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郑煤机:郑煤机H股公告-2022中期报告2022-09-16  

                        Zhengzhou Coal Mining Machinery Group Company Limited
鄭州煤礦機械集團股份有限公司




INTERIM REPORT
中  期   報 告
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.


                                                                             2008    12   28
  A      2010    8   3                                          H      2012 12 5
Contents

Corporate Information                            2
Chairman’s Statement                            5
Management Discussion and Analysis              12
Directors, Supervisors and Chief Executives     20
Material Events                                 26
Report on Review of Interim                     30
Condensed Consolidated Financial Information
Interim Condensed Consolidated Statement of     31
Profit or Loss and Other Comprehensive Income
Interim Condensed Consolidated                  33
Statement of Financial Position
Interim Condensed Consolidated                  35
Statement of Changes in Equity
Interim Condensed Consolidated                  37
Statement of Cash Flows
Notes to the Interim Condensed                  40
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)
    Mr. Fei Guangsheng (Non-Executive Director)
    Mr. Cheng Jinglei (Independent Non-Executive Director)
    Mr. Ji Feng (Independent Non-Executive Director)
    Ms. Guo Wenqing (Independent Non-Executive Director)
    Mr. Fang Yuan (Independent Non-Executive Director)

    Supervisors
    Mr. Liu Qiang (Chairman of the Board of Supervisors)
    Mr. Cheng Xiangdong
    Mr. Wang Yue
    Mr. Zhang Yonglong
    Mr. Zhang Minglin
    Mr. Bao Xueliang
    Mr. Cui Zonglin

    Strategy and Sustainable Development Committee
    Mr. Jiao Chengyao (Chairman)
    Mr. Xiang Jiayu
    Mr. Fei Guangsheng
    Mr. Jia Hao
    Mr. Cheng Jinglei

    Audit and Risk Management Committee
    Mr. Ji Feng (Chairman)
    Mr. Cui Kai
    Ms. Guo Wenqing

    Nomination Committee
    Ms. Guo Wenqing (Chairman)
    Mr. Xiang Jiayu
    Mr. Cheng Jinglei

    Remuneration and Assessment Committee
    Mr. Ji Feng (Chairman)
    Mr. Jia Hao
    Mr. Fang Yuan




2   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Corporate Information




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, Zhengzhou Section
(Econ-Tech Development Zone) of China (He’nan) Pilot Free Trade Zone, PRC            167

Headquarters in the PRC
No. 167, 9th Street, Zhengzhou Section
(Econ-Tech Development Zone) of China (He’nan) Pilot Free Trade Zone, 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




                                                                                                                      2022   3
    Corporate Information




    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 2022
Chairman’s Statement


Dear shareholders,

During the reporting period, the Company adhered to the development concept
of “technology changes the world, intelligence leads the future”, and focused on
the development strategy of “international strategic positioning, market-based
corporate governance, high-end industry layout and global human resources”.
The Company continued to drive its business reform, with faster transformation
towards intelligence, digitization and new energy, greater technology and                          2022 6 30
management innovation as well as optimisation of the governance structure,                         15,538.29
striving for high-quality development. For six months ended 30 June 2022,              3.02%                    1,464.55
the Group achieved sales revenue of RMB15,538.29 million, representing an                          21.82%
increase of 3.02% from the corresponding period of last year. Profit attributable
to owners of the Company was RMB1,464.55 million, representing an increase
of 21.82% from the corresponding period of last year.

I. Major operation initiatives in the first half of the
   year
     1. The Company won the excellent rating of Double-                                1
        Hundred Enterprises, and continued to play a
        leading and demonstration role in reform and
        innovation
          Recently, the State Council’s Office of State-owned Enterprise
          Reform Leading Group issued a notice on the 2021 annual evaluation                                          2021
          results of local “Double-Hundred Enterprises” and “Science and
          Reform Demonstration Enterprises”, and the Company was awarded
          the excellent rating of “Double-Hundred Enterprises”. Since being
          selected as the “Double-Hundred Enterprise”, the Company has
          thoroughly carried out the spirit of the important instructions from
          General Secretary Xi Jinping during his inspection of ZMJ, continued
          to explore new paths for the reform of state-owned enterprises,
          and comprehensively promoted the further marketization of the
          ownership structure, governance structure and incentive and restraint
          mechanism, giving full play to its leading and demonstration role in
          reform and innovation.

     2. The Company’s joint stock company was listed on                               2
        the stock market, and the investment boosted the
        implementation of intelligent strategy
          Nanjing Bestway Intelligent Control Technology Co. Ltd. (“Bestway
          Intelligent Control”), in which the Company invested, was officially
          listed on the ChiNext Board of the Shenzhen Stock Exchange on 1
          August after its application for listing on the ChiNext Board of the                 8    1
          Shenzhen Stock Exchange obtained the China Securities Regulatory                                               6%
          Commission’s reply approving the registration of initial public offering.
          Upon the completion of Bestway Intelligent Control’s listing, the
          Company holds appropriately 6% of its shares. The investment brings
          industrial synergy and capital appreciation for the Company, and is a
          successful attempt of the Company’s capital-empowered industrial
          chain.




                                                                                                               2022           5
    Chairman’s Statement




        3. The Company participated in the mixed ownership                             3
           reform of Luoyang Bearing and actively undertook
           overall planning on emerging industries of strategic
           importance
             As of the disclosure date of this report, the Company has successfully
             completed the public delisting and transfer of 43.33% equity interest
             in Luoyang Bearing Company by participating in the establishment                     43.33%
             of a partnership enterprise and leading the formation of a transfer
             transferee entity. Participation in the mixed ownership reform of
             Luoyang Bearing is conducive to the Company’s transformation
             and exploration into emerging industries of strategic importance,
             broadening the industrial layout, enhancing the Company’s ability
             to resist risks, and also contributing to the development of Henan’s
             manufacturing industry.

        4. The Company made another breakthrough in the                                4
           four strategies under the coal mining machinery
           segment, and continued to promote digital
           transformation
             In the first half of 2022, the order volume, payment collection volume,       2022
             total output value, total output, operating income and other indicators
             of the Company’s coal mining machinery segment reached record
             highs again. The Company adhered to the principle of “intelligent-
             driven product complete-set development and digital-driven business
             whole process transformation”. With the development direction of
             complete sets, intelligence, internationalization and socialization,
             the Company continued to lead the development of the coal mining
             machinery equipment manufacturing industry.




6   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Chairman’s Statement




     As regards complete sets, the promotion of complete sets of
     comprehensive coal mining equipment has been fully rolled out at
     home and abroad. The Company fully considered the substantive
     needs of users, and provided one-stop solutions and services for
     global customers with scientific supporting solutions, excellent
     product quality, and professional services throughout the life cycle.
     The Company won the bid for complete set projects in the high-end
     market, and completed the joint commissioning and acceptance
     of equipment for several complete set projects. As regards
     intelligence, the Company promoted the development of intelligent
     products, and witnessed continuous growth in orders for electronic
     control and intelligent projects. The Company optimized the market
     structure, and made breakthroughs in Shendong, Shaanxi Coal,
     Datong Coal and other markets. As the leading unit, the Company
     cooperated with upstream and downstream enterprises in the
     industrial chain, related universities and institutes and other units to
     jointly build the Henan Provincial Intelligent Coal Mining Equipment
     Industry Research Institute, focusing on key common technologies
     and cutting-edge technologies of intelligent coal mining, and striving
     to promote the transformation and upgrading of the coal industry.
     The foundation of the intelligent manufacturing demonstration base             371%
     project of ZMJ’s intelligent control system was laid. The project will
     build an intelligent manufacturing demonstration base, an industrial
     Internet platform base, and a research and development and
     testing base around the comprehensive coal mining control system
     and high-end valves for support, and is committed to realizing
     the strategic transformation of the Group. The construction of the
     Company’s intelligent digital factory was steadily advancing, and
     the first “lighthouse factory” in the coal machinery industry was fully
     completed and put into trial operation, which has comprehensively
     improved production efficiency and product quality. As regards
     internationalization, the Company made another breakthrough
     in the international market, with an increase of 371% year-on-year
     in order volume, and received orders for complete sets of supports
     from American customers and orders for complete sets of products
     from Turkey. As regards comprehensive promotion of digital
     transformation, the Company completed the top-level planning
     for the comprehensive digital transformation of the coal mining
     machinery segment, established an organization and operation
     mechanism for the promotion of digital transformation of the coal
     mining machinery segment, and determined the implementation
     goals of various digital projects such as marketing technology,
     production and supply, and operation. The Company has achieved
     periodical results in the digital transformation of multiple business
     links, and continued to promote the construction of independent and
     digital functional systems.




                                                                                 2022      7
    Chairman’s Statement




        5. ASIMCO took new energy and international                                    5
           business to a new level, and accelerated business
           transformation
             During the reporting period, ASIMCO accelerated its business
             transformation and upgrading. On the one hand, it consolidated its
             leading position in the existing market segment, reached ultimate
             perfection for its traditional business, broadened its customers,
             deepened its products, and developed multiple new customers and
             products to solidify its foundation for development. On the other hand,
             it focused on electrification, intelligence, and light weight, rapidly
             expanded its new energy parts business, undertook overall planning
             on components, assemblies and systems business, and increased the
             proportion of new energy products in sales to achieve transformation
             to new energy. ASIMCO expanded overseas market to enhance its
             global competitiveness and achieved sustainable business growth. It
             accelerated digital and intelligent transformation and upgrading, and
             continued to reduce costs and improve efficiency.

             During the reporting period, under the situation of decline in the
             domestic automobile sales, especially the plunge in the commercial
             vehicle sales, the export business of ASIMCO Shuanghuan and                                  3.89
             Shanxi Company increased significantly, and revenue from export                 64%
             business was RMB389 million, representing a year-on-year increase
             of 64%. Anhui Company made every effort to develop the new energy
             automobile parts market, and its shock-absorbing seals (mounting,
             sealing, chassis products, etc.) have newly obtained fixed-point new
             energy business from Changan, Dongfeng, Xiaopeng, Leapmotor,                  8,400   125%
             BYD, and Jinkang Wenjie. It has basically covered domestic
             mainstream new energy vehicle brands. ASIMCO’s revenue from new
             energy business was approximately RMB84 million, representing a
             year-on-year increase of 125%.




8   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Chairman’s Statement




   6. SEG made a breakthrough in the high-voltage motor                           6
      project, and accelerated its transformation to a
      mechatronics system supplier
       SEG has always been market-oriented and provides efficient
       solutions. While consolidating its advantages in the original 12V              12V   48V BRM
       generator and 48V BRM, it also clarified the development strategy
       of comprehensively transforming to high-voltage electrification. With
       the vision of “A Future of Intelligent Driving – Make Tomorrow’s
       Travel Better”, it developed high-voltage drive motor platforms
       simultaneously worldwide, which can provide a complete set of
       solutions according to customer needs, such as a three-in-one
       solution where a motor is equipped with inverter, software, and
       gearbox, or a single motor. During the reporting period, the Company
       invested in the establishment of SEG Automotive Electric Systems
       Co., Ltd., focusing on local customers, strengthening global research
       and development collaboration, and rapidly promoting the research
       and development and application of high-voltage drive motors. At
       present, it has obtained an order for the mass production of the
       stators and rotors of high-voltage flat wire motors from a leading new
       energy intelligent vehicle solution provider. It has entered the supply
       chain of the electric drive system of new energy vehicles from a high
       starting point, and completed the installation of the first high-voltage
       motor production line. At the same time, a number of high-voltage
       drive motor projects for domestic and foreign customers are under
       negotiation.

II. Major business plan for the second half of the
    year
   1. Explore the business partner mechanism to promote                           1
      the development of innovative business
       The Company will select suitable subsidiaries, implement the
       business partner mechanism at the subsidiary level, improve the
       corporate governance structure, implement the core backbone stock
       ownership plan, activate the entrepreneurial spirit and independent
       innovation power of team officers, accelerate the development of
       innovative business and industrial transformation and upgrading,
       actively respond to industry competition and challenges, and promote
       the Group’s comprehensive transformation to intelligence and
       electrification.




