Da Ming International : INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2020

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

DA MING INTERNATIONAL HOLDINGS LIMITED

大 明 國 際 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1090)

INTERIM RESULTS ANNOUNCEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2020

FINANCIAL HIGHLIGHTS
	Six months ended 30 June
	2020	2019
	RMB'000	RMB'000	% change
Revenue	15,633,880	16,756,469	-6.7%
Gross profit	600,096	564,259	+6.4%
Total comprehensive income for the period	140,504	130,558	+7.6%
OPERATING HIGHLIGHTS
	Six months ended 30 June
	2020	2019	% change
Stainless steel	852,485
Sales volume (tonnes)	865,681	-1.5%
Processing volume (tonnes)	1,255,415	1,270,941	-1.2%
Processing multiple	1.47	1.47
Carbon steel	1,276,876
Sales volume (tonnes)	1,272,614	+0.3%
Processing volume (tonnes)	1,477,385	1,465,379	+0.8%
Processing multiple	1.16	1.15

Note: Processing multiple = Processing volume/Sales volume

1

INTERIM RESULTS

The board of directors (the "Board") of Da Ming International Holdings Limited (the "Company") announces the unaudited consolidated results of the Company and its subsidiaries (collectively, the "Group") for the six months ended 30 June 2020 together with comparative figures for the six months ended 30 June 2019, as follows:

UNAUDITED CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENT

For the six months ended 30 June 2020		Six months ended 30 June
		2020		2019
	Note	RMB'000	RMB'000
Revenue	6	15,633,880		16,756,469
Cost of sales	7	(15,033,784)	(16,192,210)
Gross profit		600,096		564,259
Other income		14,324		12,947
Other expenses		(1,828)	(723)
Distribution costs	7	(168,873)	(167,486)
Administrative expenses	7	(151,880)	(125,174)
Operating profit		291,839		283,823
Finance income	8	14,651		15,625
Finance costs	8	(111,656)	(109,317)
Finance costs - net	8	(97,005)	(93,692)
Profit before income tax		194,834		190,131
Income tax expense	9	(54,330)	(59,573)
Profit and total comprehensive income
for the period		140,504		130,558
Attributable to:
	127,634
Equity holders of the Company			117,675
Non-controlling interests		12,870		12,883
		140,504		130,558
Earnings per share for profit attributable
to equity holders of the Company
during the period
(expressed in RMB per share)		0.10
- basic earnings per share	10		0.09
- diluted earnings per share	10	0.10		0.09

2

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2020

		As at				As at
		30 June				31 December
		2020	2019
	Note	RMB'000				RMB'000
ASSETS
Non-current assets
Property, plant and equipment		4,541,827	4,432,495
Right-of-use assets		512,465	519,362
Investment properties		4,022	4,214
Intangible assets		18,601	19,065
Deferred income tax assets		63,317	77,861
Trade receivables and contract assets	12	25,668	28,523
Other non-current assets		9,383	4,116
		5,175,283	5,085,636
Current assets
Inventories		3,105,919	2,784,448
Trade receivables and contract assets	12	597,610	384,010
Prepayments, deposits and other receivables		788,632	814,805
Restricted bank deposits		1,731,246	1,039,691
Cash and cash equivalents		176,413	161,807
		6,399,820	5,184,761
Total assets		11,575,103	10,270,397
EQUITY
Equity attributable to equity holders of the
Company
Share capital		106,607	106,607
Reserves		2,628,344	2,500,710
		2,734,951	2,607,317
Non-controlling interests		339,713	326,843
Total equity		3,074,664	2,934,160

3

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		As at			As at
		30 June			31 December
		2020	2019
	Note	RMB'000			RMB'000
LIABILITIES
Non-current liabilities
Borrowings		498,135	248,410
Deferred government grants		139,642	133,130
Deferred income tax liabilities		41,330	40,569
Trade payables	13	9,152	9,074
Long-term payables		24,782	24,060
		713,041	455,243
Current liabilities
Trade payables	13	1,181,501	966,980
Accruals and other current liabilities		351,248	383,534
Contract liabilities		580,476	607,539
Current income tax liabilities		62,177	49,261
Borrowings		5,608,608	4,829,012
Lease liabilities		3,388	3,618
Dividends payable		-	41,050
		7,787,398	6,880,994
Total liabilities		8,500,439	7,336,237
Total equity and liabilities		11,575,103	10,270,397

