Zhengzhou Coal Mining Machinery Group Company Limited
2021
INTERIM REPORT
Corporate Profile
Zhengzhou Coal Mining Machinery Group Company Limited (the “Company” or “ZMJ”) was incorporated in the People’s
Republic of China (the “PRC”) on 28 December 2008 as a joint stock company with limited liability. The Company’s A shares
were listed on the Shanghai Stock Exchange on 3 August 2010. The Company’s H shares were listed on The Stock Exchange
of Hong Kong Limited (the “Stock Exchange”) on 5 December 2012.
The Company is a leading comprehensive coal mining and excavating equipment manufacturer in the PRC. It focuses on the
manufacturing and sales of hydraulic roof supports, and is the largest hydraulic roof support manufacturer in the PRC. The
Company is also engaged, through its subsidiaries, in the research and development, manufacturing and sale of and servicing
for auto parts, as well as the trading of steel and other raw materials. The established operating history, high quality products,
strong research and development capabilities, advanced manufacturing processes and extensive sales and service network of
the Company and its subsidiaries are the keys to its success and enable it to maintain its leading position in the coal mining
and excavating equipment market and auto parts market.
A H
Contents
Corporate Information 2
Chairman’s Statement 5
Management Discussion and Analysis 10
Directors, Supervisors and Chief Executives 18
Material Events 24
Report on Review of Interim 32
Condensed Consolidated Financial Information
Interim Condensed Consolidated Statement of 33
Profit or Loss and Other Comprehensive Income
Interim Condensed Consolidated 35
Statement of Financial Position
Interim Condensed Consolidated 37
Statement of Changes in Equity
Interim Condensed Consolidated 39
Statement of Cash Flows
Notes to the Interim Condensed 42
Consolidated Financial Information
Corporate Information
Directors
Mr. Jiao Chengyao (Chairman and Executive Director)
Mr. Xiang Jiayu (Vice Chairman and Executive Director)
Mr. Jia Hao (Executive Director and Employee Director)
Mr. Fu Zugang (Executive Director)
Mr. Wang Xinying (Executive Director)
Mr. Cui Kai (Non-Executive Director) (appointed on 31 March 2021) 2021 3 31
Mr. Yang Dongsheng (Non-Executive Director)
(appointed on 31 March 2021 and resignation effective from 3 August 2021) 2021 3 31 2021 8 3
Mr. Cheng Jinglei (Independent Non-Executive Director)
Mr. Ji Feng (Independent Non-Executive Director)
(appointed on 31 March 2021) 2021 3 31
Ms. Guo Wenqing (Independent Non-Executive Director)
(appointed on 31 March 2021) 2021 3 31
Mr. Fang Yuan (Independent Non-Executive Director)
(appointed on 31 March 2021) 2021 3 31
Mr. Wang Bin (Executive Director) (resignation effective from 31 March 2021) 2021 3 31
Mr. Li Xudong (Independent Non-Executive Director)
(resignation effective from 31 March 2021) 2021 3 31
Mr. Jiang Hua (Independent Non-Executive Director)
(resignation effective from 31 March 2021) 2021 3 31
Supervisors
Mr. Liu Qiang
Mr. Cheng Xiangdong (appointed on 31 March 2021) 2021 3 31
Mr. Wang Yue
Mr. Zhang Yonglong (appointed on 31 March 2021) 2021 3 31
Mr. Zhang Minglin (appointed on 31 March 2021) 2021 3 31
Mr. Bao Xueliang (appointed on 31 March 2021) 2021 3 31
Mr. Cui Zonglin (appointed on 31 March 2021) 2021 3 31
Mr. Cui Leilei (resignation effective from 31 March 2021) 2021 3 31
Mr. Ni Wei (resignation effective from 31 March 2021) 2021 3 31
Mr. Zhou Rong (resignation effective from 31 March 2021) 2021 3 31
Mr. Zhang Yichen (resignation effective from 31 March 2021) 2021 3 31
Mr. Yuan Shaochong (resignation effective from 31 March 2021) 2021 3 31
Strategy Committee
Mr. Jiao Chengyao (Chairman)
Mr. Xiang Jiayu
Mr. Yang Dongsheng (appointed on 31 March 2021 and
resignation effective from 3 August 2021) 2021 3 31 2021 8 3
Mr. Jia Hao
Mr. Cheng Jinglei (appointed on 31 March 2021) 2021 3 31
Mr. Fu Zugang (resignation effective from 31 March 2021) 2021 3 31
Mr. Jiang Hua (resignation effective from 31 March 2021) 2021 3 31
2 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Corporate Information
Audit Committee
Mr. Ji Feng (Chairman) (appointed on 31 March 2021) 2021 3 31
Mr. Cui Kai (appointed on 31 March 2021) 2021 3 31
Ms. Guo Wenqing (appointed on 31 March 2021) 2021 3 31
Mr. Li Xudong (Chairman) (resignation effective from 31 March 2021) 2021 3 31
Mr. Jiang Hua (resignation effective from 31 March 2021) 2021 3 31
Mr. Cheng Jinglei (appointed on 15 June 2020 and 2020 6 15
resignation effective from 31 March 2021) 2021 3 31
Nomination Committee
Ms. Guo Wenqing (Chairman) (appointed on 31 March 2021) 2021 3 31
Mr. Xiang Jiayu (appointed on 31 March 2021) 2021 3 31
Mr. Cheng Jinglei (appointed on 15 June 2020) 2020 6 15
Mr. Jiang Hua (Chairman) (resignation effective from 31 March 2021) 2021 3 31
Mr. Fu Zugang (resignation effective from 31 March 2021) 2021 3 31
Remuneration and Assessment Committee
Mr. Ji Feng (Chairman) (appointed on 31 March 2021) 2021 3 31
Mr. Jia Hao (appointed on 31 March 2021) 3 31
2021
Mr. Fang Yuan (appointed on 31 March 2021) 3 31
2021
Mr. Li Xudong (Chairman) (resignation effective from 31 March 2021) 2021 3 31
Mr. Jiang Hua (resignation effective from 31 March 2021) 2021 3 31
Mr. Cheng Jinglei (appointed on 15 June 2020 and 2020 6 15
resignation effective from 31 March 2021) 2021 3 31
Auditors
International auditors:
PricewaterhouseCoopers
22/F, Prince’s Building, Central, Hong Kong 22
Domestic auditors:
BDO CHINA SHU LUN PAN, Certified Public Accountants LLP
4th Floor, No. 61 Nanjing East Road, Shanghai, 61 4
200002 200002
Principal Place of Business in Hong Kong
40/F, Dah Sing Financial Centre, 248 Queen’s Road East, Wanchai, Hong Kong 248 40
Registered Office in the PRC
No. 167, 9th Street, Econ-Tech Development Zone
Zhengzhou, Henan Province, PRC 167
2021 3
Corporate Information
Headquarters in the PRC
No. 167, 9th Street, Econ-Tech Development Zone
Zhengzhou, Henan Province, PRC 167
Company’s Website
www.zmj.com www.zmj.com
H Share Registrar H
Computershare Hong Kong Investor Services Limited
Shops 1712–1716, 17th Floor, Hopewell Centre, 183
183 Queen’s Road East, Wanchai, Hong Kong 17 1712–1716
A Share Registrar A
Shanghai Branch,
China Securities Depository and Clearing Corporation Limited
No. 188 Yanggao South Road, Pudong New District, Shanghai 188
Stock Codes
H Share: 00564 (The Stock Exchange of Hong Kong Limited) H 00564
A Share: 601717 (Shanghai Stock Exchange) A 601717
Principal Banks
Industrial and Commercial Bank of China Limited
Jianshe Road Branch, Zhengzhou
No. 11 West Jianshe Road, Zhengzhou, Henan Province, PRC 11
Bank of China Limited
Zhongyuan Branch, Zhengzhou
No. 123 Zhongyuan Middle Road, Zhengzhou, Henan Province, PRC 123
Company Secretary
Mr. Zhang Haibin
Ms. Chan Yin Wah (assistant to Company Secretary)
Authorized Representatives
Mr. Jiao Chengyao
Mr. Zhang Haibin
Legal Advisers
As to Hong Kong law:
Clifford Chance
As to PRC law:
Haiwen & Partners
4 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Chairman’s Statement
Dear shareholders,
During the reporting period, the Company focused on its development strategy
of “international strategic positioning, market-based corporate governance,
high-end industry layout and global human resources”, and conscientiously
carried out the spirit of the important instructions from General Secretary Xi
Jinping during his inspection of ZMJ. The Company continued to drive its
business reform, with faster transformation towards intelligence and digitisation,
greater technology and management innovation as well as optimisation of the 150.82 22.47%
governance structure, striving for high-quality development. As a result, its 12.86 6.69%
key economic indicators improved continuously. For the reporting period, the
operating revenue generated by the Company totalled RMB15,082 million,
representing a period-to-period increase of 22.47%. Net profit amounted to
RMB1,286 million, representing a period-to-period increase of 6.69%.
I. Business review for the first half of 2021 2021
(I) Sustained market-oriented corporate reform
1. Completing the mixed ownership reform and establishing 1
a market-oriented governance structure
The Company proactively worked with HNMIC on public
solicitation of transferring 16% of its shares in ZMJ, with the 16%
share transfer completed on 25 February 2021. The equity 2021 2 25
transfer represented a critical move for Henan Province to
explore the transition of state-owned assets supervision from
“Management of People, Affairs and Assets” to “Capital
Management”. It also constituted a major attempt for HNMIC
and ZMJ to perform their responsibility as state-owned
enterprises, carry out the “Campaign of Reforming Hundreds of
SOEs” ( ), transform their operating mechanism at a
deeper level and explore the way of SOE reform in Henan.
During the reporting period, the Company completed the
election of new sessions of its board of directors, board
of supervisors and management under a new shareholder
structure. ZMJ has established a more market-oriented
governance structure on the basis of a more diversified and
mixed shareholding structure. Its governance entities were
elected pursuant to the Company Law and the Articles of
Association, with well specified responsibilities and powers and
proper performance of duties, to enhance corporate governance
capability and keep driving the development of the Company.
2021 5
Chairman’s Statement
2. Further improving the HR management system and the 2
remuneration and incentive mechanism of the Company
We continued to solidify our three-tier talent cultivation system
with a combination of online and offline training to properly
grow our talents, build our talent portfolio and develop a hub for
talents. In addition, we further improved the market-oriented
and international mechanism for remuneration, incentives,
appraisal and restraints, as well as the remuneration system 2021
of our group companies. We also implemented the 2021
restricted share incentive scheme to stimulate impetus within
the Company.
(II) Stable development of the Company’s business
under strategic guidance
1. Operation of the coal mining machinery segment 1
In the first half of 2021, the Company continued to optimise 2021
its management structure and advance its work orderly
under the annual operation policy of “ensuring operation with
lower costs and higher efficiency, allowing more difference in
integration and innovation, facilitating upgrade through digital
transformation and expanding markets with intelligence and
comprehensiveness”. During the reporting period, the Company
recorded growth in both orders and payment collection and saw
the substantive effect of its comprehensive strategy, with steady
growth in orders for its equipment sets. High growth continued
for such intelligent products as workface control system, with a
record number of orders. Intelligent manufacturing took place
steadily as our digital plants underwent equipment installation
and commissioning, whilst the digital reform of supply chains
was launched in full swing.
During the reporting period, coal prices stood at high levels and
lifted the profitability of coal enterprises. Their development
of intelligent operation bolstered the demand for coal mining
machinery. As a leading enterprise, the Company experienced
swift period-to-period growth in orders with production in full
capacity. Still, the Company saw its profitability squeezed to a
certain extent by such elements as surging raw material prices
and stiffer industry competition.
6 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Chairman’s Statement
2. Operation of the auto parts segment 2
Given the gradual recovery of auto markets, the Company saw
improving operation of its auto parts business over the reporting
period, as the commercial vehicles business continued to grow
and the passenger vehicles business resumed its growth.
ASIMCO renewed its best same-period performance in overall
revenue and profit. On one hand, the firm enhanced and
optimised its existing business to capture the early opportunities
in technology and market from the National VI emission upgrade
project, and implemented the capacity expansion projects of
ASIMCO Shanxi and Shuanghuan Piston Ring. On the other
hand, the firm worked to develop new business, expedited
international market development, surveyed and explored
transformation and upgrade opportunities in new energy. It
strived to develop the market of noise reduction, vibration 2021
damping and sealing products for new energy vehicles, and 3,000
managed to establish its presence in the supply chain system
of new energy clients such as XPeng, Nio and Changan New
Energy. For the first half of 2021, the new energy business
recorded direct and indirect sales revenue of RMB30 million.
SEG delivered stable growth in operating revenue, as it SEG
benefited from a reviving global auto market. Meanwhile, the
firm implemented cost reduction measures and negotiated
with clients on raw material price compensation, which led SEG
to sustained improvement in operations. During the reporting
period, SEG optimised its global personnel and business
structure and finished restructuring the German business.
Its starter and generator laboratories were relocated from
Germany to Hungary. With restructuring and layoffs completed,
the German factory transferred production to its lower-cost
Hungarian counterpart, and only retained trial production
of samples, the technical centre and the highly profitable
aftermarket business to significantly reduce labour costs. The
Spanish factory reached a restructuring agreement with the
labour union, and kept promoting personnel optimisation and
capacity transfer based on order fulfilment. SEG remained
attentive to policy changes and development trends in the auto
market, maintained and expanded its advantageous position
in energy-saving and emissions reduction technologies for
internal combustion engines, proceeded with the survey and
substantiation of its electrification strategy and path, and
worked on the research and development of new energy
motors, all in an effort to transform into new energy motors on a
comprehensive scale.
2021 7
Chairman’s Statement
3. Zhima Street continuing to attract business and improve 3
its image with “Dual Innovation”
Continuous efforts were made for “Zhima Street 1958 Dual
Innovation Park Project” ( 1958 ), a project 1958
mainly engaged in renovating and improving the Company’s old +
factories and with “Scientific Innovation and Cultural Innovation” 7.36
as its theme to revitalise idle factory premises. Its first phase 80%
renovated and developed roughly 73,600 square metres, with
an occupancy rate of over 80% and stable revenue. As an
industrial platform for cross-sectoral integration on the Central
Plains of China, Zhima Street will further integrate resources,
create smart spaces, help its enterprises with transformation
and upgrade and optimise the development environment for
industries, empower both traditional and emerging enterprises,
and strive to be a first-class exemplar in Zhengzhou, Henan
Province and beyond.
II. Business outlook for the second half of 2021 2021
1. Keep driving business reform to develop into a 1
manufacturer of high-end intelligent equipment with
global influence
We will continue to work on our products, markets, talents,
digitisation, R&D and supply chains, refine and optimise our existing
main business, explore fresh industrial opportunities for the future,
and promote sustainable high-quality development of the Company.
In respect of our coal mining machinery business, we will coordinate
R&D resources, accelerate the breakthrough of intelligent technology
innovation, and deepen the strategic cooperation with Huawei and
Alibaba. We will cement our advantages as a leading enterprise in
intelligent equipment sets and services for comprehensive mining
workface, continue to develop the industrial internet platform of
ZMJ, and strengthen the development of a professional service
system for the entire lifecycle. We will also keep lowering production
costs with the intelligent transformation of production lines and
optimising procurement costs with the digital reform of supply chains.
Furthermore, we will explore the business development opportunities
related to smart mining, and accelerate the implementation of our
“comprehensive, intelligent, international and society-oriented”
strategies for the coal mining machinery segment.
8 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Chairman’s Statement
In respect of our auto parts business, firstly, ASIMCO will implement
an international development strategy and expand its core strengths SEG
from the domestic sphere to the global arena. SEG will continue to
promote business restructuring and capacity layout optimisation, in
an aim to capture market share and enhance profitability. Secondly,
the Company will leverage on its mighty R&D strength, a customer
network of global coverage and excellent production technology,
to facilitate the transformation of its auto parts business to energy
saving, emissions reduction and new energy through various means
such as R&D investment, alliance cooperation and capital operation.
Meanwhile, we will strive to develop into a first-class global provider
of auto electrification system solutions through the transformation
from parts to components and even system integration and the
implementation of the electrification strategy.
2. Engage in swift digital transformation of the 2
Company
Going forward, competition is bound to be digital. Hence, the
Company will be customer-centric to keep driving digitisation and
information system development that will cover the entire process,
and to empower its high-quality development with digitisation and
intelligence. Application of big data will take place to develop smart
mining system platforms as the command centre for intelligent
comprehensive coal mining, to provide intelligent support for the
production safety of coal mines. Internally, we will promote data
exchange, synergy and sharing among segments and businesses to
ramp up the control of the Group and strategic decision-making.