                                                                                            2022      9
     Chairman’s Statement




         2. Adhere to the drive by high goals, continue to                                   2
            promote business transformation, and achieve
            sustainable development
              In respect of the coal mining machinery segment, the Company will
              follow the annual policy of “innovation-driven, intelligence-driven,
              reform and efficiency improvement, and complete-set and high-end”,
              to better meet customer needs and accelerate implementation of the
              four strategies of “complete-sets, intelligent, international and social”.
              The Company will closely follow the development of the country
              and the development of the times, focus on its core technology
              of coal mine comprehensive mining face, expand horizontally and
              improve vertically, strengthen the forward-looking layout, gradually
              master the smart mine and expand the core technology of non-coal
              related businesses, and establish multi-level technical research and
              development strength.

              In respect of automotive parts segment, the Company will continue to
              consolidate and enhance its dominant position in its core business,
              reach ultimate perfection for traditional advantageous business,
              strive to increase market share, and stabilize the foundation for
              development. The Company will make every effort to promote the
              development of new energy business. ASIMCO will rapidly expand the
              new energy parts business, and undertake overall planning on the
              components, assemblies and systems business. With the advantages
              of the global system and the benchmarking effect of projects in hand,
              SEG will rapidly promote the research and development and market
              promotion of high-voltage drive motors, prepare for mass production
              of orders in hand, and promote the comprehensive transformation of
              automotive parts business to energy conservation, emission reduction
              and new energy, and components and even system integration.

              Meanwhile, the Company will grasp the new industrial opportunities
              in the context of “dual-carbon”, actively explore the transformation
              into new fields, develop new businesses, pay attention to industries
              such as “new energy, high-tech equipment, intelligent equipment”,
              and undertake overall planning on new industries facing the future to
              achieve sustainable development.




10   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Chairman’s Statement




  3. Improve the investment platform and create new                         3
     profit growth poles
     The Company will innovate business models, carefully study flexible
     investment mechanisms and methods in industrial investment
     and financial investment, actively explore and expand the Group’s
     business areas, further enhance the Group’s competitiveness
     and profitability, and achieve a healthy complementarity between
     industrial operation and capital operation.

  4. Rapidly promote digital transformation and enhance                     4
     new development momentum
     The Company will strengthen the goal orientation, further clarify
     the enterprise digital transformation plan and roadmap. With
     the construction of strategic finance, intelligent finance and
     lighthouse factories as the main elements, the Company will
     accelerate digitalisation, promote the digital upgrade at all levels
     of the Company, release data potential, and empower high-quality
     development with digital and intelligent technology.




      Zhengzhou Coal Mining Machinery Group Company Limited
                          Jiao Chengyao
                             Chairman
                          30 August 2022                                        2022   8   30




                                                                                           2022   11
     Management Discussion and Analysis


     Review of the period
     For six months ended 30 June 2022, the Group achieved sales revenue                    2022 6 30
     of RMB15,538.29 million, representing an increase of 3.02% from the                    15,538.29                          3.02%
     corresponding period of last year. Profit Attributable to Owners of the Company                        1,464.55
     was RMB1,464.55 million, representing an increase of 21.82% from the                    21.82%                 0.84         2022       6
     corresponding period of last year. Earnings per share was RMB0.84. As at 30       30                         6,845.10
     June 2022, the Group had borrowing balances of RMB6,845.10 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
     mining and excavating equipment market. With the completion of ASIMCO and
     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      2022     6     30
     2021 and 2022 indicated, of our consolidated results of operations.

                                                                                                         Six months ended 30 June


                                                                                                               2022                    2021

                                                                                                        RMB millions           RMB millions


      Revenue                                                                                              15,538.29             15,082.38
      Cost of sales                                                                                       (12,219.23)           (11,627.81)

      Gross profit                                                                                          3,319.06              3,454.57
      Other income                                                                                            252.96                183.05
      Other gains and losses                                                                                  128.91                 45.40
      Selling and distribution expenses                                                                      (424.87)              (438.32)
      Administrative expenses                                                                                (486.94)              (622.76)
      Research and development expenses                                                                      (786.64)              (683.82)
      Restructuring costs                                                                                          –              (121.54)
      Accrual of net impairment losses on financial
         and contract assets                                                                                  (98.98)                  (18.49)
      Share of profit of associates                                                                            16.95                    19.92
      Share of profit of joint ventures                                                                         0.26                     2.97
      Finance costs, net                                                                                     (137.99)                (150.40)

      Profit before tax                                                                                     1,782.72              1,670.58
      Income tax expense                                                                                     (263.63)              (384.11)

      Profit for the period                                                                                 1,519.09              1,286.47

      Profit for the period attributable to:
         Owners of the Company                                                                              1,464.55                 1202.21
         Non-controlling interests                                                                             54.54                   84.26

                                                                                                            1,519.09                 1286.47




12   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Management Discussion and Analysis




                                                                                                          Six months ended 30 June


                                                                                                                2022                          2021

                                                                                                      RMB millions                 RMB millions


 Other comprehensive income:

 Items that will not be reclassified to profit or loss:
 Remeasurement of post-employment benefit obligations                                                           (8.50)                        (0.03)
 Changes in the fair value of financial assets at fair value
    through other comprehensive income                                                                        277.06                          (0.01)

 Items that may be reclassified to profit or loss:
 Exchange differences arising on translation                                                                   44.32                          37.98
 Cash flow hedging                                                                                             (5.60)                          4.86

 Other comprehensive income for the period,
   net of income tax                                                                                          307.28                          42.80

 Total comprehensive income for the period                                                                  1,826.37                  1,329.27

 Total comprehensive income for
   the period attributable to:
   Owners of the Company                                                                                    1,771.83                  1,245.01
   Non-controlling interests                                                                                   54.54                     84.26

                                                                                                            1,826.37                  1,329.27

 Earnings per share
   – Basic (RMB)                                                                                               0.84                           0.69
   – Diluted (RMB)                                                                                             0.84                           0.69


Revenue
Our revenue increased by 3.02% from RMB15,082.38 million for the six months                         2021 6       30
ended 30 June 2021 to RMB15,538.29 million for the six months ended 30        15,082.38               3.02%           2022    6     30
June 2022, mainly because of the 26.93% increase of coal mining machinery                   15,538.29                             2022
segment as compared to that of the last period because of the increase in
demand of both domestic and overseas coal mining machinery market in the                          26.93%
first half of 2022.

Cost of Sales
Our cost of sales increased by 5.09% from RMB11,627.81 million for the six                                 2021 6     30
months ended 30 June 2021 to RMB12,219.23 million for the six months            11,627.81                 5.09%        2022       6      30
ended 30 June 2022, because the sales and raw material price increased in                     12,219.23
this period.




                                                                                                                                  2022                 13
     Management Discussion and Analysis




     Gross Profit
     Driven by the above factors, our gross profit decreased by 3.92% from                                                                 2021         6        30
     RMB3,454.57 million for the six months ended 30 June 2021 to RMB3,139.06                                3,454.57                    3.92%                   2022
     million for the six months ended 30 June 2022.                                     6    30                            3,139.06

     The change in gross profit primarily comprised of two parts. The gross profit
     margin of the coal mining machinery segment decreased from 31.29% for                  2021   6    30                   31.29%                          2022       6
     the six months ended 30 June 2021 to 27.20% for the six months ended 30                30             27.20%
     June 2022. And the gross profit margin of the auto parts segment of the Group                     2021 6 30                               17.05%
     decreased slightly from 17.05% for the six months ended 30 June 2021 to                       2022 6 30                             15.37%
     15.37% for the six months ended 30 June 2022.

     Therefore, the overall gross profit margin of the Group decreased from 22.90%                                                          2021        6        30
     for the six months ended 30 June 2021 to 21.36% for the six months ended 30                   22.90%                   2022        6    30
     June 2022.                                                                         21.36%

     Staff Costs and Remuneration Policy
     Our staff costs decreased by 7.41% from RMB1,942.97 million for the six                                         2021       6       30
     months ended 30 June 2021 to RMB1,798.96 million for six months ended 30               1,942.97                7.41%                2022       6       30
     June 2022, primary because of the employee long-term profit-sharing plan has                        1,798.96
     completed in 2021. The staff remuneration of the Group comprises of basic                         2021
     salary and 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 6.71% from RMB1,670.58 million for the six months ended 30        2021 6         30                                1,670.58
     June 2021 to RMB1,782.72 million for the six months ended 30 June 2022.            6.71%            2022   6     30                                     1,782.72



     Income Tax Expense
     Our income tax expense decreased by 31.37% from RMB384.11 million for                                               2021       6       30
     the six months ended 30 June 2021 to RMB263.63 million for the six months                384.11                  31.37%                 2022       6        30
     ended 30 June 2022, primarily because of the decrease in taxable income. Our                            263.63
     effective tax rate decreased to 14.79% for the six months ended 30 June 2022                                                            2021       6        30
     from 22.99% for the six months ended 30 June 2021.                                            22.99%                   2022        6     30
                                                                                        14.79%

     Profit for the period
     In view of the combined effect of the above factors, our profit for the period
     and the aggregate of comprehensive income increased by 18.08% from                              2021 6         30                                  1,286.47
     RMB1,286.47 million for the six months ended 30 June 2021 to RMB1,519.09                      18.08%            2022      6    30
     million for the year ended 30 June 2022.                                           1,519.09




14   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Management Discussion and Analysis




Cash Flows and Capital Expenditures
As of 30 June 2022, the Group had RMB2,726.09 million in cash and cash                     2022 6      30
equivalents. The Group’s cash and cash equivalents primarily consist of cash              2,726.09
and bank deposits.


                                                                                                                  Six months ended 30 June


                                                                                                                             2022                              2021

                                                                                                                RMB millions                       RMB millions


 Net cash used in operating activities                                                                                 (147.81)                          (401.32)
 Net cash (used in)/from investing activities                                                                          (577.38)                         1,077.51
 Net cash from/(used in) financing activities                                                                           227.27                           (864.93)

 Net decrease in cash and cash equivalents                                                                             (497.92)                          (188.74)
 Effect of foreign exchange rate changes                                                                                 28.34                             (20.58)
 Cash and cash equivalents at the beginning of year                                                                   3,195.67                          2,978.73

 Cash and cash equivalents at the end of period                                                                       2,726.09                          2,769.41


Operating Activities
Net cash outflow in operating activities for the six months ended 30 June 2022             2022     6 30
was RMB147.81 million. Cash outflow primarily comprised profit before taxation                    147.81
of RMB1,782.72 million, primary adjusted for: (i) increase in trade and other                     1,782.72                                       (i)
receivables of RMB2,045.67 million; (ii) increase in inventories of RMB1,018.95                                   2,045.67                (ii)
million; (iii) increase in trade and other payables of RMB649.51 million; (iv)           1,018.95             (iii)
increase in contract liabilities of RMB372.39 million; (v) depreciation of property,   649.51          (iv)                           372.39                            (v)
plant and equipment of RMB274.33 million; (vi) decrease in gain on disposal of                                            274.33                        (vi)
a subsidiary of RMB195.49 million.                                                                                     195.49

Investing Activities
Net cash outflow in investing activities for the six months ended 30 June 2022             2022     6 30
was RMB577.38 million, primarily comprising: (i) placement for RMB2,682.43                        577.38                            (i)
million for other financial assets and structured deposits; (ii) proceeds of                                       2,682.43                      (ii)
RMB2,488.48 million from other financial assets and structured deposits; (iii)                                                 2,488.48                         (iii)
withdrawal of pledged bank deposits with original maturity over three months
and restricted cash of RMB2,569.83 million; (iv) placement of bank deposits                       2,569.83        (iv)
with original maturity over three months of RMB2,468.93 million; (v) payment                                 2,468.93                     (v)
of RMB482.52 million for the purchase of property, plant and equipment; (vi)                                     482.52                          (vi)
withdrawal of pledged bank deposits of RMB374.27 million; (vii) net cash inflow                         374.27           (vii)
of proceeds on disposal of a subsidiary of RMB274.61 million.                                                          274.61




                                                                                                                                                 2022                         15
     Management Discussion and Analysis




     Financing Activities
     Net cash inflow in financing activities for the six months ended 30 June             2022    6 30
     2022 was RMB227.27 million, primarily consisting of (i) net cash inflow from              227.27                              (i)
     borrowing of RMB1,597.27 million; and (ii) cash outflow from the repayment                   1,597.27                  (ii)
     of borrowings in the amount of RMB453.95 million; (iii) cash outflow from               453.95          (iii)
     dividends paid to company’s shareholders of RMB631.59 million; (iv) principal               631.59             (iv)
     elements of lease payments of RMB125.97 million.                                   125.97

     Capital Expenditures
     We incurred capital expenditures of RMB502.67 million for the six months             2022   6   30
     ended 30 June 2022, for purchase of property, plant and equipment and                                                                   502.67
     intangible assets.

