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