3. Enhance comprehensive risk management with 3
better emergency management capabilities
Since July this year, Zhengzhou has successively confronted the 7
abrupt assaults from extreme rainstorm disasters and the COVID-19
pandemic. Such calamities were met by active and orderly response
from the Company to ensure safety of its employees as well as normal
production and operation. Looking ahead, in view of extreme weather
conditions and the COVID-19 pandemic, the Company will properly
work on regular epidemic prevention and control, further improve its
ability to prevent and respond to various emergencies and enhance
the Company’s emergency management mechanism. It will regularly
organise training on essential knowledge and skills and emergency
drills, and ramp up the emergency response awareness and skills
of all its employees. We will also keep improving the comprehensive
risk control system of the Company with internal control and internal
audit as the core, and further tap into the functions of our board of
supervisors, internal auditing and disciplinary inspection bodies, so
that they can work as a collective force and ensure our operation in
compliance with laws and regulations and asset security.
Zhengzhou Coal Mining Machinery Group Company Limited
Jiao Chengyao
Chairman
26 August 2021 2021 8 26
2021 9
Management Discussion and Analysis
Review of the period
For six months ended 30 June 2021, the Group achieved sales revenue 2021 6 30
of RMB15,082.38 million, representing an increase of 22.47% from the 15,082.38 22.47%
corresponding period of last year. Profit Attributable to Owners of the Company 1,286.47
was RMB1,286.47 million, representing an increase of 6.69% from the 6.69% 0.69 2021 6
corresponding period of last year. Earnings per share was RMB0.69. As at 30 30 5,060.33
June 2021, the Group had borrowing balances of RMB5,060.33 million.
Overview
The Group is a leading comprehensive coal mining and excavating equipment
and auto parts manufacturer in the PRC. Our established operating history,
high quality products, strong research and development capabilities, advanced
manufacturing processes and extensive sales and service network are the keys
to our success and allow us to maintain our leading position in the PRC coal SEG Automotive
mining and excavating equipment market. With the completion of ASIMCO and Germany GmbH
SEG Automotive Germany GmbH acquisition, the Group has duly entered the
auto parts market and is engaged in two principal businesses, namely coal
mining machinery and auto parts.
Results of Operations
The following table sets forth a summary, for the six months ended 30 June 2021 2020 6 30
2021 and 2020 indicated, of our consolidated results of operations.
Six months ended 30 June
2021 2020
RMB millions RMB millions
Revenue 15,082.38 12,315.47
Cost of sales (11,476.20) (9,152.08)
Gross profit 3,606.18 3,163.39
Other income 183.05 152.39
Other gains and losses 45.41 (120.86)
Selling and distribution expenses (589.94) (446.73)
Administrative expenses (622.76) (534.83)
Research and development expenses (683.82) (535.98)
Restructuring costs (121.54) –
Accrual of net impairment losses on
financial and contract assets (18.49) (46.16)
Share of profit of associates 19.92 10.91
Share of profit of a joint venture 2.97 2.15
Finance costs (150.40) (125.19)
Profit before tax 1,670.58 1,519.09
Income tax expense (384.11) (313.30)
Profit for the year 1,286.47 1,205.79
Profit for the year attributable to:
Owners of the Company 1,202.21 1,135.17
Non-controlling interests 84.26 70.62
1,286.47 1,205.79
10 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Management Discussion and Analysis
Six months ended 30 June
2021 2020
RMB millions RMB millions
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurement of post-employment benefit obligations (0.03) 0.57
Changes in the fair value of financial assets at fair value
through other comprehensive income (0.01) (1.33)
Items that may be reclassified to profit or loss:
Exchange differences arising on translation 37.98 (64.29)
Cash flow hedging 4.86 (32.44)
Other comprehensive income for the period,
net of income tax 42.80 (97.49)
Total comprehensive income for the period 1,329.27 1,108.30
Total comprehensive income for the period
attributable to:
Owners of the Company 1,245.01 1,037.67
Non-controlling interests 84.26 70.63
1,329.27 1,108.30
Earnings per share
– Basic (RMB) 0.69 0.66
– Diluted (RMB) 0.69 0.66
Revenue
Our revenue increased by 22.47% from RMB12,315.47 million for the six months 2020 6 30
ended 30 June 2020 to RMB15,082.38 million for the six months ended 30 12,315.47 22.47% 2021 6 30
June 2021, mainly because of the 34.20% increase of auto parts segment as 15,082.38 2021
compared to that of the last period because of the increase in demand of both
overseas and domestic auto parts market in the first half of 2021. 34.20%
Cost of Sales
Our cost of sales increased by 25.39% from RMB9,152.08 million for the six 2020 6 30
months ended 30 June 2020 to RMB11,476.20 million for the six months 9,152.08 25.39% 2021 6 30
ended 30 June 2021, because the sales increased in this period. 11,476.20
2021 11
Management Discussion and Analysis
Gross Profit
Driven by the above factors, our gross profit increased by 14.00% from 2020 6 30
RMB3,163.39 million for the six months ended 30 June 2020 to RMB3,606.18 3,163.39 14.00% 2021
million for the six months ended 30 June 2021. 6 30 3,606.18
The change in gross profit primarily comprised of two parts. The gross profit
margin of the coal mining machinery segment decreased from 38.15% for the 2020 6 30 38.15% 2021 6
six months ended 30 June 2020 to 32.90% for the six months ended 30 June 30 32.90% 2021 6 30
2021. As of 30 June 2021, the gross profit margin of the auto parts segment 2020 6 30
of the Group increased slightly from 14.19% for the six months ended 30 June 14.19% 2021 6 30
2020 to 17.64% for the six months ended 30 June 2021. 17.64%
Therefore, the overall gross profit margin of the Group decreased from 25.69% 2020 6 30
for the six months ended 30 June 2020 to 23.91% for the six months ended 30 25.69% 2021 6 30
June 2021. 23.91%
Staff Costs and Remuneration Policy
Our staff costs increased by 18.05% from RMB1,645.90 million for the six 2020 6 30
months ended 30 June 2020 to RMB1,942.97 million for six months ended 30 1,645.90 18.05% 2021 6 30
June 2021. The staff remuneration of the Group comprises of basic salary and 1,942.97
bonus payment, which is determined with reference to the operating results of
the Group and results of performance assessment on the employees. The Group
adheres to the orientation towards efficiency and results as well as the focus
on top-tier staff. It also strives to ensure scientific and reasonable allocation of
income.
Profit Before Tax
Being affected by the factors referred to above in aggregate, our profit before
tax increased by 9.97% from RMB1,519.09 million for the six months ended 30 2020 6 30 1,519.09
June 2020 to RMB1,670.58 million for the six months ended 30 June 2021. 9.97% 2021 6 30 1,670.58
Income Tax Expense
Our income tax expense increased by 22.60% from RMB313.30 million for 2020 6 30
the six months ended 30 June 2020 to RMB384.11 million for the six months 313.30 22.60% 2021 6 30
ended 30 June 2021, primarily because of the significant increase in taxable 384.11
income. Our effective tax rate increased to 22.99% for the six months ended 30 2020 6 30
June 2021 from 20.62% for the six months ended 30 June 2020. 20.62% 2021 6 30
22.99%
Profit for the period
In viewed of the combined effect of the above factors, our profit for the period
and the aggregate of comprehensive income increased by 6.69% from 2020 6 30 1,205.79
RMB1,205.79 million for the six months ended 30 June 2020 to RMB1,286.47 6.69% 2021 6 30
million for the period ended 30 June 2021. 1,286.47
12 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Management Discussion and Analysis
Cash Flows and Capital Expenditures
As of 30 June 2021, the Group had RMB2,769.41 million in cash and cash 2021 6 30
equivalents. The Group’s cash and cash equivalents primarily consist of cash 2,769.41
and bank deposits.
Six months ended 30 June
2021 2020
RMB millions RMB millions
Net cash (used in)/from operating activities (401.32) 538.29
Net cash from/(used in) investing activities 1,077.51 (1,807.68)
Net cash (used in)/from financing activities (864.93) 105.74
Net decrease in cash and cash equivalents (188.74) (1,163.65)
Effect of foreign exchange rate changes (20.58) (90.44)
Cash and cash equivalents at the beginning of year 2,978.73 3,863.44
Cash and cash equivalents at the end of period 2,769.41 2,609.35
Operating Activities
Net cash outflow in operating activities for the six months ended 30 June 2021 2021 6 30
was RMB401.32 million. Cash outflow primarily comprised profit before taxation 401.32
of RMB1,670.58 million, primary adjusted for: (i) finance cost of RMB150.40 1,670.58 (i)
million; (ii) depreciation of property, plant and equipment of RMB340.99 million, 150.40 (ii) 340.99
(iii) increase in inventories of RMB753.57 million, (iv) increase in trade and other (iii) 753.57 (iv)
receivables of RMB2,004.36 million, (v) increase in trade and other payables of 2,004.36 (v)
RMB252.59 million. 252.59
Investing Activities
Net cash from investing activities for the six months ended 30 June 2021 2021 6 30
was RMB1,077.51 million, primarily comprising: (i) payment of RMB391.08 1,077.51 (i)
million for the purchase of property, plant and equipment; (ii) placement for 391.08 (ii)
RMB999.75 million for structured deposits; (iii) proceeds of RMB2,225.00 999.75 (iii)
million from structured deposits; (iv) payment of pledged bank deposits of 2,225.00 (iv) 611.11
RMB611.11 million; (v) withdrawal of pledged bank deposits of RMB973.55 (v) 973.55 (vi)
million; (vi) placement of bank deposits with original maturity over three months 2,102.21
of RMB2,102.21 million.
2021 13
Management Discussion and Analysis
Financing Activities
Net cash outflow in financing activities for the six months ended 30 June 2021 6 30
2021 was RMB864.93 million, primarily consisting of (i) net cash inflow from 864.93 (i)
borrowing of RMB567.15 million; and (ii) cash outflow from the repayment of 567.15 (ii)
redemption liability in the amount of RMB1,066.06 million. 1,066.06
Capital Expenditures
We incurred capital expenditures of RMB425.87 million for the period ended 30 2021 6 30
June 2021, for purchase of property, plant and equipment and intangible assets. 425.87
Commitments and Contingent Liabilities
Capital Commitments
As of 30 June 2021, our commitments consisted of capital commitments for 2021 6 30
the acquisition of property, plant and equipment that have been authorized and 526.77
contracted for in the amount of RMB526.77 million.
Contingent Liabilities
During the year, the Group has endorsed and derecognised certain notes
receivable for the settlement of trade and other payables with full recourse. In
the opinion of the directors of the Company, the risk of the default in payment
of the endorsed notes receivable is low because all endorsed notes receivable
are issued and guaranteed by reputable PRC banks. The maximum exposure to
the Group that may result from the default of these endorsed and derecognised
notes receivable at the end of each reporting period is as follows:
At At
30 June 31 December
2021 2020
RMB millions RMB millions
Outstanding endorsed bills receivable with recourse 3,057.98 2,694.30
14 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Management Discussion and Analysis
Working Capital and Indebtedness
The following table sets forth details of our current assets and liabilities as of 30 2021 6 30
June 2021 (in RMB millions):
2021 2020
RMB millions RMB millions
CURRENT ASSETS
Finance lease receivables, current portion 139.28 122.83
Long-term receivables, current portion 37.43 156.94
Loans receivable from associates and a joint venture – 6.50
Inventories 5,244.05 4,531.79
Trade and other receivables 8,397.22 6,991.91
Transferred trade receivables 1,044.86 830.94
Financial assets at fair value through profit or loss
1,632.06 2,857.31
Financial assets at fair value through other
comprehensive income 3,997.22 3,780.07
Derivative financial instruments 38.51 40.41
Tax recoverable 47.91 34.70
Contract related assets – 8.80
Bank deposits 2,713.32 2,763.29
Cash and cash equivalents 2,769.41 2,978.73
26,061.27 25,104.22
CURRENT LIABILITIES
Trade and other payables 9,429.78 8,523.82
Contract liabilities 1,674.89 1,625.44
Income tax liabilities 179.62 231.90
Borrowings 669.76 974.00
Lease liabilities 117.96 114.98
Redemption liabilities – 1,420.88
Provisions 1,002.64 1,092.79
Liabilities associated with transferred trade receivables 1,044.86 830.94
Derivative financial instruments 23.37 13.73
14,142.88 14,828.48
NET CURRENT ASSETS 11,918.39 10,275.74
As of 30 June 2021, the Group had net current assets of approximately 2021 6 30
RMB11,918.39 million (31 December 2020: RMB10,275.74 million) and 11,918.39 2020 12 31 10,275.74
current ratio of 1.84 (31 December 2020: 1.69). The increase in current ratio 1.84 2020 12 31 1.69
was primarily due to the decrease in redemption liabilities for the period.
As of 30 June 2021, the balance of the Group’s outstanding borrowings was 2021 6 30
RMB5,060.30 million, of which RMB669.76 million are current portion (31 5,060.30 669.76
December 2020: outstanding borrowings was RMB4,598.90 million, of which 2020 12 31 4,598.90
RMB974.00 million was current portion). 974.00
2021 15
Management Discussion and Analysis
Capital Adequacy Ratio
Gearing ratio is calculated by dividing the total liabilities netting off cash and
cash equivalent at the end of the period/year by total equity at the end of the 100%
period/year and multiplying by 100%.
As of 30 June 2021, our gearing ratio was 121% (31 December 2020: 124%). 2021 6 30 121%
2020 12 31 124%
Credit Risk
Credit risk arises from trade and other receivables, finance lease receivables,
long-term receivables, structured deposits, derivative assets, loan receivable
from associates and a joint venture, pledged bank deposit, cash and cash
equivalents.
To manage the risk with respect to pledged bank deposit, cash and cash
equivalents, structured deposits and derivative assets, the Group placed them in
or entered into the contract with the banks with high reputation.
The Group has policies in place to ensure that sales are made to reputable and
creditworthy customers with an appropriate financial strength, credit history
and an appropriate percentage of down payments. It also has other monitoring
procedures to ensure that follow-up action is taken to recover overdue debts.
In addition, the Group reviews regularly the authorisation of credit limits
to individual customers and recoverable amount of each individual trade
receivables to ensure that adequate impairment losses are made for
irrecoverable amounts. In respect of the business of manufacture of coal
mining machinery, the Group generally receives advances in the form of notes 30%
receivable or cash from customers (which approximate 30% of the contract 180
price) before delivery of its product and allows a credit period of 180 days to its 0 90
customers for the remaining contract price. In respect of auto parts, normally a
credit period of 0 to 90 days is granted to its customers.
During the period, the Group has endorsed and derecognised certain notes
receivable for the settlement of trade and other payables with full recourse. In
the opinion of the directors of the Company, the risk of the default in payment of
the endorsed notes receivable is low because all endorsed notes receivable are
issued and guaranteed by reputable PRC banks.
The Group considers the probability of default upon initial recognition of asset
and whether there has been a significant increase in credit risk on an ongoing
basis throughout each reporting period. To assess whether there is a significant
increase in credit risk, the Group compares the risk of default occurring on the
asset as at the reporting date with the risk of default as at the date of initial 1 3
recognition. The expected credit loss rates are determined based on historical
credit losses experienced from the past 1 to 3 years and are adjusted to reflect
current and forward-looking information such as macroeconomic factors
affecting the ability of the customers to settle the receivables. It considers
available reasonable and supportive forwarding-looking information.
16 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Management Discussion and Analysis
Interest Rate Risk
The Group is exposed to cash flow interest rate risk in relation to variable-rate
borrowings. Currently, the Group does not have a specific policy to manage its
interest rate risk, but management will closely monitor interest rate exposures
and consider hedging significant interest rate risk should the need arise.
Currency Risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various non-functional currencies. Foreign exchange risk arises
from future commercial transactions, recognised assets and liabilities.
The actual foreign exchange risk faced by the Group therefore is primarily with
respect to non-functional currency bank balances, and receivable (collectively
“Non-Functional Currency Items”).
Management monitors foreign exchange exposure and will consider hedging
certain foreign currency exposure by using foreign exchange forward contracts
when the need arises.
The Group is mainly exposed to the foreign currency risk between USD/RMB,
EUR/RMB and HKD/RMB.
2021 17
Directors, Supervisors and Chief Executives
Change in information of Directors, Supervisors and
Chief Executives
Change of directors
Due to the expiry of the term of the fourth session of the board of directors of
the Company (the “Board”), Mr. Wang Bin, Mr. Jiang Hua and Mr. Li Xudong,
members of the fourth session of the Board, were not nominated as candidates
for re-election to the fifth session of the Board, they retired as directors of the
Company with effect from 31 March 2021.
As approved at the first Extraordinary General Meeting of the Company in 2021:
Mr. Cui Kai and Mr. Yang Dongsheng were appointed as non-executive directors
of the Company; Mr. Ji Feng, Ms. Guo Wenqing and Mr. Fang Yuan were
appointed as independent non-executive directors of the Company with effect
from 31 March 2021.