     Commitments and Contingent Liabilities
     Capital Commitments
     As of 30 June 2022, our commitments consisted of capital commitments for             2022   6   30
     the acquisition of property, plant and equipment that have been authorized and                                                        864.50
     contracted for in the amount of RMB864.50 million.

     Contingent Liabilities
     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                      At
                                                                                                                     30 June             31 December
                                                                                                                        2022                    2021



                                                                                                             RMB millions                RMB millions


      Outstanding endorsed notes receivable with recourse                                                            3,818.21               2,133.20




16   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Management Discussion and Analysis




Working Capital and Indebtedness
The following table sets forth details of our current assets and liabilities as of 30                   2022    6     30
June 2022 (in RMB millions):

                                                                                                                     At 30 June       At 31 December
                                                                                                                           2022                 2021



                                                                                                                RMB millions                RMB millions


 CURRENT ASSETS
 Finance lease receivables, current portion                                                                               52.53                   42.13
 Long-term receivables, current portion                                                                                   86.03                   30.32
 Inventories                                                                                                           7,071.59                6,242.41
 Trade and other receivables                                                                                           9,660.14                7,374.07
 Transferred trade receivables                                                                                           435.07                  687.47
 Financial assets at fair value through profit or loss
                                                                                                                       3,430.24                3,236.29
 Financial assets at fair value through other
    comprehensive income                                                                                               3,452.04                4,111.05
 Derivative financial instruments                                                                                          7.19                   15.37
 Tax recoverable                                                                                                          46.04                   43.67
 Bank deposits                                                                                                         3,264.09                2,944.10
 Cash and cash equivalents                                                                                             2,726.09                3,195.67

                                                                                                                      30,231.05              27,922.55

 CURRENT LIABILITIES
 Trade and other payables                                                                                             10,493.44                9,978.41
 Contract liabilities                                                                                                  2,640.11                2,272.37
 Income tax liabilities                                                                                                  156.03                  132.29
 Borrowings                                                                                                            4,890.10                1,167.95
 Lease liabilities                                                                                                       130.36                  103.22
 Provisions                                                                                                              616.77                  687.34
 Liabilities associated with transferred trade receivables                                                               435.07                  687.47
 Derivative financial instruments                                                                                         67.55                   49.32

                                                                                                                      19,429.43              15,078.37

 NET CURRENT ASSETS                                                                                                   10,801.62              12,844.18


As of 30 June 2022, the Group had net current assets of approximately                        2022   6   30
RMB10,801.62 million (31 December 2021: RMB12,844.18 million) and                       10,801.62            2021      12 31                 12,844.18
current ratio of 1.56 (31 December 2021: 1.85). The decrease in current ratio                                       1.56 2021    12   31      1.85
was primarily due to the increase in current borrowings for the period.

As of 30 June 2022, the balance of the Group’s outstanding borrowings was                   2022 6 30
RMB6,845.10 million, of which RMB4,890.10 million are current portion (31               6,845.10                                            4,890.10
December 2021: outstanding borrowings was RMB5,798.61 million, of which                     2021 12 31                                      5,798.61
RMB1,167.95 million was current portion).                                                                                  1,167.95


                                                                                                                                           2022            17
     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 2022, our gearing ratio was 125% (31 December 2021: 118%).                 2022 6 30                     125%
                                                                                           2021 12 31   118%

     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.




18   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
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.




                                                                                    2022   19
     Directors, Supervisors and Chief Executives


     Change in information of Directors, Supervisors and
     Chief Executives
     For the six months period ended 30 June 2022 (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.




20   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
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 knowledge of the directors, as at 30 June 2022, the directors,
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
were 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 were 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, which are stated 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        Director              Beneficial owner       A Share           4,926,964            0.32              0.28      Long position
                                                                   A

 Xiang Jiayu          Director              Beneficial owner       A Share           3,421,420            0.22              0.19      Long position
                                                                   A

 Jia Hao              Director              Beneficial owner       A Share           2,631,000            0.17              0.15      Long position
                                                                   A

 Fu Zugang            Director              Beneficial owner       A Share           4,724,720            0.31              0.27      Long position
                                                                   A
                                            Interest of spouse     A Share             100,000           0.007             0.006      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           0.001             0.001      Long position
                                                                   A

 Zhang Minglin        Supervisor            Beneficial owner       A Share              80,000           0.005             0.004      Long position
                                                                   A




                                                                                                                                    2022              21
     Directors, Supervisors and Chief Executives




     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                                  469,000           0.031             0.026
                                                                  A

      Fu Zugang                   Beneficial owner                A Share                                  402,000           0.026             0.023
                                                                  A

     Note:

     Whether the stock options in the above table can be exercised, depends on whether the                                       2019   A
     exercise conditions of the 2019 A share stock option incentive Scheme can be fulfilled.

     Save as disclosed above, as at 30 June 2022, 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 2022, the Company had appointed four independent
     non-executive directors, namely Mr. CHENG Jinglei, Mr. JI Feng, Ms. GUO
     Wenqing and Mr. FANG Yuan.




22   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
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 2022 are as follows:

 Holders of A Shares                                      A                                                                                40,353
 Holders of H Shares                                      H                                                                                    57

 Total number of shareholders                                                                                                              40,410


Substantial Shareholders’ Interests and Short
Positions in Shares and Underlying Shares of the
Company
To the knowledge of the directors, as at 30 June 2022, 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           shares %        shares %       Lending pool



                                                                                                             %                %

 Henan Asset Management Co., Ltd.(1)   Interest of beneficial      A Share       346,404,576             22.55            19.47      Long position
                          (1)             owner and party acting   A
                                          in concert




 Hong Yi Investment Management         Beneficial owner            A Share       277,195,419             18.04            15.58      Long position
   (Henan) Partnership                                             A
   (Limited Partnership)(1)

                (1)




 State-owned Assets Supervision and    Beneficial owner            A Share       242,842,381             15.81            13.65      Long position
    Administration Commission of Henan                             A
    Provincial People’s Government(2)

                (2)




                                                                                                                                   2022                  23
     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           shares %           shares %         Lending pool



                                                                                                                            %                    %

       Henan Machinery Investment              Beneficial owner            A Share            242,842,381             15.81                  13.65        Long position
         Group Co., Ltd.(2)                                                A

                          (2)



       UBS Group AG.(3)                        Interest in a controlled    H Share             21,798,475                 8.96                1.22        Long 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 242,842,381 A Shares       (2)                                                         242,842,381
           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 242,842,381 A Shares of the                                         242,842,381             A
           Company directly held by Henan Machinery Investment Group Co., Ltd.

           Henan Machinery Investment Group Co., Ltd. participated in the refinancing
           business. As at 30 June 2022, 1,050,000 A shares held by it were outstanding, if                                                           1,050,000
           fully repaid, the number of A shares actually held by it will be 243,892,381.               A
                                                                                                            243,892,381           A




24   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Directors, Supervisors and Chief Executives




Substantial Shareholders’ Interests and Short
Positions in Shares and Underlying Shares of the
Company (Continued)
Notes: (Continued)

(3)   UBS Group AG is interested in a total of 21,798,475 (long position) H Shares held in   (3)     UBS Group AG                     21,798,475            H
      the Company. 2,504,800 (long position) H Shares are held by non-listed derivative                  2,504,800             H
      instrument through cash settlement. As disclosed in the notice of interest submitted                              UBS Group AG
      by UBS Group AG (with the relevant event dated 18 March 2022), UBS Group AG is                        2022   3   18            UBS Group AG       H
      interested in the following H Shares:


       Name of controlled                               Name of                                               Direct interest
       corporation                                      controlling person                   % control                  (Y/N)           Number of shares




       UBS AG                                           UBS Group AG                               100.00                  Y    Long position       1,917,670



       UBS Asset Management                             UBS Group AG                               100.00                  Y    Long position       5,827,816
         (Hong Kong) Ltd

       UBS O’Connor LLC                                 UBS Group AG                              100.00                  Y    Long position       7,636,600



        UBS Switzerland AG                               UBS Group AG                              100.00                  Y    Long position       3,549,998



        UBS Asset Management                            UBS Group AG                               100.00                  Y    Long position       2,548,791
          Switzerland AG

        UBS Asset Management                             UBS Group AG                              100.00                  Y    Long position          317,600
          (Singapore) Ltd




                                                                                                                                                2022             25
     Material Events


     Equity Interest
     As at 30 June 2022, 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
     RMB1,536,259,470, divided into 1,536,259,470 shares of RMB1.00 each.                 1,536,259,470                 1,536,259,470
                                                                                             1.00

     Interim Dividend
     The Board did not propose the payment of interim dividend for the six months
     ended 30 June 2022.

     Use of Proceeds from Initial Public Offering on the
     Stock Exchange
     All the proceeds raised from H Share offering have been used up before 31            H                      2021    12    31
     December 2021.

     Restricted Share Incentive Scheme
     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 to the selected 186               186
     employees (including directors) of the Group (the “Participants”).                           42,300,000             A

     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 unlocked or repurchased                       48
     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                                                              12
     Participants with an interval of 12 months between the Date of Grant 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.




26   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Material Events




Restricted Share Incentive Scheme (Continued)
On 7 June 2021, 42,300,000 A shares were issued at the price of RMB5.88                                                                  A
per A share under the Scheme, and the amount of RMB248,724,000 cash                           5.88             42,300,000   A
received from the Participants is recorded as trade and other payables                                   248,724,000
(Note 20).                                                                                    20

During six months ended 30 June 2022, the Group provided RMB50,326,000 as
expense.                                                                              50,326,000

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.

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.




                                                                                                                                2022          27
     Material Events




     Restricted Share Incentive Scheme (Continued)
     The restricted shares outstanding at the period end listed below:


                                                                                             Number of
      Details                                                                         Restricted shares


      Opening balance 1 January 2022                                                        42,300,000
      Forfeited during the six months                                                         (848,000)
      Unlocked during the six months                                                       (16,804,000)

      Balance 30 June 2022                                                                  24,648,000


     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 2022 and up to 30 June 2022 (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
     During the Review Period, neither the Company nor any of its subsidiaries
     purchased, sold or redeemed any of the Company’s listed securities.

     Acquisition and Disposal
     During the Review Period, the Company was not involved in any material action
     of acquisition and disposal of assets.




28   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
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 and risk management 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
2022 and this interim report of the Company.

Subsequent Events
Pursuant to the Company’s board resolution dated 19 July 2022, the Company
plans to jointly acquire a total of 43.33% of shareholdings of Luoyang LYC                                 LYC
Bearing Co., Ltd with several related parties. The Company plans to invest               43.33%
Luoyang LYC Bearing Co., Ltd through a limited partnership. The Group paid               LYC
RMB389 million to acquire 16.67% shareholdings of Luoyang LYC Bearing Co.,         389            LYC   16.67%
Ltd. And the transaction was completed on 25 August 2022.




