Huajin International Holdings Limited
華津國際控股有限公司
(Incorporated in the Cayman Islands with limited liability)
INTERIM REPORT
Huajin International Holdings Limited / Interim Report 2020
CONTENTS
FINANCIAL HIGHLIGHTS | 2 |
REPORT ON REVIEW OF CONDENSED | 3-4 |
CONSOLIDATED FINANCIAL STATEMENTS | |
CONDENSED CONSOLIDATED STATEMENT OF | |
PROFIT OR LOSS AND OTHER | 5 |
COMPREHENSIVE INCOME | |
CONDENSED CONSOLIDATED STATEMENT OF | 6-7 |
FINANCIAL POSITION | |
CONDENSED CONSOLIDATED STATEMENT OF | 8 |
CHANGES IN EQUITY | |
CONDENSED CONSOLIDATED STATEMENT OF | 9-10 |
CASH FLOWS | |
NOTES TO THE CONDENSED CONSOLIDATED | 11-30 |
FINANCIAL STATEMENTS | |
MANAGEMENT DISCUSSION AND ANALYSIS | 31-40 |
OTHER INFORMATION | 41-47 |
CORPORATE INFORMATION | 48 |
FINANCIAL HIGHLIGHTS
Six months ended 30 June | |||
2020 | 2019 | Change | |
(unaudited) | (unaudited) | ||
Revenue (RMB million) | 910.4 | 927.3 | -1.8% |
Gross profit (RMB million) | 24.8 | 56.4 | -56.0% |
Gross profit margin (%) | 2.7% | 6.1% | |
EBITDA (RMB million) (note 1) | 27.3 | 63.1 | -56.7% |
EBITDA margin (%) | 3.0% | 6.8% | |
(Loss) profit attributable to owners of | |||
the Company (RMB million) | (14.0) | 10.5 | -233.3% |
Basic (loss) earnings per shares (RMB cent) | (2.33) | 1.75 | -233.1% |
Sales volume (tonne) (note 2) | 208,299 | 197,407 | +5.5% |
Average processing fee per tonne (RMB) | |||
(note 3) | 361 | 422 | -14.5% |
As at | As at | ||
30.6.2020 | 31.12.2019 | Change | |
(unaudited) | (audited) | ||
Net asset value (RMB million) | 520.0 | 534.0 | -2.6% |
Net asset value per share (RMB) | 0.87 | 0.89 | -2.2% |
Borrowings (RMB million) | 839.4 | 790.8 | +6.1% |
Gearing ratio (%) (note 4) | 161.4% | 148.1% |
Notes:
- EBITDA is calculated at profit before taxation subtracted by net finance costs and adding back depreciation of property, plant and equipment, and depreciation of right-of-use assets.
- It represents the sales volume of processed steel products and galvanized steel products during the reporting period.
- The average processing fee is the difference between the average selling price and the average cost of direct materials charged for its processed steel products and galvanized steel products.
- Gearing ratio is calculated at borrowings divided by net asset value.
2 | Huajin International Holdings Limited / Interim Report 2020 |
REPORT ON REVIEW OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TO THE BOARD OF DIRECTORS OF
HUAJIN INTERNATIONAL HOLDINGS LIMITED 華津國際控股有限公司
(incorporated in the Cayman Islands with limited liability)
INTRODUCTION
We have reviewed the condensed consolidated financial statements of Huajin International Holdings Limited (the "Company") and its subsidiaries set out on pages 5 to 30, which comprise the condensed consolidated statement of financial position as of 30 June 2020 and the related condensed consolidated statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended, and certain explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 "Interim Financial Reporting" ("HKAS 34") issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance with HKAS 34. Our responsibility is to express a conclusion on these condensed consolidated financial statements based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.
SCOPE OF REVIEW
We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants. A review of these condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Huajin International Holdings Limited / Interim Report 2020 | 3 |
REPORT ON REVIEW OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS 34.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
27 August 2020
4 | Huajin International Holdings Limited / Interim Report 2020 |
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2020
Six months ended 30 June | |||
2020 | 2019 | ||
Notes | RMB'000 | RMB'000 | |
(Unaudited) | (Unaudited) | ||
Revenue | 4 | 910,412 | 927,349 |
Cost of sales | (885,563) | (870,938) | |
Gross profit | 24,849 | 56,411 | |
Other income, other gains and losses | 2,341 | 4,426 | |
Selling expenses | (11,167) | (8,470) | |
Administrative expenses | (18,129) | (19,608) | |
Share of loss of an associate | (50) | - | |
(Loss) profit before investment (loss) gain, net | |||
finance costs and taxation | (2,156) | 32,759 | |
Investment (loss) gain | (1,944) | 1,695 | |
Finance income | 5 | 1,341 | 1,164 |
Finance costs | 5 | (14,441) | (19,351) |
Finance costs, net | 5 | (13,100) | (18,187) |
(Loss) profit before taxation | (17,200) | 16,267 | |
Income tax credit (expenses) | 6 | 3,199 | (5,791) |
(Loss) profit for the period attributable to | |||
owners of the Company | 7 | (14,001) | 10,476 |
Other comprehensive expense for the period | |||
which may be subsequently reclassified to | |||
profit or loss, attributable to owners of the | |||
Company | |||
- exchange differences arising on | |||
translation of foreign operations | - | (32) | |
Total comprehensive (expense) income for the | |||
period | (14,001) | 10,444 | |
(Loss) earnings per share for (loss) profit | |||
attributable to owners of the Company | |||
- basic (RMB cents) | 8 | (2.33) | 1.75 |
Huajin International Holdings Limited / Interim Report 2020 | 5 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2020
30 June | 31 December | ||
2020 | 2019 | ||
Notes | RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | ||
NON-CURRENT ASSETS | |||
Property, plant and equipment | 10 | 853,987 | 741,458 |
Right-of-use assets | 10 | 171,250 | 173,803 |
Interests in an associate | 6,080 | 6,130 | |
Deposits paid for acquisition of property, | |||
plant and equipment | 62,178 | 109,100 | |
Deferred tax assets | 9,108 | 5,363 | |
1,102,603 | 1,035,854 | ||
CURRENT ASSETS | |||
Inventories | 140,511 | 81,460 | |
Trade, bills and other receivables | 11 | 431,734 | 316,915 |
Derivative financial instruments | |||
at fair value through profit or loss | 12 | 5 | - |
Tax recoverable | - | 915 | |
Restricted bank and other deposits | 20,453 | 72,484 | |
Bank balances and cash | 23,612 | 38,695 | |
616,315 | 510,469 | ||
CURRENT LIABILITIES | |||
Trade, bills and other payables and | |||
accrued expenses | 13 | 145,261 | 89,390 |
Contract liabilities | 182,609 | 96,838 | |
Tax payables | 1,816 | 2,596 | |
Amounts due to related parties | 14 | 5,610 | 6,217 |
Borrowings - due within one year | 15 | 345,574 | 418,290 |
Lease liabilities | 1,314 | 1,313 | |
682,184 | 614,644 | ||
NET CURRENT LIABILITIES | (65,869) | (104,175) | |
TOTAL ASSETS LESS CURRENT LIABILITIES | 1,036,734 | 931,679 | |
6 | Huajin International Holdings Limited / Interim Report 2020 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2020 | |||
30 June | 31 December | ||
2020 | 2019 | ||
Notes | RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | ||
NON-CURRENT LIABILITIES | |||
Borrowings - due more than one year | 15 | 493,850 | 372,550 |
Lease liabilities | 3,090 | 3,684 | |
Deferred income | 19,800 | 21,450 | |
516,740 | 397,684 | ||
NET ASSETS | 519,994 | 533,995 | |
CAPITAL AND RESERVES | |||
Share capital | 16 | 4,999 | 4,999 |
Reserves | 514,995 | 528,996 | |
TOTAL EQUITY | 519,994 | 533,995 | |
Huajin International Holdings Limited / Interim Report 2020 | 7 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2020
Equity attributable to owners of the Company | |||||||
Share | Share | Statutory | Capital | Translation | Retained | ||
capital | premium | reserve | reserve | reserve | profits | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
(Note) | |||||||
At 1 January 2019 (audited) | 4,999 | 254,343 | 41,153 | 63,840 | (5,012) | 226,632 | 585,955 |
Profit for the period | - | - | - | - | - | 10,476 | 10,476 |
Other comprehensive expense | |||||||
for the period | - | - | - | - | (32) | - | (32) |
Total comprehensive (expense) | |||||||
income for the period | - | - | - | - | (32) | 10,476 | 10,444 |
At 30 June 2019 (unaudited) | 4,999 | 254,343 | 41,153 | 63,840 | (5,044) | 237,108 | 596,399 |
At 1 January 2020 (audited) | 4,999 | 184,003 | 43,608 | 63,840 | (5,012) | 242,557 | 533,995 |
Loss and total comprehensive | |||||||
expense for the period | - | - | - | - | - | (14,001) | (14,001) |
At 30 June 2020 (unaudited) | 4,999 | 184,003 | 43,608 | 63,840 | (5,012) | 228,556 | 519,994 |
Note: Amount represents statutory reserve of the Group's subsidiaries in the People's Republic of China (the "PRC"). According to the relevant laws in the PRC, the Group's subsidiaries in the PRC are required to transfer at least 10% of their net profit after taxation, as determined under the PRC accounting regulations, to a non-distributable reserve fund until the reserve balance reaches 50% of their registered capital. The transfer to this reserve must be made before the distribution of a dividend to owners. Such reserve can be used to offset the previous years' losses, if any, and is non-distributable other than upon liquidation.
