, dynamically adjust investment projects, and commit to high-quality transformation and intelligent mine construction, adhering to green energy development policies to address climate change and national carbon peak and neutrality goals - The construction of the Indonesian SDE coal mine is a top priority, with continued resource allocation and dynamic adjustment of investment[246] - SDE has successfully renewed its mining operating license until May 14, 2034[246] - The Group is committed to high-quality transformation, intelligent mine construction, and green energy development, responding to national "carbon peak before 2030 and carbon neutrality by 2060" policies[247] - China's coal production is expected to continue increasing in 2023, with the coal market stabilizing and prices fluctuating within a reasonable range[267] Corporate Governance This section outlines the Group's corporate governance practices, including the roles of the Audit Committee and the auditor Board Audit Committee The Board Audit Committee, comprising three independent non-executive directors, is responsible for reviewing and overseeing the Group's financial reporting processes and internal controls - The Audit Committee was established on June 12, 2009, with written terms of reference in accordance with the Code[248] - Primary responsibilities: reviewing and overseeing the Group's financial reporting processes and internal controls[248] - Members: Mr Liu Sik Yuen (Chairman), Professor Sha Zhenquan, and Mr Jing Dacheng (all independent non-executive directors)[248] Auditor's Scope of Work The Audit Committee has reviewed the audited consolidated financial statements for FY2022; the Group's auditor has reconciled the preliminary announcement data with the consolidated financial statements, but their work does not constitute an assurance engagement - The Audit Committee has reviewed the audited consolidated financial statements for FY2022[270] - The Group's auditor, UHY CPA Limited, has reconciled the preliminary announcement data with the consolidated financial statements[270] - The auditor's work does not constitute an assurance engagement under Hong Kong Standards on Auditing, Review Engagements, or Assurance Engagements[270] Extract from Independent Auditor's Report This section highlights key findings from the independent auditor's report, including the fair presentation of financial statements and significant uncertainties regarding going concern - The auditor believes the consolidated financial statements fairly present the Group's financial position, performance, and cash flows in accordance with International Financial Reporting Standards[271] - Significant uncertainties regarding going concern exist, including net current liabilities of approximately RMB 4,155,839 thousand, and borrowings of approximately RMB 1,330,634 thousand and accrued interest of approximately RMB 219,718 thousand due and immediately payable[271] - Pending litigations against the Group exist, primarily demanding immediate repayment of certain interest-bearing payables[271] - The auditor's opinion on the significant uncertainties regarding going concern has not been modified[253] Other Information This section provides additional information regarding the company's securities, annual report publication, and share transfer registration suspension Purchase, Sale or Redemption of the Company's Listed Securities For the year ended December 31, 2022, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - In 2022, neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities[254] Publication of Annual Report The annual report, containing information required by Appendix 16 of the Listing Rules and other applicable laws and regulations, will be dispatched to shareholders and published on the HKEX and company websites in due course - The annual report will be dispatched to shareholders and published on the HKEX website (www.hkex.com.hk) and the company's website (www.qinfagroup.com)[255](index=255&type=chunk) Suspension of Share Transfer Registration To determine eligibility for the Annual General Meeting on June 20, 2023, the company will suspend share transfer registration from June 13 to June 20, 2023 - Share transfer registration will be suspended from Tuesday, June 13, 2023, to Tuesday, June 20, 2023[274] - The deadline for share transfer registration is 4:00 p.m. on Monday, June 12, 2023[274]