                                                                                                        2022     29
     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 31 to 92,                       31   92
     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 2022
     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 notes, comprising significant
     accounting policies and other explanatory information. 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, 30 August 2022


30   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the six months ended 30 June 2022


                                                                   Six months ended 30 June


                                                                         2022                 2021

                                                         Note        RMB’000          RMB’000

                                                                   (unaudited)        (unaudited)


 Revenue                                                  5         15,538,288        15,082,378
 Cost of sales                                           11        (12,219,232)      (11,627,811)

 Gross profit                                                       3,319,056         3,454,567
 Other income                                             7           252,955           183,052
 Other gains and losses                                   8           128,913            45,397
 Selling and distribution expenses                       11          (424,871)         (438,322)
 Administrative expenses                                 11          (486,935)         (622,756)
 Research and development expenses                       11          (786,638)         (683,822)
 Restructuring costs                                     11                 –         (121,536)
 Accrual of net impairment losses on financial
    and contract assets                                  11           (98,981)            (18,493)
 Share of profit of associates                                         16,945              19,923
 Share of profit of joint ventures                                        259               2,970
 Finance costs, net                                       9          (137,979)          (150,397)

 Profit before tax                                                  1,782,724         1,670,583
 Income tax expense                                      10          (263,636)         (384,113)

 Profit for the period                                              1,519,088         1,286,470

 Profit for the period attributable to:
    Owners of the Company                                           1,464,553         1,202,212
    Non-controlling interests                                          54,535            84,258

                                                                    1,519,088         1,286,470




                                                                                   2022              31
     Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income


     For the six months ended 30 June 2022


                                                                                  Six months ended 30 June


                                                                                        2022                 2021

                                                                           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                                                                   (8,499)                (27)
      Changes in the fair value of financial assets at fair
         value through other comprehensive income                                    277,058                   (7)

      Items that may be reclassified to profit or loss:
      Exchange differences arising on translation                                     44,318            37,970
      Cash flow hedging                                                               (5,602)            4,861

      Other comprehensive income for the period,
        net of income tax                                                            307,275            42,797

      Total comprehensive income for the period                                    1,826,363         1,329,267

      Total comprehensive income for the period
         attributable to:
         Owners of the Company                                                     1,771,828         1,245,009
         Non-controlling interests                                                    54,535            84,258

                                                                                   1,826,363         1,329,267

      Earnings per share
        – Basic (RMB)                                                     13           0.84                 0.69
        – Diluted (RMB)                                                   13           0.84                 0.69




32   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Interim Condensed Consolidated Statement of Financial Position

As at 30 June 2022


                                                       As at 30 June   As at 31 December
                                                                2022                2021



                                                Note       RMB’000            RMB’000

                                                        (unaudited)               (audited)


 NON-CURRENT ASSETS
 Property, plant and equipment                  14        4,947,061           4,843,738
 Right-of-use assets                                      1,821,602           1,668,455
 Investment properties                                      337,854             377,593
 Goodwill                                                   406,410             412,850
 Intangible assets                              15          908,358           1,176,924
 Investments in associates                                  182,917             171,961
 Investments in joint ventures                               87,237              86,978
 Financial assets at fair value through other
    comprehensive income                        16          355,695               143,752
 Deferred tax assets                            17          396,013               383,830
 Finance lease receivables                                   54,503                23,149
 Long-term receivables                                      164,815               116,849
 Assets classified as held for sale                           1,635                 1,685

                                                          9,664,100           9,407,764

 CURRENT ASSETS
 Finance lease receivables, current portion                  52,533              42,122
 Long-term receivables, current portion                      86,032              30,324
 Inventories                                              7,071,594           6,242,407
 Trade and other receivables                    18        9,660,146           7,374,073
 Transferred trade receivables                              435,070             687,473
 Financial assets at fair value through
    profit or loss                              16        3,430,235           3,236,286
 Financial assets at fair value through other
    comprehensive income                        16        3,452,043           4,111,050
 Derivative financial instruments               16            7,191              15,372
 Tax recoverable                                             46,035              43,667
 Bank deposits                                  19        3,264,086           2,944,102
 Cash and cash equivalents                      19        2,726,088           3,195,674

                                                         30,231,053          27,922,550

 Total assets                                            39,895,153          37,330,314




                                                                           2022               33
     Interim Condensed Consolidated Statement of Financial Position


     As at 30 June 2022


                                                                                                    As at 30 June     As at 31 December
                                                                                                             2022                  2021



                                                                                     Note               RMB’000              RMB’000

                                                                                                      (unaudited)              (audited)


      NON-CURRENT LIABILITIES
      Borrowings                                                                     21                 1,955,000            4,630,658
      Lease liabilities                                                                                 1,221,161            1,142,850
      Deferred tax liabilities                                                       17                   187,368              246,853
      Contract liabilities                                                                                 30,610               26,528
      Provisions                                                                     22                    45,370               62,157
      Employee benefit obligations                                                                        283,386              303,261
      Other non-current liabilities                                                                       214,929              188,657

                                                                                                        3,937,824            6,600,964

      CURRENT LIABILITIES
      Trade and other payables                                                       20               10,493,448             9,978,408
      Contract liabilities                                                                             2,640,112             2,272,366
      Income tax liabilities                                                                             156,034               132,287
      Borrowings                                                                     21                4,890,096             1,167,952
      Lease liabilities                                                                                  130,356               103,221
      Provisions                                                                     22                  616,767               687,344
      Liabilities associated with transferred trade
         receivables                                                                                        435,070            687,473
      Derivative financial instruments                                               16                      67,545             49,322

                                                                                                      19,429,428            15,078,373

      Total liabilities                                                                               23,367,252            21,679,337

      CAPITAL AND RESERVES
      Share capital                                                                  23                 1,779,493            1,779,493
      Share premium                                                                                     4,426,102            4,426,102
      Reserves                                                                                          9,743,945            8,589,896

      Equity attributable to owners of the Company                                                    15,949,540            14,795,491

      Non-controlling interests                                                                             578,361            855,486

      Total equity                                                                                    16,527,901            15,650,977

      Total equity and liabilities                                                                    39,895,153            37,330,314


     The interim condensed consolidated financial statements on pages 31 to 92       31     92
     were approved and authorised for issue by the Board of Directors on 30 August
     2022 and are signed on its behalf by:

                                   Jiao Chengyao                                                  Jia Hao

                                      DIRECTOR                                                   DIRECTOR




34   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Interim Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2022


                                                                                              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 31 December 2021 and at
    1 January 2022 (audited)
                                                       1,779,493 4,426,102    (248,724)     37,926 1,198,347        (121,266)     (14,723)      161,371 7,576,965 14,795,491         855,486 15,650,977

 Profit for the period                                        –         –          –          –          –           –               –         – 1,464,553 1,464,553          54,535 1,519,088
 Other comprehensive income for the period                    –         –          –    232,738           –      44,318           (5,602)         –    35,821 307,275                 – 307,275

 Total comprehensive income for the period                    –         –          –    232,738           –      44,318           (5,602)         – 1,500,374 1,771,828          54,535 1,826,363

 Share-based payment                                          –         –         –           –          –            –              –     3,014           –       3,014            –      3,014
 Employee share schemes                                       –         –   126,087            –          –            –              –    50,326           –    176,413             –    176,413
 Disposal of a subsidiary (Note 25)               25          –         –         –           –          –      (23,126)              –         –          –     (23,126)    (152,669)   (175,795)
 Dividends (Note 12)                         12               –         –         –           –          –            –              –         –   (774,080)   (774,080)     (178,991)   (953,071)

 At 30 June 2022 (unaudited)
                                                       1,779,493 4,426,102    (122,637)    270,664 1,198,347        (100,074)     (20,325)      214,711 8,303,259 15,949,540         578,361 16,527,901




                                                                                                                                                                                    2022                     35
     Interim Condensed Consolidated Statement of Changes in Equity


     For the six months ended 30 June 2022


                                                                                                         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 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 24)                 24         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 12)                         12                   –          –          –         –           –              –            –           –   (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


     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 (“Henan SASAC”), the former 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., the entity under Henan SASAC and one of investors
             of the Company, issued a notification to the Company to withdraw the capital
             contribution made before, and the Company repaid RMB95,000,000 to Henan                                                                                                95,000,000
             Machinery Investment Group Co., Ltd in January 2021.




36   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Interim Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2022


                                                                   Six months ended 30 June


                                                                         2022                 2021

                                                                     RMB’000          RMB’000

                                                                   (unaudited)        (unaudited)


 OPERATING ACTIVITIES

 Profit before tax                                                  1,782,724         1,670,583
 Adjustments for:
    Finance costs                                                     137,979             150,397
    Interest income on bank deposits, long-term
        receivables and finance lease receivables                     (74,445)            (57,230)
    Share of profit of associates                                     (16,945)            (19,923)
    Share of profit of joint ventures                                    (259)              (2,970)
    Gain on disposal of property, plant and equipment,
        and intangible assets                                         (10,685)              (1,826)
    Gain on disposal of a subsidiary (Note 25)                25     (195,494)                   –
    Gain on disposal of an associate                                        –            (20,257)
    Dividend from financial assets at fair value
        through other comprehensive income                                   –            (1,458)
    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                            (27,055)            (50,505)
    Net fair value loss/(gain) of derivative financial
        instruments                                                    56,695               (1,592)
    Depreciation of property, plant and equipment                     274,333             340,994
    Depreciation of investment properties                              10,310                5,750
    Amortisation of intangible assets                                 102,064             119,805
    Depreciation of right-of-use assets                                75,122              83,756
    Accrual for net impairment losses on financial
        and contract assets                                            98,981              18,493
    Share-based payment                                                 3,014               5,030
    Restricted share incentive scheme (Note 24)          24            50,326              10,352
    Impairment of intangible assets                                    77,328                   –
    Accrual of inventory provision                                     15,338              44,090
    Effect of foreign exchange rate changes                           (29,828)             13,942

 Operating cash flows before movements
   in working capital                                               2,329,503         2,305,031

 Increase in inventories                                            (1,018,948)         (753,569)
 Increase in trade and other receivables                            (2,045,671)       (2,004,360)
 (Increase)/decrease in long-term receivables and
    finance lease receivables                                        (145,439)            148,073
 Increase in trade and other payables                                 649,505             252,589
 Increase in contract liabilities                                     372,393              51,824

 Cash generated from/(used in) operations                             141,343              (412)
 Income tax paid                                                     (289,155)         (400,896)

 NET CASH USED IN OPERATING ACTIVITIES                               (147,812)         (401,308)




                                                                                   2022               37
     Interim Condensed Consolidated Statement of Cash Flows


     For the six months ended 30 June 2022


                                                                           Six months ended 30 June


                                                                                 2022                 2021

                                                                             RMB’000          RMB’000

                                                                           (unaudited)        (unaudited)


      INVESTING ACTIVITIES

      Interest income on bank deposits, long-term
         receivables and finance lease receivables                             74,445            57,231
      Government grants related to assets received                             35,541            22,697
      Dividends from financial assets at fair value
         through other comprehensive income                                          –           1,458
      Dividends from financial assets at fair value
         through profit and loss                                                     –           2,400
      Proceeds on disposal of a subsidiary,
         net of cash                                                          274,613                 –
      Proceeds on disposal of an associate                                     17,153            35,103
      Proceeds from sale of financial assets at fair value
         through other comprehensive income                                    65,115                   –
      Proceeds on disposal of property, plant and
         equipment and intangible assets                                        1,946             38,048
      Purchases of property, plant and equipment                             (482,518)         (391,077)
      Purchases of other intangible assets                                    (20,105)           (34,669)
      Placement for other financial assets and
         structured deposits                                                (2,682,426)        (999,753)
      Proceeds from other financial assets and
         structured deposits                                                2,488,477         2,225,000
      Repayment of loans receivable from a joint venture                            –             6,500
      Payments for establishment of an associate                                    –            (2,000)
      Placement of bank deposits with original
         maturity over three months                                         (2,468,926)       (2,102,213)
      Withdrawal of bank deposits with original
         maturity over three months and restricted cash                     2,569,828         1,789,743
      Placement of pledged bank deposits                                     (795,160)         (611,110)
      Withdrawal of pledged bank deposits                                     374,274           973,546
      Net fair value (loss)/gain of derivative
         financial instruments                                                (29,640)           66,601

      NET CASH (USED IN)/GENERATED FROM
        INVESTING ACTIVITIES                                                 (577,383)        1,077,505




38   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Interim Condensed Consolidated Statement of Cash Flows


For the six months ended 30 June 2022


                                                                  Six months ended 30 June


                                                                        2022                 2021

                                                                    RMB’000          RMB’000

                                                                  (unaudited)        (unaudited)


 FINANCING ACTIVITIES

 Proceeds from the equipment leasing companies                             –            447,216
 Proceeds from restricted
    share incentive scheme (Note 24)                    24                 –           247,367
 Proceeds from new borrowings                                      1,597,266          1,121,437
 Repayment of redemption liability                                         –        (1,066,055)
 Repayment of borrowings                                            (453,950)          (554,291)
 Interests paid                                                     (121,259)          (494,215)
 Dividends paid to Company’s shareholders                          (631,587)          (321,470)
 Dividends paid to non-controlling interests                         (37,227)            (57,374)
 Repayment of contributions to State-owned investors                       –            (95,000)
 Principal elements of lease payments                               (125,972)            (92,549)

 NET CASH GENERATED FROM/(USED IN)
   FINANCING ACTIVITIES                                              227,271           (864,934)

 NET DECREASE IN CASH AND CASH EQUIVALENTS                          (497,924)         (188,737)
 EFFECT OF FOREIGN EXCHANGE RATE CHANGES                              28,338            (20,577)
 CASH AND CASH EQUIVALENTS AT 1 JANUARY                            3,195,674         2,978,727

 CASH AND CASH EQUIVALENTS AT 30 JUNE
   represented by cash and cash equivalents (Note 19)        19    2,726,088         2,769,413




                                                                                  2022              39
     Notes to the Interim Condensed Consolidated Financial Information

     For the six months ended 30 June 2022

     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%




40   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

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
     Investment and Henan Asset Management Limited has been changed from                          19.99%       19.52%
     19.99% to 19.52%.