Change of supervisors
Due to the expiry of the term of the fourth session of the supervisory committee
of the Company, Mr. Cui Leilei, Mr. Ni Wei, Mr. Zhou Rong, Mr. Zhang Yichen
and Mr. Yuan Shaochong, members of the fourth session of the supervisory
committee, were not nominated as candidates for re-election to the fifth session
of the supervisory committee, they resigned as supervisors of the Company with
effect from 31 March 2021.
As approved at the first Extraordinary General Meeting of the Company in 2021
and the employees’ representative meeting of the Company:
Mr. Cheng Xiangdong, Zhang Yonglong, Mr. Cui Zonglin, Mr. Zhang Minglin and
Mr. Bao Xueliang were appointed as supervisors of the Company with effect
from 31 March 2021.
For the latest lists of directors and supervisors of the Company, please refer to
the section headed “Corporate Information”.
Save as disclosed above, for the six months period ended 30 June 2021 (the
“Review Period”), there is no change in information of directors, supervisors
and chief executives of the Company.
Model Code for Securities Transactions by Directors
and Supervisors
The Company has adopted the Model Code for Securities Transactions by
Directors of Listed Issuers (the “Model Code”) set out in Appendix 10 to the
Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited (the “Listing Rules of the Stock Exchange”) as its code of conduct
regarding securities transactions by the directors and the supervisors. After
specific enquiry had been made with all the directors and supervisors, the
directors and supervisors have confirmed that they had complied with the Model
Code during the Review Period.
18 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Directors, Supervisors and Chief Executives
Directors’, Supervisors’ and Chief Executives’
Interests and Short Positions in Securities of the
Company and its Associated Corporations
To the best knowledge of the directors, as at 30 June 2021, the directors,
the supervisors and chief executives of the Company had interests and short
positions in the shares, underlying shares and debentures of the Company or
any of its associated corporations (as defined in the Securities and Futures
Ordinance (the “SFO”) of Hong Kong) which were required to be notified to the XV 7 8
Company and the Stock Exchange pursuant to the provisions of Divisions 7
and 8 of Part XV of the SFO (including interests and short positions which they
are taken or deemed to have under relevant provisions of the SFO); or were 352
required, pursuant to Section 352 of the SFO, to be recorded in the register
referred to therein (including interests and short positions which they are taken
or deemed to have under relevant provisions of the SFO); or were required to be
notified to the Company and the Stock Exchange pursuant to the Model Code
under the Listing Rules of the Stock Exchange, as follows:
Approximate Approximate
percentage of percentage of
Director/ the relevant the total Long position/
Supervisor/ Capacity/ Class of Number of class of number of Short position/
Name Chief executive Nature of interest shares shares capital % shares % Lending pool
% %
Jiao Chengyao(1) Director Beneficial owner A Share 5,901,964 0.39 0.33 Long position
(1) A
Xiang Jiayu(1) Director Beneficial owner A Share 3,895,120 0.25 0.22 Long position
(1) A
Jia Hao(1) Director Beneficial owner A Share 2,400,000 0.16 0.14 Long position
(1) A
Fu Zugang(1) Director Beneficial owner A Share 4,526,720 0.30 0.26 Long position
(1) A
Interest of spouse A Share 200,000 0.01 0.01 Long position
A
Wang Xinying Director Beneficial owner A Share 1,895,040 0.12 0.11 Long position
A
Liu Qiang Supervisor Beneficial owner A Share 11,500 0.00 0.00 Long position
A
Zhang Minglin Supervisor Beneficial owner A Share 100,000 0.01 0.01 Long position
A
2021 19
Directors, Supervisors and Chief Executives
Directors’, Supervisors’ and Chief Executives’
Interests and Short Positions in Securities of the
Company and its Associated Corporations (Continued)
Note:
(1) During the Review Period, the Company implemented the 2021 Restricted Share (1) 2021
Incentive Plan, through which Mr. Jiao Chengyao, a director, was granted 3,000,000 A 3,000,000
restricted A Shares, Mr. Xiang Jiayu was granted 2,000,000 restricted A Shares, A 2,000,000
Mr. Jia Hao was granted 2,400,000 restricted A Shares, and Mr. Fu Zugang was A 2,400,000 A
granted 2,000,000 restricted A Shares. The number of shares of the four directors 2,000,000
listed in the table above included the restricted A Shares granted to them. The A A
unlocking arrangement of the restricted A Shares of the Company as held by the 2021
four directors is subject to the unlocking conditions required by the 2021 Restricted
Share Incentive Plan of the Company.
Interests in Underlying Shares
Approximate Approximate
percentage of the percentage of the
Number of relevant class of total number of
Name of Directors Nature of interest Class of shares share options held capital % shares %
% %
Jia Hao Beneficial owner A Share 700,000 0.05 0.04
A
Fu Zugang Beneficial owner A Share 600,000 0.04 0.03
A
Save as disclosed above, as at 30 June 2021, none of the directors, the
supervisors or chief executives of the Company had any interest or short
position in the shares, underlying shares or debentures of the Company or any
of its associated corporations (as defined in the SFO of Hong Kong) which were
required to be notified to the Company and the Stock Exchange pursuant to the XV 7 8
provisions of Divisions 7 and 8 of Part XV of the SFO (including interests or short
positions which they are deemed to have); or were required, pursuant to Section 352
352 of the SFO, to be recorded in the register referred to therein; or were
required to be notified to the Company and the Stock Exchange pursuant to the
Model Code for Securities Transactions by Directors of Listed Companies under
the Listing Rules of the Stock Exchange.
Independent Non-executive Directors
The Company had appointed a sufficient number of independent non-executive
directors with appropriate professional qualifications or accounting or related
financial management expertise as required under the Listing Rules of the Stock
Exchange. As at 30 June 2021, the Company had appointed four independent
non-executive directors, namely Mr. CHENG Jinglei, Mr. JI Feng, Ms. GUO
Wenqing and Mr. FANG Yuan.
20 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Directors, Supervisors and Chief Executives
Structure and Number of Shareholders
Details of the shareholders recorded in the register of members of the Company
as at 30 June 2021 are as follows:
Holders of A Shares A 48,608
Holders of H Shares H 60
Total number of shareholders 48,668
Substantial Shareholders’ Interests and Short
Positions in Shares and Underlying Shares of the
Company
To the knowledge of the directors, as at 30 June 2021, the following
shareholders (other than the directors, supervisors or chief executives) had
interests or short positions in any shares and the underlying shares of the XV 2 3
Company which were required to be notified to the Company pursuant to the
provisions of Divisions 2 and 3 of Part XV of the SFO, or which were required, 336
pursuant to Section 336 of the SFO, to be recorded in the register of members
kept by the Company:
Approximate Approximate
percentage of percentage of
the relevant the total Long position/
Capacity/Nature Class of Number of class of number of Short position/
Name of interest shares shares capital % shares % Lending pool
% %
Henan Asset Management Co., Ltd.(1) Interest of beneficial A Share 346,404,576 22.62 19.52 Long position
(1) owner and party acting A
in concert
Hong Yi Investment Management Beneficial owner A Share 277,195,419 18.10 15.62 Long position
(Henan) Partnership A
(Limited Partnership)(1)
(1)
State-owned Assets Supervision and Interest in a controlled A Share 243,892,381 15.92 13.74 Long position
Administration Commission of Henan corporation A
Provincial People’s Government(2)
(2)
2021 21
Directors, Supervisors and Chief Executives
Substantial Shareholders’ Interests and Short
Positions in Shares and Underlying Shares of the
Company (Continued)
Approximate Approximate
percentage of percentage of
the relevant the total Long position/
Capacity/Nature Class of Number of class of number of Short position/
Name of interest shares shares capital % shares % Lending pool
% %
Henan Machinery Investment Beneficial owner A Share 243,892,381 15.92 13.74 Long position
Group Co., Ltd.(2) A
(2)
Prime Capital Management Investment manager H Share 33,918,711 13.94 1.91 Long position
Company Limited H
Morgan Stanley(3) Interest in a controlled H Share 12,610,455 5.18 0.71 Long position
(3) corporation H
Interest in a controlled H Share 1,497,706 0.62 0.08 Short position
corporation H
Notes:
(1) Henan Asset Management Co., Ltd. directly holds 69,209,157 A Shares of the (1) 69,209,157 A
Company. Pursuant to Article 317(1)(a) of the SFO, Henan Asset Management Co., 317(1)(a)
Ltd. is deemed a party acting in concert with Hong Yi Investment Management
(Henan) Partnership (Limited Partnership). Hence, Henan Asset Management Co.,
Ltd. is deemed to own the same batch of 277,195,419 A Shares of the Company
directly held by Hong Yi Investment Management (Henan) Partnership (Limited 277,195,419 A
Partnership). Henan Asset Management Co., Ltd. directly owns and is deemed to 346,404,576 A
own an aggregate of 346,404,576 A Shares of the Company.
(2) Henan Machinery Investment Group Co., Ltd. directly holds 243,892,381 A Shares (2) 243,892,381
of the Company. Henan Machinery Investment Group Co., Ltd. is a wholly owned A
subsidiary of the State-owned Assets Supervision and Administration Commission
of Henan Provincial People’s Government. Pursuant to the SFO, the State-owned
Assets Supervision and Administration Commission of Henan Provincial People’s
Government is deemed to own the same batch of 243,892,381 A Shares of the 243,892,381 A
Company directly held by Henan Machinery Investment Group Co., Ltd.
22 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Directors, Supervisors and Chief Executives
Substantial Shareholders’ Interests and Short
Positions in Shares and Underlying Shares of the
Company (Continued)
Notes: (Continued)
(3) By way of its relations with certain corporations, Morgan Stanley is interested in a (3)
total of 12,610,455 (long position) and 1,497,706 (short position) H Shares held in 12,610,455 1,497,706 H 253,203
the Company. 253,203 (long position) and 306 (short position) H Shares are held by 306 H
non-listed derivative instrument through cash settlement. As disclosed in the notice
of interest submitted by Morgan Stanley (with the relevant event dated 25 June H
2021), Morgan Stanley is interested in the following H Shares:
Direct
Name of controlled Percentage interest
corporation Name of controlling person of control (Yes/No) Number of shares
Morgan Stanley International Morgan Stanley 100.00 No Long position 12,304,255
Holdings Inc.
Short position 1,455,428
Morgan Stanley International Limited Morgan Stanley International 100.00 No Long position 12,304,255
Holdings Inc.
Short position 1,455,428
Morgan Stanley Investments (UK) Morgan Stanley International 100.00 No Long position 12,304,255
Limited
Short position 1,455,428
Morgan Stanley & Co. International plc Morgan Stanley Investments (UK) 100.00 Yes Long position 12,304,255
Short position 1,455,428
Morgan Stanley Capital Morgan Stanley 100.00 No Long position 306,200
Management, LLC
Short position 42,278
Morgan Stanley Domestic Holdings, Inc. Morgan Stanley Capital 100.00 No Long position 306,200
Management, LLC
Short position 42,278
Morgan Stanley & Co. LLC Morgan Stanley Domestic 100.00 Yes Long position 186,600
Holdings, Inc.
Short position 42,000
Morgan Stanley Capital Services LLC Morgan Stanley Domestic 100.00 Yes Long position 119,600
Holdings, Inc.
Short position 278
2021 23
Material Events
Equity Interest
During the Review Period, the Company implemented the Restricted A Share A
Incentive Plan, making its total share capital change from 1,732,471,370 to 1,732,471,370 1,774,771,370
1,774,771,370. The equity incentive plan implemented by the Company will not
have significant impact on its shareholder structure as well as the structure of
its assets and liabilities.
As at 30 June 2021, the aggregate share capital of the H shares of the H
Company was RMB243,234,200, divided into 243,234,200 shares of RMB1.00 243,234,200 243,234,200
each. The aggregate share capital of the A shares of the Company was 1.00 A
RMB1,531,537,170, divided into 1,531,537,170 shares of RMB1.00 each. 1,531,537,170 1,531,537,170
1.00
Interim Dividend
The Board did not propose the payment of interim dividend for the six months
ended 30 June 2021.
Use of Proceeds from Initial Public Offering on the
Stock Exchange
The H shares of the Company were listed on the Stock Exchange on 5 December H
2012 and the net proceeds were HK$2,155.55 million after deducting relevant 2,155.55
expenses. During the Review Period, save as described in the announcement 2014 3 31
of the Company dated 31 March 2014 in relation to the update on the use of 2017 5 23 H
proceeds and the announcement dated 23 May 2017 in relation to the proposed
change to the use of proceeds from H share offering, the use of proceeds was
in line with the usage disclosed in the prospectus of the Company.
During the Review Period, as resolved by the Board of the Company, the 2017 5 23 H
unutilized proceeds of RMB38,254,573.04 from the H share offering would
be used to repurchase partnership shares in SMG Acquisition Fund, L.P. in H 38,254,573.04 SMG
accordance with the announcement dated 23 May 2017 in relation to the Acquisition Fund, L.P.
proposed change to the use of proceeds from the H share offering.
The details of the use of proceeds from the H share offering of the Company 2021 H
in the first half of 2021 included expense of bank handling charges of 1,265.74
RMB1,265.74, interest income of deposit received of RMB62.47, exchange 62.47 792,598.82
losses of RMB792,598.82 and expenses used for the above repurchase of 38,254,573.04 2021 6 30
RMB38,254,573.04. As of 30 June 2021, the amount of remaining proceeds H 296,139.79
from the H share offering was approximately RMB296,139.79.
For the unutilized proceeds from the H share offering, the Company expects H 2017 5 23
that they will be used for the payment of costs associated with the intermediary H
agency for the special case of repurchasing partnership shares in SMG SMG Acquisition Fund, L.P.
Acquisition Fund, L.P. in accordance with the announcement dated 23 May
2017 in relation to the proposed change to the use of proceeds from the H
share offering.
24 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Material Events
Share Option Incentive Scheme
In order to implement the national policies on deepening the reform of state-
owned enterprises and documents such as the Notice by the State Council of
Issuing the Plan for Reforming the State-owned Capital Authorized Operation [2019]9
System (Guo Fa [2019] No.9) ( [2018]70
[2019]9 ) and the Notice by the State-
owned Assets Supervision and Administration Commission of the State Council
on Issuing the ‘Double-Hundred’ Work Plan for the Reform of State-owned
Enterprises (Guo Zi Fa Yan Jiu [2018] No.70) (
[2018]70 ), further improve
the corporate governance structure of the Company, promote the establishment
and perfection of the distribution mechanism that combines incentives and
restraints, fully mobilize the directors, senior management, core management A H
and core technicians and key business personnel of the Company, effectively A
align the interests of shareholders and the Company with the personal
interests of the management, facilitate the Company in releasing new vitality
in sustainable development as well as promote the sustainable development of
the Company, the establishment of the A Share Option Incentive Scheme was
approved by shareholders at the second Extraordinary General Meeting of 2019,
the first A Shareholders Class Meeting of 2019 and the first H Shareholders
Class Meeting of 2019 held on 21 October 2019.
In accordance with the Share Option Incentive Scheme, the Company will grant
a number of options to the qualified participants who are entitled to purchase A A
Shares of the Company. The number of share options proposed to be granted
to the participants under the Share Option Incentive Scheme is no more than 1,603
16,030,000, amounting to 0.93% of the total share capital of the Company 1,732,471,370 0.93%
(i.e. 1,732,471,370 shares) as at the date of this report. The total number
of shares of the Company granted to any participant under the Share Option
Incentive Scheme within the validity periods of all equity incentive schemes of 1%
the Company shall in aggregate not exceed 1% of the Company’s total share A 1%
capital and 1% of the Company’s total issued A Share capital at the date on A
which the scheme was approved at the general meetings. The total number of 10%
A Shares in respect of all equity incentive schemes of the Company in effect A 10%
shall in aggregate not exceed 10% of the Company’s total share capital and
10% of the Company’s total issued A Share capital at the date on which the
scheme was approved at the general meetings. Under the scheme, options
granted to participants are only vested if certain performance standards are
met. Participation in the scheme is at the Board’s discretion and no individual
has a contractual right to participate in the scheme or to receive any guaranteed
benefits.