4

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020

			Attributable to equity holders	Non-
			of the Company	controlling			Total
		Share Capital			Reserves			interests			equity
			RMB'000			RMB'000	RMB'000			RMB'000
Balance at 1 January 2020	106,607	2,500,710	326,843	2,934,160
Comprehensive income
Profit for the period			-	127,634	12,870	140,504
Total comprehensive income
for the period			-	127,634	12,870	140,504
Transaction with owners
Employee share options scheme
- value of employee services			-			-	-			-
Share award scheme
- value of employee services			-			-	-			-
Total transaction with owners
		-			-	-			-
Balance at 30 June 2020
106,607	2,628,344	339,713	3,074,664

			Attributable to equity holders	Non-
			of the Company	controlling			Total
		Share Capital			Reserves			interests			equity
			RMB'000			RMB'000	RMB'000			RMB'000
Balance at 1 January 2019	106,607	2,387,020	358,975	2,852,602
Comprehensive income
Profit for the period			-	117,675	12,883	130,558
Total comprehensive income
for the period			-	117,675	12,883	130,558
Transaction with owners
Employee share options scheme
- value of employee services			-	486	-	486
Share award scheme
- value of employee services			-	5,275	-	5,275
Total transaction with owners
		-	5,761	-	5,761
Balance at 30 June 2019
106,607	2,510,456	371,858	2,988,921

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020

	Six months ended 30 June
	2020		2019
	RMB'000	RMB'000
Cash flows from operating activities
Cash flows from operations	104,621		253,586
Interest received	14,651		15,625
Interest paid	(111,656)	(109,317)
Income tax paid	(56,719)	(89,730)
Net cash (used in)/from operating activities	(49,103)	70,164
Cash flows from investing activities
Purchase of property, plant and equipment	(235,052)	(196,724)
Other investing cash flow	2,045		21,160
Net cash used in investing activities	(233,007)	(175,564)
Cash flows from financing activities
Net change in borrowings	1,029,321		817,665
Net change in restricted bank deposits	(691,555)	(68,447)
Net change in bank acceptance notes	-	(573,028)
Dividend paid	(41,050)	-
Net cash from financing activities	296,716		176,190
Net change in cash and cash equivalents	14,606		70,790
Cash and cash equivalents at beginning of the period	161,807		140,004
Exchange loss on cash and cash equivalents	-	-
Cash and cash equivalents at end of the period	176,413		210,794

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

1. GENERAL INFORMATION
   The Company was incorporated in the Cayman Islands on 14 February 2007 as an exempted company with limited liability under the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. The Company's registered office is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands.
   The shares of the Company have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 1 December 2010.
2. BASIS OF PREPARATION
   The unaudited condensed consolidated financial statements for the six months ended 30 June 2020 have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") and Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. These unaudited condensed consolidated financial statements have not been reviewed by external auditors but have been reviewed by the Company's audit committee.
   Going Concern
   As at 30 June 2020, the Group's current liabilities exceeded its current assets by approximately RMB1,387,578,000 (31 December 2019: RMB1,696,233,000). The Group meets its day-to-day working capital requirements mainly through its bank borrowings and facilities with banks in the PRC and Hong Kong that are refinanced and/or renewed every twelve months. In preparing this financial statements, the directors of the Company have considered the Group's available sources of funds as follows:
3. • The net cash inflows from operating activities;
   • The available financing including bank borrowings in Mainland China and Hong Kong to be renewed during the next twelve months. The directors are confident that these bank financing could be renewed and/or extended for at least another twelve months upon renewal based on the Group's past experience and good credit standing; and
   • Other available sources of financing from banks and other financial institutions given the Group's credit history and that most of the Group's property, plant and equipment are free from pledge or restriction and would be available to secure further financing when necessary.

Having considered the above, the directors of the Company believe that the Group has adequate resources to continue operation for the foreseeable future of not less than twelve months from period end date of these financial statements. The directors, therefore, are of the opinion that it is appropriate to adopt the going concern basis in preparing the consolidated financial statements.

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3. SIGNIFICANT ACCOUNTING POLICIES

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2019, as described in those annual financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total earnings.

1. New and amended standards adopted by the Group
   The Group has applied the following standards and amendments for the first time for their annual financial period commencing 1 January 2020.

		Effective for
		annual periods
		beginning
		on or after
HKAS 1 and HKAS 8 (Amendments)	Definition of Material	1 January 2020
HKFRS 3 (Amendments)	Definition of a Business	1 January 2020
Revised Conceptual Framework	Revised Conceptual Framework	1 January 2020
	for Financial Reporting
HKRS 9, HKAS 39 and	Interest Rate Benchmark Reform	1 January 2020
HKFRS 7 (Amendments)
HKFRS 16 (Amendments)	Covid-19-related Rent	1 June 2020
	Concessions

The newly adopted standards did not have material impact on the group's accounting policies and did not require retrospective adjustments.

1. The following new standard has been issued but are not effective for the financial year beginning on 1 January 2020 and have not been early adopted.