8 | Huajin International Holdings Limited / Interim Report 2020 |
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 | |
(Unaudited) | (Unaudited) | |
OPERATING ACTIVITIES | ||
(Loss) profit before taxation | (17,200) | 16,267 |
Adjustments for: | ||
Share of loss of an associate | 50 | - |
Depreciation of property, plant and equipment | 4,116 | 6,791 |
Depreciation of right-of-use assets | 1,967 | 1,853 |
Interest expense | 14,441 | 19,351 |
Investment loss (gain) on derivative financial | ||
instruments | 1,944 | (1,695) |
Others | (3,267) | (3,530) |
Operating cash flows before movements in working | ||
capital | 2,051 | 39,037 |
(Increase) decrease in inventories | (34,951) | 134,447 |
(Increase) decrease in trade, bills and other receivables | (77,995) | 2,545 |
Increase in trade, bills and other payables | ||
and accrued expenses | 11,559 | 55,815 |
Increase in contract liabilities | 85,771 | 2,532 |
Decrease in amount due to a related party | (5) | - |
Cash (used in) generated from operations | (13,570) | 234,376 |
Income tax paid | (409) | (12) |
NET CASH (USED IN) FROM OPERATING ACTIVITIES | (13,979) | 234,364 |
INVESTING ACTIVITIES | ||
Withdrawal of restricted bank and other deposits | 90,877 | 295,309 |
Interest received | 1,341 | 1,164 |
Deposit paid for acquisition and purchase of property, | ||
plant and equipment | (46,798) | (41,438) |
Placement of restricted bank and other deposits | (38,846) | (365,923) |
Payment for acquisition of additional interest in a | ||
subsidiary completed in previous years | (3,000) | - |
Settlement of derivative financial instruments | (1,949) | 1,695 |
Capital injection to an associate | (25) | - |
NET CASH FROM (USED IN) INVESTING ACTIVITIES | 1,600 | (109,193) |
Huajin International Holdings Limited / Interim Report 2020 | 9 |
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 | |
(Unaudited) | (Unaudited) | |
FINANCING ACTIVITIES | ||
Repayment of borrowings | (347,171) | (693,410) |
Interest paid | (20,731) | (19,322) |
Repayment of lease liabilities | (600) | (264) |
New borrowings raised | 365,755 | 573,704 |
Repayment to a related party | - | (26,654) |
NET CASH USED IN FINANCING ACTIVITIES | (2,747) | (165,946) |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (15,126) | (40,775) |
CASH AND CASH EQUIVALENTS AT 1 JANUARY | 38,695 | 72,465 |
Effect of foreign exchange rate changes | 43 | 131 |
CASH AND CASH EQUIVALENTS AT 30 JUNE, | ||
represented by bank balances and cash | 23,612 | 31,821 |
10 | Huajin International Holdings Limited / Interim Report 2020 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
1. BASIS OF PREPARATION
Huajin International Holdings Limited (the "Company", together with its subsidiaries, the "Group") is a public limited company incorporated in the Cayman Islands as an exempted company and its shares are listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). Its immediate and ultimate holding company is Haiyi Limited, a company incorporated in the British Virgin Islands and ultimately controlled by two individuals, namely Mr. Xu Songqing ("Mr. Xu") and Mr. Luo Canwen ("Mr. Luo") who have been acting in concert.
The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
In preparing the condensed consolidated financial statements of the Group, the directors of the Company have given careful consideration to the future liquidity of the Group in light of the fact that the Group's current liabilities exceeded its current assets by RMB65,869,000 as at 30 June 2020 and had capital commitments contracted for but not provided in the condensed consolidated financial statements of RMB172,672,000 on the same date, of which RMB125,151,000 is due for payment in the next twelve months from 30 June 2020. The Group had also incurred a net cash outflow of RMB15,126,000 for the six months ended 30 June 2020.
In the opinion of the directors of the Company, the Group will be able to continue as a going concern at least in the coming twelve months taking into consideration that the available bank facilities from various banks for the operation requirements of the Group based on the past history of renewal of such facilities and the working capital estimated to be generated from operating activities. As at 30 June 2020, the Group had total financing facilities relating to borrowings amounted to approximately RMB793,913,000, of which approximately RMB687,909,000 had been utilised, and the unutilised financing facilities amounted to RMB106,004,000. In addition, based on the best estimation of the directors of the Company, all of the currently utilised financing facilities would be renewed upon expiry.
Mr. Xu and Mr. Luo also agreed to provide necessary financial support to enable the Group to meet its financial obligations as they fall due for a period of eighteen months from the date of approval of the condensed consolidated financial statements.
Huajin International Holdings Limited / Interim Report 2020 | 11 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
1. BASIS OF PREPARATION (Continued)
Based on the aforesaid factors, the directors of the Company are satisfied that the Group will have sufficient financial resources to meet in full its financial obligations as and when they fall due for the foreseeable future. Accordingly, the directors of the Company consider that it is appropriate to prepare the condensed consolidated financial statements on a going concern basis.
2. SIGNIFICANT EVENTS IN THE CURRENT INTERIM PERIOD
The outbreak of Covid-19 and the subsequent quarantine measures as well as the travel restrictions imposed by many countries have had negative impacts to the global economy and business environment which would directly and indirectly affect the operations of the Group. The operations of the Group's factories had been suspended for around two weeks and had resumed their operations in February 2020 due to mandatory government quarantine measures in an effort to contain the spread of the pandemic. The Group understands that its major suppliers and most of its customers have also resumed their operations. On the other hand, the Chinese government has announced some financial measures and supports for corporates to overcome the negative impact arising from the pandemic. In addition, during the current interim period, the Group has begun the trial production of the production line of the coupled pickling and tandem cold rolling mill in the new production plant. As such, the financial position and performance of the Group were affected in different aspects, including mainly decrease in revenue and increase in manufacturing costs (included in cost of sales) due to the temporary close-down of the Group's factories due to the Covid-19 pandemic.
3. PRINCIPAL ACCOUNTING POLICIES
The condensed consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair values, as appropriate.
Other than changes in accounting policies resulting from application of amendments to Hong Kong Financial Reporting Standards ("HKFRSs"), the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2020 are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2019.
12 | Huajin International Holdings Limited / Interim Report 2020 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
3. PRINCIPAL ACCOUNTING POLICIES (Continued)
Application of amendments to HKFRSs
In the current interim period, the Group has applied the Amendments to References to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the HKICPA, for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the Group's condensed consolidated financial statements:
Amendments to HKFRS 3 | Definition of a Business |
Amendments to HKAS 1 and HKAS 8 | Definition of Material |
Amendments to HKFRS 9, | Interest Rate Benchmark Reform |
HKAS 39 and HKFRS 7 |
Except as described below, the application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current period has had no material impact on the Group's financial positions and performance for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements.
Impacts of application on Amendments to HKAS 1 and HKAS 8 "Definition of Material"
The amendments provide a new definition of material that states "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.
The application of the amendments in the current period had no impact on the condensed consolidated financial statements. Changes in presentation and disclosures on the application of the amendments, if any, will be reflected on the consolidated financial statements for the year ending 31 December 2020.
Huajin International Holdings Limited / Interim Report 2020 | 13 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
4. REVENUE AND SEGMENT INFORMATION
Operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the executive directors, Mr. Xu and Mr. Luo, being the chief operating decision maker (the "CODM"), in order to allocate resources to segments and to assess their performance. During the six months ended 30 June 2020 and 2019, the CODM assesses the operating performance and allocates the resources of the Group as a whole as the Group is primarily engaged in production and sales of cold-rolled steel products and galvanized steel products. Therefore, the management considers that the Group has one operating segment only. The Group mainly operates in the PRC and the Group's non-current assets are also located in the PRC.