2021 25
Material Events
Share Option Incentive Scheme (Continued)
In 2019, the Company granted 16,030,000 share options to 333 participants 2019 333
under the Share Option Incentive Scheme. The date of grant was 4 November 1,603 2019 11 4
2019. The breakdown of allocation is as follows:
Percentage of the
Percentage of the total share capital
Number of share number of the of the Company
options granted share options as at the date
Name Position (0’000) in the grant of this report
Jia Hao Executive Director and General Manager 70 4.37% 0.04%
Fu Zugang Executive Director 60 3.74% 0.03%
Fu Qi Deputy General Manager 35 2.18% 0.02%
Zhang Haibin Secretary to the Board 35 2.18% 0.02%
Huang Hua Chief Financial Officer 35 2.18% 0.02%
Li Weiping Deputy General Manager 35 2.18% 0.02%
Core management and core personnel of the Company’s headquarters and 1,333 83.16% 0.75%
relevant business segments (327 in total)
327
Total 1,603 100.00% 0.90%
The exercise price of the share options in the grant is RMB5.98 per A Share. A 5.98
Exercise price of the share options shall be adjusted accordingly with reference
to the occurrence of any events to the Company such as capitalization of capital
reserves, bonus issue, share subdivision or consolidation, rights issue and A
dividend distribution prior to the exercise of share options. The closing price of A 6.05
the A Shares of the Company at the date of grant was RMB6.05 per A Share.
26 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Material Events
Share Option Incentive Scheme (Continued)
The validity period of the Share Option Incentive Scheme is 10 years, starting 10
from the date of approval of the scheme at the general meetings. The validity
period of the share options in the first grant under the scheme shall be no more 60
than 60 months, starting from the date of registration of the grant. The vesting
period refers to the period from the registration date for the grant of share 24 24
options to the first exercise date, and the vesting period shall be 24 months. If
the conditions of exercise stipulated under the Share Option Incentive Scheme 36
are fulfilled within the exercise date after expiry of the 24-month period from the
date of grant, the participants shall exercise their share options in stages within
the next 36 months. The exercise period of the Share Option Incentive Scheme
and the time arrangement for each exercise period are set out in the following
table:
Exercise period Exercise time arrangement Exercisable ratio
First exercise period Commencing on the first trading day after expiry of the 24-month period from the grant 33%
registration date, and ending on the last trading day of the 36-month period from the
grant registration date
24 36
Second exercise period Commencing on the first trading day after expiry of the 36-month period from the grant 33%
registration date, and ending on the last trading day of the 48-month period from the
grant registration date
36 48
Third exercise period Commencing on the first trading day after expiry of the 48-month period from the grant 34%
registration date, and ending on the last trading day of the 60-month period from the
grant registration date
48 60
The implementation of the Share Option Incentive Scheme will not cause the
shareholding structure of the Company to be unable to comply with the listing
requirements.
(i) Fair value of options granted (i)
The assessed fair value at grant date of options granted in 2019 was 2019
RMB0.49 per share. The fair value at grant date is independently 0.49
determined using an adjusted form of the Black Scholes Model which (Black Scholes)
includes a Monte Carlo simulation model that takes into account the (Monte Carlo)
exercise price, the term of the option, the impact of dilution (where
material), the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield, the risk-free interest rate for
the term of the option and the correlations and volatilities of the peer group
companies.
2021 27
Material Events
Share Option Incentive Scheme (Continued)
(i) Fair value of options granted (Continued) (i)
The model inputs for options granted during the year ended 30 June 2021
included:
(a) options are granted for no consideration and vested based on the (a) 20
Company’s ranking within a peer group of 20 selected companies
over a three-year period. Vested options are exercisable for a period
of two years after vesting
(b) exercise price: RMB5.98 per share (the exercise price became (b) 5.98
RMB5.5851 per share in 2021) 5.5851
(c) grant date: 4 November 2019 (c)
(d) expiry dates: 19 December 2022, 19 December 2023, and 19 (d)
December 2024
(e) share price at grant date: RMB6.05 per share (e) 6.05
(f) expected price volatility of the Company’s shares: (f)
30.38% First phase 30.38%
29.93% Second phase 29.93%
40.83% Third phase 40.83%
(g) expected dividend yield: Nil (g)
(h) risk-free interest rate: (h)
2.8219% Two years 2.8219%
2.9280% Three years 2.9280%
3.0197% Four years 3.0197%
The expected price volatility is based on the historic volatility (based on the
remaining life of the options), adjusted for any expected future volatility
due to publicly available information.
Restricted Share Incentive Plan
In order to further improve the Company’s governance structure, enhance the
Company’s incentive mechanism, strengthen the sense of responsibility and
sense of mission of the Company’s management team towards the realization
of the sustainable and healthy development of the Company, and ensure the 2021
realization of the Company’s development target, the Company intends to
implement the 2021 Restricted Share Incentive Plan in accordance with relevant
laws, regulations and normative documents as well as the provisions of the
Articles of Association.
As at 17 April 2021, the Board of the Company resolved to propose the 2021 4 17 2021
adoption of the 2021 Restricted Share Incentive Plan (Draft) (the “2021 2021 2021
Incentive Plan”). To be valid, the 2021 Incentive Plan shall be reviewed and 2021 6 4 2020
approved by shareholders at the 2020 Annual General Meeting, the 2021 first A 2021 A 2021
Shareholders Class Meeting and the 2021 first H Shareholders Class Meeting of H
the Company held on 4 June 2021.
28 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Material Events
Restricted Share Incentive Plan (Continued)
As at 4 June 2021, the Board approved the grant of 42,300,000 restricted A 2021 6 4 2021
Shares to 186 participants of the Group under the 2021 Incentive Plan at the 186 42,300,000 A
grant price of RMB5.88 per share, all the proceeds will be used as additional 5.88
working capital for the Company, and the registration for the grant had 2021 6 11
completed on 11 June 2021.
Given that the participants under the 2021 Incentive Plan included the directors 2021
or chief executives of the Company and certain of its subsidiaries, who are
related persons of the Company, the grant of restricted shares to such persons 14A
constitutes a non-exempt connected transaction of the Company under Chapter
14A of the Listing Rules.
The allocation of restricted shares granted under the Scheme to each participant
is shown in the following table:
Percentage of the
total share capital
Number of Percentage of the of the Company
restricted number of the as at the end of
shares granted restricted shares the Reporting
Name Position (0’000) under the grant Period
Jiao Chengyao Chairman 300 7.09% 0.17%
Xiang Jiayu Vice Chairman 200 4.73% 0.11%
Jia Hao Director and General Manager 240 5.67% 0.14%
Fu Zugang Director 200 4.73% 0.11%
Fu Qi Deputy General Manager 70 1.65% 0.04%
Zhang Haibin Secretary to the Board 70 1.65% 0.04%
Huang Hua Chief Financial Officer 70 1.65% 0.04%
Li Weiping Deputy General Manager 70 1.65% 0.04%
Core management and core personnel of the Company’s headquarters and
relevant business segments (178 in total) 3,010 71.16% 1.74%
178
Total 4,230 100.00% 2.44%
2021 29
Material Events
Restricted Share Incentive Plan (Continued)
The terms of the Restricted Share Incentive Plan were entered into on the third
meeting of the fifth session of the Board of the Company. The closing price A
of the A shares on the latest trading day was RMB11.73. As of 7 June 2021, 11.73 2021 6 7
the Company received contribution of RMB248,724,000.00 for 42.3 million 186 4,230.00
Shares paid by 186 Participants. Each Participant contributed in cash, of which 248,724,000.00
RMB42,300,000.00 was credited into share capital, deducting the fees such 42,300,000.00
as fees for capital verification, legal fees, issuance related charges which
amounted to RMB1,357,452.83 in total (taxes not included) and the remaining 1,357,452.83
RMB205,066,547.17 was included in capital reserves. 205,066,547.17
For details of the 2021 Incentive Plan, please refer to the announcements of the 2021 2021 4
Company dated 18 April 2021, 4 June 2021 and 15 June 2021 as well as the 18 2021 6 4 2021 6 15
circular of the Company dated 14 May 2021. 2021 5 14
Corporate Governance
The Board of the Company is committed to maintaining a high standard
of corporate governance practices. The Board believes that effective and
reasonable corporate governance practices are essential to the development of
the Group and can safeguard and enhance the interests of the shareholders.
The Company was listed on the Stock Exchange on 5 December 2012 (“Listing
Date”). The Company has adopted the code provisions of the Corporate 14
Governance Code (the “CG Code”) (the “Code Provisions”) contained in
Appendix 14 to the Listing Rules of the Stock Exchange. During the period from
1 January 2021 and up to 30 June 2021 (the “Review Period”), the Code
Provisions were applied to the Company. Throughout the Review Period, the
Company complied with the applicable Code Provisions of the CG Code.
Purchase, Sale or Redemption of the Company’s
Listed Securities
As at 4 June 2021, the Company granted 42,300,000 restricted A Shares to 2021 6 4 2021
186 participants under the 2021 Restricted Share Incentive Plan at the grant 186 42,300,000 A
price of RMB5.88 per A share, and had completed the registration for the grant A 5.88 2021 6 11
as at 11 June 2021. Details of the 2021 Restricted Share Incentive Plan are set 2021
out in the section headed “Restricted Share Incentive Plan” above.
Save as disclosed above, there was no other purchase, sale or redemption of
any listed shares of the Company by the Company or any of its subsidiaries.
Acquisition and Disposal
During the Review Period, the Company was not involved in any material action
of acquisition and disposal of assets.
30 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Material Events
Material Litigation and Arbitration
During the Review Period, the Company was not involved in any material
litigation or arbitration, and there was no litigation or claim of material
importance pending and threatened by or against the Company.
Audit Committee
The audit committee of the Company (the “Audit Committee”) has reviewed
the accounting standards and practices adopted by the Company, and discussed
the matters related to auditing, internal control and financial reporting. The Audit
Committee has reviewed the unaudited interim condensed consolidated financial
information for the six months ended 30 June 2021 and this interim report of
the Company.
Subsequent Events
Many places in Henan Province were hit by rainstorms and floods in July 2021.
The Company’s manufacturing plants in Henan Zhengzhou were shut down
for around three days due to power failure caused by the floods. After the
Company’s quick response to the disaster, the plants resumed work shortly and
the loss caused by the disaster to the Company was insignificant.
Mr. Yang Dongsheng, a non-executive director of the Company, applied to
resign from his positions as a non-executive director of the fifth session of the
Board and a member of the Strategy Committee of the Board of the Company
due to his need of committing more time to other affairs. He does not hold any 2021 8 3
positions in the Company after his resignation, which has been effective from 3
August 2021.
The Company convened the sixth meeting of the fifth session of the Board 2021 8 3
on 3 August 2021. As recommended by the Company’s shareholder Hong
Yi Investment Management (Henan) Partnership (Limited Partnership) and
approved by the Nomination Committee of the Board of the Company, the Board
of the Company has nominated Mr. Fei Guangsheng as the candidate for the
non-executive director of the fifth session of the Board of the Company, which is
subject to election at the general meeting of the Company.
2021 31
Report on Review of Interim Condensed Consolidated Financial Information
To the Board of Directors of Zhengzhou Coal Mining Machinery Group
Company Limited
(Incorporated in the People’s Republic of China with limited liability)
Introduction
We have reviewed the interim financial information set out on pages 33 to 96, 33 96
which comprises the interim condensed consolidated statement of financial
position of Zhengzhou Coal Mining Machinery Group Company Limited (the
“Company”) and its subsidiaries (together, the “Group”) as at 30 June 2021
and the interim condensed consolidated statement of profit or loss and other
comprehensive income, the interim condensed consolidated statement of
changes in equity and the interim condensed consolidated statement of cash
flows for the six-month period then ended, and a summary of significant
accounting policies and other explanatory notes. The Rules Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited require the 34
preparation of a report on interim financial information to be in compliance with 34
the relevant provisions thereof and International Accounting Standard 34 “Interim
Financial Reporting”. The directors of the Company are responsible for the
preparation and presentation of this interim financial information in accordance
with International Accounting Standard 34 “Interim Financial Reporting”. Our
responsibility is to express a conclusion on this interim financial information
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 2410
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 interim financial information 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.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial information of the Group is not prepared, in
all material respects, in accordance with International Accounting Standard 34 34
“Interim Financial Reporting”.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 26 August 2021
32 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the six months ended 30 June 2021
Six months ended 30 June
2021 2020
Note RMB’000 RMB’000
(unaudited) (unaudited)
Revenue 5 15,082,378 12,315,468
Cost of sales 12 (11,476,195) (9,152,082)
Gross profit 3,606,183 3,163,386
Other income 7 183,052 152,390
Other gains and losses 8 45,397 (120,868)
Selling and distribution expenses 12 (589,938) (446,726)
Administrative expenses 12 (622,756) (534,825)
Research and development expenses 12 (683,822) (535,980)
Restructuring costs 9, 12 (121,536) –
Accrual of net impairment losses on financial
and contract assets 12 (18,493) (46,156)
Share of profit of associates 19,923 10,910
Share of profit of joint ventures 2,970 2,148
Finance costs, net 10 (150,397) (125,187)
Profit before tax 1,670,583 1,519,092
Income tax expense 11 (384,113) (313,299)
Profit for the period 1,286,470 1,205,793
Profit for the period attributable to:
Owners of the Company 1,202,212 1,135,168
Non-controlling interests 84,258 70,625
1,286,470 1,205,793
2021 33
Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the six months ended 30 June 2021
Six months ended 30 June
2021 2020
Note RMB’000 RMB’000
(unaudited) (unaudited)
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurement of post-employment benefit
obligations (27) 572
Changes in the fair value of financial assets at fair
value through other comprehensive income (7) (1,329)
Items that may be reclassified to profit or loss:
Exchange differences arising on translation 37,970 (64,293)
Cash flow hedging 4,861 (32,441)
Other comprehensive income for the period,
net of income tax 42,797 (97,491)
Total comprehensive income for the period 1,329,267 1,108,302
Total comprehensive income for the period
attributable to:
Owners of the Company 1,245,009 1,037,677
Non-controlling interests 84,258 70,625
1,329,267 1,108,302
Earnings per share
– Basic (RMB cents) 14 69.39 65.52
– Diluted (RMB cents) 14 69.09 65.52
34 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Interim Condensed Consolidated Statement of Financial Position
As at 30 June 2021
As at 30 June As at 31 December
2021 2020
Note RMB’000 RMB’000
(unaudited) (audited)
NON-CURRENT ASSETS
Property, plant and equipment 15 4,607,443 4,641,837
Right-of-use assets 1,758,466 1,268,668
Investment properties 387,849 387,226
Goodwill 506,599 520,431
Intangible assets 16 1,381,657 1,513,961
Investments in associates 220,091 297,460
Investments in joint ventures 82,171 81,339
Financial assets at fair value through other
comprehensive income 17 28,986 28,993
Deferred tax assets 18 379,196 429,507
Finance lease receivables 30,124 15,497
Long-term receivables 114,699 165,531
Assets classified as held for sale 1,794 1,922
9,499,075 9,352,372
CURRENT ASSETS
Finance lease receivables, current portion 139,283 122,834
Long-term receivables, current portion 37,431 156,944
Loans receivable from associates and
a joint venture – 6,500
Inventories 5,244,049 4,531,794
Trade and other receivables 19 8,397,214 6,991,913
Transferred trade receivables 1,044,863 830,941
Financial assets at fair value through
profit or loss 17 1,632,058 2,857,305
Financial assets at fair value through other
comprehensive income 17 3,997,218 3,780,065
Derivative financial instruments 17 38,508 40,405
Tax recoverable 47,913 34,701
Contract related assets – 8,804
Bank deposits 20 2,713,323 2,763,289
Cash and cash equivalents 20 2,769,413 2,978,727
26,061,273 25,104,222
Total assets 35,560,348 34,456,594
2021 35
Interim Condensed Consolidated Statement of Financial Position
As at 30 June 2021
As at 30 June As at 31 December
2021 2020
Note RMB’000 RMB’000
(unaudited) (audited)
NON-CURRENT LIABILITIES
Borrowings 22 4,390,568 3,624,892
Lease liabilities 1,187,126 690,226
Deferred tax liabilities 18 248,745 263,567
Contract liabilities 12,694 10,312
Provisions 24 158,163 136,148
Employee benefit obligations 395,430 707,321
Other non-current liabilities 174,705 161,818
6,567,431 5,594,284
CURRENT LIABILITIES
Trade and other payables 21 9,429,775 8,523,817
Contract liabilities 1,674,886 1,625,444
Income tax liabilities 179,622 231,896
Borrowings 22 669,762 974,003
Lease liabilities 117,957 114,980
Redemption liabilities 23 – 1,420,875
Provisions 24 1,002,639 1,092,793
Liabilities associated with transferred trade
receivables 1,044,863 830,941
Derivative financial instruments 17 23,373 13,730
14,142,877 14,828,479
Total liabilities 20,710,308 20,422,763
CAPITAL AND RESERVES
Share capital 25 1,774,771 1,732,471
Share premium 4,404,488 4,199,421
Reserves 7,673,861 7,131,903
Equity attributable to owners of the Company 13,853,120 13,063,795
Non-controlling interests 996,920 970,036
Total equity 14,850,040 14,033,831
Total equity and liabilities 35,560,348 34,456,594
The interim condensed consolidated financial statements on pages 33 to 96 33 96
were approved and authorised for issue by the Board of Directors on 26 August
2021 and are signed on its behalf by:
Jiao Chengyao Jia Hao
DIRECTOR DIRECTOR
36 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Interim Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2021
Attributable to owners of the Company
Statutory Currency Cash flow Non-
Share Share Treasury Revaluation surplus translation hedging Other Retained controlling Total
capital premium share reserve reserve reserve reserves reserves earnings Total interests equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note a)
a
At 1 January 2021 (audited)
1,732,471 4,199,421 – (35,394) 1,026,520 (145,790) (2,168) 115,203 6,173,532 13,063,795 970,036 14,033,831
Profit for the period – – – – – – – – 1,202,212 1,202,212 84,258 1,286,470
Other comprehensive income for the period – – – (34) – 37,970 4,861 – – 42,797 – 42,797
Total comprehensive income for the period – – – (34) – 37,970 4,861 – 1,202,212 1,245,009 84,258 1,329,267
Share-based payment – – – – – – – 5,030 – 5,030 – 5,030
Employee share schemes (Note 26) 26 42,300 205,067 (248,724) – – – – 10,352 – 8,995 – 8,995
Contributions from State-owned b
investors (Note b) – – – – – – – (95,000) – (95,000) – (95,000)
Disposal of an associate – – – – – – – (2,184) – (2,184) – (2,184)
Dividends (Note 13) 13 – – – – – – – – (372,525) (372,525) (57,374) (429,899)
At 30 June 2021 (unaudited)
1,774,771 4,404,488 (248,724) (35,428) 1,026,520 (107,820) 2,693 33,401 7,003,219 13,853,120 996,920 14,850,040
2021 37
Interim Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2021
Attributable to owners of the Company
Statutory Currency Cash flow Non-
Share Share Treasury Revaluation surplus translation hedging Other Retained controlling Total
capital premium share reserve reserve reserve reserves reserves earnings Total interests equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note a) (Note b)
a b
At 1 January 2020 (audited)
1,732,471 4,199,421 – (55,531) 790,994 (25,900) 2,793 105,067 5,490,416 12,239,731 902,515 13,142,246
Profit for the period – – – – – – – – 1,135,168 1,135,168 70,625 1,205,793
Other comprehensive income for the period – – – (757) – (64,293) (32,441) – – (97,491) – (97,491)
Total comprehensive income for the period – – – (757) – (64,293) (32,441) – 1,135,168 1,037,677 70,625 1,108,302
Share-based payment – – – – – – – 4,804 – 4,804 – 4,804
Dividends (Note 13) 13 – – – – – – – – (320,507) (320,507) (23,258) (343,765)
At 30 June 2020 (unaudited)
1,732,471 4,199,421 – (56,288) 790,994 (90,193) (29,648) 109,871 6,305,077 12,961,705 949,882 13,911,587
Note a: The cash flow hedging reserve represents the cumulative effective portion of a
gains and losses arising on changes in fair value of hedging instruments entered
into for cash flow hedges. The cumulative gains and losses arising on changes in
fair value of the hedging instrument that are recognised and accumulated under
the cash flow hedging reserve will be reclassified to profit or loss only when the
hedged item affects the profit or loss, or is included as an adjustment to the non-
financial hedged item.