     On 18 December 2021, the first vesting period of the share options
     granted under the 2019 Option Incentive Scheme was due, and 301
     participants with number of 4,722,300 shares were eligible for option
     exercise in accordance with the relevant provisions of the Option Incentive                              301            4,722,300
     Scheme. After the completion of the exercise of share options, the total                                                        1,774,771,370
     share capital of the Company increased from 1,774,771,370 shares to                              1,779,493,670
     1,779,493,670 shares. As a result, the aggregate shareholding of Hong Yi                                                       19.52%
     Investment and Henan Asset Management Limited has been changed from                 19.47%
     19.52% to 19.47%.

     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.




                                                                                                                                   2022              41
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     2 Basis of preparation of interim condensed                                       2
       consolidated financial information
          This interim condensed consolidated financial information for the six
          months ended 30 June 2022 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 2021 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 2022 are the same as
          those followed in the preparation of the Group’s consolidated financial
          statements for the year ended 31 December 2021.

     3 New and amended standards adopted by the                                        3
       Group
          A number of new or amended standards became applicable for the current
          reporting period. The Group did not change its accounting policies or
          make retrospective adjustments as a result of adopting these amended
          standards.

          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 2022.




42   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

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 2022 (unaudited)

            Non-derivatives financial liabilities
            Trade and other payables                                              –     8,565,960          1,927,488               –             –   10,493,448   10,493,448
            Liabilities associated with transferred
               trade receivables                                                  –             –           435,070             –             –        435,070      435,070
            Borrowings                                                         2.76      1,122,725          3,904,429       672,154      1,374,080       7,073,388    6,845,096
            Lease liabilities                                                  3.67         51,157            141,813       178,793      1,423,325       1,795,088    1,351,517

            Derivative financial liabilities
            Designated as hedging instruments                                     –         8,100            10,299                –             –      18,399       18,399
            Not designated as hedging instruments                                 –        22,108            27,038                –             –      49,146       49,146

                                                                                  –     9,770,050          6,446,137       850,947      2,797,405      19,864,539   19,192,676




                                                                                                                                                              2022                43
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     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 2021 (audited)

                 Non-derivatives financial liabilities
                 Trade and other payables                                                  –   7,838,874            2,139,534               –             –     9,978,408      9,978,408
                 Liabilities associated with transferred
                    trade receivables                                                     –       57,453              630,020           –               –         687,473        687,473
                 Borrowings                                                            2.51       174,309            1,174,821   3,812,768          889,091        6,050,989      5,798,610
                 Lease liabilities                                                     3.72        26,313              129,330     203,109        1,135,635        1,494,387      1,246,071

                 Derivative financial liabilities
                 Designated as hedging instruments                                         –        1,956             14,368                –             –        16,324        16,324
                 Not designated as hedging instruments                                     –       10,751             22,247                –             –        32,998        32,998

                                                                                           –   8,109,656            4,110,320   4,015,877        2,024,726       18,260,579     17,759,884


          (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.




44   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

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).




                                                                                                             2022       45
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     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 2022           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: Nil
                    non-current                 (31 December 2021: RMB31,752,000)
                                                                                       1

                                                      31,752,000

                 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
                                               – RMB7,191,000                                             rates at the end of the reporting date) and contracted forward
                                               (31 December 2021: RMB15,372,000)                           rate, discounted at a rate that reflects the credit risk of the
                                                                                                           counterparty.
                                                                                       2
                                                        7,191,000

                                                      15,372,000

                 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
                                               – RMB18,399,000                                            rates at the end of the reporting date) and contracted forward
                                               (31 December 2021: RMB16,324,000)                           rate, discounted at a rate that reflects the credit risk of the
                                                                                                           counterparty.
                                                                                       2
                                                        18,399,000

                                                      16,324,000

                 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
                                               – RMB49,146,000                                            rates at the end of the reporting date) and contracted forward
                                               (31 December 2021: RMB32,998,000)                           rate, discounted at a rate that reflects the credit risk of the
                                                                                                           counterparty.
                                                                                       2
                                                        49,146,000

                                                      32,998,000




46   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

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 2022            hierarchy          Valuation technique and key input


            Financial assets at fair    Other financial assets                   Level 2            Fair values of asset management schemes options contracts
               value through              – RMB2,379,993,000                                          have been determined based on quotes from market makers,
               profit or loss             (31 December 2021: RMB1,286,026,000)                         funds administrators or alternative pricing sources supported by
                                                                                                       observable inputs. The most significant inputs are market interest
                                                                                                       rates, net asset values and latest redemption prices or transaction
                                                                                                       prices of the respective asset management schemes.
                                                                 2,379,993,000     2

                                                 1,286,026,000



            Financial assets at fair    Structured deposit                       Level 3            Discounted cash flow. The estimated future cash flow is based on
               value through               – RMB218,000,000                                           the contractual amount, discounted at a rate that reflects the
               profit or loss              (31 December 2021: RMB918,000,000)                          expected return rates ranged from 1.00% to 2.82%. The higher
                                                                                                       the expected return rate, the higher the fair value.
                                                               218,000,000         3
                                                                                                                                                1.00% 2.82%
                                                 918,000,000

            Financial assets at fair    Other financial assets                   Level 3            Discounted cash flow. The estimated future cash flow is based on
               value through              – RMB830,946,000                                            the contractual amount, discounted at a rate that reflects the
               profit or loss             (31 December 2021: RMB1,030,964,000)                         expected return rates ranged from 2.38% to 5.80%. The higher
                                                                                                       the expected return rate, the higher the fair value.
                                                                 830,946,000       3
                                                                                                                                                2.38% 5.80%
                                                 1,030,964,000




                                                                                                                                                     2022                    47
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     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 2022              hierarchy          Valuation technique and key input


                 Financial assets at fair    Notes receivables                          Level 3            Discounted cash flow. The estimated future cash flow is based on
                    value through OCI,         – RMB3,452,043,000                                            the contractual amount, discounted at a rate that reflects the
                    current                    (31 December 2021: RMB4,111,050,000)                           expected discounted rate range from 0.9% to 3.95%. The higher
                                                                                                              the discount rate, the lower the fair value.
                                                                   3,452,043,000          3
                                                                                                                   0.9% 3.95%
                                                       4,111,050,000

                 Financial assets at fair    Equity interest in unlisted company        Level 3            Discounted cash flow. The estimated future cash flow is based on
                    value through OCI,         with no open market price quote                                expected volatility, discount for lack of marketability (“DLOM”),
                    non-current                – RMB355,695,000                                              and discount rate. The higher the expected volatility, the lower
                                               (31 December 2021: RMB112,000,000)                             the fair value. The higher the DLOM, the lower the fair value. The
                                                                                                              higher the discount rate, the lower the fair value.
                                                                                          3
                                                         355,695,000

                                                       112,000,000

                 Financial assets at fair value Equity interest in unlisted company     Level 3            Discounted cash flow. The estimated future cash flow is based on
                    through profit or loss        with no open market price quote                             expected volatility, discount for lack of marketability (“DLOM”),
                                                   – RMB1,296,000                                            and discount rate. The higher the expected volatility, the lower
                                                  (31 December 2021: RMB1,296,000)                            the fair value. The higher the DLOM, the lower the fair value. The
                                                                                                              higher the discount rate, the lower the fair value.
                                                                                          3
                                                         1,296,000

                                                       1,296,000

                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.




48   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

5 Revenue                                               5

                                                                   Six months ended 30 June 2022


                                                             Manufacture
                                                            of coal mining   Manufacture
                                                                machinery    of auto parts           Total



                                                                RMB’000        RMB’000         RMB’000

                                                             (unaudited)      (unaudited)      (unaudited)


       Sales of auto parts                                             –       7,614,071       7,614,071
       Sales of hydraulic roof supports                        4,417,014                –      4,417,014
       Revenue from steel and other materials trading          2,047,569           14,110       2,061,679
       Sales of spare parts for coal mining machinery          1,130,843                –      1,130,843
       Sales of other coal mining equipment                      218,382                –        218,382
       Other revenue                                              55,139           41,160          96,299

                                                               7,868,947        7,669,341      15,538,288



                                                                    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




                                                                                              2022            49
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     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 2022

            Segment revenue                                                                          7,868,948      7,669,340      15,538,288

            Segment net profit excluding interest
              expense of redemption liabilities                                                      1,301,678       217,410           1,519,088

            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




50   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

6 Segment information (Continued)                                                       6

                                                                                                      Six months ended 30 June


                                                                                                            2022                   2021

                                                                                                        RMB’000             RMB’000

                                                                                                      (unaudited)           (unaudited)


       Segment revenue and consolidated revenue                                                       15,538,288           15,082,378

       Segment net profit excluding interest expense of
          redemption liabilities                                                                       1,519,088            1,307,500
       Interest expense on redemption liabilities                                                              –              (21,030)

       Consolidated profit for the period                                                              1,519,088            1,286,470


     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
                                                                                                            2022                  2021



                                                                                                        RMB’000             RMB’000

                                                                                                      (unaudited)               (audited)


       SEGMENT ASSETS
       Manufacture of coal mining machinery                                                           25,701,412           22,763,293
       Manufacture of auto parts                                                                      13,787,331           14,154,171

       Total segment assets                                                                           39,488,743           36,917,464
       Goodwill                                                                                          406,410              412,850

       Consolidated assets                                                                            39,895,153           37,330,314

       SEGMENT LIABILITIES
       Manufacture of coal mining machinery                                                           14,586,644           12,885,253
       Manufacture of auto parts                                                                       8,780,608            8,794,084

       Consolidated liabilities                                                                       23,367,252           21,679,337




                                                                                                                         2022               51
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     6 Segment information (Continued)                                            6
          Geographical information
          The analysis of revenue by geographical location of customers is as
          follows:


                                                                                      Six months ended 30 June


                                                                                            2022                 2021

                                                                                        RMB’000          RMB’000

                                                                                      (unaudited)        (unaudited)


            The PRC                                                                   10,179,734        10,068,259
            Germany                                                                    2,139,173         2,496,933
            Other countries                                                            3,219,381         2,517,186

                                                                                      15,538,288        15,082,378


          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.