A disaggregation of revenue from contracts with customers by types of goods is as follow:
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Unaudited) | |
Sales of cold-rolled steel products | ||
- steel strips and sheets | 628,770 | 643,963 |
- welded steel tubes | 68,243 | 92,401 |
Sales of galvanized steel products | 153,258 | 108,184 |
Sales of hot-rolled steel products and others | 60,141 | 82,801 |
910,412 | 927,349 | |
All revenue of the Group are recognised at a point in time. All products are delivered within a period less than one year. As permitted under HKFRS 15, the transaction price allocated to these unsatisfied contracts is not disclosed.
14 | Huajin International Holdings Limited / Interim Report 2020 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
4. REVENUE AND SEGMENT INFORMATION (Continued)
The Group's revenue is derived from customers located in the PRC and the Southeast Asia. The Group's revenue by the geographical locations of the customers, determined based on the destination of goods delivered, irrespective of the origin of goods, is detailed below:
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Unaudited) | |
PRC | 907,971 | 921,806 |
Southeast Asia | 2,441 | 5,543 |
910,412 | 927,349 | |
No revenue from any customer of the Group contributed to over 10% of the total revenue of the Group for the six months ended 30 June 2020 (six months ended 30 June 2019: nil (unaudited)).
Huajin International Holdings Limited / Interim Report 2020 | 15 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
5. FINANCE INCOME AND COSTS
Six months ended 30 June
2020 2019
RMB'000 RMB'000
(Unaudited) (Unaudited)
Finance costs
- Interest expense on borrowings, net of
- amounts capitalised in the cost of
- qualifying assets of RMB6,292,000
- (six months ended 30 June 2019:
RMB4,985,000) | (14,341) | (19,238) |
- Interest expense on lease liabilities | (100) | (113) |
(14,441) | (19,351) | |
Finance income | ||
- Interest income from bank deposits | 1,341 | 1,164 |
Finance costs, net | (13,100) | (18,187) |
Borrowing costs capitalised during the six months ended 30 June 2020 arose on the general borrowing pool and are calculated by applying a capitalisation rate of 7.11% (six months ended 30 June 2019: 5.3%) per annum to expenditure on qualifying assets.
6. INCOME TAX (CREDIT) EXPENSES
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Unaudited) | |
Current tax charge: | ||
- PRC Enterprise Income Tax ("EIT") | 2,282 | 3,347 |
Overprovision in prior year: | ||
- PRC EIT | (1,736) | (2,219) |
Deferred tax (credit) charge | (3,745) | 4,663 |
Income tax (credit) expenses for the period | (3,199) | 5,791 |
16 | Huajin International Holdings Limited / Interim Report 2020 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
7. (LOSS) PROFIT FOR THE PERIOD
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Unaudited) | |
(Loss) profit for the period has been arrived at | ||
after charging (crediting): | ||
Directors' remuneration | ||
- fees | 340 | 324 |
- other emoluments, salaries, allowances and | ||
other benefits | 739 | 520 |
- retirement benefit scheme contributions | 51 | 59 |
1,130 | 903 | |
Staff salaries, allowances and other benefits | 32,678 | 32,872 |
Retirement benefit scheme contributions, | ||
excluding those of directors | 1,617 | 4,100 |
Total employee benefits expenses | 35,425 | 37,875 |
Depreciation of property, plant and equipment | 29,402 | 26,821 |
Less: amount capitalised as cost of inventories | ||
manufactured | (25,286) | (20,030) |
4,116 | 6,791 | |
Depreciation of right-of-use assets | 1,967 | 1,853 |
Cost of inventories recognised as an expense | 883,567 | 870,938 |
Gain on disposal of property, plant and equipment | (276) | (717) |
Huajin International Holdings Limited / Interim Report 2020 | 17 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
8. (LOSS) EARNINGS PER SHARE
The calculation of basic (loss) earnings per share attributable to the owners of the Company is based on the following data:
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Unaudited) | |
(Loss) earnings: | ||
(Loss) profit for the period attributable to owners | ||
of the Company for the purpose of basic (loss) | ||
earnings per share | (14,001) | 10,476 |
Number of shares: | ||
Weighted average number of ordinary shares for | ||
the purpose of basic (loss) earnings per share | ||
(in thousands) | 600,000 | 600,000 |
No diluted (loss) earnings per share is presented for the six months ended 30 June 2020 and 30 June 2019 as the Group had no potential dilutive ordinary shares in issue during these periods.
9. DIVIDENDS
No dividend has been paid during the six months ended 30 June 2020 and 2019.
No interim dividend for the six-month period ended 30 June 2020 has been proposed since the end of the reporting period. (2019: an interim dividend of HK3.0 cents per share and a special interim dividend of HK10.0 cents per share amounting to HK$78,000,000 (equivalent to RMB70,340,000) in aggregate).
18 | Huajin International Holdings Limited / Interim Report 2020 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
10. MOVEMENTS IN PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS
During the current interim period, the Group acquired property, plant and equipment and incurred construction costs of RMB149,029,000 (unaudited) (six months ended 30 June 2019: RMB78,008,000 (unaudited)).
During the current interim period, the Group disposed of certain property, plant and equipment with an aggregate carrying amount of RMB5,678,000 (six months ended 30 June 2019: RMB1,000,000) for cash proceeds of RMB 5,954,000 (six months ended 30 June 2019: RMB1,717,000), resulting in a gain on disposal of RMB276,000 (six months ended 30 June 2019: RMB717,000).
During the six months ended 30 June 2019, the Group made two lease modifications of two existing leases by extending the lease term for 3 years and 2 years respectively. At the effective dates of the lease modification, the Group recognised RMB1,937,000 of right-of-use asset and lease liability of the same amount. No other additions of the Group's right-of-use assets for the six months ended 30 June 2020 and 2019.
Impairment assessment
Certain long-lived assets are related to the Group's business of sales of processed steel products and galvanized steel products, comprising certain property, plant and equipment, right-of-use assets other than leasehold lands and deposits paid for acquisition of property, plant and equipment (the "Identified Long-lived Assets"). Due to the suspension of certain of the Group's production and the changes in the current economic environment related to the Covid-19 pandemic during the current interim period, the Group is experiencing negative conditions including mainly decreased revenue that indicate that the Identified Long-lived Assets may be impaired. The Group performed impairment testing on these assets and concluded that no impairment loss of the Identified Long-lived Assets has been recognised in profit or loss for the six months ended 30 June 2020 (six months ended 30 June 2019: nil).
Huajin International Holdings Limited / Interim Report 2020 | 19 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
11. TRADE, BILLS AND OTHER RECEIVABLES
30.6.2020 | 31.12.2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Trade receivables from contracts with customers | 97,296 | 102,912 |
Bills receivables | 18,545 | 54,865 |
Prepayments to suppliers | 274,759 | 134,926 |
Value-added tax recoverable | 26,457 | 15,051 |
Other prepayments, deposits and other | ||
receivables | 14,677 | 9,161 |
431,734 | 316,915 | |
No allowance of credit losses was provided for the six months ended 30 June 2020 and 30 June 2019.
For long-term customers with good credit quality and payment history, the Group allows credit periods of no longer than 90 days. For other customers, the Group demands for full settlement upon delivery of goods.
20 | Huajin International Holdings Limited / Interim Report 2020 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
11. TRADE, BILLS AND OTHER RECEIVABLES (Continued)
The following is an ageing analysis of trade receivables and bills receivables presented based on the invoice date and bills receipt dates respectively at the end of each reporting period:
30.6.2020 | 31.12.2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Trade receivables: | ||
Within 30 days | 89,153 | 98,256 |
31-60 days | 5,271 | 3,050 |
61-90 days | 771 | 358 |
91-120 days | 460 | 488 |
121-180 days | 643 | 416 |
181-365 days | 761 | 315 |
Over 1 year | 237 | 29 |
97,296 | 102,912 | |
Bills receivables: | ||
Within 30 days | 5,501 | 1,267 |
31-60 days | - | 352 |
61-90 days | 1,237 | 279 |
91-120 days | 3,800 | 827 |
121-180 days | 6,649 | 38,803 |
181-365 days | 1,358 | 13,337 |
18,545 | 54,865 | |
Huajin International Holdings Limited / Interim Report 2020 | 21 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
11. TRADE, BILLS AND OTHER RECEIVABLES (Continued)
As at 30 June 2020, included in the Group's bills receivables are amounts of RMB13,044,000 (unaudited) (31 December 2019: RMB 53,498,000 (audited)), being the discounted bills receivables transferred to certain banks with full recourse. If the issuing banks of bills receivables default payment on maturity, the banks have the right of recourse to request the Group to pay the unsettled balance. As the Group has not transferred substantially all the risks and rewards relating to these bills receivables, it continues to recognise the full carrying amount of the bills receivables and has recognised the cash received on the transfer as bank borrowings from factoring of trade receivables with full recourse (note 15). The financial asset is carried at amortised cost in the condensed consolidated statement of financial position. All the bills receivables are with a maturity period of less than one year.
