Zhengzhou Coal Mining Machinery Group Company Limited
鄭州煤礦機械集團股份有限公司
Annual Report 2022 年報
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 4
Management Discussion and Analysis 23
Directors, Supervisors and Senior Management 36
Corporate Governance Report 51
Report of the Board of Directors 77
Report of the Board of Supervisors for 2022 2022 98
Independent Auditor’s Report 108
Consolidated Statement of Profit or Loss and 117
Other Comprehensive Income
Consolidated Statement of Financial Position 119
Consolidated Statement of Changes in Equity 122
Consolidated Statement of Cash Flows 125
Notes to the Consolidated Financial Statements 128
Five Year Financial Highlights 276
2 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
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 (resignation effective from 18 January 2023) 2023 1 18
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
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, 200002 61 4 200002
Principal Place of Business in Hong Kong
40/F, Dah Sing Financial Centre, 248 Queen’s Road East,
Wanchai, Hong Kong 248 40
2022 3
Corporate Information
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, 17 1712–1716
Wanchai, Hong Kong
A Share Registrar A
Shanghai Branch, China Securities Depository and Clearing Corporation Limited
No. 188 Yanggao South Road, Pudong New District, Shanghai 188
Stock Codes
H Share: 00564 (The Stock Exchange of Hong Kong Limited) H 00564
A Share: 601717 (Shanghai Stock Exchange) A 601717
Principal Banks
Industrial and Commercial Bank of China Limited
Jianshe Road Branch, Zhengzhou
No. 11 West Jianshe Road, Zhongyuan District,
Zhengzhou, Henan Province, PRC 11
China Construction Bank Zhengzhou Jinshui Branch
No. 29 Jinshui Road, Jinshui District, Zhengzhou, Henan Province, PRC 29
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. Annual Report 2022
Chairman’s Statement
Dear Shareholders,
I am pleased, on behalf of the board of directors (the
“Board”) of Zhengzhou Coal Mining Machinery Group
Company Limited, to present the annual report of
the Group for the period from 1 January 2022 to 31
December 2022 (the “2022 Annual Report”).
Jiao Chengyao
Chairman
2022 5
Chairman’s Statement
Dear Shareholders,
During the year ended 31 December 2022 (the “Review Period”), the Company adhered 2022 12 31
to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a
New Era, and earnestly implemented the important instructions of General Secretary Xi
Jinping on his site inspection of ZMJ. Facing the severe and complex external situation,
the Company strengthened the top-level planning, maintained development determination,
clarified strategic objectives, deepened reform and innovation, accelerated digital
transformation, and achieved stable growth in operating results, laying a solid foundation
for building a new pattern of high-quality development. In 2022, the Group’s revenue was 2022
RMB32,043.31 million, representing a year-on-year increase of 9.39%; profit for the year 32,043.31
attributable to shareholders of the Company was RMB2,538.24 million, representing a 9.39%
year-on-year increase of 30.31%. 2,538.24 30.31%
6 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Chairman’s Statement
I. 2022 Business Review . 2022
(I) Deepened the reform and innovation and set ( )
up aggressive goals to drive innovation and
development
1. Defined new strategies and adhere to the development 1.
driven by aggressive goals
Under the background of “dual-carbon” development with the
notion of “Looking Forward, Emancipation of Mind”, we have
clearly defined the strategic goals and transformation paths of 5–10
ZMJ Group and its various business segments for the next 5-10
years, and have formulated the implement initiatives for entering 5
the new energy field, building a market-oriented mechanism 500
and driving development by aggressive goals. The Company
has firmly adhered to the strategic goal of “50 billion in 5
years”, and driven the Company to take the path of high-quality
development with a brand-new spirit and vibrant enterprise
vitality.