52   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

6 Segment information (Continued)                   6
     Geographical information (Continued)

                                                                      At 30 June 2022


                                                                         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                                          25,737,803          180,416            345,915
       Germany                                               3,150                –                 –
       Other countries                                      54,942                –               388

       Manufacture of auto parts
       The PRC                                           7,479,332           89,738            325,709
       Germany                                           2,053,781                –            37,610
       Other countries                                   4,441,845                –           130,029

       Total segment assets                             39,770,853          270,154            839,651

       Elimination                                        (282,110)

       Unallocated:
         Goodwill                                          406,410

       Total assets as per the financial position       39,895,153




                                                                                        2022              53
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     6 Segment information (Continued)                                                       6
          Geographical information (Continued)

                                                                                                           At 31 December 2021

                                                                                                                 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                                                                              22,748,968        170,842          427,414
            Germany                                                                                   3,246              –               –
            Other countries                                                                          26,145              –             113

            Manufacture of auto parts
            The PRC                                                                               7,584,037         88,097          323,222
            Germany                                                                               2,287,384              –         268,792
            Other countries                                                                       4,371,882              –         753,377

            Total segment assets                                                                 37,021,662        258,939       1,772,918

            Elimination                                                                            (104,198)

            Unallocated:
              Goodwill                                                                             412,850

            Total assets as per the financial position                                           37,330,314


          Information about major customers
          Note: No customer contributed over 10% of the total revenue of the Group for the
                six months ended 30 June 2022 and 2021.                                                                    10%




54   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

7 Other income                                                                             7

                                                                                               Six months ended 30 June


                                                                                                     2022                 2021

                                                                                                 RMB’000          RMB’000

                                                                                               (unaudited)        (unaudited)


       Government grants (Note)                                                                   178,510             125,821
       Interest income on bank deposits, long-term
          receivables and finance lease receivables                                                74,445              57,231

                                                                                                  252,955             183,052


     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.




                                                                                                               2022              55
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     8 Other gains and losses                                              8

                                                                                     Six months ended 30 June


                                                                                           2022                 2021

                                                                                       RMB’000          RMB’000

                                                                                     (unaudited)        (unaudited)


            Gain on disposal of a subsidiary (Note 25)                          25      195,494                  –
            Net foreign exchange gain/(loss)                                             29,828            (13,944)
            Net fair value gain on financial assets at fair value
               through profit or loss                                                    27,055            50,505
            Gain on disposal of property, plant and equipment,
               and intangible assets                                                     10,685             1,826
            Gain on disposal of an associate                                                  –           20,257
            Dividends from financial assets through profit or loss                            –            2,400
            Dividends from financial assets at fair value through
               other comprehensive income                                                     –            1,458
            Impairment of intangible assets (Note 15)                      15           (77,328)                –
            Net fair value (loss)/gain on derivative financial
               instruments                                                              (56,695)             1,592
            Others                                                                         (126)           (18,697)

                                                                                        128,913            45,397




56   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

9 Finance costs, net                          9

                                                            Six months ended 30 June


                                                                  2022                 2021

                                                              RMB’000          RMB’000

                                                            (unaudited)        (unaudited)


       Interests on bank borrowings                            118,834             106,783
       Interests on leases                                      19,145              18,873
       Interests on redemption liabilities                           –             24,741

                                                               137,979             150,397


10 Income tax expense                         10

                                                            Six months ended 30 June


                                                                  2022                 2021

                                                              RMB’000          RMB’000

                                                            (unaudited)        (unaudited)


       Current income tax                                      326,617             347,962
       Deferred income tax                                     (62,981)             36,151

                                                               263,636             384,113




                                                                            2022              57
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     10 Income tax expense (Continued)                                                    10
          (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 2022 and 2021.

          (b) Germany profits tax                                                              (b)
                Applicable profit tax rate of Germany is 29%. During the first half of                            29%
                2022, no profit tax has been provided due to accumulated losses
                (2021: Nil).

          (c) Others                                                                           (c)
                Applicable profit tax rates of the Group’s other subsidiaries are
                between 9% and 34.01% for the first half of 2022 (2021: between                              9%   34.01%
                9% to 34.01%).                                                                       9% 34.01%

                During the first half of 2022, the applicable profit tax rate of SEG
                Automotive France SAS Corporation decreased from 27.37% to                                    27.37%       25.00%
                25.00%.




58   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

11 Expense by nature (including cost of sales,                   11
   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


                                                                            2022                 2021

                                                                        RMB’000          RMB’000

                                                                      (unaudited)        (unaudited)


       Raw material costs                                             10,580,041         9,984,136
       Employee benefits expenses (including directors)                1,798,956         1,942,967
       Depreciation for property, plant and equipment                    274,333           340,994
       Service fee                                                       212,871           237,726
       Freight charges                                                   210,707           173,769
       Amortization of intangible assets                                 102,064           119,805
       Depreciation of right-of-use assets                                75,122             83,756
       Tax and surcharges                                                 63,353             64,575
       Provision for impairment of trade and other receivables            98,981             18,493
       Rental                                                             15,107             14,958
       Depreciation for investment properties                             10,310              5,750
       Reversal of write-down of inventories                             (15,483)           (42,705)
       Others                                                            590,295           568,516

                                                                      14,016,657        13,512,740




                                                                                      2022              59
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     12 Dividends                                                                        12

                                                                                                                 Six months ended 30 June


                                                                                                                       2022                 2021

                                                                                                                   RMB’000          RMB’000

                                                                                                                 (unaudited)        (unaudited)


            Dividends recognised as distribution during the year
            – 2021 Final (RMB0.435 per share)
                                                                                       0.435                        774,080                   –
            – 2020 Final (RMB0.2099 per share)
                                                                                       0.2099                             –          372,525

                                                                                                                    774,080           372,525


          During the current interim period, a final dividend in respect of the
          year ended 31 December 2021 of RMB0.435 per share was declared
          to the owners of the Company. The aggregate amount of the final                       0.435
          dividend declared in the interim period amounted to approximately                        774,080,000
          RMB774,080,000. The directors of the Company have determined that no
          dividend will be paid in respect of the six months ended 30 June 2022 (six
          months ended 30 June 2021: Nil).




60   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

13 Earnings per share                                                              13
     (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


                                                                                                      2022                 2021

                                                                                                  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)                                                             1,464,553         1,202,212

            Weighted average number of ordinary shares
               for the purpose of basic earnings per share                                    1,737,847,159    1,732,513,670

            Earnings per share (RMB)                                                                   0.84                0.69




                                                                                                                2022              61
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     13 Earnings per share (Continued)                                                13
          (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


                                                                                                          2022                2021

                                                                                                     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                                                            1,464,553        1,202,212

                 Number of shares:
                 Weighted average number of ordinary shares
                   in issue during the year per share calculation                                1,737,847,159    1,734,299,882
                 Add: share options                                                                  5,211,068        5,584,023
                      restricted share incentive                                                             –         232,071

                 Weighted average number of ordinary shares
                   in issue and potential ordinary shares used
                   as the denominator in calculating diluted
                   earnings per share                                                            1,743,058,227    1,740,115,976

                 Diluted earnings per share (RMB)                                                         0.84                0.69




62   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

14 Property, plant and equipment                                                      14

                                                                                       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 2021 (audited)                                   1,669,727      4,004,390       53,961       865,312      1,029,764      7,623,154
       Additions                                                            6,531         91,876        1,935        31,261       350,965        482,568
       Transfer                                                            14,766         66,569        3,945      117,033       (202,313)              –
       Disposals                                                                –       (28,361)      (3,659)      (13,810)       (16,231)       (62,061)
       Disposal of a subsidiary                                           (36,657)     (124,459)         (927)        (1,748)        (4,125)    (167,916)
       Transfer in from investment
          properties                                                            –             –          –            –        29,429           29,429
       Currency exchange                                                      668        (28,929)         11       (40,098)         (2,909)        (71,257)

       At 30 June 2022 (unaudited)                                     1,655,035      3,981,086       55,266       957,950      1,184,580      7,833,917

       ACCUMULATED DEPRECIATION
          AND IMPAIRMENT
       At 31 December 2021 (audited)                                     441,255      1,741,042       27,717       572,104          (2,702)    2,779,416
       Provided for the period                                            23,038        192,030         3,183        56,082              –      274,333
       Impairment loss for the period                                          –           (483)        (447)            –        (1,910)         (2,840)
       Elimination on disposals                                                –        (27,602)      (2,702)      (12,779)             –       (43,083)
       Elimination on disposal of
          a subsidiary                                                    (11,406)       (40,204)       (534)            –             –         (52,144)
       Currency exchange                                                    (1,196)      (31,404)          3       (37,619)         1,390          (68,826)

       At 30 June 2022 (unaudited)                                       451,691      1,833,379       27,220       577,788          (3,222)    2,886,856

       CARRYING VALUES
       At 31 December 2021 (audited)                                   1,228,472      2,263,348       26,244       293,208      1,032,466      4,843,738

       At 30 June 2022 (unaudited)                                     1,203,344      2,147,707       28,046       380,162      1,187,802      4,947,061


     The Group was in process of obtaining the relevant property ownership
     certificates for buildings with a net book value of RMB51,309,000 as at 30                     51,309,000
     June 2022 (31 December 2021: RMB52,378,000). In the opinion of the                             52,378,000
     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 RMB217,024,000 as at 30 June 2022 (31                                     217,024,000
     December 2021: RMB195,578,000) to secure banking facilities granted to                             195,578,000
     the Group.




                                                                                                                                           2022               63
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     15 Intangible assets                                                             15

                                                                                                 Development                       Customer
                                                                    Trademark      Software             costs    Patent right    relationship          Total

                                                                      RMB’000     RMB’000          RMB’000       RMB’000        RMB’000       RMB’000


            COST
            At 31 December 2021                                        77,860       165,960          765,000        588,754          553,373      2,150,947
            Additions                                                       –         4,019           16,086               –              –        20,105
            Disposals                                                       –             (5)           (415)              –              –          (420)
            Disposal of a subsidiary                                        –              –              –       (55,590)       (145,920)      (201,510)
            Currency exchange                                               –        (4,441)         (21,721)         (9,630)         (8,431)       (44,223)

            At 30 June 2022                                            77,860       165,533          758,950        523,534          399,022      1,924,889

            AMORTISATION
            At 31 December 2021                                        68,875       144,160          112,200        293,249          232,829        851,313
            Charge for the period                                       3,709        11,155           31,685          33,097           22,418       102,064
            Disposals                                                       –             (5)              –              –               –            (5)
            Disposal of a subsidiary                                        –              –              –       (41,930)         (74,176)     (116,106)
            Currency exchange                                               –        (3,958)          (3,228)         (5,660)          (3,520)      (16,366)

            At 30 June 2022                                            72,584       151,352          140,657        278,756          177,551        820,900

            IMPAIRMENT
            At 31 December 2021                                             –           790         121,530             390                –      122,710
            Additions                                                       –              –        77,328                –              –       77,328
            Currency exchange                                               –            (23)         (4,363)            (11)              –        (4,397)

            At 30 June 2022                                                 –           767         194,495             379                –      195,641

            CARRYING VALUES
            At 31 December 2021 (audited)
                                                                        8,985        21,010          531,270        295,115          320,544      1,176,924

            At 30 June 2022 (unaudited)
                                                                        5,276        13,414          423,798        244,399          221,471        908,358


          Total research and development expenses incurred during six months
          ended 30 June 2022 was approximately RMB802,724,000 (30 June                                              802,724,000
          2021: RMB716,842,000), among which, RMB16,086,000 (30 June                                              716,842,000
          2021: RMB33,020,000) related to auto parts technology project have                                          16,086,000
          been capitalised as development costs. As at 30 June 2022, part of the                                  33,020,000
          related development projects was still in progress. During six months
          ended 30 June 2022, the Group assessed the BRM technology impairment
          considering the future market outlook of the technology, and made an                                                                        BRM
          impairment of about RMB77,328,000, which belong to the manufacture of                                                                   77,328,000
          auto parts segment.




64   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

16 Financial asset at fair value through profit or           16
   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
                                                                           2022                2021



                                                                      RMB’000            RMB’000

                                                                   (unaudited)               (audited)


       Non-current assets
       Unlisted equity securities                                      355,695               112,000
       Equity securities listed in Hong Kong                                 –               31,752

                                                                       355,695               143,752

       Current assets
       Notes receivable                                              3,452,043           4,111,050


     Financial assets at fair value through profit or loss


                                                                  As at 30 June   As at 31 December
                                                                           2022                2021



                                                                      RMB’000            RMB’000

                                                                   (unaudited)               (audited)


       Current assets
       Other financial assets (Note a)                       a       3,210,939           2,316,990
       Structured deposits                                             218,000             918,000
       Unlisted equity securities                                        1,296               1,296

                                                                     3,430,235           3,236,286




                                                                                      2022               65
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     16 Financial asset at fair value through profit or                                                 16
        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 2022 and 31 December 2021, the other financial assets were                   (a)
                  as following:


                                                                                                                         As at 30 June     As at 31 December
                                                                                                                                  2022                  2021



                                                                                                                             RMB’000              RMB’000

                                                                                                                          (unaudited)               (audited)



                        Assets management products (i)                                            (i)                       2,379,993             1,286,026
                        Principal guaranteed financial products                                                               520,000               580,000
                        Principal non-guaranteed floating financial products                                                  310,946               450,964

                                                                                                                            3,210,939             2,316,990


                  (i)       As at 30 June 2022, the Group held some assets management                              (i)
                            products amounting to RMB2,379,993,000. The assets management                                         2,379,993,000
                            products are the combination of different investment portfolios and are
                            managed by the securities companies entrusted by the Group. The fair
                            value of the assets management products are assessed based on the
                            fair value changes of underlying investment portfolios.