30.6.2020 | 31.12.2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Carrying amount of transferred asset | 13,044 | 53,498 |
Carrying amount of associated liability | (13,044) | (53,498) |
- | - | |
During the year ended 31 December 2019, certain transactions between subsidiaries of the Company arising from steel processing services were settled by bank bills. As at 31 December 2019, bills receivables held by two subsidiaries of the Company issued by other members of the Group of RMB72,346,000 were transferred to certain banks with full recourse similar to the arrangements as set out above. These bills receivables were eliminated in full on consolidation. The Group has recognised the cash received on the transfer of the bills receivables as bank borrowings from factoring of trade receivables with full recourse (note 15). No transaction between subsidiaries of the Company were settled by bank bills for the six-month period ended 30 June 2020.
22 | Huajin International Holdings Limited / Interim Report 2020 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
12. DERIVATIVE FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
As at 30 June 2020, the derivative financial instruments represent the outstanding future contracts of hot rolled coils with total notional amount of approximately RMB5,000 (unaudited) with maturity date in October 2020 which are publicly traded in futures exchange. Future contracts of hot rolled coils entered into during the year ended 31 December 2019 have been fully settled before the end of the reporting period. The resulting gain or loss on the derivative financial instruments during the six- month periods ended 30 June 2020 and 2019 were recognised in profit or loss.
13. TRADE, BILLS AND OTHER PAYABLES AND ACCRUED EXPENSES
30.6.2020 | 31.12.2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Trade payables | 39,196 | 28,785 |
Bills payables | 10,000 | - |
Accrued staff costs | 11,784 | 6,599 |
Construction payables | 56,175 | 26,147 |
Transportation fee payables | 3,308 | 1,237 |
Other tax payables | 2,617 | 720 |
Consideration payable for acquisition of additional | ||
interest in a subsidiary | 7,138 | 10,138 |
Other payables and accrued expenses | 15,043 | 15,764 |
145,261 | 89,390 | |
Huajin International Holdings Limited / Interim Report 2020 | 23 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
13. TRADE, BILLS AND OTHER PAYABLES AND ACCRUED EXPENSES (Continued)
The following is an ageing analysis of trade payables and bills payables presented based on the invoice date and bills' issue date at the end of each reporting period:
30.6.2020 | 31.12.2019 | ||
RMB'000 | RMB'000 | ||
(Unaudited) | (Audited) | ||
Trade payables: | |||
Within 30 days | 21,228 | 15,010 | |
31-60 days | 1,716 | 4,386 | |
61-90 days | 6,218 | 2,627 | |
91-120 days | 3,556 | 455 | |
121-180 days | 944 | 946 | |
181-365 days | 1,501 | 2,296 | |
Over 1 year | 4,033 | 3,065 | |
39,196 | 28,785 | ||
Bills payables: | |||
Within 30 days | 10,000 | - | |
14. AMOUNTS DUE TO RELATED PARTIES
30.6.2020 | 31.12.2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Mr. Xu (Note i) | 1,470 | 2,047 |
Jiangmen Jinyuan Metals Company Limited | ||
("Jiangmen Jinyuan") (Note ii) | 4,140 | 4,165 |
Hua Jin Holdings Pte Ltd | ||
("Hua Jin Holdings") (Note iii) | - | 5 |
5,610 | 6,217 |
Notes:
- The amount is non-trade in nature, interest free, unsecured and repayable within twelve months from the respective dates.
- Jiangmen Jinyuan is an associate of the Group. The amount is non-trade in nature, interest free, unsecured and repayable on demand.
- This is an entity controlled by Mr. Xu. The entire balance as at 31 December 2019 is trade in nature, interest free, unsecured and repayment on demand. The full amount has been settled by the Group during the current period.
24 | Huajin International Holdings Limited / Interim Report 2020 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
15. BORROWINGS
30.6.2020 | 31.12.2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Fixed-rate borrowings: | ||
Secured bank borrowings | 307,399 | 352,100 |
Bank borrowings from factoring of bills | ||
receivables with full recourse (note 11) | 13,044 | 125,844 |
Unsecured bank borrowings | 29,437 | 29,437 |
Secured borrowings from entities established | ||
in the PRC and individuals independent with | ||
the Group | 45,305 | - |
Unsecured borrowings from entities established | ||
in the PRC independent with the Group | 80,339 | 50,459 |
475,524 | 557,840 | |
Variable-rate borrowings: | ||
Secured bank borrowings | 363,900 | 233,000 |
839,424 | 790,840 | |
The carrying amounts of the above borrowings are | ||
repayable based on the scheduled repayment | ||
dates set out in the loan agreements, as: | ||
- within one year | 345,574 | 418,290 |
- more than one year, but not more than two | ||
years | 224,960 | 190,900 |
- more than two years, but not more than five | ||
years | 160,510 | 95,600 |
- more than five years | 108,380 | 86,050 |
839,424 | 790,840 | |
Less: amounts due within one year shown under | ||
current liabilities | (345,574) | (418,290) |
Amounts shown under non-current liabilities | 493,850 | 372,550 |
The secured portion of the Group's borrowings are secured by certain assets of the Group as detailed in note 18. Certain of the Group's borrowings are also guaranteed personally by certain directors of the Company.
Huajin International Holdings Limited / Interim Report 2020 | 25 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
16. SHARE CAPITAL | |||
Number of | Share | ||
shares | capital | ||
HK$'000 | |||
Ordinary shares of HK$0.01 each | |||
Authorised: | |||
At 1 January 2019, 31 December 2019 and | |||
30 June 2020 | 8,000,000,000 | 80,000 | |
Issued: | |||
At 1 January 2019 (audited), 31 December 2019 | |||
(audited) and 30 June 2020 (unaudited) | 600,000,000 | 6,000 | |
30.6.2020 | 31.12.2019 | ||
RMB'000 | RMB'000 | ||
(Unaudited) | (Audited) | ||
Shown in the condensed consolidated statement | |||
of financial position | 4,999 | 4,999 | |
17. CAPITAL COMMITMENTS
30.6.2020 | 31.12.2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Capital expenditure contracted but not provided | ||
for in the condensed consolidated financial | ||
statements in respect of acquisition of property, | ||
plant and equipment | 172,672 | 189,451 |
26 | Huajin International Holdings Limited / Interim Report 2020 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
18. PLEDGE OF ASSETS
Certain of the Group's borrowings are secured by assets of the Group and the carrying amounts of which at the end of each reporting period are stated below:
30.6.2020 | 31.12.2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Property, plant and equipment | 716,927 | 496,021 |
Right-of-use assets | 164,209 | 168,972 |
Restricted bank and other deposits | 20,453 | 72,484 |
901,589 | 737,477 | |
19. RELATED PARTY DISCLOSURES
-
Related party balances
Details of the outstanding balances with related parties are set out in the condensed consolidated statement of financial position and in note 14. - Related party transactions
The Group entered into the following transactions with related parties, during the reporting period:
Six months ended 30 June | |||
Related party | Nature of transactions | 2020 | 2019 |
RMB'000 | RMB'000 | ||
(Unaudited) | (Unaudited) | ||
江門市華志金屬製品有限公司 | Interest expense on lease | 15 | 23 |
Jiangmen Huazhi Metal | liabilities | ||
Product Company Limited | |||
("Jiangmen Huazhi ") (Note i) | |||
Hua Jin Holdings (Note ii) | Interest expense on lease | 10 | - |
liabilities | |||
Short term lease expenditure | - | 149 | |
Huajin International Holdings Limited / Interim Report 2020 | 27 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
19. RELATED PARTY DISCLOSURES (Continued)
- Related party transactions (Continued)
Notes:
- The Group entered into a lease agreement with Jiangmen Huazhi with the remaining lease term of 3 years from 1 January 2019 for the use of warehouse located in Muzhou Town, Xinhui District, Jiangmen City. The Group is required to make fixed quarterly payments. During the current interim period, no repayment of lease payment has been made (six months ended 30 June 2019: nil). As at 30 June 2020, the carrying amounts of the right-of-use assets and the lease liabilities in relation to this lease are RMB467,000 and RMB655,000 respectively (31 December 2019: RMB623,000 and RMB640,000 respectively).