		Effective for
		annual periods
		beginning
		on or after
HKAS 1 (Amendments)	Classification of Liabilities as Current	1 January 2022
	or Non-current
HKAS 16 (Amendments)	Property, Plant and Equipment:	1 January 2022
	Proceeds before intended use
HKAS 37 (Amendments)	Onerous Contracts - Cost of Fulfilling	1 January 2022
	a Contract
HKFRS 3 (Amendments)	Reference to the Conceptual	1 January 2022
	Framework
HKFRS 17	Insurance contracts	1 January 2023
HKFRS 10 and	Sale or contribution of assets	To be determined
HKAS 28 (Amendments)	between an investor and its
	associate or joint venture
Annual Improvements to		1 January 2022
HKFRS Standards 2018-2020

The Group is assessing the full impact of the new standards, new interpretations and amendments to standards and interpretations.

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1. ESTIMATES
   The preparation of unaudited condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
   In preparing these unaudited condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2019.

2. FINANCIAL RISK MANAGEMENT
3. 1. Financial risk factors
      The Group's activities expose it to a variety of financial risks: market risk (including currency risk and fair value interest rate risk), credit risk, and liquidity risk.
      The unaudited condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 31 December 2019.
      There have been no changes in the risk management department since year end or in any risk management policies.
   2. Fair value estimation
      There are no financial assets/liabilities carried at fair value determined by valuation method. The carrying value of cash and cash equivalents, restricted bank deposits, trade and other receivables and financial liabilities including trade and other payables and borrowings are assumed to approximate their fair values.

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6. REVENUE

The result of its sales from external customers in different countries and regions was as follows:

Six months ended 30 June

2020 2019

RMB'000 RMB'000

- Mainland China	15,246,754	16,394,935
- Hong Kong and other overseas countries and regions (i)	387,126	361,534
Total sales	15,633,880	16,756,469

1. Other overseas countries and regions mainly represented Australia, United States of America, South Korea, Japan, Europe, South America and Southeast Asia.

Revenue of the Group consists of the following revenues for the six months ended 30 June 2020 and 2019. All revenues are derived from external customers.

Six months ended 30 June

2020 2019

RMB'000 RMB'000

Processing and sales of stainless steel and carbon steel products	14,824,138	16,297,995
Manufacturing of stainless steel and carbon steel products	809,742	458,474
	15,633,880	16,756,469

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The segment results for the six months ended 30 June 2020:

	Processing	Manufacturing	Elimination	Total
	RMB'000		RMB'000	RMB'000	RMB'000
Segment revenue	15,139,822	809,742	(315,684)	15,633,880
Segment results	226,907	67,988	(15,552)	279,343
- including depreciation and
amortisation	91,199	34,521	-	125,720
Other income and expenses							12,496
Finance costs - net							(97,005)
Profit before income tax							194,834
Income tax expense							(54,330)
Profit for the period							140,504

The segment results for the six months ended 30 June 2019:

	Processing		Manufacturing	Elimination	Total
	RMB'000		RMB'000	RMB'000	RMB'000
Segment revenue	16,482,335	458,474	(184,340)	16,756,469
Segment results	278,125	4,533	(11,059)	271,599
- including depreciation and
amortisation	83,842	32,182	-	116,024
Other income and expenses							12,224
Finance costs - net							(93,692)
Profit before income tax							190,131
Income tax expense							(59,573)
Profit for the period							130,558

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7. EXPENSES BY NATURE

Expenses included in cost of sales, distribution costs and administrative expenses were analysed as follows:

		Six months ended
		30 June 2020	30 June 2019
		RMB'000	RMB'000
	Changes in inventories of finished goods	23,674		(155,527)
	Raw materials consumed	14,475,623		15,915,906
	Stamp duty, property tax and other surcharges	22,029		22,416
	Transportation costs	172,887		148,843
	Employee benefit expenses, including directors'
	emoluments	350,306		312,970
	Depreciation and amortisation	125,720		116,024
	Operating lease rental for buildings	2,743		3,619
	Utilities charges	30,797		33,458
	Reversal of write-down of inventories	(14,882)	(41,367)
	Entertainment and travelling expenses	17,793		24,171
	Professional service expenses	4,949		4,921
	Others	142,898		99,436
		15,354,537		16,484,870
8.	FINANCE COSTS - NET
		Six months ended
		30 June 2020	30 June 2019
		RMB'000	RMB'000
	Interest expenses on bank borrowings	60,106		73,674
	Interest expenses on bank acceptance notes	50,221		39,217
	Exchange loss/(gain), net	1,329		(3,574)
	Total finance costs	111,656		109,317
	Interest income	(14,651)	(15,625)
		97,005		93,692

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9.	INCOME TAX EXPENSE
		Six months ended
		30 June 2020		30 June 2019
		RMB'000		RMB'000
	Current income tax expense
	- Mainland China corporate income tax	52,608	57,968
	Deferred income tax expense	1,722	1,605
		54,330	59,573

The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of Cayman Islands and, accordingly, is exempted from payment of Cayman Islands income tax.