2. Established the business partner mechanism and 2.
completed the mixed ownership reform of subsidiaries
The Company has formulated the Regulations Governing the
Investment of Business Partners, established and improved
the business partner mechanism of risk bearing and gains
sharing, and formulated a team of business partners who
have consensus of concepts, create the common values, bear
risks and share gains with the shareholders and the Company,
so as to form a common destiny, effectively address future
risks and challenges and promote the sustainable and healthy
development of the Company.
Zhengzhou Coal Mining Machinery Hydraulic Electrical
Control Co., Ltd. (hereinafter referred to as “Electric Control
Company”), a wholly-owned subsidiary of the Company,
implemented the business partner share ownership scheme by
way of capital increase and share expansion, and introduced
strategic investors to hold shares, so as to enhance the capital
strength of Electric Control Company, improve the incentive
and restraint mechanism, stimulate endogenous power, and
facilitate the implementation of intelligent strategy.
2022 7
Chairman’s Statement
3. Participated in the mixed ownership reform of Luoyang 3.
Bearing and actively undertook overall planning on
emerging industries of strategic importance
By establishing a partnership enterprise, the Company took
the lead in forming a transfer transferee entity to participate in LYC
the mixed ownership reform of Luoyang LYC Bearing Co., Ltd., 15%
and currently holds 15% of its equity interests. Participation in
the mixed ownership reform of Luoyang LYC Bearing Co., Ltd.
is conducive to the Company’s transformation and exploration
into strategic emerging industries, broadening the industrial
layout, enhancing the Company’s ability to resist risks, and
also contributing to the development of Henan’s manufacturing
industry.
4. Accelerated digital transformation and reconstructed 4.
corporate core values
Digital transformation is a must for manufacturing enterprises
to change lanes and lead the way. On the basis of business
digitalization, the Company coordinated and promoted the timely
and effective flow of data such as products, production, supply
chain and customers, and realised the deep integration of
information technology with business processes and operation
management models, so as to drive the transformation of the
entire business process with digitalization.
The intelligent industrial park of ZMJ was officially put into
operation, integrating digitalization into the whole process
from product design to service, building a leading intelligent
laser cutting production line, intelligent welding production
line, intelligent warehousing, logistics transfer system and
highly intelligent manufacturing execution system in the coal
mining machinery industry, and further accelerating the pace of
transformation from a manufacturing enterprise to a technology
service enterprise.
8 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Chairman’s Statement
(II) Reform and transformation of each business ( )
segment to achieve high-quality development
1. The coal mining machinery segment seized market 1.
opportunities externally and achieved record high in
major operating indicators
During the Review Period, the Company’s coal mining machinery
segment adhered to the operating policy of “innovation-
driven, intelligent-led, reform to increase efficiency, complete-
set and high-end”, implemented the “four-transformation”
development strategy supported by digitalization, seized
market opportunities externally, and strengthened process
capacity building internally. Major indicators such as market, 50
production, operation management, among others, have hit a 50
record high, and our leading position in the industry was further
consolidated. The Company won a number of honours such as
the Top 50 Chinese Coal Enterprises, the Top 50 Chinese Coal
Machinery Industry, and the commendation award of the 7th
China Industrial Award.
The complete-set effect has gradually emerged. Focusing
on the domestic and overseas markets, the Company continued
to build a complete set of benchmark projects, and the
complete-set projects such as Pingmei No. 2 Mine, Yunnan
Xiongda and Turkey Ozsen preliminarily formed the benchmark
demonstration effect; we have developed a pre-sales, in-sales
and after-sales digitalisation system and an industrial internet
digitalisation service system for the complete-set projects, so as
to transform from a physical set of hardware to an “organic” set
under software system integration, and to establish a leading
edge in complete sets.