- The Group entered into a lease agreement with Hua Jin Holdings with the remaining lease term of 7 months from 1 January 2019 for the use of office premise and furniture located in Tradehub 21, 8 Boon Lay Way, Singapore. The Group is required to make fixed monthly payments. As at 30 June 2019, the Group made a lease modification of this existing lease by extending the lease term for another three year and recognised the lease liabilities of RMB898,000 and right-of-use assets of the same amount. During the current interim period, the Group has made repayment of the lease liability of RMB203,000. As at 30 June 2020, the carrying amounts of the right-of-use assets and the lease liabilities in relation to this lease are RMB607,000 and RMB667,000 respectively (31 December 2019: RMB767,000 and RMB876,000 respectively).
- During the current interim period, the Group has disposed of certain property, plant and equipment with an aggregate carrying amount of RMB617,000 to Mr. Xu for consideration of the same amount.
28 | Huajin International Holdings Limited / Interim Report 2020 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
19. RELATED PARTY DISCLOSURES (Continued)
- Guarantees provided by related parties
Certain of the Group's borrowings are secured by guarantees provided by certain directors of the Company as at 30 June 2020 and 31 December 2019 as set out in note 15. - Compensation of key management personnel
The remuneration of directors and other members of key management during the reporting period were as follows:
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Unaudited) | |
Directors' fees | 340 | 324 |
Salaries, allowances and other benefits | 1,443 | 1,406 |
Retirement benefit scheme contributions | 62 | 75 |
1,845 | 1,805 | |
Huajin International Holdings Limited / Interim Report 2020 | 29 |
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
20. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
Some of the Group's financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used), as well as the level of the fair value hierarchy into which the fair value measurements are categorised (levels 1, 2 or 3) based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirely, which are described as follows:
- Level 1 fair value measurements are based on quoted prices (unadjusted) in active market for identical assets or liabilities;
- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Fair value as at | Fair value | Valuation techniques | ||
Financial asset | 30.6.2020 | 31.12.2019 | hierarchy | and key inputs |
RMB'000 | RMB'000 | |||
(Unaudited) | (Audited) | |||
Derivative financial instruments at | ||||
fair value through profit or loss: | ||||
- Future contracts of hot rolled | 5 | - | Level 1 | Quoted bid prices in an |
coils | active market | |||
Except for the above financial assets that are measured at fair value on a recurring basis, the directors of the Company consider that the carrying amounts of financial assets and financial liabilities recognised at amortised cost in the condensed consolidated financial statements approximate to their fair values at the end of the reporting period.
30 | Huajin International Holdings Limited / Interim Report 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW
The Company is an investment holding company and the Group is a leading cold-rolled steel processor in Guangdong Province, the PRC. The Group is principally engaged in processing of hot-rolled steel coils into cold-rolled steel strips, sheets and welded steel tubes and galvanized steel products customised to the specification of the customers covering a wide range of industries, including light industrial hardware, home appliances, furniture, motorcycle/bicycle accessories, LED and lighting. The Group provides processing, cutting, slitting, warehousing and delivery services on customized cold-rolled steel products and galvanized steel products.
During the first half of 2020, the Group recorded revenue of approximately RMB910.4 million and a loss attributable to shareholders of approximately RMB14.0 million, representing a decrease of 1.8% and 233.3%, respectively, from the corresponding period in 2019.
The sales volume of processed steel products and galvanized steel products in aggregate was 208,299 tonnes in the first half of 2020, representing an increase of 10,892 tonnes or 5.5%, as compared to 197,407 tonnes in the first half of 2019. The annual processing capacity of our cold-rolling process and zinc coating process was approximately 750,000 tonnes and 250,000 tonnes respectively, with an average utilisation rate of approximately 46.1% (first half of 2019: 46.3%), and 28.5% (first half of 2019: 19.1%), respectively during the reporting period under review. The utilisation rate for the galvanized steel products was slightly improved during the reporting period under review. After three years of preparation, planning and construction for the Group's new production plant located at Gujing Town, Xinhui District, Jiangmen City, Guangdong Province, the PRC, the 950mm coupled pickling and tandem cold rolling mill (the "New Production Line") has begun the trial production and has completed production of its first qualified coil successfully on 6 June 2020. The Board anticipates that the New Production Line will begin to contribute to the Group's operating performance in commercial production in the second half of 2020.
In order to maintain its business growth in the long run, the Group invested substantially in property, plant and equipment to strengthen the scale and processing capacity of the existing production base and facilities. During the first half of 2020, the Group incurred the addition of property, plant and equipment, and construction costs of approximately RMB149.0 million.
Huajin International Holdings Limited / Interim Report 2020 | 31 |
MANAGEMENT DISCUSSION AND ANALYSIS
The capital commitments towards the acquisition of property, plant and equipment as at 30 June 2020, was approximately RMB172.7 million, which will be financed by the Group's internal resources and borrowings. It is believed that these investments will contribute to the Group's business growth and net profit margin improvement in the years ahead.
FINANCIAL REVIEW
Revenue
The Group primarily generates revenue from sales of processed steel products and galvanized steel products. The revenue slightly decreased to approximately RMB910.4 million for the first half of 2020, by approximately RMB16.9 million or 1.8%, as compared with that of approximately RMB927.3 million in the first half of 2019.
The sales volume of processed steel products slightly decreased to 172,689 tones in the first half of 2020, by 789 tonnes or 0.5%, as compared with that of 173,478 tonnes in the first half of 2019. The sales volume of galvanized steel products increased to 35,610 tonnes in the first half of 2020, by 11,681 tonnes or 48.8%, as compared with that of 23,929 tonnes in the first half of 2019. Thus, the sales volume of processed steel products and galvanized steel products in aggregate was 208,299 tonnes during the first half of 2020, representing an increase of 10,892 tonnes or 5.5%, as compared to 197,407 tonnes during the first half of 2019.
The decrease in revenue was mainly attributable to the decrease in the average selling price of the products and the drop in other sales. The average selling price of the processed steel products decreased to approximately RMB4,036 per tonne in the first half of 2020 as compared with that of approximately RMB4,245 per tonne in the first half of 2019. The average selling price of the galvanized steel products decreased to approximately RMB4,304 per tonne in the first half of 2020 as compared with that of approximately RMB4,521 per tonne in the first half of 2019. On average, the average selling price of the processed steel products and galvanized steel products decreased to approximately RMB4,082 per tonne in the first half of 2020 as compared with that of approximately RMB4,278 per tonne in the first half of 2019.
32 | Huajin International Holdings Limited / Interim Report 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
The domestic sales in the PRC market contributed over 99% (first half of 2019: 99%) of the revenue while the remaining portion was attributable to sales to our customers located in Southeast Asia.
Other revenue was primarily attributable to the sales of scrap steel residual in the manufacturing process to recycling agents and the provision of processing service to the customers. Such other revenue accounted for about 6.6% (first half of 2019: 8.9%) of the revenue during the first half of 2020.
The following table sets out the breakdown of our revenue during the reporting period:
Six months ended 30 June | |||||
2020 | 2019 | ||||
RMB'000 | % | RMB'000 | % | ||
Sales of processed steel | 697,013 | 76.6 | 736,364 | 79.4 | |
products | |||||
- processed steel strips | 628,770 | 69.1 | 643,963 | 69.4 | |
and sheets | |||||
- welded steel tubes | 68,243 | 7.5 | 92,401 | 10.0 | |
Sales of galvanized steel | 153,258 | 16.8 | 108,184 | 11.7 | |
products | |||||
Others | 60,141 | 6.6 | 82,801 | 8.9 | |
910,412 | 100.0 | 927,349 | 100.0 | ||
Cost of sales
Our cost of sales increased to approximately RMB885.6 million in the first half of 2020, by approximately RMB14.7 million or 1.7%, as compared with that of approximately RMB870.9 million in the first half of 2019.
Huajin International Holdings Limited / Interim Report 2020 | 33 |
MANAGEMENT DISCUSSION AND ANALYSIS
The following table sets out the breakdown of our cost of sales for the periods indicated:
Six months ended 30 June | ||||
2020 | 2019 | |||
RMB'000 | % | RMB'000 | % | |
Direct materials | 775,173 | 87.5 | 761,274 | 87.4 |
Utilities | 44,822 | 5.1 | 38,194 | 4.4 |
Depreciation expense | 25,286 | 2.9 | 20,030 | 2.3 |
Direct labour | 18,319 | 2.1 | 23,804 | 2.7 |
Consumables | 17,604 | 2.0 | 21,001 | 2.4 |
Others | 4,359 | 0.4 | 6,635 | 0.8 |
885,563 | 100.0 | 870,938 | 100.0 | |
Direct materials represented the cost of raw materials, primarily hot-rolled steel coils. The direct materials accounted for 87.5% (first half of 2019: 87.4%) of the cost of sales in the first half of 2020. The increase in direct materials was mainly attributable to the increase in raw material price and increase in the sales volume of galvanized steel products during the reporting period under review.