The subsidiary incorporated in British Virgin Islands under the International Business Companies Acts of the British Virgin Islands is exempted from payment of British Virgin Islands income tax.

Hong Kong profits tax has not been provided as there is no estimated assessable profit arising in or derived from Hong Kong during the financial periods.

The PRC corporate income tax is calculated based on the statutory profit of subsidiaries incorporated in the PRC in accordance with the PRC tax laws and regulations, after adjustments on certain income and expense items, which are not assessable or deductible for income tax purposes.

10. EARNINGS PER SHARE

1. Basic
   Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the period.

	Six months ended
	30 June 2020	30 June 2019
Profit attributable to equity holders
of the company (RMB'000)	127,634	117,675
Weighted average number of ordinary shares
in issue (thousands)	1,245,190	1,245,190
Basic earnings per share (RMB)	0.10	0.09

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1. Diluted
   Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The dilutive potential ordinary shares of the company are share options. For the share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

	Six months ended
	30 June 2020	30 June 2019
Profit attributable to equity holders
of the company (RMB'000)	127,634	117,675
Weighted average number of ordinary shares in
issue (thousands)	1,245,190	1,245,190
Adjustments for share option plan (thousands)	-	132
Weighted average number of ordinary shares for diluted
earnings per share (thousands)	1,245,190	1,245,322
Diluted earnings per share (RMB)	0.10	0.09

11. INTERIM DIVIDEND

The directors do not recommend the payment of an interim dividend in respect of the six months ended 30 June 2020 (2019: HK$0.06 per share).

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12. TRADE RECEIVABLES AND CONTRACT ASSETS

			As at 30 June					As at 31 December
			2020							2019
	Current	Non-Current	Total	Current		Non-Current	Total
	RMB'000		RMB'000	RMB'000	RMB'000		RMB'000	RMB'000
Contract assets	47,005		25,811	72,816	67,145	28,666	95,811
Accounts receivable	493,591			-	493,591	294,897		-	294,897
Notes receivable
- bank acceptance notes	60,548			-	60,548	27,255		-	27,255
- commercial acceptance notes	5,427			-	5,427	3,682		-	3,682
	606,571		25,811	632,382	392,979	28,666	421,645
Less: provision for impairment	(8,961)		(143)	(9,104)	(8,969)	(143)	(9,112)
	597,610		25,668	623,278	384,010	28,523	412,533

The carrying amounts of trade receivables and contract assets approximate their fair value as at the balance sheet date.

The majority of the Group's sales are made on (i) cash on delivery, (ii) bank or commercial acceptance notes with maturity within 1 year, and (iii) credit terms within 180 days. As at 30 June

2020 and 31 December 2019, the aging analysis of trade receivables was as follows:

	As at		As at
	30 June		31 December
	2020	2019
	RMB'000		RMB'000
Accounts receivable
- within 30 days	428,281	210,498
- 30 days to 3 months	19,418	37,450
- 3 months to 6 months	24,918	23,101
- 6 months to 1 year	16,836	21,323
- 1 year to 2 years	3,868	2,430
- over 2 years	270	95
	493,591	294,897
Notes receivable
- within 1 year	65,975	30,937
	559,566	325,834

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13. TRADE PAYABLES
	As at	As at
	30 June	31 December
	2020		2019
	RMB'000	RMB'000
Accounts payable	911,947		597,214
Notes payable	278,706		378,840
	1,190,653		976,054
Less: non-current portion of accounts payables	(9,152)	(9,074)
	1,181,501		966,980
The ageing analysis of the trade payable was as follows:
	As at	As at
	30 June	31 December
	2020		2019
	RMB'000	RMB'000
Within 6 months	1,186,339		974,265
6 months to 1 year	3,824		1,377
1 year to 2 years	437		388
More than 2 years	53		24
	1,190,653		976,054

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BUSINESS REVIEW

Processing centres

We are a leading metals processing service provider providing comprehensive processing service to modern manufacturers in China with more than 20,000 active customers. Our processing services cover the whole manufacturing process including cutting, slitting, polishing, forming, welding, heat treating, machinery, painting and assembling. The Group has established ten processing centres strategically located in various regions in China, namely, Wuxi, Hangzhou, Tianjin, Wuhan, Taiyuan, Zibo, Jingjiang, Taian, Qianzhou and Jiaxing.