Note b: The other reserves mainly represent the contribution from the State-owned b
Assets Supervision and Administration Commission of Henan Provincial People’s
Government, the previous ultimate controlling party of the Company, and was
recognised as contribution from the ultimate controlling party of the Company
before 1 January 2021. On 18 January 2021, Henan Machinery Investment
Group Co., Ltd. issued a notification to the Company to withdraw the contribution
provided before, and the Company repaid RMB95,000,000 to Henan Machinery 95,000,000
Investment Group Co., Ltd in January 2021.
38 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2021
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
OPERATING ACTIVITIES
Profit before tax 1,670,583 1,519,092
Adjustments for:
Finance costs 150,397 125,187
Interest income on bank deposits, long-term
receivables and finance lease receivables (57,230) (54,985)
Share of profit of associates (19,923) (10,910)
Share of profit of joint ventures (2,970) (2,148)
(Gain)/loss on disposal of property, plant and
equipment, and intangible assets (1,826) 9,209
Gain on disposal of an associate (20,257) –
Dividend from financial assets at fair value
through other comprehensive income (1,458) (2,022)
Dividend from financial assets at fair value
through profit and loss (2,400) –
Net fair value gain on financial assets at
fair value through profit and loss (50,505) –
Net fair value (gain)/loss of derivative
financial instruments (1,592) 57,739
Depreciation of property, plant and equipment 340,994 348,917
Depreciation of investment properties 5,750 3,851
Amortisation of intangible assets 119,805 114,623
Depreciation of right-of-use assets 83,756 81,087
Accrual for net impairment losses on financial
and contract assets 18,493 46,156
Impairment of property, plant and equipment – 32,071
Share-based payment 5,030 4,804
Restricted share incentive scheme (Note 26) 26 10,352 –
Accrual/(reversal) of inventory provision 44,090 (3,808)
Effect of foreign exchange rate changes 13,942 21,848
Operating cash flows before movements in
working capital 2,305,031 2,290,711
Increase in inventories (753,569) (8,316)
Increase in trade and other receivables (2,004,360) (909,123)
Decrease in long-term receivables and finance
lease receivables 148,073 55,693
Increase/(decrease) in trade and other payables 252,589 (403,220)
Increase/(decrease) in contract liabilities 51,824 (245,193)
Cash (used in)/generated from operations (412) 780,552
Income tax paid (400,896) (242,255)
NET CASH (USED IN)/GENERATED FROM
OPERATING ACTIVITIES (401,308) 538,297
2021 39
Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2021
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
INVESTING ACTIVITIES
Interest income on bank deposits, long-term
receivables and finance lease receivables 57,231 12,160
Government grants related to assets received 22,697 46,107
Dividends received from associates – 3,296
Dividends from financial assets at fair value
through comprehensive income 1,458 2,022
Dividends from financial assets at fair value
through profit and loss 2,400 –
Proceeds on disposal of an associate 35,103 –
Proceeds on disposal of property, plant and
equipment and intangible assets 38,048 5,287
Purchases of property, plant and equipment (391,077) (341,738)
Purchases of other intangible assets (34,669) (143,744)
Placement for structured deposits (999,753) (2,225,000)
Proceeds from structured deposits 2,225,000 1,393,000
Repayment of loans receivable from a joint venture 6,500 10,000
Payments for establishment of an associate (2,000) –
Placement of bank deposits with original
maturity over three months (2,102,213) (700,000)
Withdrawal of bank deposits with original
maturity over three months and restricted cash 1,789,743 31,270
Placement of pledged bank deposits (611,110) (659,440)
Withdrawal of pledged bank deposits 973,546 826,871
Net fair value gains/(loss) of derivative
financial instruments 66,601 (67,775)
NET CASH GENERATED FROM/(USED IN)
INVESTING ACTIVITIES 1,077,505 (1,807,684)
40 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2021
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
FINANCING ACTIVITIES
Proceeds from the equipment leasing companies 447,216 42,855
Proceeds from employee share scheme (Note 26) 26 247,367 –
Payments for the equipment leasing companies – (109,067)
Proceeds from new borrowings raised 1,121,437 1,431,714
Repayment of redemption liability (1,066,055) –
Repayment of borrowings (554,291) (839,313)
Interests paid (494,215) (54,630)
Dividends paid to Company’s shareholders (321,470) (275,509)
Dividends paid to non-controlling interests (57,374) (23,258)
Repayment of contributions from State-owned investors (95,000) –
Principal elements of lease payments (92,549) (67,053)
NET CASH (USED IN)/GENERATED FROM
FINANCING ACTIVITIES (864,934) 105,739
NET DECREASE IN CASH AND
CASH EQUIVALENTS (188,737) (1,163,648)
EFFECT OF FOREIGN EXCHANGE RATE CHANGES (20,577) (90,435)
CASH AND CASH EQUIVALENTS AT 1 JANUARY 2,978,727 3,863,435
CASH AND CASH EQUIVALENTS AT 30 JUNE
represented by cash and cash equivalents (Note 20) 20 2,769,413 2,609,352
2021 41
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
1 General information 1
Zhengzhou Coal Mining Machinery Group Company Limited (the
“Company”) was established in the People’s Republic of China (the “PRC”)
on 28 December 2008 as a joint stock company with limited liability
under the Company Law of the PRC after a reorganisation of Zhengzhou
Coal Mining Machinery Group Co., Ltd., a state owned enterprise in the
PRC. On 28 October 2015, 32.14% of the Company’s total issued share
capital held by the State-owned Assets Supervision and Administration 32.14%
Commission of Henan Provincial People’s Government (“Henan SASAC”)
were transferred to Henan Machinery Investment Group, a wholly-owned
subsidiary of Henan SASAC. In the opinion of the directors of the Company,
upon completion of the share transfer, the parent of the Company was
Henan Machinery Investment Group and its ultimate controlling party was
Henan SASAC of the PRC Government.
On 3 August 2010, the Company completed its initial public offering and 140,000,000
listing of 140,000,000 A shares on the Shanghai Stock Exchange under A
the stock code 601717.SS. The Company was listed on the Main Board of 601717.SS
The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) (stock
code: 00564) on 5 December 2012. 00564
On 9 March 2017, the Company issued 93,220,338 ordinary shares
to ASIMCO (China) Limited. On 22 March 2017, the Company issued 93,220,338
18,129,032 ordinary shares to Zhengzhou Coal Mining Machinery Group
Company Limited – the first phase of ESOP, Bridge Trust Co., Ltd., Jinxiu 1
Zhonghe (Beijing) Capital Management Co., Ltd. – Jinxiu Tianyou No. 106
Private Investment Fund, Tianhong Asset Management – Bank of Ningbo 106
– HANG TANG WEALTH, Tianhong Asset Management – Bank of Ningbo
– No. 2 Wealth Management Plan of Tianhong Dashu Dingzengbao and 2
Anhui Railway Development Funds Co., Ltd. After the shares issuance, 18,129,032
Henan Machinery Investment Group held 30.08% of the Company’s total
issued share capital. 30.08%
42 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
1 General information (Continued) 1
On 26 February 2021, Henan Machinery Investment Group Co., Ltd.
transferred 277,195,419 A shares of the Company to Hong Yi Investment
Management (Henan) Partnership (Limited Partnership) (“Hong Yi 277,195,419
Investment”). After the transfer, Henan Machinery Investment Group Co., A
Ltd. holds 243,892,381 shares of the Company (representing 14.08% 243,892,381
of the total share capital of the Company), and Hong Yi Investment holds 14.08% 277,195,419
277,195,419 shares of the Company, representing 16% of the total 16%
share capital of the Company. While Henan Asset Management Co., Ltd.
(“Henan Asset”), the party acting in concert with Hong Yi Investment holds 69,209,157 3.99%
69,209,157 shares of the Company, representing 3.99% of the total share 19.99%
capital of the Company, Hong Yi Investment and Henan Asset held 19.99%
of shares of the Company in aggregate. According to the Acting-in-Concert
Agreement entered into by Hong Yi Investment and Henan Asset and the
governance structure of Hong Yi Investment, Hong Yi Investment and
Henan Asset have become the controlling shareholders of the Company,
and the Company has no de facto controller.
On 4 June 2021, the Annual General Meeting of the Group adopted a
restricted share incentive scheme (the “Scheme”) to grant and issue
a total number of 42,300,000 A shares. After the completion of the 42,300,000 A
grant registration of the restricted shares under the Scheme, the total
share capital of the Company increased from 1,732,471,370 Shares to 1,732,471,370 1,774,771,370
1,774,771,370 Shares. As a result, the aggregate shareholding of Hong Yi 19.99%
Investment and Henan Asset has been changed from 19.99% to 19.52%. 19.52%
The respective addresses of the registered office and the principal place of
business of the Company are disclosed in the corporate information section
of the annual report. The Company and its subsidiaries (collectively the
“Group”) are mainly engaged in manufacturing of coal mining machinery
and auto parts.
The interim condensed consolidated financial information is presented in
Renminbi (“RMB”), unless otherwise stated.
2021 43
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
2 Basis of preparation of interim condensed 2
consolidated financial information
This interim condensed consolidated financial information for the six
months ended 30 June 2021 has been prepared in accordance with
International Accounting Standard (“IAS”) 34 Interim Financial Reporting
issued by the International Accounting Standards Board (the “IASB”). The 34
interim condensed consolidated financial information does not include
all the notes of the type normally included in an annual financial report.
Accordingly, this report should be read in conjunction with the audited
consolidated financial statements of the Group for the year ended 31
December 2020 and any public announcements made by the Company
during the interim reporting period.
Except as described below, the accounting policies and methods of
computation used in the interim condensed consolidated financial
information for the six months ended 30 June 2021 are the same as
those followed in the preparation of the Group’s consolidated financial
statements for the year ended 31 December 2020.
3 New and amended standards adopted by the 3
Group
The following amendments to existing standards are mandatory for the first
time for the financial year beginning on 1 January 2021 and are currently
relevant to the Group. The adoption of the above new amendments starting
from 1 January 2021 did not have any significant impact on the Group’s
results of operation and financial position for the six months ended 30
June 2021.
Amendments of IAS 9, IAS 39, IAS 7, IAS 4 and IAS 16 – Interest 9 39
Rate Benchmark Reform – Phase 2 7 4
16
New standard, amendments and interpretation of IASs
not yet adopted
The Group has not early adopted any new accounting and financial
reporting standards, amendments and interpretation which have been
issued but are not yet effective for the financial year ending on 31
December 2021.
44 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
4 Financial risk factors 4
(a) Liquidity risk (a)
The Group monitors and maintains a level of cash and cash
equivalents deemed adequate by the management to finance the
Group’s operations and mitigate the effects of fluctuations in cash
flows. The management monitors the utilization of bank borrowings
and ensures compliance with loan covenants.
The following table details the Group’s remaining contractual
maturity for its non-derivative financial liabilities based on the
agreed repayment terms. The table has been drawn up based on the
undiscounted cash flows of financial liabilities based on the earliest
date on which the Group is required to pay. The table includes both
interest and principal cash flows.
Weighted On demand Total
average or less than 3 months to 1 year to 2 years to undiscounted Carrying
The Group interest rate 3 months 1 year 2 years 5 years cashflows amount
3 3 1 1 2 2 5
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 30 June 2021 (unaudited)
Non-derivatives financial liabilities
Trade and other payables – 7,352,416 2,077,359 – – 9,429,775 9,429,775
Liabilities associated with transferred
trade receivables – 47,176 997,687 – – 1,044,863 1,044,863
Borrowings 2.55 114,383 690,778 3,796,341 686,352 5,287,854 5,060,330
Lease liabilities 3.68 56,989 118,440 143,340 1,215,464 1,534,233 1,305,083
Derivative financial liabilities
Designated as hedging instruments – – – – – – –
Not designated as hedging instruments – 17,825 5,548 – – 23,373 23,373
– 7,588,789 3,889,812 3,939,681 1,901,816 17,320,098 16,863,424
2021 45
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
4 Financial risk factors (Continued) 4
(a) Liquidity risk (Continued) (a)
Weighted On demand Total
average or less than 3 months to 1 year to 2 years to undiscounted Carrying
The Group interest rate 3 months 1 year 2 years 5 years cashflows amount
3 3 1 1 2 2 5
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2020 (audited)
Non-derivatives financial liabilities
Trade and other payables – 7,500,973 1,022,844 – – 8,523,817 8,523,817
Liabilities associated with transferred
trade receivables – 8,073 822,868 – – 830,941 830,941
Borrowings 2.47 443,639 640,292 857,452 2,881,030 4,822,413 4,598,895
Lease liabilities 3.72 36,317 93,229 131,248 704,873 965,667 805,206
Redemption liabilities 10 1,420,875 – – – 1,420,875 1,420,875
Derivative financial liabilities
Designated as hedging instruments – 4,238 1,925 – – 6,163 6,163
Not designated as hedging instruments – 6,925 642 – – 7,567 7,567
– 9,421,040 2,581,800 988,700 3,585,903 16,577,443 16,193,464
(b) Fair value measurements of financial instruments (b)
This note provides information about how the Group determines fair
values of various financial assets and financial liabilities.
Fair value of the Group’s financial assets and financial liabilities that
are measured at fair value on a recurring basis.
46 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
4 Financial risk factors (Continued) 4
(b) Fair value measurements of financial instruments (b)
(Continued)
The table below analyses financial instruments carried at fair value,
by valuation method. The different levels have been defined as
follows:
Level 1: The fair value of financial instruments traded in active 1
markets (such as publicly traded derivatives, and equity securities)
is based on quoted market prices at the end of the reporting period.