Utilities related primarily to electricity, water, and natural gas consumed throughout our production process. Utilities expenses increased to approximately RMB44.8 million in the first half of 2020, by approximately RMB6.6 million or 17.3%, as compared with that of approximately RMB38.2 million in the first half of 2019. Such increase was mainly due to the increase in production activities during the reporting period under review.
Depreciation expense experienced an increase to approximately RMB25.3 million in the first half of 2020, by approximately RMB5.3 million or 26.5%, as compared with that of approximately RMB20.0 million in the first half of 2019. Such increase was mainly due to the increase in depreciation for property, plant and equipment during the reporting period under review.
34 | Huajin International Holdings Limited / Interim Report 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
Direct labour decreased to approximately RMB18.3 million in the first half of 2020, by approximately RMB5.5 million or 23.1%, as compared with that of approximately RMB23.8 million in the first half of 2019. The decrease in direct labour was mainly due to (a) production halt of the Group's factories for around two weeks due to the Chinese New Year holidays and compliance with the local government's preventive policies, (b) a number of our workers, subject to mandatory quarantine by the local government, resumed work gradually, and (c) basic wages were paid to certain newly employed workers during the reporting period under review.
Consumables consisted of machinery spare parts and supplies consumed in the production process. Consumables also decreased to approximately RMB17.6 million in the first half of 2020, by approximately RMB3.4 million or 16.2%, as compared with that of approximately RMB21.0 million in the first half of 2019. Such decrease was mainly attributable to the drop in the consumption of consumables in the production process during the reporting period under review.
Other costs primarily comprised other taxes and surcharges, and other direct cost consumed during the production process.
Gross profit
Due to the drop in the average processing fee (being the difference between the selling price and the cost of the raw materials, namely hot-rolled steel coils) of the Group's processed steel products and galvanized steel products and the drop in other sales, the Grop recorded a gross profit of approximately RMB24.8 million in the first half of 2020, representing a decrease of approximately RMB31.6 million or 56.0%, as compared with that of approximately RMB56.4 million in the first half of 2019, and a gross profit margin of 2.7%, representing a decrease of approximately 3.4 percentage points as compared with that of 6.1% in the corresponding period in 2019.
Other income, other gains and losses
Other income, other gains and losses decreased to approximately RMB2.3 million in the first half of 2020, by approximately RMB2.1 million or 47.7%, as compared with that of approximately RMB4.4 million in the first half of 2019.
Huajin International Holdings Limited / Interim Report 2020 | 35 |
MANAGEMENT DISCUSSION AND ANALYSIS
Selling expenses
The selling expenses increased to approximately RMB11.2 million in the first half of 2020, by approximately RMB2.7 million or 31.8%, as compared with that of approximately RMB8.5 million in the first half of 2019. The increase in selling expenses during the reporting period under review was mainly attributable to the increase in delivery costs and other selling related expenses.
Administrative expenses
The administrative expenses slightly decreased to approximately RMB18.1 million in the first half of 2020, by approximately RMB1.5 million or 7.7%, as compared with that of approximately RMB19.6 million in the first half of 2019.
Investment (loss) gain
Investment loss was approximately RMB1.9 million in the first half of 2020 when compared with investment gain of approximately RMB1.7 million in the first half of 2019. Such investment loss during the reporting period under review was primarily due to the net realised loss on derivative financial instruments in relation to the commodity futures contracts amounting to approximately RMB1.9 million.
Finance costs
The finance costs comprised interest expenses on borrowings which were charged at interest rates ranging from 1.00% to 7.1% (first half of 2019: 4.35% to 8.05%) per annum in the first half of 2020. Finance costs decreased to approximately RMB14.4 million in the first half of 2020, by approximately RMB5.0 million or 25.8%, as compared with that of approximately RMB19.4 million in the first half of 2019. Such decrease was primarily resulted from the decrease in factoring cost during the reporting period under review.
Income tax credit/(expenses)
Income tax credit was approximately RMB3.2 million during the first half of 2020 while there were income tax expenses of approximately RMB5.8 million during the first half of 2019. The changes was mainly attributable to the recognition of unutilised tax losses of approximately RMB4.2 million as deferred tax assets in one of the Group's principal subsidiary in the PRC during the first half of 2020.
36 | Huajin International Holdings Limited / Interim Report 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
Profit for the period
The Group's EBITDA decreased to approximately RMB27.3 million in the first half of 2020, by approximately RMB35.8 million or 56.7%, as compared with that of approximately RMB63.1 million in the first half of 2019. Such decrease reflected the drop in the operating cash flow from our business during the reporting period under review.
The loss attributable to shareholders of the Company decreased to approximately RMB14.0 million in the first half of 2020 when compared with the profit attributable to shareholders of the Company of approximately RMB10.5 million in the first half of 2019.
Net loss margin was approximately 1.5% in the first half of 2020 when compared with net profit margin of approximately 1.1% in the first half of 2019.
Liquidity and financial resources
As at 30 June 2020, the Group's bank balances and cash decreased to approximately RMB23.6 million, by approximately RMB15.1 million or 39.0%, from approximately RMB38.7 million as at 31 December 2019. The Group's restricted bank and other deposits decreased to approximately RMB20.5 million as at 30 June 2020, by approximately RMB52.0 million or 71.7%, from approximately RMB72.5 million as at 31 December 2019.
As at 30 June 2020, the Group had the net current liabilities and the net assets of approximately RMB65.9 million (31 December 2019: RMB104.2 million) and approximately RMB520.0 million (31 December 2019: RMB534.0 million), respectively. As at 30 June 2020, the current ratio calculated based on current assets divided by current liabilities of the Group was 90.3% as compared with that of 83.1% as at 31 December 2019.
At 30 June 2020, the Group's total borrowings amounted to approximately RMB839.4 million (31 December 2019: RMB790.8 million) and total equity amounted to approximately RMB520.0 million (31 December 2019: RMB534.0 million). The gearing ratio of the Group, calculated based on total borrowings divided by total equity, was approximately 1.61 times (31 December 2019: 1.48 times) as at 30 June 2020.
Huajin International Holdings Limited / Interim Report 2020 | 37 |
MANAGEMENT DISCUSSION AND ANALYSIS
As at 30 June 2020, the Group had total financing facilities amounted to approximately RMB793.9 million (31 December 2019: RMB701.0 million), of which approximately RMB687.9 million (31 December 2019: RMB575.3 million) had been utilised. As at 30 June 2020, certain of the Group's borrowings, which were secured by certain assets of the Group, were also secured by personal guarantees from Mr. Xu Songqing, Mr. Luo Canwen and Mr. Chen Chunniu respectively. Mr. Xu and Mr. Luo also agreed to provide necessary financial support to enable the Group to meet its financial obligations as they fall due for a period of eighteen months from the date of approval of these condensed consolidated financial statements. The Group believes that it has and will have sufficient unutilised financing facilities to meet its business operation, capital expenditures and expansion.
Foreign currency exposure
As the functional currency of our PRC subsidiaries is Renminbì ("RMB") and a portion of our revenue is derived from sales to overseas customers who settle in United States dollars ("USD"), we are exposed to risks associated with fluctuations in USD against RMB. In addition, we are exposed to foreign currency risk arising from certain bank balances which are denominated in USD, Hong Kong dollars and Singapore dollars. Our Group currently does not have any foreign currency hedging policy. However, our management closely monitors its exposure to foreign currency risk and will consider hedging significant foreign currency exposure should the need arise.
Financial instruments
During the reporting period under review, apart from the commodity futures contracts, the Group had not entered into any financial instruments for hedging purpose.
Material acquisitions and disposal
During the reporting period under review, the Group had no material acquisitions or disposal of subsidiaries, associates and joint ventures.
Capital structure
Details of the share capital are set out in note 16 to the condensed consolidated financial statements.
38 | Huajin International Holdings Limited / Interim Report 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
Capital commitment
Details of the capital commitment are set out in note 17 to the condensed consolidated financial statements.
Pledge of assets
Details of the pledge of assets are set out in note 18 to the condensed consolidated financial statements.
Contingent liabilities
During the reporting period under review, the Company provided guarantees to banks as securities for financing facilities granted to certain subsidiaries of the Company in the PRC. The Group did not provide any guarantee to any third parties and did not have contingent liabilities as at 30 June 2020 (31 December 2019: nil).