Business highlights

1. Da Ming contributed to "Made in Wuxi" by providing for Huoshenshan Hospital
   In the evening of 31 January 2020, the whole of Huoshenshan Hospital, the first hospital in Wuhan, Hubei based on the Xiaotangshan model, was connected to power. Three days before that, four high-efficiency precipitators manufactured by Wuxi Hi-Tech Environmental Protection were loaded for delivery. The giants Jiangsu Daming Metal Products Co., Ltd. and Daming Metal Products Wuxi Co., Ltd., both being companies under Da Ming International, joined hands with Wuxi Hi-Tech Environmental Protection in this project. Da Ming provided the raw materials of carbon steel (Q235B) and stainless steel (304, 316L) and ancillary services for parts processing such as cutting and bending, while Hi-Tech Environmental Protection was responsible for the construction of the precipitators. It took Da Ming only two days from taking the order to inspection and delivery.
   During the pandemic, Da Ming made use of its strengths as a large corporation and produced items used in the medical equipment of Wuhan Leishenshan Hospital, Huoshenshan Hospital and Fangcang Hospital. Its subsidiaries also actively participated in the production of parts used in CT equipment, disinfection equipment, water treatment equipment, ultrasonic cleaners, hand-washing devices, important chemical equipment for medical supplies, etc.
2. Valmet RAPP (EN standards) dual-phase steel pulping machines with parts from Daming Heavy Industry shipped overseas
   Daming Heavy Industry held the "Valmet RAPP Dual-phase Steel Pulping Machine Shipment Ceremony" to announce the shipment of four large-scaledual-phase steel digesters overseas.
   Valmet is a leading developer and supplier for the pulping, paper manufacturing and energy industries in the world and screens and reviews suppliers stringently. After a long period of observation and study, Daming Heavy Industry has successfully been nominated for the supply of parts on a number of projects for Valmet. The projects covered equipment such as heat exchangers, carbon steel tanks, stainless steel containers and dual-phase steel digesters, which won high acclaim from customers in countries such as Chile, Indonesia and Brazil.

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1. Jiangsu Daming kickstarted a high-end new energy vehicle parts project
   Jiangsu Daming held the kickstart ceremony for the "High-end New Energy Vehicle Parts Project".
   This batch of products was the structural parts of the body frame for high-end new energy vehicles, and the professional and highly efficient cutting and processing services were provided by Jiangsu Daming. The products covered nine specifications with a total of over one million pieces. The order required a large quantity of items of a high quality requirement to be delivered within a short time frame, which was a test of the company's ability to process parts. During the first half of 2020, more than 700,000 parts were completed.
2. Daming Heavy Industry worked on a large project and started to ship prefabricated tank equipment to South America
   After the full resumption of work, in February, Daming Heavy Industry loaded and shipped the large-scale equipment ordered by a renowned European enterprise to South America. The dual-phase steel equipment shipped this time weighed approximately 300 tonnes. This not only represented Daming Heavy Industry's complete fulfillment of the client's order, but also indicated Daming Heavy Industry is increasingly mature in the export of prefabricated tank equipment.
3. Daming Heavy Industry shipped for the Hangzhou Oxygen U12 Project
   Daming Heavy Industry held a shipment ceremony for a state key project - Hangzhou Oxygen U12 State Key Project. The successful shipment of the key components of four sets of supersized containers indicates that the manufacturing standard of Daming Heavy Industry has raised to a higher level.
4. The EOEG plant tower Daming Heavy Industry manufactured for Lianyungang Petrochemical has been shipped
   The first batch of EOEG equipment Daming Heavy Industry manufactured for Lianyungang Petrochemical has been shipped. The project covered 38 sets of equipment with a total weight of nearly 2,400 tonnes, including 14 sets of stainless steel equipment, 20 sets of composite panel equipment, 2 sets of carbon steel equipment and 2 heat exchangers, with a maximum diameter of 6.6 meters and a maximum length of 55 meters.