The quoted market price used for financial assets held by the Group is
the current bid price. These instruments are included in level 1. 1
Level 2: The fair value of financial instruments that are not traded 2
in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques which maximise the use of
observable market data and rely as little as possible on entity-specific
estimates. If all significant inputs required to fair value an instrument
are observable, the instrument is included in level 2. 2
Level 3: If one or more of the significant inputs is not based on 3
observable market data, the instrument is included in level 3. This is 3
the case for unlisted equity securities.
Some of the Group’s financial assets and financial liabilities 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).
2021 47
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
4 Financial risk factors (Continued) 4
(b) Fair value measurements of financial instruments (b)
(Continued)
Fair value
Financial instruments Fair value as at 30 June 2021 hierarchy Valuation technique and key input
Financial assets at fair Listed equity securities in Hong Kong Level 1 Quoted bid prices in an active market
value through OCI, – Coal industry RMB28,986,000
non-current (31 December 2020: RMB28,993,000)
1
28,986,000
28,993,000
Derivative financial Forward foreign exchange contract Level 2 Discounted cash flow. The estimated future cash flow is based
instruments designated as hedging instruments on forward exchange rate (from observable forward exchange
– RMB2,209,000 rates at the end of the reporting date) and contracted forward
(31 December 2020: Nil) rate, discounted at a rate that reflects the credit risk of the
counterparty.
2
2,209,000
Derivative financial Forward foreign exchange contract not Level 2 Discounted cash flow. The estimated future cash flow is based
instruments designated as hedging instruments on forward exchange rate (from observable forward exchange
– RMB36,299,000 rates at the end of the reporting date) and contracted forward
(31 December 2020: RMB40,405,000) rate, discounted at a rate that reflects the credit risk of the
counterparty.
2
36,299,000
40,405,000
Derivative financial Forward foreign exchange contract Level 2 Discounted cash flow. The estimated future cash flow is based
instruments designated as hedging instruments on forward exchange rate (from observable forward exchange
– Nil rates at the end of the reporting date) and contracted forward
(31 December 2020: RMB6,163,000) rate, discounted at a rate that reflects the credit risk of the
counterparty.
2
6,163,000
48 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
4 Financial risk factors (Continued) 4
(b) Fair value measurements of financial instruments (b)
(Continued)
Fair value
Financial instruments Fair value as at 30 June 2021 hierarchy Valuation technique and key input
Derivative financial Forward foreign exchange contract not Level 2 Discounted cash flow. The estimated future cash flow is based
instruments designated as hedging instruments on forward exchange rate (from observable forward exchange
– RMB23,373,000 rates at the end of the reporting date) and contracted forward
(31 December 2020: RMB7,567,000) rate, discounted at a rate that reflects the credit risk of the
counterparty.
2
23,373,000
7,567,000
Financial assets at fair Other financial assets Level 2 Fair values of collective investment schemes, debt securities,
value through – RMB920,762,000 base, ferrous and precious metals futures and options contracts
profit or loss (31 December 2020: RMB634,009,000) have been determined based on quotes from market makers,
funds administrators or alternative pricing sources supported
by observable inputs. The most significant inputs are market
interest rates, market prices of metals, net asset values and latest
redemption prices or transaction prices of the respective collective
investment schemes.
920,762,000 2
634,009,000
Financial assets at fair Structured deposit Level 3 Discounted cash flow. The estimated future cash flow is based on
value through – RMB30,000,000 the contractual amount, discounted at a rate that reflects the
profit or loss (31 December 2020: RMB1,310,000,000) expected return rates ranged from 1.90% to 3.00%. The higher
the expected return rate, the higher the fair value.
30,000,000 3
1.90% 3.00%
1,310,000,000
2021 49
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
4 Financial risk factors (Continued) 4
(b) Fair value measurements of financial instruments (b)
(Continued)
Fair value
Financial instruments Fair value as at 30 June 2021 hierarchy Valuation technique and key input
Financial assets at fair Other financial assets Level 3 Discounted cash flow. The estimated future cash flow is based on
value through – RMB528,000,000 the contractual amount, discounted at a rate that reflects the
profit or loss (31 December 2020: RMB800,000,000) expected return rates ranged from 2.78% to 4.05%. The higher
the expected return rate, the higher the fair value.
528,000,000 3
2.78% 4.05%
800,000,000
Financial assets at fair Notes receivables Level 3 Discounted cash flow. The estimated future cash flow is based on
value through OCI – RMB3,997,218,000 the contractual amount, discounted at a rate of 2.54% The higher
(31 December 2020: RMB3,780,065,000) the discount rate, the lower the fair value.
3,997,218,000 3
2.54%
3,780,065,000
Financial assets at fair Equity interest in unlisted company Level 3 Discounted cash flow. The estimated future cash flow is based on
value through with no open market price quote expected volatility, discount for lack of marketability (“DLOM”),
profit or loss – RMB113,296,000 and discount rate. The higher the expected volatility, the lower
(31 December 2020: RMB113,296,000) the fair value. The higher the DLOM, the lower the fair value. The
higher the discount rate, the lower the fair value.
3
113,296,000
113,296,000
There were no transfers among Level 1, 2 and 3 during the period. 1 2 3
The directors consider that the carrying amounts of current financial
assets and financial liabilities recorded at amortised cost in the
interim condensed consolidated financial information approximate
their fair values.
50 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
5 Revenue 5
Six months ended 30 June 2021
Manufacture
of coal mining Manufacture
machinery of auto parts Total
RMB’000 RMB’000 RMB’000
(unaudited) (unaudited) (unaudited)
Sales of auto parts – 8,822,319 8,822,319
Sales of hydraulic roof supports 3,586,796 – 3,586,796
Revenue from steel and other materials trading 1,553,842 21,429 1,575,271
Sales of spare parts for coal mining machinery 914,412 – 914,412
Sales of other coal mining equipment 57,932 – 57,932
Other revenue 86,497 39,151 125,648
6,199,479 8,882,899 15,082,378
Six months ended 30 June 2020
Manufacture
of coal mining Manufacture
machinery of auto parts Total
RMB’000 RMB’000 RMB’000
(unaudited) (unaudited) (unaudited)
Sales of auto parts – 6,573,150 6,573,150
Sales of hydraulic roof supports 3,587,224 – 3,587,224
Revenue from steel and other materials trading 1,112,719 22,208 1,134,927
Sales of spare parts for coal mining machinery 873,896 – 873,896
Sales of other coal mining equipment 84,347 – 84,347
Other revenue 38,065 23,859 61,924
5,696,251 6,619,217 12,315,468
2021 51
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
6 Segment information 6
Information reported to the chief executive of the Company, being the chief
operating decision maker (CODM), for the purposes of resource allocation
and assessment of segment performance focuses on types of goods
or services delivered or provided. Specifically, the Group’s reportable 8 (i)
segments under IFRS 8 are (i) manufacture of coal mining machinery; (ii)
and (ii) manufacture of auto parts. No operating segments have been
aggregated in arriving at the reportable segments of the Group.
CODM primarily uses a measure of segment net profit to assess the
performance of operating segments.
The following is an analysis of the Group’s revenue and results by
reportable and operating segments. The Group prepared the segment
reporting for net profit excluding the impact of interest expense of
redemption liabilities. The item is related to manufacture of auto parts
segment.
Manufacture
of coal mining Manufacture
machinery of auto parts Total
RMB’000 RMB’000 RMB’000
(unaudited) (unaudited) (unaudited)
Six months ended 30 June 2021
Segment revenue 6,199,479 8,882,899 15,082,378
Segment net profit excluding interest
expense of redemption liabilities 1,153,161 154,339 1,307,500
Six months ended 30 June 2020
Segment revenue 5,696,251 6,619,217 12,315,468
Segment net profit excluding interest
expense of redemption liabilities 1,411,114 (147,185) 1,263,929
52 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
6 Segment information (Continued) 6
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Segment revenue and consolidated revenue 15,082,378 12,315,468
Segment net profit excluding interest expense
of redemption liabilities 1,307,500 1,255,209
Interest expense on redemption liabilities (21,030) (49,416)
Consolidated profit for the period 1,286,470 1,205,793
The following is an analysis of the Group’s assets and liabilities by
reportable and operating segments. The Group prepared the segment
reporting for total assets and liabilities excluding, the impact of a) goodwill, a b 2
and b) redemption liabilities. The 2 items are related to manufacture of
auto parts segment.
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
SEGMENT ASSETS
Manufacture of coal mining machinery 20,431,569 19,328,850
Manufacture of auto parts 14,622,180 14,607,313
Total segment assets 35,053,749 33,936,163
Goodwill 506,599 520,431
Consolidated assets 35,560,348 34,456,594
SEGMENT LIABILITIES
Manufacture of coal mining machinery 11,366,047 9,139,033
Manufacture of auto parts 9,344,261 9,862,855
Total segment liabilities excluding redemption liabilities 20,710,308 19,001,888
Redemption liabilities – 1,420,875
Consolidated liabilities 20,710,308 20,422,763
2021 53
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
6 Segment information (Continued) 6
Geographical information
The analysis of revenue by geographical location of customers is as
follows:
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
The PRC 10,068,259 8,713,793
Germany 2,496,933 1,815,979
Other countries 2,517,186 1,785,696
15,082,378 12,315,468
Segment assets are measured in the same way as in the financial
statements. These assets are allocated based on the operations of the
segment and the physical location of the asset.
54 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
6 Segment information (Continued) 6
Geographical information (Continued)
At 30 June 2021
Investment
in associates Additions to
Segment and joint non-current
assets ventures assets
RMB’000 RMB’000 RMB’000
(unaudited) (unaudited) (unaudited)
Manufacture of coal mining machinery
The PRC 20,157,580 218,010 129,871
Germany 3,830 – –
Other countries 25,232 – 17
Manufacture of auto parts
The PRC 8,034,489 84,252 129,779
Germany 3,059,383 – 69,292
Other countries 3,878,658 – 706,433
Total segment assets 35,159,172 302,262 1,035,392
Elimination (105,423)
Unallocated:
Goodwill 506,599
Total assets as per the financial position 35,560,348
2021 55
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
6 Segment information (Continued) 6
Geographical information (Continued)
At 31 December 2020
Investment
in associates Additions to
Segment and joint non-current
assets ventures assets
RMB’000 RMB’000 RMB’000
(audited) (audited) (audited)
Manufacture of coal mining machinery
The PRC 19,320,697 299,546 455,327
Germany 3,382 – –
Other countries 20,041 – 380
Manufacture of auto parts
The PRC 8,213,663 79,253 251,329
Germany 3,025,221 – 439,787
Other countries 3,380,113 – 376,420
Total segment assets 33,963,117 378,799 1,523,243
Elimination (26,954)
Unallocated:
Goodwill 520,431
Total assets as per the financial position 34,456,594
Information about major customers
Note: No customer contributed over 10% of the total revenue of the Group for the
six months ended 30 June 2021 and 2020. 10%
56 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
7 Other income 7
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Government grants (Note) 125,821 97,405
Interest income on bank deposits, long-term
receivables and finance lease receivables 57,231 54,985
183,052 152,390
Note: Government grants mainly represent government grants received from the
local government for compensation of research and development expenses
incurred, and in respect of construction of the Group’s new plant, which are
transferred from deferred income to profit or loss when related expenses
incurred or over the useful lives of the relevant assets.
2021 57
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
8 Other gains and losses 8
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Net fair value gain on financial assets at fair value
through profit or loss 50,505 22,066
Gain on disposal of an associate 20,257 –
Dividends from financial assets through profit or loss
2,400 –
Gain/(loss) on disposal of property, plant and
equipment and intangible assets 1,826 (9,209)
Net fair value gain/(loss) on derivative financial
instruments 1,592 (57,739)
Dividends from financial assets at fair value through
other comprehensive income 1,458 2,022
Impairment of property, plant and equipment (Note) – (32,071)
Net foreign exchange loss (13,944) (21,848)
Others (18,697) (24,089)
45,397 (120,868)
Note: For the six months ended 30 June 2020, the Group assessed the fixed assets
operation status and made an impairment amounting to RMB32,071,000
based on the future utilization plan. 32,071,000
58 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
9 Restructuring costs 9
In October 2020, the Company approved the global business restructuring
plan (“Plan”) of SEG Automotive Germany GmbH (“SEG”) and its SEG SEG
subsidiaries ( together, the “SEG group”). According to the Plan, SEG SEG
group will close the plant in Germany, downsize the business in Spain
and transfer orders to Hungary so as to enjoy the lower production cost. SEG
Therefore, SEG group will incur the personnel restructuring costs by
terminating the labour contracts with relevant employees.
In 2020, based on the local labour policy and regulation, agreed
compensation schemes with some employees and working council, SEG 535
SEG group provided RMB397,464,000 compensation cost for 535 397,464,000
employees in Germany, of which, compensation of RMB18,448,000 18,448,000
was settled in 2020. Besides, based on the relevant arrangement in Robert Bosch Investment Nederland
between the Company and Robert Bosch B.V
Investment Nederland B.V, the Company additional accrued compensation 249,490,000
of RMB249,490,000, which will be paid to Robert Bosch Investment 535 Robert Bosch Investment Nederland
Nederland B.V for the estimated 428 employees who will choose to return B.V 428 Bosch SEG
to Bosch among the above 535 employees. In addition, SEG group accrued
RMB109,987,000 fixed assets impairment in accordance with the global 109,987,000
business restructuring plan and future usage plan.
During the first half year of 2021, the restructuring process commenced in
SEG Automotive Spain, S.A.U., and based on the agreement “Plan for the
future” voted by workers in a referendum on 29 June 2021, SEG group SEG
provided RMB87,408,000 compensation cost for 63 qualified employees 63 87,408,000
in Spain. In addition, restructuring costs of RMB34,128,000 were provided SEG
by SEG group in accordance with the global business restructuring plan. 34,128,000
2021 59
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
10 Finance costs, net 10
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Interests on bank borrowings 106,783 56,307
Interests on redemption liabilities 24,741 58,136
Interests on leases 18,873 10,744
150,397 125,187
11 Income tax expense 11
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Current income tax 347,962 317,384
Deferred income tax 36,151 (4,085)
384,113 313,299
60 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
11 Income tax expense (Continued) 11
(a) PRC corporate income tax (a)
The corporate income tax (“CIT”) is calculated based on the statutory
profit of subsidiaries incorporated in the PRC and the applicable
tax rate 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.
In accordance with the PRC tax laws, standard corporate income tax 25%
rate is 25%. The Company and certain subsidiaries are qualified for
new/high-tech technology enterprises status and enjoyed preferential 15%
income tax rate of 15% during the first half of 2021 and 2020.
(b) Germany profits tax (b)
Applicable profit tax rate of Germany is 29%. During the first half of 29%
2021, no profit tax has been provided due to accumulated losses
(2020: 0). 0
(c) Others (c)
Applicable profit tax rates of the Group’s other subsidiaries are
between 9% and 34.01% for the first half of 2021 (2020: between 9% 9% 34.01%
to 34.43%). 9% 34.43%
During the first half of 2021, the applicable profit tax rate of SEG
Automotive Italy S.r.l. decreased from 27.9% to 27.5% and the 27.9% 27.5%
applicable profit tax rate of SEG Automotive France SAS Corporation
decreased from 34.43% to 27.0%. 34.43% 27.0%
2021 61
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
12 Expense by nature (including cost of sales, 12
selling and distribution expenses, administrative
expenses, restructuring costs and research
and development expenses and accrual of net
impairment losses on financial and contract
assets)
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Raw material costs 9,984,136 7,562,854
Employee benefits expenses
(including directors) (Note) 1,942,967 1,645,897
Depreciation for property, plant and equipment 340,994 348,917
Service fee 237,726 149,409
Freight charges 173,769 148,616
Amortization of intangible assets 119,805 114,623
Depreciation of right-of-use assets 83,756 81,087
Tax and surcharges 64,575 54,309
Provision for impairment of trade and
other receivables 18,493 22,999
Rental 14,958 18,669
Depreciation for investment properties 5,750 3,851
Write-down of inventories (42,705) (3,808)
Others 568,516 568,346
13,512,740 10,715,769
Note: In June 2019, the Group issued a mid to long-term super profit incentive
scheme (covering 2019 till 2021) to the Group’s top and mid-level
management according to the resolution of 2019 Annual General Meeting.
The estimated incentive to be paid is based on the super net profit attributable
to Owners of the Company for 2019 till 2021 after deducting non-recurring
gains and losses in accordance with PRC Accounting Standards. According
to the management’s estimate, the Group accrued RMB122,021,000 (2020:
RMB120,570,000) long-term employee benefits obligation for the six months
ended 30 June 2021. 122,021,000
120,570,000
62 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
13 Dividends 13
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Dividends recognised as distribution during the year
– 2020 Final (RMB0.2099 per share)
0.2099 372,525 –
– 2019 Final (RMB0.185 per share)
0.185 – 320,507
372,525 320,507
During the current interim period, a final dividend of RMB0.2099 per
share in respect of the year ended 31 December 2020 was declared
to the owners of the Company. The aggregate amount of the final 0.2099
dividend declared in the interim period amounted to approximately 372,525,000
RMB372,525,000. The directors of the Company have determined that no
dividend will be paid in respect of the six months ended 30 June 2021 (six
months ended 30 June 2020: Nil).