Employees
As at 30 June 2020, the Group had a total of 858 (31 December 2019: 845) full-time employees in mainland China, Hong Kong and Singapore. The Group's total staff costs (including Directors' remuneration) during the first half of 2020 amounted to approximately RMB35.4 million (first half of 2019: RMB37.9 million). The Group remunerated the employees based on their performance, experience and prevailing market practices. The Company has share option scheme in place as a means to encourage and reward the eligible employees (including the Directors) for their contributions to the Group's results and business development based on their individual performance. No share option was granted during the six months ended 30 June 2020.
Huajin International Holdings Limited / Interim Report 2020 | 39 |
MANAGEMENT DISCUSSION AND ANALYSIS
PROSPECTS
The outbreak of Covid-19 and the subsequent quarantine measures as well as the travel restrictions imposed by many countries have had negative impacts to the global economy and business environment which would directly and indirectly affect the operations of the Group. The operations of the Group's factories in Jiangmen city, Guangdong Province, the PRC had been suspended for around two weeks and had resumed their operations in February 2020 due to mandatory government quarantine measures in an effort to contain the spread of the pandemic.
Despite the above, the 950mm coupled pickling and tandem cold rolling mill has begun its trial production in the Group's new production plant and has completed production of its first qualified coil successfully on 6 June 2020. The successful trial production of the New Production Line marks an important milestone for the Group. The Group's annual processing design capacity for cold rolling processes is expected to increase from the existing 750,000 tonnes to 1,350,000 tonnes when the New Production Line will be commencing commercial production in the second half of 2020. Based on the preliminary assessment by the Group's management, the sales volume of processed steel products and galvanized steel products in aggregate amounting to approximately 67,000 tonnes, representing an increase of approximately 93% as compared with the average monthly sales volume of approximately 34,700 tonnes in the first half of 2020, was completed and recognized in the month of July 2020. As at 31 July 2020, the Group's total backlog on sales orders for processed steel products and galvanized steel products in aggregate amounted to approximately 83,900 tonnes.
Notwithstanding the loss incurred by the Group during the first half of 2020, the Board anticipates that the New Production Line will begin to contribute to the Group's operating performance in commercial production in the second half of 2020. Based on the preliminary assessment of the Group's unaudited consolidated management accounts for the seven months ended 31 July 2020, which has not been reviewed by the audit committee or the independent auditors of the Company, the Group's operation was back to profit. The Board anticipates that the Group's operating performance in the second half of 2020 will improve significantly when compared to the first half of 2020. The Board is optimistic that the Group's operating results will achieve better performance for the financial year ending 31 December 2020. The Group will continue to maintain its leading position in the cold rolled carbon steel processors in Guangdong Province in terms of annual production volume. The New Production Line will enhance quality products and production efficiency of the Group thereby providing a solid foundation for the entrenchment of the Company's long term competitive advantage.
40 | Huajin International Holdings Limited / Interim Report 2020 |
OTHER INFORMATION
DISCLOSURE OF INTERESTS
DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES OF THE COMPANY
As at 30 June 2020, the interests and short positions of the Directors and the chief executive of the Company and their associates in the ordinary share(s) of HK$0.01 each in the share capital of the Company (the "Shares") and underlying Shares of the Company which have been notified to the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to Divisions 7 and 8 of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) ("SFO"), or which were recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules") were as follows:
Long positions in the Shares of the Company
Percentage of | |||
the issued | |||
share capital | |||
Number of | of the | ||
Name of Directors | Nature of interest | Shares held | Company |
Mr. Xu Songqing | Interest held jointly with | 450,000,000 | 75.00% |
("Mr. Xu") | another person (1); | ||
Interest of controlled | |||
corporation (2) (3) | |||
Mr. Luo Canwen | Interest held jointly with | 450,000,000 | 75.00% |
("Mr. Luo") | another person (1); | ||
Interest of controlled | |||
corporation (2) (3) |
Huajin International Holdings Limited / Interim Report 2020 | 41 |
OTHER INFORMATION
Notes:
- On 4 January 2016, Mr. Xu and Mr. Luo entered into the acting in concert agreement, pursuant to which, among other things, Mr. Xu and Mr. Luo acknowledged and confirmed that they, as ultimate shareholders of the Company, have been parties acting in concert throughout the period and up to the date thereof and will continue to act in concert thereafter. As such, our ultimate controlling shareholders together control 75.00% interest in the share capital of the Company through Intrend Ventures, Zhong Cheng and Haiyi (as defined below). As a result, each of the ultimate controlling shareholders and their respective holding company is deemed to be interested in such 75.00% interest in the share capital of the Company. On 30 August 2017, 391,500,000 Shares beneficially owned by Haiyi were pledged to Big Thrive (as defined below).
- The entire issued share capital of Intrend Ventures is legally and beneficially owned by Mr. Xu and the entire issued share capital of Zhong Cheng is legally and beneficially owned by Mr. Luo. Haiyi is legally owned as to 87.00% by Intrend Ventures and 12.00% by Zhong Cheng. Intrend Ventures and Zhong Cheng are taken to be interested in all the Shares held by Haiyi for the purposes of the SFO.
- As disclosed in the announcement of the Company dated 30 August 2017, Haiyi has pledged an aggregate of 391,500,000 Shares (representing 65.25% of the issued share capital of the Company) in favour of Big Thrive as security for an extendable senior secured bonds with the principal amount of HK$450,000,000 issued by Intrend Ventures. Based on the disclosure of interests' records on the Disclosure of Interests Online System of the Stock Exchange, Big Thrive is an indirect wholly-owned subsidiary of Huarong Investment Stock (as defined below), which is an indirect subsidiary of China Huarong Asset (as defined below).
- The percentage of shareholding is calculated on the basis of the Company's issued share capital of 600,000,000 Shares as at 30 June 2020.
Long positions in the shares of associated corporations of the Company
Percentage of | ||||
the issued | ||||
share capital | ||||
Name of | of the | |||
Name of | associated | Number of | associated | |
Directors | corporation | Nature of interest | shares held | corporation |
Mr. Xu | Haiyi | Interest of controlled | 870 | 87.00% |
corporation | ||||
Mr. Luo | Haiyi | Interest of controlled | 120 | 12.00% |
corporation |
Note:
Haiyi is legally owned as to 87.00% by Intrend Ventures and 12.00% by Zhong Cheng. The entire issued share capital of Intrend Ventures is legally and beneficially owned by Mr. Xu and the entire issued share capital of Zhong Cheng is legally and beneficially owned by Mr. Luo.
42 | Huajin International Holdings Limited / Interim Report 2020 |
OTHER INFORMATION
Save as disclosed above, as at 30 June 2020, none of the Directors or chief executive of the Company nor their associates had any interests or short positions in the Shares or underlying Shares of the Company which had to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or which were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.
SUBSTANTIAL SHAREHOLDERS' AND OTHER PERSONS' INTERESTS IN SHARES AND UNDERLYING SHARES OF THE COMPANY
As at 30 June 2020, so far as the Directors are aware, the following persons or corporations (not being a Director or a chief executive of the Company) who/which had interests and/or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO were:
Long positions in the Shares of the Company
Percentage of | |||
the issued | |||
share capital | |||
Number of | of the | ||
Name of shareholders | Nature of interest | Shares held | Company |
Haiyi Limited ("Haiyi") | Beneficial owner (1)(3) | 450,000,000 | 75.00% |
Intrend Ventures Limited | Interest held jointly with | 450,000,000 | 75.00% |
("Intrend Ventures") | another person (1) | ||
Interest of controlled | |||
corporation (2)(3) | |||
Zhong Cheng International | Interest held jointly with | 450,000,000 | 75.00% |
Limited ("Zhong Cheng") | another person (1) | ||
Interest of controlled | |||
corporation (2)(3) |
Huajin International Holdings Limited / Interim Report 2020 | 43 |
OTHER INFORMATION
Percentage of | |||
the issued | |||
share capital | |||
Number of | of the | ||
Name of shareholders | Nature of interest | Shares held | Company |
Big Thrive Limited | Security interest (3) | 391,500,000 | 65.25% |
("Big Thrive") | |||
Huarong Investment Stock | Interest of controlled | 391,500,000 | 65.25% |
Corporation Limited | corporation (3) | ||
("Huarong Investment | |||
Stock") | |||
Right Select International | Interest of controlled | 391,500,000 | 65.25% |
Limited ("Right Select") | corporation (3) | ||
China Huarong International | Interest of controlled | 391,500,000 | 65.25% |
Holdings Limited ("China | corporation (3) | ||
Huarong International") | |||
China Huarong Asset | Interest of controlled | 391,500,000 | 65.25% |
Management Co., Ltd. | corporation (3) | ||
("China Huarong Asset") |
Notes:
- On 4 January 2016, Mr. Xu and Mr. Luo entered into the acting in concert agreement, pursuant to which, among other things, Mr. Xu and Mr. Luo acknowledged and confirmed that they, as ultimate shareholders of our Group, have been parties acting in concert throughout the period and up to the date thereof and will continue to act in concert thereafter. As such, our ultimate controlling shareholders together control 75.00% interest in the share capital of the Company through Intrend Ventures, Zhong Cheng and Haiyi. As a result, each of our ultimate controlling shareholders and their respective holding company is deemed to be interested in such 75.00% interest in the share capital of the Company. On 30 August 2017, 391,500,000 Shares beneficially owned by Haiyi were pledged to Big Thrive.