66   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

16 Financial asset at fair value through profit or                                  16
   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
                                                                                                  2022                2021



                                                                                             RMB’000            RMB’000

                                                                                          (unaudited)               (audited)


       Not designated as hedging instruments                                                    7,191                15,372


     Derivative financial liabilities

                                                                                         As at 30 June   As at 31 December
                                                                                                  2022                2021



                                                                                             RMB’000            RMB’000

                                                                                          (unaudited)               (audited)


       Not designated as hedging instruments                                                   49,146                32,998
       Designated as hedging instruments                                                       18,399                16,324

                                                                                               67,545                49,322




                                                                                                             2022               67
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     17 Deferred tax assets/liabilities                                              17
          The following is the analysis of the deferred tax balances for financial
          reporting purposes:


                                                                                          As at 30 June   As at 31 December
                                                                                                   2022                2021



                                                                                              RMB’000            RMB’000

                                                                                           (unaudited)             (audited)


            Deferred tax assets to be recovered
            – within 12 months                                     12                         218,404             210,262
            – after 12 months                                      12                         229,636             216,028

                                                                                               448,040             426,290

            Deferred tax liabilities to be settled
            – within 12 months                                     12                         (32,240)             (29,941)
            – after 12 months                                      12                        (207,155)           (259,372)

                                                                                              (239,395)           (289,313)

            Deferred tax assets, net                                                           208,645             136,977




68   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

17 Deferred tax assets/liabilities (Continued)                                                            17
     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 2021
           (audited)                             96,645          17,516      181,871        27,434       (34,734)           5         (16,296)     (141,738)       (40,080)     46,354        136,977
       Credit/(charge) to profit or loss         10,906            5,123      11,777         1,803       (15,181)         114             283        35,562          2,814       9,780         62,981
       Disposal of a subsidiary                   (2,776)         (2,307)      (3,496)           –         (334)           –          2,870        12,816          1,333           –         8,106
       Currency exchange                              47           (237)        (985)            –         (702)           (2)            –        2,444            513         (497)          581

       At 30 June 2022
           (unaudited)                          104,822          20,095      189,167        29,237       (50,951)         117        (13,143)       (90,916)       (35,420)     55,637        208,645



     The net balances of deferred tax assets and liabilities after offsetting are as
     follows:


                                                                                                                                                   At 30 June                 At 31 December
                                                                                                                                                         2022                           2021



                                                                                                                                                      RMB’000                            RMB’000

                                                                                                                                                  (unaudited)                             (audited)


       Deferred tax assets, net                                                                                                                         396,013                            383,830
       Deferred tax liabilities, net                                                                                                                   (187,368)                          (246,853)

                                                                                                                                                        208,645                           136,977




                                                                                                                                                                               2022                     69
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     17 Deferred tax assets/liabilities (Continued)                                17
          At the end of the reporting period, the Group had the following
          unrecognised unused tax losses:


                                                                                        At 30 June    At 31 December
                                                                                              2022              2021



                                                                                          RMB’000         RMB’000

                                                                                        (unaudited)         (audited)


            Unused tax losses                                                            4,148,718        4,174,920


          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
                                                                                              2022              2021



                                                                                          RMB’000         RMB’000

                                                                                        (unaudited)         (audited)


            31 December 2022                                                                     –           1,377
            31 December 2023                                                                     –               –
            31 December 2024                                                                     –               –
            31 December 2025                                                                 2,107            2,113
            31 December 2026                                                                 3,198            5,961
            31 December 2027                                                                12,117                –
            No expiry date                                                               4,131,296        4,165,469

                                                                                         4,148,718        4,174,920




70   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

18 Trade and other receivables                    18

                                                             At 30 June   At 31 December
                                                                   2022             2021



                                                              RMB’000         RMB’000

                                                            (unaudited)           (audited)


       Trade receivables                                     7,811,665        6,268,846
       Less: loss allowance                                   (621,243)        (545,649)

                                                             7,190,422        5,723,197

       Prepayments to suppliers                                964,650            727,630
       Financial asset receivable (note)                       500,000                   –
       Other tax recoverable                                   429,392            542,903
       Deposits                                                128,591            111,567
       Receivable from disposal of an associate                 65,526              81,908
       Staff advances                                           19,239              10,305
       Others                                                  398,258            215,255
       Less: loss allowance                                    (35,932)            (38,692)

                                                             2,469,724        1,650,876

       Total trade and other receivables                     9,660,146        7,374,073




                                                                           2022               71
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     18 Trade and other receivables (Continued)                                                18
          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
                                                                                                                 2022               2021



                                                                                                             RMB’000          RMB’000

                                                                                                           (unaudited)          (audited)


            Within 180 days                                              180                                5,584,887         4,356,449
            Over 180 days but within 1 year                                    180        1                   972,982           935,779
            Over 1 year but within 2 years                                     1      2                       579,938           378,746
            Over 2 years within 3 years                                        2      3                        52,615            52,223

                                                                                                            7,190,422         5,723,197


          Note: In February 2022, the Group purchased a financial asset receivable amounting
                to RMB500 million from a third party securities company. The estimated                             500
                annual yield rate is 4.5% and the financial asset receivable will be due in         4.5%
                December 2022.

          Movement of loss allowance on trade and other
          receivables

                                                                                                           Six months ended 30 June


                                                                                                                 2022                 2021

                                                                                                             RMB’000          RMB’000

                                                                                                           (unaudited)        (unaudited)


            Opening balance                                                                                   584,341           673,803
            Accrual during the period                                                                          93,155             30,908
            Write off                                                                                            (821)           (90,920)
            Disposal of a subsidiary                                                                          (18,505)                  –
            Currency exchange                                                                                    (995)             (1,199)

            Closing balance                                                                                   657,175           612,592




72   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

19 Cash and cash equivalents/bank deposits                                       19

                                                                                        At 30 June    At 31 December
                                                                                              2022              2021



                                                                                         RMB’000           RMB’000

                                                                                       (unaudited)              (audited)


       Cash and cash equivalents
       Cash                                                                                    161                  411
       Bank deposits with original maturity within
         three months or less                                                            2,725,927         3,195,263

       Cash and cash equivalents                                                         2,726,088         3,195,674

       Bank deposits
       Pledged bank deposits                                                               795,160           374,274
       Bank deposits with original maturity over three months                            2,468,926         2,249,706
       Restricted cash                                                                           –          320,122

                                                                                         3,264,086         2,944,102


     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 0.0001% to 2.75% per annum as at 30 June 2022 (31              0.0001% 2.75%
     December 2021: 0.001% to 2.25% per annum).                                           0.001% 2.25%




                                                                                                         2022               73
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     20 Trade and other payables                                               20

                                                                                            At 30 June    At 31 December
                                                                                                  2022              2021



                                                                                              RMB’000         RMB’000

                                                                                            (unaudited)         (audited)


            Notes payable (Note a)                                         a                 3,423,406        2,470,233
            Trade payable (Note a)                                             a             5,024,664        4,989,188

                                                                                             8,448,070        7,459,421

            Salary and bonus payables (Note b)                                     b           404,402        1,006,865
            Deposits (Note c)                                        c                          92,841           86,937
            Interest payable                                                                    19,263           21,688
            Dividends payable                                                                  142,493                –
            Other taxes payable                                                                616,864          511,726
            Restrictive shares payable (Note 24)                                   24          122,637          248,724
            Factoring payable (Note d)                                         d                33,032           29,735
            Accruals and other payables (Note e)                                        e      613,846          613,312

                                                                                            10,493,448        9,978,408




74   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

20 Trade and other payables (Continued)                                                     20
     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
                                                                                                                   2022                 2021



                                                                                                               RMB’000              RMB’000

                                                                                                            (unaudited)              (audited)



              Within 1 year                                          1                                        8,164,910           7,179,570
              Over 1 year                                                  1                                    283,160             279,851

                                                                                                              8,448,070           7,459,421


     (b)   Pursuant to the board resolution of “Distribution plan of 2019-2021 super            (b)
           profit incentive scheme of Zhengzhou Coal Mining Machinery Group Co.,
           Ltd” dated 28 March 2022, the Group paid 8% of the total long-term super
           profit incentive scheme amounting to RMB40,791,000 in cash directly to the                                                  8%
           relevant employees, and contributed the remaining 92% of the total long-                    40,791,000
           term super profit incentive scheme amounting to RMB469,102,000 into                         92%          469,102,000
           three trusts on behalf of relevant rewarded employees. The three trusts are
           operated independently under the instructions of the trust committees.

     (c)   Deposits represent the deposits received from suppliers for transportation and        (c)
           other services.

     (d)   In 2020, a subsidiary of the Group entered into an agreement to arrange               (d)
           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.

     (e)   Accruals and other payables mainly consist of payables for the acquisition of         (e)
           property, plant and equipment, rental payables, sales rebate and payables for
           other services.




                                                                                                                              2022               75
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     21 Borrowings                                                                 21

                                                                                                At 30 June     At 31 December
                                                                                                      2022               2021



                                                                                                  RMB’000          RMB’000

                                                                                                (unaudited)          (audited)


            Non-current:
              – Bank borrowings – secured (Note b, c)                                 b   c     1,499,798        1,650,018
              – Bank borrowings – unsecured                                                     4,151,373        3,258,769
              Less: current portion of non-current borrowings                                    (3,696,171)        (278,129)

                                                                                                 1,955,000         4,630,658

            Current:
              – Bank borrowings – secured (Note a, c)                                 a   c      740,363           572,177
              – Bank borrowings – unsecured                                                      453,562           317,646
              Add: current portion of non-current borrowings                                     3,696,171           278,129

                                                                                                 4,890,096         1,167,952

            Total borrowings                                                                     6,845,096         5,798,610

            Secured (Note: a, b, c)                                        a   b    c            2,240,161         2,222,195
            Unsecured                                                                            4,604,935         3,576,415

                                                                                                 6,845,096         5,798,610

            Fixed-rate borrowings                                                                  472,562           150,646
            Variable-rate borrowings                                                             6,372,534         5,647,964

                                                                                                 6,845,096         5,798,610




76   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

21 Borrowings (Continued)                                                                  21
     Notes:

     (a)   As at 30 June 2022, the balance of bank borrowings totalling RMB24,000,000           (a)
           (31 December 2021: RMB38,000,000) were secured by the pledge of the                               24,000,000
           land use rights and property, plant and equipment.                                                38,000,000



     (b)   As at 30 June 2022, the balance of bank borrowing amounting to                       (b)
           RMB133,160,000 (EUR19,000,000) (31 December 2021: RMB158,833,000                           133,160,000         19,000,000
           (EUR22,000,000)) was guaranteed by the Company.                                                                    158,833,000     22,000,000



     (c)   The balance of RMB2,083,001,000 as at 30 June 2022 (31 December 2021:                (c)                                                  2,083,001,000
           RMB2,025,362,000) mainly represented:
                                                                                                      2,025,362,000

           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)    EUR120,000,000 (equivalent to RMB841,008,000), with the effective                   (i)      120,000,000                               841,008,000
                  interest rate of Euribor+2.40% per annum, and is repayable from July                                                Euribor+2.40%
                  2019 to January 2023.

           (ii)   EUR104,015,000 (equivalent to RMB728,978,000), with the effective                   (ii)     104,015,000                               728,978,000
                  interest rate of Euribor+2.40% per annum is an annually revolving loan                                            Euribor+2.40%
                  and is repayable finally in January 2023.