2021 63
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
14 Earnings per share 14
(a) Basic earnings per share (a)
The calculation of basic earnings per share attributable to owners of
the Company is based on the following data:
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Earning for the purpose of basic earnings
per share (profit for the year attributable to
owners of the Company) 1,202,212 1,135,168
Weighted average number of ordinary shares
for the purpose of basic earnings per share 1,732,471,370 1,732,471,370
Earnings per share (RMB cents) 69.39 65.52
64 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
14 Earnings per share (Continued) 14
(b) Diluted earnings per share (b)
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 Company has two
categories of dilutive potential ordinary shares: share options and
restricted share incentive. The share options and restricted share
incentive are assumed to have been converted into ordinary shares.
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Earnings:
Profit attributable to the ordinary equity holders of
the Company used in the diluted earnings per
share calculation 1,202,212 1,135,168
Number of shares:
Weighted average number of ordinary shares
in issue during the year per share calculation 1,734,299,882 1,732,471,370
Add: share options 5,584,023 –
restricted share incentive (Note 26) 26 232,071 –
Weighted average number of ordinary shares
in issue and potential ordinary shares used as
the denominator in calculating diluted
earnings per share 1,740,115,976 1,732,471,370
Diluted earnings per share (RMB cents) 69.09 65.52
2021 65
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
15 Property, plant and equipment 15
Plant and Motor Other Construction
Buildings machinery vehicles equipment in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
COST
At 31 December 2020 (audited) 1,586,516 3,987,357 52,163 983,908 665,032 7,274,976
Additions 10,447 33,996 5,141 2,361 339,260 391,205
Transfer 62,802 154,789 437 20,142 (238,170) –
Disposals (57) (66,520) (5,705) (15,058) – (87,340)
Transfer to investment properties (10,025) – – – – (10,025)
Currency exchange (5,838) (96,381) (2) (85,666) (11,107) (198,994)
At 30 June 2021 (unaudited) 1,643,845 4,013,241 52,034 905,687 755,015 7,369,822
ACCUMULATED DEPRECIATION
AND IMPAIRMENT
At 31 December 2020 (audited) 377,241 1,616,256 27,509 582,330 29,803 2,633,139
Provided for the period 32,978 209,158 2,528 96,330 – 340,994
Elimination on disposals (48) (33,119) (4,016) (13,936) – (51,119)
Transfer to investment properties (3,652) – – – – (3,652)
Currency exchange (3,891) (77,378) – (76,263) 549 (156,983)
At 30 June 2021 (unaudited) 402,628 1,714,917 26,021 588,461 30,352 2,762,379
CARRYING VALUES
At 31 December 2020 (audited) 1,209,275 2,371,101 24,654 401,578 635,229 4,641,837
At 30 June 2021 (unaudited) 1,241,217 2,298,324 26,013 317,226 724,663 4,607,443
The Group was in process of obtaining the relevant property ownership
certificates for buildings with a net book value of RMB74,960,000 as at 30 74,960,000
June 2021 (31 December 2020: RMB31,364,000). In the opinion of the 31,364,000
directors of the Company, the relevant property ownership certificates can
be obtained in due time without incurring significant costs.
The Group has pledged property, plant and equipment with a net book
value of approximately RMB163,364,000 as at 30 June 2021 (31 163,364,000
December 2020: RMB194,408,900) to secure banking facilities granted to 194,408,900
the Group.
66 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
16 Intangible assets 16
Development Patent Customer
Trademark Software costs right relationship Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
COST
At 31 December 2020
(audited) 77,860 163,302 1,014,066 625,068 585,506 2,465,802
Additions – 1,588 33,020 61 – 34,669
Disposals – (67) – – – (67)
Currency exchange – (6,576) (42,918) (15,383) (13,519) (78,396)
At 30 June 2021
(unaudited) 77,860 158,247 1,004,168 609,746 571,987 2,422,008
AMORTISATION
At 31 December 2020
(audited) 53,203 113,261 62,362 246,639 189,789 665,254
Charge for the period 7,836 22,612 28,849 33,018 27,490 119,805
Disposals – (66) – – – (66)
Currency exchange – (4,847) (2,880) (7,131) (4,275) (19,133)
At 30 June 2021
(unaudited) 61,039 130,960 88,331 272,526 213,004 765,860
IMPAIRMENT
At 31 December 2020
(audited) – 340 285,815 432 – 286,587
Additions – – – – – –
Currency exchange – (13) (12,066) (17) – (12,096)
At 30 June 2021
(unaudited) – 327 273,749 415 – 274,491
CARRYING VALUES
At 31 December 2020 (audited)
24,657 49,701 665,889 377,997 395,717 1,513,961
At 30 June 2021 (unaudited)
16,821 26,960 642,088 336,805 358,983 1,381,657
Total research and development expenses incurred during six months
ended 30 June 2021 was approximately RMB716,842,000 (30 June 716,842,000
2020: RMB675,566,000), among which, RMB33,020,000 (30 June 675,566,000
2020: RMB139,586,000) related to auto parts technology project have 33,020,000
been capitalised as development costs. As at 30 June 2021, part of the 139,586,000
related development projects was still in progress.
2021 67
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
17 Financial asset at fair value through profit or 17
loss/Financial asset at fair value through other
comprehensive income/Derivative financial
instruments
Financial assets at fair value through other
comprehensive income
As at 30 June As at 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Non-current assets
Equity securities listed in Hong Kong 28,986 28,993
Current assets
Notes receivable 3,997,218 3,780,065
Financial assets at fair value through profit or loss
As at 30 June As at 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Current assets
Other financial assets (Note a) a 1,488,762 1,434,009
Structured deposits 30,000 1,310,000
Unlisted equity securities 113,296 113,296
1,632,058 2,857,305
68 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
17 Financial asset at fair value through profit or 17
loss/Financial asset at fair value through other
comprehensive income/Derivative financial
instruments (Continued)
Financial assets at fair value through profit or loss
(Continued)
Note:
(a) As at 30 June 2021 and 31 December 2020, the other financial assets were as (a)
following:
As at 30 June As at 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Assets management products 960,762 634,009
Pledged quotation repurchase trading products 280,000 550,000
Principal guaranteed income products – 250,000
Other non – guaranteed income products 248,000 –
1,488,762 1,434,009
2021 69
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
17 Financial asset at fair value through profit or 17
loss/Financial asset at fair value through other
comprehensive income/Derivative financial
instruments (Continued)
Derivative financial instruments
Derivatives are only used for economic hedging purposes and not as
speculative investments. However, where derivatives do not meet the
hedging accounting criteria, they are classified as ‘held for trading’ for
accounting purposes and are accounted for at fair value through profit or
loss. The Group has the following derivative financial instruments:
Derivative financial assets
As at 30 June As at 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Not designated as hedging instruments 36,299 40,405
Designated as hedging instruments 2,209 –
38,508 40,405
Derivative financial liabilities
As at 30 June As at 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Not designated as hedging instruments 23,373 7,567
Designated as hedging instruments – 6,163
23,373 13,730
70 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
18 Deferred tax assets/liabilities 18
The following is the analysis of the deferred tax balances for financial
reporting purposes:
As at 30 June As at 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Deferred tax assets to be recovered
– within 12 months 12 205,108 246,176
– after 12 months 12 199,931 245,172
405,039 491,348
Deferred tax liabilities to be settled
– within 12 months 12 (36,107) (63,195)
– after 12 months 12 (238,481) (262,213)
(274,588) (325,408)
Deferred tax assets, net 130,451 165,940
2021 71
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
18 Deferred tax assets/liabilities (Continued) 18
The following are the major deferred tax assets/liabilities recognised and
movements thereon:
Property,
Trade plant and Revaluation Revaluation
receivable Accruals equipment Intangible on prepaid Revaluation of property,
loss Write-down and Unrealized tax assets tax lease of intangible plant and
allowance of inventory provision profit difference difference payments assets equipment Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
The Group
At 31 December 2020 (audited)
114,671 13,636 199,859 16,909 12,543 21,120 (16,949) (182,683) (48,560) 35,394 165,940
(Charge)/credit to profit or loss (15,827) (1,745) 15,075 97 8,819 (20,378) 327 15,680 2,391 (10,440) (36,151)
Currency exchange 13 (181) (433) – (2,471) (604) – 5,140 1,048 (1,850) 662
At 30 June 2021 (unaudited)
98,857 11,710 184,351 17,006 18,891 138 (16,622) (161,863) (45,121) 23,104 130,451
The net balances of deferred tax assets and liabilities after offsetting are as
follows:
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Deferred tax assets, net 379,196 429,507
Deferred tax liabilities, net (248,745) (263,567)
130,451 165,940
72 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
18 Deferred tax assets/liabilities (Continued) 18
At the end of the reporting period, the Group had the following
unrecognised unused tax losses:
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Unused tax losses 4,209,741 3,971,616
No deferred tax asset has been recognised in relation to the above tax
losses due to the unpredictability of future profit streams.
The expiry dates of the above unrecognised tax losses are as follow:
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
31 December 2021 943 4,775
31 December 2022 – 1,782
31 December 2023 – –
31 December 2024 – –
31 December 2025 3,159 4,663
31 December 2026 4,775 –
No expiry date 4,200,864 3,960,396
4,209,741 3,971,616
2021 73
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
19 Trade and other receivables 19
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Trade receivables 7,295,446 6,275,986
Less: loss allowance (573,766) (560,433)
6,721,680 5,715,553
Prepayments to suppliers 840,173 497,630
Deposits 111,218 77,247
Other tax recoverable 434,685 572,583
Receivable from disposal of an associate 81,908 –
Staff advances 18,999 15,323
Others 227,377 226,947
Less: loss allowance (38,826) (113,370)
1,675,534 1,276,360
Total trade and other receivables 8,397,214 6,991,913
The following is the ageing analysis of trade receivables net of loss
allowance presented based on the invoice date at the end of each
reporting period:
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Within 180 days 180 5,624,061 4,672,144
Over 180 days but within 1 year 180 1 653,334 790,972
Over 1 year but within 2 years 1 2 379,971 234,325
Over 2 years but within 3 years 2 3 64,314 18,112
6,721,680 5,715,553
74 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
19 Trade and other receivables (Continued) 19
Movement of loss allowance on trade and other receivables
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Opening balance 673,803 726,353
Accrual during the period 30,908 22,999
Write off (90,920) (211)
Currency exchange (1,199) 115
Closing balance 612,592 749,256
2021 75
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
20 Cash and cash equivalents/bank deposits 20
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Cash and cash equivalents
Cash 987 1,592
Bank deposits with original maturity within
three months or less 2,768,426 2,977,135
Cash and cash equivalents 2,769,413 2,978,727
Bank deposits
Pledged bank deposits 611,110 973,546
Bank deposits with original maturity over three months 2,091,659 1,770,806
Restricted cash (Note 28) 28 10,554 18,937
2,713,323 2,763,289
Pledged bank deposits represent deposits pledged to banks to secure bank
acceptance bills and letters of guarantee and are therefore classified as
current assets. The pledged bank deposits carry interest at market rates
which ranged from 0.30% to 1.69% per annum as at 30 June 2021 (31 0.30% 1.69%
December 2020: 0.25% to 2.1% per annum). 0.25% 2.1%
76 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
21 Trade and other payables 21
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Notes payable (Note a) a 2,383,274 1,593,690
Trade payable (Note a) a 4,555,200 5,021,579
6,938,474 6,615,269
Salary and bonus payables 950,043 575,880
Deposits (Note b) b 95,689 84,145
Interest payable 22,674 25,552
Dividends payable 51,055 –
Other taxes payable 427,139 461,135
Restrictive shares payable (Note 26) 26 248,724 –
Factoring payable (Note c) c 20,307 128,607
Accruals and other payables (Note d) d 675,670 633,229
9,429,775 8,523,817
2021 77
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
21 Trade and other payables (Continued) 21
Notes:
(a) The following is the ageing analysis of notes payable and trade payables (a)
presented based on invoice date at the end of each reporting period:
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Within 1 year 1 6,722,440 6,421,726
Over 1 year 1 216,034 193,543
6,938,474 6,615,269
(b) Deposits represent the deposits received from suppliers for transportation and (b)
other services.
(c) In 2020, a subsidiary of the Group entered into an agreement to arrange (c)
factoring upon certain accounts receivables with a bank, and the Group
derecognized those accounts receivables due to the factoring meets the
derecognition criteria of financial assets under IFRS. The factoring payable
balance represented the cash flow received from the accounts receivables
but did not pay to the bank yet as the Group acted as an agent to collect cash
flows on behalf of the bank under the arrangement.
(d) Accruals and other payables mainly consist of payables for the acquisition of (d)
property, plant and equipment, rental payables, sales rebate and payables for
other services.
78 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
22 Borrowings 22
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Non-current:
– Bank borrowings – secured (Note a,c,d)
a c d 2,126,577 2,229,642
– Bank borrowings – unsecured 2,776,362 2,030,250
Less: current portion of non-current borrowings (512,371) (635,000)
4,390,568 3,624,892
Current:
– Bank borrowings – secured (Note b,d) b d 129,455 312,230
– Bank borrowings – unsecured 27,936 26,773
Add: current portion of non-current borrowings 512,371 635,000
669,762 974,003
Total borrowings 5,060,330 4,598,895
Secured (Note: a, b, c, d) a b c d 2,256,032 2,541,872
Unsecured 2,804,298 2,057,023
5,060,330 4,598,895
Fixed-rate borrowings 80,937 66,773
Variable-rate borrowings 4,979,393 4,532,122
5,060,330 4,598,895
2021 79
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
22 Borrowings (Continued) 22
Notes:
(a) As at 31 December 2020, the balance of bank borrowings amounting to (a)
RMB19,000,000 was secured by the pledged bank deposits. The bank 19,000,000
borrowings were repaid in March 2021.
(b) As at 30 June 2021, the balance of bank borrowings totally amounting to (b)
RMB53,000,000 (31 December 2020: RMB40,000,000) was secured by the 53,000,000
pledge of the land use rights and property, plant and equipment. 40,000,000
(c) As at 30 June 2021, the balance of bank borrowings amounting to (c)
RMB184,469,000 (EUR24,000,000) (31 December 2020: RMB200,625,000 184,469,000 24,000,000
(EUR25,000,000)) was guaranteed by the Company. 200,625,000 25,000,000
(d) The balance of RMB2,018,563,000 as at 30 June 2021 (31 December 2020: (d) 2,018,563,000
RMB2,282,247,000) mainly represented:
2,282,247,000
SEG entered into a facility agreement of EUR300 million with the lenders in SEG 300
2019, of which Deutsche Bank AG, Singapore Branch acted as mandated
lead arranger and bookrunner. The Group has drawn down two loans under
the above mentioned facility agreement:
(i) EUR142,500,000 (equivalent to RMB1,058,195,000), with the effective (i) 142,500,000 1,058,195,000
interest rate of Euribor+2.40% per annum, and is repayable from July Euribor+2.40%
2019 to January 2023.
(ii) EUR84,947,000 (equivalent to RMB652,920,000), with the effective (ii) 84,947,000 652,920,000
interest rate of Euribor+2.40% per annum is an annually revolving loan Euribor+2.40%
and is repayable finally in January 2023.
80 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
22 Borrowings (Continued) 22
Notes: (Continued)
(d) (Continued) (d)
In 2020, SEG entered into an amendment to the above mentioned SEG 91,500,000
facilitate agreement to have an Incremental Facility in an amount of EUR
91,500,000. As at 30 June 2021, the Group has drawn down the loan of 40,000,000
EUR40,000,000 (equivalent to RMB307,448,000), with the effective interest 307,448,000
rate of Euribor+2.40% per annum. It is an annually revolving loan and will be Euribor+2.40%
repayable finally in October 2022.
All of the three loans are guaranteed by the Company and the letter of credit
issued by the Company, SEG Automotive Products (China) Co., Ltd. and New Neckar Holdings
the letter of credit issued by the Company, EUR550 million (equivalent to and Operations GmbH & Co. KG 550
RMB4,417 million), New Neckar Holdings and Operations GmbH & Co. KG, 4,417
and are secured, inter alia, by one or more of the following:
(a) Global Assignment of money trade and insurance receivables and (a)
intra-group receivables, security assignment of all intellectual property
rights, bank account pledge over all bank accounts (including in U.S.),
but excluding the bank account held with Bank of China Stuttgart in
connection with the Existing Guarantee for the exclusive purpose of
providing cash collateral in respect of that Existing Guarantee, security SEG
transfer in respect of all moveable assets of SEG;
(b) Share of certain subsidiaries (SEG Automotive Components Brazil Ltda., (b)
Starters E-Components Generators Automotive Hungary Kft., SEG Starters E-Components Generators Automotive Hungary
Automotive Mexico Manufacturing, S.A. de C.V., SEG Automotive Spain, Kft.