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1. Daming Heavy Industry contributes to a major international project and products for Shanghai Electric's Photo-thermal Storage Tank Project in Dubai (second phase) has been shipped
   Da Ming serves high-end power stations under the "Belt and Road" initiative to build an ecosphere for large-scale projects. The first batch of prefabricated steel plates for light-heat storage tanks that Daming Heavy Industry manufactured for Shanghai Electric's 700MW photo-thermal and 250MW photovoltaic solar power plant project in Dubai (second phase) has been shipped.
2. Daming Heavy Industry and Daming Precision joined hands to provide for the environment-friendly equipment RTO
   Two major manufacturing companies of the Da Ming Group, Daming Heavy Industry and Daming Precision, jointly provided parts for the environment-friendly equipment RTO (Regenerative Thermal Oxidizer) of a renowned foreign-owned enterprise using their respective strengths.
3. Daming Heavy Industry contributes to the Australian mining industry - a large-scale ore scrubber has been successfully exported
   A large-scale ore scrubber jointly manufactured and processed by Production Division 1, Production Division 3 and the Equipment Manufacturing Division of Daming Heavy Industry was successfully exported to Mclanahan in Australia. The final owner is FMG, the third largest mining giant in Australia and the fourth largest in the world.
4. The world's largest welded tube sheet manufactured by Daming Heavy Industry has been successfully shipped
   A tube sheet with the longest diameter in the world at present that was manufactured and processed by the Machine Processing Division of Daming Heavy Industry for a paper project of Valmet has been successfully shipped to Brazil.
5. Daming Heavy Industry serves CNOOC's fertilizer project - heaters successfully shipped
   Air heaters manufactured by Daming Heavy Industry for a fertilizer project of CNOOC in Hainan have been successfully shipped. This also marks the inclusion of Daming Heavy Industry on CNOOC's supplier list in a real sense for the first time.

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12. Daming Heavy Industry manufactured stacked heat exchangers to serve a 600,000-tonne ABS and AS project

In mid-June, the manufacturing of parts by Daming Heavy for the first phase works of the Zhangzhou ABS and AS project, with an annual production capacity of 450,000 tonnes, entered the final stage. It was the first time that Daming Heavy Industry had joined hands with a large-scale Taiwan enterprise in the PRC and won a contract for nearly 50 heat exchangers, including 12 stacked heat exchangers, made of stainless steel.

Operating results

The Group recorded a net profit of approximately RMB140.5 million for the six months ended 30 June 2020 representing an increase of approximately 7.6% as compared with the net profit of approximately RMB130.6 million for the six months ended 30 June 2019. The improvement in operating results was mainly due to the higher gross profit margin resulted from an improvement in operating efficiency.

The sales volume of our stainless steel processing business decreased from approximately 866,000 tonnes for the six months ended 30 June 2019 to approximately 852,000 tonnes for the six months ended 30 June 2020 representing a decrease of approximately 1.5%. The processing volume decreased slightly from approximately 1,271,000 tonnes for the six months ended 30 June 2019 to approximately 1,255,000 tonnes for the six months ended 30 June 2020 representing a decrease of approximately 1.2%.

The sales volume of our carbon steel processing business increased from approximately 1,273,000 tonnes for the six months ended 30 June 2019 to approximately 1,277,000 tonnes for the six months ended 30 June 2020 representing an increase of approximately 0.3% while the processing volume increased from approximately 1,465,000 tonnes for the six months ended 30 June 2019 to approximately 1,477,000 tonnes for the six months ended 30 June 2020 representing an increase of approximately 0.8%.

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The sales volume and processing volume of our processing centres for the six months ended 30 June 2020 and the corresponding period in 2019 were as follows:

Stainless steel
	Six months ended 30 June
	2020	2019
		tonnes		tonnes	% change
Sales volume
Wuxi	336,730	330,673		+1.8%
Hangzhou	125,464	132,293		-5.2%
Tianjin	113,274	116,823		-3.0%
Taiyuan	80,218	67,726		+18.4%
Wuhan	38,940	48,327		-19.4%
Jingjiang	75,369	110,151		-31.6%
Shandong	77,395	59,688		+29.7%
Jiaxing	5,095		-	n/a
Total	852,485	865,681		-1.5%
Processing volume
Wuxi	548,129	557,133		-1.6%
Hangzhou	152,146	172,579		-11.8%
Tianjin	121,650	128,577		-5.4%
Taiyuan	209,274	157,665		+32.7%
Wuhan	43,403	60,471		-28.2%
Jingjiang	104,587	140,502		-25.6%
Shandong	68,306	54,014		+26.5%
Jiaxing	7,920		-	n/a
Total	1,255,415	1,270,941		-1.2%

21

Carbon steel
	Six months ended 30 June
	2020	2019
		tonnes		tonnes	% change
Sales volume
Wuxi	259,637	261,341		-0.7%
Hangzhou	93,111	93,059		-0.1%
Tianjin	138,728	119,479		+16.1%
Taiyuan	122,826	103,624		+18.5%
Wuhan	140,232	260,582		-46.2%
Jingjiang	280,362	296,597		-5.5%
Shandong	158,130	121,124		+30.6%
Jiaxing	83,850	16,808		+398.9%
	1,276,876	1,272,614		+0.3%
Processing volume
Wuxi	205,611	188,017		+9.4%
Hangzhou	101,419	100,369		+1.0%
Tianjin	203,565	201,121		+1.2%
Taiyuan	179,524	191,430		-6.2%
Wuhan	175,096	297,226		-41.1%
Jingjiang	358,444	348,812		+2.8%
Shandong	179,958	122,541		+46.9%
Jiaxing	73,768	15,863		+365.0%
	1,477,385	1,465,379		+0.8%

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FINANCIAL REVIEW AND ANALYSIS

During the six months ended 30 June 2020, we recorded a revenue of approximately RMB15,634 million, gross profit of approximately RMB600 million and profit attributable to equity holders of the Company of approximately RMB128 million. Total assets of the Group as at 30 June 2020 amounted to approximately RMB11,575 million while equity attributable to equity holders of the Company amounted to approximately RMB2,735 million.