           In 2020, SEG entered into an amendment to the above mentioned facilitate                                          SEG   91,500,000
           agreement to have an Incremental Facility in an amount of EUR91,500,000.
           As at 30 June 2022, the Group has drawn down the loan of EUR73,200,000                                                           73,200,000
           (equivalent to RMB513,015,000), with the effective interest rate of                                    513,015,000
           Euribor+2.40% per annum. It is an annually revolving loan and will be                      Euribor+2.40%
           repayable finally in October 2022.




                                                                                                                                                   2022                77
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     21 Borrowings (Continued)                                                                    21
          Notes: (Continued)

          (c)   (Continued)                                                                            (c)

                All of the above loans are guaranteed by the Company and SEG Automotive
                Products (China) Co., Ltd., together with the letter of credit issued by the                                                               New Neckar
                Company, the pledged shares of New Neckar Holdings and Operations GmbH                       Holdings and Operations GmbH & Co. KG
                & Co. KG and are secured, inter alia, by one or more of the following assets in                                                         SEG
                SEG group worth of EUR667 million (equivalent to RMB4,671 million):                                         667                            4,671



                (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
                      Automotive Mexico Manufacturing, S.A. de C.V., SEG Automotive Spain,                         Hungary 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.;

                (e)   Security agreement relating to bank accounts and insurance and intra-                  (e)
                      group receivables of SEG Automotive North America LLC.

                As at 30 June 2022, the secured assets in SEG group were as follows:                                                        SEG




                                                                                                                                                           RMB’000

                                                                                                                                                        (unaudited)



                  Cash and cash equivalents                                                                                                                  69,340
                  Trade and other receivables                                                                                                             1,308,778
                  Property, plant and equipment                                                                                                             160,248
                  Investment in subsidiaries                                                                                                              1,546,547
                  Others                                                                                                                                  1,586,299

                                                                                                                                                          4,671,212




78   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

21 Borrowings (Continued)                                                               21
     Notes: (Continued)

     Breakdown of borrowings by maturity profiles:


                                                                                             At 30 June     At 31 December
                                                                                                   2022               2021



                                                                                               RMB’000            RMB’000

                                                                                             (unaudited)           (audited)



       Carrying amount repayable:
       Within one year                                                                        4,890,096         1,167,952
       More than one year, but not exceeding two years                                          625,000         3,750,658
       More than two years, but not exceeding five years                                      1,330,000           880,000

                                                                                               6,845,096         5,798,610
       Less: Amounts shown under current liabilities                                          (4,890,096)       (1,167,952)

       Amounts shown under non-current liabilities                                            1,955,000         4,630,658


     The carrying amounts of the Group’s borrowings are denominated in the following
     currencies:


                                                                                             At 30 June     At 31 December
                                                                                                   2022               2021



                                                                                               RMB’000            RMB’000

                                                                                             (unaudited)           (audited)



       RMB                                                                                    4,566,062         3,549,646
       EUR                                                                                    2,279,034         2,248,964

                                                                                              6,845,096         5,798,610




                                                                                                            2022               79
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     21 Borrowings (Continued)                                                                       21
          Notes: (Continued)

          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
                                                                                                                                   2022                  2021


                                                                                                                               RMB’000             RMB’000

                                                                                                                            (unaudited)              (audited)


            Effective interest rate per annum
               Fixed-rate borrowings                                                                                       1.15%~3.95%         1.00%~3.95%
               Variable-rate borrowings                                                                                    1.48%~3.70%         0.80%~3.80%


     22 Provisions                                                                                   22

                                                                                                              Onerous        Restructuring
                                                                                                Warranty      contract           provision              Total

                                                                                                RMB’000      RMB’000           RMB’000           RMB’000


            At 1 January 2022 (audited)
                                                                                                 222,012      198,799             328,690            749,501
            Additional provision
               in the period                                                                     119,846       65,893                     –         185,739
            Reversal/utilisation of
               provision                                                                        (114,484)      (93,837)            (37,045)         (245,366)
            Disposal of a subsidiary                                                              (13,000)            –                  –          (13,000)
            Currency exchange                                                                       (2,165)      (3,448)             (9,124)          (14,737)

            At 30 June 2022 (unaudited)
                                                                                                 212,209      167,407             282,521            662,137

            Current portion                                                                      212,209      122,037             282,521            616,767
            Non-current portion                                                                        –      45,370                   –            45,370

                                                                                                 212,209      167,407             282,521            662,137




80   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

22 Provisions (Continued)                                                               22
     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 of                                    SEG
     SEG group and restructuring plant plan from the former group and the                                                                     SEG
     restructuring plan relating to SEG group in 2020 and 2021.

23 Share capital                                                                        23

                                                                      Listed A Shares               Listed H Shares                   Total
                                                                                A                            H
                                                                  Number of                     Number of                    Number of
                                                                     share           Amount        share           Amount       share           Amount

                                                                        ’000        RMB’000        ’000        RMB’000        ’000         RMB’000


       At 31 December 2021 (audited)
                                                                   1,536,259        1,536,259     243,234          243,234   1,779,493         1,779,493
       At 30 June 2022 (unaudited)
                                                                   1,536,259        1,536,259     243,234          243,234   1,779,493         1,779,493




                                                                                                                                      2022                 81
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     24 Restricted share incentive scheme                                                 24
          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 20).                                                                            20

          During six months ended 30 June 2022, the Group provided
          RMB50,326,000 as expenses.                                                               50,326,000

          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.




82   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

24 Restricted share incentive scheme (Continued)                                     24
     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 1 January 2022                                                                                                42,300,000
       Forfeited during the six months                                                                                                 (848,000)
       Unlocked during the six months                                                                                               (16,804,000)

       Balance 30 June 2022                                                                                                          24,648,000




                                                                                                                                   2022            83
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     25 Disposal of a subsidiary                                                       25
          In March 2022, the Group signed an equity transfer agreement to sell all
          of its 50.97% shares of Hubei Super Electric Auto Motor Co., Ltd. (“Super        50.97%
          Electric”) to a third party, Hubei Jingchuan Intelligent Equipment Co.,
          Ltd. with total consideration of RMB331,328,000, among which, cash                                331,328,000
          consideration was RMB310,673,000. The cash consideration has been                   310,673,000
          fully received, and the transaction was completed in March 2022. After the
          transaction, Super Electric ceased to be a subsidiary of the Group.

          Details of the sale of the subsidiary

            Consideration received or receivable:
            Cash                                                                                                          310,673
            Non-cash consideration                                                                                         20,655

            Total disposal consideration                                                                               331,328
            Carrying amount of net assets sold                                                                        (158,960)

            Gain on sale before income tax and reclassification of
              foreign currency translation reserve                                                                        172,368
            Reclassification of foreign currency translation reserve                                                       23,126

            Gain on sale before income tax                                                                                195,494
            Income tax expense on gain                                                                                     (20,655)

            Gain on sale after income tax                                                                                 174,839


          The carrying amounts of assets and liabilities of Super Electric as at the
          date of disposal were:

            Total assets                                                                                               760,226
            Total liabilities                                                                                         (448,597)

            Net assets of Super Electric                                                                                  311,629




84   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

26 Related party transactions                                                    26
     During the six months ended 30 June 2022, 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.

     (a) The Group and its investors                                                  (a)
           The transactions details are as follow:


                                                                                            Six months ended 30 June

                                                                                                  2022                 2021

                                                                                              RMB’000          RMB’000

                                                                                            (unaudited)        (unaudited)


            Sales of services                                                                    1,460                  947



                                                                                            Six months ended 30 June

                                                                                                  2022                 2021

                                                                                              RMB’000          RMB’000

                                                                                            (unaudited)        (unaudited)


            Purchase of goods and services                                                   1,221,142                   –




                                                                                                            2022              85
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     26 Related party transactions (Continued)                                          26
          (a) The Group and its investors (Continued)                                        (a)
                The details of outstanding balances with investors are set as follow:


                                                                                                   At 30 June    At 31 December
                                                                                                         2022              2021



                                                                                                     RMB’000         RMB’000

                                                                                                   (unaudited)         (audited)


                 Amount due to investors                                                               23,622                 –



                                                                                                   At 30 June    At 31 December
                                                                                                         2022              2021



                                                                                                     RMB’000         RMB’000

                                                                                                   (unaudited)         (audited)


                 Amount due from investors                                                            131,628            2,740


                The amount due to investors was unsecured, interest-free and
                repayable on demand.

          (b) The Group and other PRC government related                                     (b)
              entities
                The Group ceased to be controlled by Henan SASAC since 26
                February 2021, and other PRC government related entities were not
                considered as related parties since then.




86   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

26 Related party transactions (Continued)                                             26
     (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

                                                                                                       2022                 2021

                                                                                                   RMB’000          RMB’000

                                                                                                 (unaudited)        (unaudited)


            Sales of goods and services
            Associates                                                                               51,085              17,763
            Joint ventures                                                                            2,778               1,508

                                                                                                     53,863              19,271



                                                                                                 Six months ended 30 June

                                                                                                       2022                 2021

                                                                                                   RMB’000          RMB’000

                                                                                                 (unaudited)        (unaudited)


            Purchase of goods and services
            Associates                                                                              115,304             116,558
            Joint ventures                                                                            9,368               7,243

                                                                                                    124,672             123,801




                                                                                                                 2022              87
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     26 Related party transactions (Continued)                                         26
          (c) The Group and its associates and joint ventures                               (c)
                (Continued)

                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
                                                                                                        2022              2021



                                                                                                    RMB’000         RMB’000

                                                                                                  (unaudited)         (audited)


                 Amounts due from:
                   Associates                                                                          4,163           34,668
                   Joint ventures                                                                     71,598           72,962

                                                                                                      75,761          107,630



                                                                                                  At 30 June    At 31 December
                                                                                                        2022              2021



                                                                                                    RMB’000         RMB’000

                                                                                                  (unaudited)         (audited)


                 Amounts due to:
                   Associates                                                                        141,546          143,865
                   Joint ventures                                                                      1,599            6,141

                                                                                                     143,145          150,006


                All amounts due from or due to associates and joint ventures are
                from trade sales and purchases.




88   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

26 Related party transactions (Continued)                                     26
     (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

                                                                                               2022                 2021

                                                                                           RMB’000          RMB’000

                                                                                         (unaudited)        (unaudited)


            Short-term benefits                                                              10,659              7,886
            Post-employment benefits                                                              –                 –
            Share options                                                                     1,799                854
            Restricted share incentive scheme                                                14,812              2,496

                                                                                             27,270             11,236


           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.




                                                                                                         2022              89
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     27 Contingent liabilities                                                            27
          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
                                                                                                                          2022              2021


                                                                                                                      RMB’000         RMB’000

                                                                                                                    (unaudited)         (audited)


            Outstanding endorsed notes receivable with recourse
                                                                                                                     3,818,212        2,133,197


          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 honor their notes and guarantees,          3,818,212,000
          amounted to RMB3,818,212,000 as at 30 June 2022 (31 December                              2,133,197,000
          2021: RMB2,133,197,000).




90   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022
Notes to the Interim Condensed Consolidated Financial Information


For the six months ended 30 June 2022

28 Capital risk management                                                               28
     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 2022 and 31 December 2021 were as
     follows:


                                                                                              As at 30 June   As at 31 December
                                                                                                       2022                2021



                                                                                               (unaudited)               (audited)


       Gearing ratio                                                                                 125%                  118%




                                                                                                                  2022               91
     Notes to the Interim Condensed Consolidated Financial Information


     For the six months ended 30 June 2022

     29 Capital commitments                                                             29

                                                                                                     As at 30 June     As at 31 December
                                                                                                              2022                  2021


                                                                                                            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                                                                          864,502             857,979


     30 Events after the reporting period                                               30
          Pursuant to the Company’s board resolution dated 19 July 2022, the
          Company plans to jointly acquire a total of 43.33% of shareholdings of
          Luoyang LYC Bearing Co., Ltd with several related parties. The Company             LYC               43.33%
          plans to invest Luoyang LYC Bearing Co., Ltd through a limited partnership.                                LYC
          The Group paid RMB389 million to acquire 16.67% shareholdings of                                        389                 LYC
          Luoyang LYC Bearing Co., Ltd. And the transaction was completed on 25                    16.67%
          August 2022.




92   Zhengzhou Coal Mining Machinery Group Co., Ltd. INTERIM REPORT 2022