- The entire issued share capital of Intrend Ventures is legally and beneficially owned by Mr. Xu and the entire issued share capital of Zhong Cheng is legally and beneficially owned by Mr. Luo. Haiyi is legally owned as to 87.00% by Intrend Ventures and 12.00% by Zhong Cheng. Intrend Ventures and Zhong Cheng are taken to be interested in all the Shares held by Haiyi for the purposes of the SFO.
44 | Huajin International Holdings Limited / Interim Report 2020 |
OTHER INFORMATION
- As disclosed in the announcement of the Company dated 30 August 2017, Haiyi has pledged an aggregate of 391,500,000 Shares (representing 65.25% of the issued share capital of the Company) in favour of Big Thrive as security for an extendable senior secured bonds with the principal amount of HK$450,000,000 issued by Intrend Ventures. Based on the disclosure of interests' records on the Disclosure of Interests Online System of the Stock Exchange, Big Thrive is an indirect wholly-owned subsidiary of Huarong Investment Stock. Huarong Investment Stock is owned as to approximately 50.99% by Right Select, which is in turn wholly owned by China Huarong International. China Huarong International is an indirect wholly-owned subsidiary of China Huarong Asset. Each of Huarong Investment Stock, Right Select, China Huarong International, and China Huarong Asset is deemed to be interested in all the interests held by Big Thrive.
- The percentage of shareholding is calculated on the basis of the Company's issued share capital of 600,000,000 Shares as at 30 June 2020.
Save as disclosed above, as at 30 June 2020, the Company has not been notified by any person nor corporation (other than Directors or the chief executive of the Company) who/ which had interests or short positions in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO.
SHARE OPTIONS
Pursuant to the written resolution of all the shareholders of the Company passed on 23 March 2016, the Company adopted a share option scheme conditional upon the Listing of the Company's Shares on the Stock Exchange. Since the adoption of the share option scheme on 23 March 2016 and up to 30 June 2020, no option has been granted by the Company.
INTERIM DIVIDEND
The Directors do not recommend the payment of an interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: interim dividend of HK3 cents and special interim dividend of HK10 cents per Share).
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
Neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company's Shares during the six months ended 30 June 2020.
Huajin International Holdings Limited / Interim Report 2020 | 45 |
OTHER INFORMATION
ARRANGEMENTS TO PURCHASE SHARES OR DEBENTURES
At no time during the six months ended 30 June 2020 was the Company or its subsidiary a party to any arrangement to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
CORPORATE GOVERNANCE PRACTICE
The Company has adopted the code provisions set out in the Corporate Governance Code (the "CG Code") contained in Appendix 14 to the Listing Rules as its code of corporate governance. The Company has complied with the applicable code provisions in the CG Code during the six months ended 30 June 2020, except as noted hereunder.
Code provision A.4.1
In respect of the code provision A.4.1 of the CG Code, non-executive directors should be appointed for a specific term, subject to re-election. The non-executive Director is appointed for an initial term of three years. All the independent non-executive Directors of the Company are not appointed for a specific term. However, all Directors are subject to retirement by rotation and re-election by the shareholders at the general meeting in accordance with the Articles of Association. As such, the Board considers that sufficient measures have been taken to ensure that the Company's corporate governance practices are no less exacting than those set out in the CG Code.
The Directors will continue to use their best endeavours to procure the Company to comply with the CG Code.
MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted the Model Code as the Company's code of conduct regarding Directors' securities transactions. Having made specific enquiry of all Directors, all Directors confirmed that they complied with the Model Code at all applicable times during the six months ended 30 June 2020.
46 | Huajin International Holdings Limited / Interim Report 2020 |
OTHER INFORMATION
SUFFICIENCY OF PUBLIC FLOAT
Based on the publicly available information to the Company and within the knowledge of the Directors as at date of this report, the Company has maintained the prescribed public float required by the Listing Rules for the six months ended 30 June 2020 and up to the date of this report.
REVIEW OF FINANCIAL STATEMENTS
The audit committee of the Company (the "Audit Committee") has reviewed the Group's unaudited condensed consolidated financial statements for the six months ended 30 June 2020 in conjunction with the Company's external auditor. Based on the review and discussions with the management, the Audit Committee was satisfied that the unaudited condensed consolidated financial statements were prepared in accordance with applicable accounting standards and fairly present the Group's financial position and results for the six months ended 30 June 2020.
APPRECIATION
On behalf of the Board, I would like to take this opportunity to express our sincere appreciation of the support from our shareholders, customers and suppliers. I would also like to thank my fellow Directors for their valuable contribution and the staff members of the Group for their commitment and dedicated services throughout the period.
On behalf of the Board
Huajin International Holdings Limited
Xu Songqing
Chairman
Hong Kong, 27 August 2020
Huajin International Holdings Limited / Interim Report 2020 | 47 |
CORPORATE INFORMATION
BOARD OF DIRECTORS | AUDITOR | |
Deloitte Touche Tohmatsu | ||
Executive Directors | Certified Public Accountants | |
Mr. Xu Songqing (Chairman) | PRINCIPAL SHARE REGISTRAR | |
Mr. Luo Canwen (Chief Executive Officer) | ||
Mr. Chen Chunniu | AND TRANSFER OFFICE | |
Mr. Xu Songman | Conyers Trust Company (Cayman) Limited | |
Cricket Square, P.O. Box 2681 | ||
Non-executive Director | Grand Cayman, KY1-1111 | |
Mr. Xu Jianhong | Cayman Islands | |
Independent non-executive Directors | BRANCH SHARE REGISTRAR | |
Mr. Goh Choo Hwee | AND TRANSFER OFFICE | |
Mr. Tam Yuk Sang Sammy | Union Registrars Limited | |
Mr. Wu Chi Keung | Suites 3301-04, 33/F., | |
AUDIT COMMITTEE | Two Chinachem Exchange Square, | |
338 King's Road, North Point, | ||
Mr. Wu Chi Keung (Chairman) | Hong Kong | |
Mr. Goh Choo Hwee | REGISTERED OFFICE | |
Mr. Tam Yuk Sang Sammy | ||
REMUNERATION COMMITTEE | Cricket Square, Hutchins Drive | |
P.O. Box 2681, Grand Cayman | ||
Mr. Tam Yuk Sang Sammy (Chairman) | KY1-1111, Cayman Islands | |
Mr. Xu Songqing | HEADQUARTER IN THE | |
Mr. Goh Choo Hwee | ||
Mr. Wu Chi Keung | PEOPLE'S REPUBLIC OF | |
NOMINATION COMMITTEE | CHINA (THE "PRC") | |
Xinsha Industrial Zone of Muzhou Town | ||
Mr. Xu Songqing (Chairman) | Xinhui District, Jiangmen City | |
Mr. Goh Choo Hwee | Guangdong Province, PRC | |
Mr. Tam Yuk Sang Sammy | PRINCIPAL PLACE OF | |
Mr. Wu Chi Keung | ||
COMPANY SECRETARY | BUSINESS IN HONG KONG | |
Room 518, Tower A | ||
Mr. Wong Chak Keung | New Mandarin Plaza | |
PRINCIPAL BANKERS | No. 14 Science Museum Road | |
Tsim Sha Tsui East | ||
Agricultural Bank of China Limited | Kowloon, Hong Kong | |
Jiangmen Xinhui Branch | STOCK CODE | |
Jiangmen Rural Commercial Bank | ||
Company Limited | 2738 | |
Bank of Guangzhou Jiangmen Branch | WEBSITE | |
www.huajin-hk.com
48 | Huajin International Holdings Limited / Interim Report 2020 |
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original document
- Permalink
Disclaimer
Huajin International Holdings Ltd. published this content on 15 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 September 2020 11:19:01 UTC