S.A.U., SEG Automotive North America LLC);
(c) Bank accounts, rights and receivables (other than trade receivables) of (c) Starters E-Components Generators Automotive Hungary
Starters E-Components Generators Automotive Hungary Kft.; Kft.
(d) The credit rights arising from bank accounts and trade receivables of (d)
SEG Automotive Spain, S.A.U.;
2021 81
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
22 Borrowings (Continued) 22
Notes: (Continued)
(e) Security agreement relating to bank accounts and insurance and intra-group (e)
receivables of SEG Automotive North America LLC.
As at 30 June 2021, the secured assets in SEG group were as follows: SEG
RMB’000
(unaudited)
Cash and cash equivalents 87,843
Trade and other receivables 423,896
Property, plant and equipment 71,877
Investment in subsidiaries 1,580,207
Intercompany loan 929,432
Others 112,933
3,206,188
Breakdown of borrowings by maturity profiles:
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Carrying amount repayable:
Within one year 669,762 974,003
More than one year, but not exceeding two years 3,713,706 774,363
More than two years, but not exceeding five years 676,862 2,850,529
5,060,330 4,598,895
Less: Amounts shown under current liabilities (669,762) (974,003)
Amounts shown under non-current liabilities 4,390,568 3,624,892
82 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
22 Borrowings (Continued) 22
Notes: (Continued)
The carrying amounts of the Group’s borrowings are denominated in the following
currencies:
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
RMB 2,780,437 2,035,218
USD – 555
EUR 2,279,893 2,563,122
5,060,330 4,598,895
The ranges of effective interest rates (which are also equal to contracted interest
rates) on the Group’s borrowings are as follows:
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Effective interest rate per annum
Fixed-rate borrowings 3.85%~3.95% 1.00%~4.35%
Variable-rate borrowings 0.91%~3.75% 1.10%~4.33%
2021 83
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
23 Redemption liabilities 23
During the acquisition of SEG group, the Group and the sellers, including SEG China
China Renaissance Capital Investment Inc., (“CRCI”) and Chizhou Zhongan Renaissance Capital Investment Inc.
Zhaoshang Equity Investment LLP (Limited Partnership) (“Zhongan
Zhaoshang”) set up limited partnership to acquire 100% of SEG group. SEG 100%
The Group and the sellers hold 69.11% and 30.89% equity interests of the 69.11%
partnership, respectively. In the meantime, the Group granted the sellers 30.89%
a put option to sell their 30.89% interests in the partnership (the “Option
Interest”) to the Group at the highest amount using 3 different calculation 30.89%
method, including:
– Scenario a) the aggregate capital contributions made by the sellers a
to the Partnership, plus an interest at the rate of 10% per annum
(compounded annually) on sellers’ each capital contributions
calculated on a daily basis for period from the date of such capital
contribution to the date when the sellers issue a notice to the Group 10%
to exercise the put option (“Put Option Notice”), minus the amount of
cash and the value of securities which have been distributed to the
sellers on or before the date of the Put Option Notice;
– Scenario b) the fair market value of the Option Interest; b
– Scenario c) the value of the Option Interest calculated pursuant to the c
formula defined in the agreement.
In 2021, the Company received the Notice of Buy-back issued by CRCI and
Zhongan Zhaoshang, which required the Company to acquire the equity
interests held by CRCI and Zhongan Zhaoshang in Zhengzhou Shengji
Mechanical and Electrical Equipment Company Limited (“Zhengzhou
Shengji”) as agreed under the Investment Agreement. Based on the
Investment Agreement and negotiation between the Company, CRCI and c
Zhongan Zhaoshang, the Company agreed to buy back the equity interests
held by CRCI and Zhongan Zhaoshang in Zhengzhou Shengji in the amount
calculated under Scenario c.
On 15 March 2021, the Company and Zhongan Zhaoshang signed the
Equity Transfer Agreement with the consideration determined to be
RMB794,301,000 for the transfer. On the same date, the Company 794,301,000
and CRCI signed the Equity Transfer Agreement with the consideration 81,567,000
determined to be EUR81,567,000 for the transfer. The Company fully paid
the consideration to CRCI and Zhongan Zhaoshang in April 2021 and June
2021, respectively.
84 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
24 Provisions 24
Onerous Restructuring
Warranty contract provision Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021 (audited)
200,817 351,258 676,866 – 1,228,941
Additional provision in the
period 89,514 55,345 89,643 8,245 242,747
Reversal/utilisation of provision (55,027) (132,452) (79,290) – (266,769)
Currency exchange (3,310) (12,199) (28,608) – (44,117)
At 30 June 2021 (unaudited)
231,994 261,952 658,611 8,245 1,160,802
Current portion 231,994 202,886 559,514 8,245 1,002,639
Non-current portion – 59,066 99,097 – 158,163
231,994 261,952 658,611 8,245 1,160,802
The warranty provision which represents management’s best estimate of
the Group’s liability under warranty periods granted to customers (who
purchased auto parts), based on prior experience relating to defective
products claims.
Onerous contract provision represents management’s best estimate of the
expected contract loss, based on the forecast performance relating to the
contract.
Restructuring provision represents the costs relating to the spin-off cost SEG
of SEG group and restructuring plant plan from the former group in the 32,135,000
amount of RMB32,135,000 and the restructuring plan relating to SEG SEG
group in 2020 and 2021 in the amount of RMB626,476,000. 626,476,000
25 Share capital 25
Listed A Shares Listed H Shares Total
A H
Number of Number of Number of
share Amount share Amount share Amount
’000 RMB’000 RMB’000 RMB’000 ’000 RMB’000
At 31 December 2020 (audited)
1,489,237 1,489,237 243,234 243,234 1,732,471 1,732,471
At 30 June 2021 (unaudited)
1,531,537 1,531,537 243,234 243,234 1,774,771 1,774,771
2021 85
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
26 Restricted share incentive scheme 26
On 4 June 2021, the Annual General Meeting of the Group adopted a
restricted share incentive scheme (the “Scheme”). Under the Scheme, a
total number of 42,300,000 A shares of the Group issued and granted 186
to the selected 186 employees (including directors) of the Group (the 42,300,000 A
“Participants”).
The Validity Period of the Scheme is no more than 48 months from the
date of the completion of the grant registration of the restricted shares
to the date when all the restricted shares granted to the Participants are 48
unlocked or repurchased and cancelled.
The Lock-up Period for the restricted shares granted under the Scheme
commenced from the date on which the restricted shares were granted to
the Participants with an interval of 12 months between the Date of Grant 12
and the unlocking date.
Participants who were granted with the restricted shares were entitled
to acquire the restricted shares on the grant date and sell the restricted
shares after the Lock-up Period of the relevant restricted shares, subject
to the fulfilment of the relevant conditions under the Scheme.
On 7 June 2021, 42,300,000 A shares were issued at the price
of RMB5.88 per A share under the Scheme, and the amount of A 5.88 42,300,000 A
RMB248,724,000 cash received from the Participants is recorded as trade 248,724,000
and other payables (Note 21). 21
Upon expiry of the Lock-up Period, the Company shall proceed with
unlocking for the Participants who satisfy the Unlocking Conditions, and
the restricted shares held by the Participants who do not satisfy the
Unlocking Conditions shall be repurchased and cancelled by the Company.
86 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
26 Restricted share incentive scheme (Continued) 26
The arrangements of Unlocking Period under the grant of restricted shares
and unlocking duration for each reporting period pursuant to the Scheme
are set out in the table below:
Arrangement of Unlocking
Unlocking Period Unlocking duration percentage
First Unlocking Period Commencing from the first trading day upon the expiry of 12 months from the Date of
Grant to the last trading day upon the expiry of 24 months from the Date of Grant 40%
12 24
Second Unlocking Period Commencing from the first trading day upon the expiry of 24 months from the Date of
Grant to the last trading day upon the expiry of 36 months from the Date of Grant 30%
24 36
Third Unlocking Period Commencing from the first trading day upon the expiry of 36 months from the Date of
Grant to the last trading day upon the expiry of 48 months from the Date of Grant 30%
36 48
The evaluation period for unlocking the restricted shares under the
Scheme shall be from 2021-2023, and the evaluation shall be conducted
annually. The performance evaluation for each Unlocking Period includes
performance evaluation requirements for the Company and individual
performance evaluation requirement for the Participants.
The restricted shares outstanding at the period end listed below:
Number of
Details Restricted shares
Opening balance at 1 January 2021 –
Issue of restricted shares under the incentive scheme 42,300,000
Balance at 30 June 2021 42,300,000
2021 87
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
27 Related party transactions 27
During the six months ended 30 June 2021, the Group entered into
transactions with its related parties and the transactions set out below.
The related party transactions were carried out in the normal course of
business and at terms negotiated between the Group and the respective
related parties.
Before 18 January 2021, in the opinion of the directors of the Company,
the ultimate controlling party of the Company was Henan SASAC of the
PRC government and that the Group was subject to the control of the 24
PRC government. In accordance with IAS 24, entities that are controlled,
jointly controlled or significantly influenced by the PRC government (“PRC
government related entities”) are regarded as related parties of the Group.
Due to the complex ownership structure, the PRC government may hold
indirect interests in many companies. Some of these interests may, in
themselves or when combined with other indirect interests, be controlling
interests which may not be known to the Group.
(a) The Group and its investors/The Group and Henan (a)
SASAC
The transactions details are as follow/The Group has transactions
with entities controlled, jointly controlled or significantly influenced by
Henan SASAC (“Henan SASAC related entities”) and the transactions
details are as follow:
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Sales of services 947 1,007
88 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
27 Related party transactions (Continued) 27
(a) The Group and its investors/The Group and Henan (a)
SASAC (Continued)
The details of outstanding balances with investors are set as follow/
The details of outstanding balances with Henan SASAC and Henan
SASAC related entities are set as follow:
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Amount due to investors/Henan SASAC
related entities 995 7
(b) The Group and other PRC government related (b)
entities
Apart from the significant transactions with Henan SASAC related
entities set out above, during the six months ended 30 June 2020,
the Group’s transactions with other PRC government related entities
are collectively significant as a large portion of its sales of goods,
purchases of materials, most of bank deposits, and other general
banking facilities and the relevant interest income earned and
expenses incurred during the six months ended 30 June 2020 are
transacted with entities owned/controlled by the PRC government.
2021 89
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
27 Related party transactions (Continued) 27
(b) The Group and other PRC government related (b)
entities (Continued)
In the opinion of the directors of the Company, the transactions with
PRC government related entities are activities in the ordinary course
of the Group’s business and entered into under normal commercial
terms and conditions, and that the dealings of the Group have not
been significantly or unduly affected by the fact that the Group and
those entities are government related. The Group has also established
its approval process for sales of goods and purchases of materials
and its financing policy for borrowings, such approval process and
financing policy do not depend on whether the counterparties are
government related entities or not.
(c) The Group and its associates and joint ventures (c)
The Group had the following significant transactions with its associates
and joint ventures.
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Sales of goods and services
Associates 17,763 21,763
Joint ventures 1,508 552
19,271 22,315
90 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
27 Related party transactions (Continued) 27
(c) The Group and its associates and joint ventures (c)
(Continued)
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Purchase of goods and services
Associates 116,558 99,232
Joint ventures 7,243 11,534
123,801 110,766
The Group had the following outstanding balances with its associates
and joint ventures at the end of each reporting period:
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Amounts due from:
Associates 14,309 4,281
Joint ventures 64,771 21,436
79,080 25,717
2021 91
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
27 Related party transactions (Continued) 27
(c) The Group and its associates and joint ventures (c)
(Continued)
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Amounts due to:
Associates 62,181 74,483
Joint ventures 5,544 3,140
67,725 77,623
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Loans to:
Joint ventures – 6,500
All amounts due from or due to associates and joint ventures are
from trade sales and purchases.
92 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
27 Related party transactions (Continued) 27
(d) Remuneration of key management personnel (d)
The remuneration of executive directors and other members of key
management were as follows:
Six months ended 30 June
2021 2020
RMB’000 RMB’000
(unaudited) (unaudited)
Short-term benefits 7,886 7,441
Post-employment benefits – 177
Share options 854 809
Restricted share incentive scheme 2,496 –
11,236 8,427
Key management represents the executive directors and other
senior management personnel disclosed in the interim condensed
consolidated financial information. The remuneration of key
management personnel is determined with reference of the
performance to individuals and market trends.
2021 93
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
28 Contingent liabilities 28
During the period, the Group has endorsed and derecognised certain notes
receivable for the settlement of trade and other payables with full recourse.
In the opinion of the directors of the Company, the risk of the default in
payment of the endorsed notes receivable is low because all endorsed
notes receivable are issued and guaranteed by reputable PRC banks. The
maximum exposure to the Group that may result from the default of these
endorsed and derecognised notes receivable at the end of each reporting
period is as follows:
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Outstanding endorsed notes receivable
with recourse 3,057,979 2,694,304
These endorsed and derecognised notes receivable have a maximum
maturity of 1 year, and the total undiscounted cash flows of these
endorsed and derecognised notes receivable, representing the Group’s
maximum loss if the issuing banks fail to honour their notes and 3,057,979,000
guarantees, amounted to RMB3,057,979,000 as at 30 June 2021 (31 2,694,304,000
December 2020: RMB2,694,304,000).
Note (a): On 28 September 2018, a subsidiary of the Group, Zhengzhou Coal (a)
Mining Machinery Gelin Material Technology Co., Ltd. (“ZMJ Gelin
Material”) signed a construction contract with Zhengzhou Construction
Engineer Group Co., Ltd. (“ZCE”) to purchase a manufacturing project
construction service. The construction was completed on 25 December
2019. ZMJ Gelin Material was in dispute with ZCE over the contract
settlement amount. On 28 October 2020, ZCE filed ZMJ Gelin Material
through Zhengzhou Shangjie District Court on the final settlement amount
and applied for property preservation against ZMJ Gelin Material. On
2 November 2020, Zhengzhou Shangjie District Court froze 4 bank
accounts of ZMJ Gelin Material and asked both parties to have further
negotiation. The total frozen amount was RMB10,554,000 as at 31 4
December 2020 and 30 June 2021. As at 31 December 2020 and 30
June 2021, management estimated that ZMJ Gelin Material would not 10,554,000
likely to pay the additional settlement amount, so no contingent liability
was recognised on the financial statements. The first instance judged
that ZMJ Gelin Material should compensate ZCE with the amount of
RMB13 million, after ZMJ Gelin Material appealed, the second instance
rejected the first instance judgment and sent back for retrial. 13
Note (b): According to the global business restructuring plan of SEG group, the (b) SEG
Group estimates besides the amount provided as at 30 June 2021 (Note
9), SEG group will incur further restructuring costs in Germany, Spain 9 SEG
and India in second half year of 2021 and 2022. Given the negotiation
is ongoing with the employees and working council, the number of
employees and costs could not be reasonably estimated as at the sign-
off date of this report.
94 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
29 Capital risk management 29
The Group manages its capital to ensure that entities in the Group will
be able to continue as a going concern while maximizing the return to
shareholders through the optimisation of the debt and equity balance. The
Group’s overall strategy remains unchanged.
The capital structure of the Group consists of debts and equity attributable
to owners of the Company, comprising share capital, share premium and
other reserves.
Management of the Company reviews the capital structure on an annual
basis. As part of this review, the management considers the cost of
capital and the risks associated with each class of capital. Based on
recommendations of management, the Group will balance its overall
structure through the payment of dividends, new share issues as well as
the issue of new debt or the redemption of existing debts.
The gearing ratio ((total liabilities netting off cash and cash equivalent)/total
equity) of the Group as at 30 June 2021 and 31 December 2020 were as
follows:
As at 30 June As at 31 December
2021 2020
(unaudited) (audited)
Gearing ratio 121% 124%
2021 95
Notes to the Interim Condensed Consolidated Financial Information
For the six months ended 30 June 2021
30 Capital commitments 30
As at 30 June As at 31 December
2021 2020
RMB’000 RMB’000
(unaudited) (audited)
Capital expenditure in respect of acquisition of
property, plant and equipment contracted for not
provided in the interim condensed consolidated
financial information/consolidated financial
statements 526,774 478,791
Incorporation capital of an investment in an associate 2,000 4,000
528,774 482,791
31 Events after the reporting period 31
Many places in Henan Province were hit by rainstorms and floods in July
2021. The Company’s manufacturing plants in Henan Zhengzhou were
shut down for around three days due to power failure caused by the floods.
After the Company’s quick response to the disaster, the plants resumed
work shortly and the loss caused by the disaster to the Company was
insignificant.
96 Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2021