Revenue

Our revenue for the six months ended 30 June 2020 amounted to approximately RMB15,634 million comprising approximately RMB10,479 million from our stainless steel processing business, approximately RMB4,345 million from our carbon steel processing business and approximately RMB810 million from our manufacturing business. As compared with the revenue for the six months ended 30 June 2019 of approximately RMB16,756 million, it represented a decrease of approximately 6.7%. Such decrease was mainly due to the decrease in the average market price of stainless steel and carbon steel raw materials.

The sales volume of our stainless steel processing business decreased slightly from 865,681 tonnes for the six months ended 30 June 2019 to 852,485 tonnes for the six months ended 30 June 2020 representing a decrease of approximately 1.5%. The sales volume of our carbon steel processing business increased from 1,272,614 tonnes for the six months ended 30 June 2019 to 1,276,876 tonnes for the six months ended 30 June 2020 representing an increase of approximately 0.3%.

The processing volume of our stainless steel processing business decreased slightly from 1,270,941 tonnes for the six months ended 30 June 2019 to 1,255,415 tonnes for the six months ended 30 June 2020 representing a decrease of approximately 1.2%. The processing volume of our carbon steel processing business increased from 1,465,379 tonnes for the six months ended 30 June 2019 to 1,477,385 tonnes for the six months ended 30 June 2020 representing an increase of approximately 0.8%.

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Analysis of revenue by key industry segments

During the six months ended 30 June 2020 and the corresponding period in 2019, our revenue by key industry segments were shown below:

Revenue
		Six months ended 30 June
	2020			2019
Industry	RMB'000	%	RMB'000	%
Machineries	5,452,540			34.9	5,286,185			31.5
Distributors and Traders	3,514,564			22.5	5,041,475			30.1
Petrochemical	1,197,305			7.7	1,316,735			7.9
Home Hardware and Appliances	1,743,824			11.1	2,002,573			12.0
Automobile and Transport	959,353			6.1	909,226			5.4
Construction	499,393			3.2	475,090			2.8
Renewable Energy	630,134			4.0	559,221			3.3
Others	1,636,767			10.5	1,165,964			7.0
Total	15,633,880			100.0	16,756,469			100.0

RMB'000

10.5%

(1,636,767)

4.0%

(630,134)

3.2%

(499,393)

6.1%

(959,353)

11.1%

(1,743,824)

7.7%

(1,197,305)

	34.9%	7.0%
	(1,165,964)
	(5,452,540)	3.3%
		(559,221)
		2.8%
2020		(475,090)
22.5%	5.4%
	(909,226)
	(3,514,564)
		12.0%
		(2,002,573)
		7.9%
		(1,316,735)

2019

31.5%

(5,286,185)

30.1%

(5,041,475)

Machineries	Automobile and Transport
Distributors and Traders	Construction
Petrochemical	Renewable Energy
Home Hardware and Appliances	Others

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Analysis of revenue by geographical regions

During the six months ended 30 June 2020 and the corresponding period in 2019, our revenue by geographical regions were shown below:

Region

Eastern region, China Northern region, China Central region, China Southwestern region, China Northeastern region, China Northwestern region, China Southern region, China Overseas

Total

RMB'000
2.5%
(387,126)
2.6%
(407,549)
1.1%
(175,704)
1.9%
(291,320)
1.2%	2020
(185,656)
7.2%
(1,133,913)
15.2%
(2,381,154)

	Six months ended 30 June
2020			2019
RMB'000	%	RMB'000	%
10,671,458			68.3	11,437,946			68.2
2,381,154			15.2	2,266,107			13.5
1,133,913			7.2	1,704,094			10.2
185,656			1.2	217,812			1.3
291,320			1.9	285,019			1.7
175,704			1.1	144,331			0.9
407,549			2.6	339,626			2.0
387,126			2.5	361,534			2.2
15,633,880			100.0	16,756,469			100.0

	2.2%
	(361,534)
	2.0%
	(339,626)
	0.9%
	(144,331)
	1.7%
	(285,019)	2019	68.2%
	1.3%
	(217,812)
(10,671,458)	10.2%		(11,437,946)
	(1,704,094)
	13.5%
	(2,266,107)

Eastern region, China	Northeastern region, China
Northern region, China	Northwestern region, China
Central region, China	Southern region, China
Southwestern region, China	Overseas

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Gross profit

Gross profit increased from approximately RMB564.3 million for the six months ended 30 June 2019 to approximately RMB600.1 million for the six months ended 30 June 2020 mainly due to the improvement in operating efficiency and contribution from our manufacturing business during the period.

Other income

Other income increased from approximately RMB12.9 million for the six months ended 30 June 2019 to approximately RMB14.3 million for the six months ended 30 June 2020 mainly due to the increase in government grants received.

Distribution costs

Distribution costs increased from approximately RMB167.5 million for the six months ended 30 June 2019 to approximately RMB168.9 million for the six months ended 30 June 2020. Such increase was mainly due to the increase in transportation costs.

Administrative expenses

Administrative expenses increased from approximately RMB125.2 million for the six months ended 30 June 2019 to approximately RMB151.9 million for the six months ended 30 June 2020. Such increase was mainly due to the increase in staff costs.

Finance costs

Finance costs increased from approximately RMB93.7 million for the six months ended 30 June 2019 to approximately RMB97.0 million for the six months ended 30 June 2020. Such increase was mainly due to the increase in interest expenses on bank acceptance notes and letters of credit.

Income tax expense

The income tax expense decreased from approximately RMB59.6 million for the six months ended 30 June 2019 to approximately RMB54.3 million for the six months ended 30 June 2020.

Profit for the period

The Group recorded a net profit of approximately RMB140.5 million for the six months ended 30 June 2020 as compared with a net profit of approximately RMB130.6 million for the six months ended 30 June 2019. The increase was mainly due to the increase in gross profit.

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Foreign exchange risk management

The Group mainly operates in the PRC with most of the transactions denominated and settled in RMB. However, the Group has certain trade receivables, restricted bank balances, cash and cash equivalents, trade payables, other payables and borrowings denominated in foreign currencies, mainly United States Dollar, EURO and Hong Kong Dollar, which are exposed to foreign currency translation risk.

Our management will closely monitor the exchange rate fluctuations to ensure sufficient precautionary measures against any adverse impacts.

LIQUIDITY, CAPITAL STRUCTURE AND FINANCIAL RESOURCES

As at 30 June 2020, the borrowings of the Group amounted to approximately RMB6,107 million. Notes payable amounted to approximately RMB279 million while the bank balances were approximately RMB1,908 million of which approximately RMB1,731 million were restricted bank deposits for issuing letter of credit and notes payable.

As at 30 June 2020, the Group recorded a net current liabilities of approximately RMB1,388 million.

The gearing ratios as at 30 June 2020 and 31 December 2019 were 65.86% and 62.62% respectively. The ratios are calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents while total capital is calculated as total equity plus net debt.

CONTINGENT LIABILITIES

As at 30 June 2020, the Group did not have any material contingent liabilities.

CORPORATE GOVERNANCE

The Company is committed to ensuring high standards of corporate governance in enhancing shareholders' value and safeguarding interests of shareholders and other stakeholders.

The Company has complied with the Corporate Governance Code and Corporate Governance Report (the "CG Code") set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") during the six months ended 30 June 2020.

INTERIM DIVIDENDS

The Directors do not recommend the payment of an interim dividend in respect of the six months ended 30 June 2020 (2019: HK$0.06 per share)

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PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

There was no purchase, sale or redemption of the Company's listed shares by the Company or any of its subsidiaries during the six months ended 30 June 2020.

AUDIT COMMITTEE

The Audit Committee of the Company has discussed with the management and reviewed the unaudited condensed consolidated financial statements of the Group for the six months ended 30 June 2020 and considered that the Company has complied with all applicable accounting standards and requirements.

INTERIM REPORT

The 2020 Interim Report will be sent to shareholders on or before 18 September 2020. It will also be available on the Stock Exchange of Hong Kong Limited website at http://www.hkexnews.hk and the Company website at http://www.dmssc.net on or before 14 September 2020.

By order of the Board of

Da Ming International Holdings Limited

Zhou Keming

Chairman

Hong Kong, 10 August 2020

As at the date of this announcement, the executive Directors are Mr. Zhou Keming (Chairman), Mr. Jiang Changhong (Chief Executive Officer), Ms. Xu Xia, Mr. Zou Xiaoping, Dr. Fukui Tsutomu, Mr. Zhang Feng and Mr. Wang Jian; the non-executive Directors are Mr. Lin Changchun and Mr. Lu Jian; and the independent non-executive Directors are Mr. Cheuk Wa Pang, Prof. Hua Min, Mr. Lu Daming, Mr. Liu Fuxing and Mr. Hu Xuefa.

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