Intelligent promotion is becoming more practical and
deeper. We planned the “6S” architecture system for intelligent 6S
product development, took multiple measures to develop new
products and expand business lines, including self-research ZMOS
and cooperative development. Based on the ZMOS intelligent
mining operating system, the Company deeply integrated the
software and hardware of mining, support, transportation and
liquid subsystems; deepened the application and scenario
development of advanced technologies such as video
monitoring of the comprehensive mining face, machine vision
and digital twin system of the whole mining face; the intelligent
control system opened up the market for high-end customers of
national energy, and blossomed in the markets of Shaanxi Coal,
Ningxia Coal and Datong Coal Mine, and our intelligent business
maintained a leading market share in China.
2022 9
Chairman’s Statement
The international market has achieved remarkable
results, and the high-end market has been gaining
popularity. The Group successfully entered into the high- 10
end markets of Signal Peak Energy and Peabody Energy of the
United States, with the total bidding and direct order amount
exceeding RMB1 billion therein, and the bidding amount hit
a record high. As the “general contractor of hydraulic roof
support and control system”, the Company won the bid for the
Australian customer project for the first time, and completed
product testing and batch manufacturing with high quality.
The Company won the bid for the Qinfa Project in Indonesia,
the self-developed large-set project of Boshida and Baxter
in Turkey, and completed the installation and commissioning
of Kinetic Coal in Russia, which further enhanced the market
awareness and competitiveness of ZMJ in international market.
Taking multiple measures to increase production
capacity vertically. With a market-oriented approach and
focusing on the overall requirements of production capacity and
quality improvement, the Company optimised and upgraded
the internal production organisation mode, opened up high-
quality supporting resources externally, and realised the
digitization and online operation of supplier management T0C
business. While improving the hard production capacity, we will
continue to strengthen the construction of soft capacity, learn
advanced production management ideas, methods and tools
such as lean management, Six Sigma management and T0C
bottleneck theoretical management, and continuously improve
quality, reduce cost and improve efficiency. The Company
continued to strengthen the integrated management and control
model of complete set products through internal and external
collaboration, and achieved on-time delivery of complete set
projects, creating favourable conditions for meeting customer
needs and facilitating market development.
10 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Chairman’s Statement
2. ASIMCO’s New Energy and international business 2.
reached a new level and accelerated business
transformation
During the Review Period, ASIMCO accelerated its business
transformation and upgrading. On the one hand, it consolidated
its leading position in the existing market segments, reached
ultimate perfection for its traditional business, broadened its
customer base, deepened its products, expanded exports, and
developed multiple new customers and products to solidify its
foundation for development. On the other hand, in the face of
the fast-changing automobile industry landscape, it focused on
electrification, intelligence and light weight, further clarified the
overall development strategy of transformation and upgrading,
rapidly expanded its new energy parts business, quickly entered
the high-end market of systems and assemblies, 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 Review Period, under the situation of decline in the
domestic commercial automobile sales, especially where the
sales volume of medium and heavy-duty trucks declined by a
half or so, the export business of ASIMCO Shuanghuan and 5.9 34%
Shanxi Company increased significantly, achieving an export 2022
business revenue of RMB590 million, representing a year-on- NVH
year increase of 34%; ASIMCO seized the rising trend of the
domestic passenger vehicle industry in 2022, strengthened the
management of NVH business and rapidly promoted the growth
of passenger vehicle business. ASIMCO Anhui made every effort
to develop the new energy automobile parts market, and its
shock-absorbing seals (mounting, sealing, chassis products, 1.9 130%
etc.) have newly obtained fixed-point new energy business from
Chang’an, Dongfeng, Xiaopeng, Leapmotor, BYD, and Jinkang
Wenjie. It has basically covered domestic mainstream new
energy vehicle brands. ASIMCO’s revenue from new energy
business was approximately RMB190 million, representing a
year-on-year increase of approximately 130%.
2022 11
Chairman’s Statement
The new energy business has broken ice, clarified the direction
of new energy product development, and completed the
establishment and operation of the new energy team; the digital
and intelligent transformation achieved remarkable results. With
the construction of a new intelligent demonstration factory as
the starting point, we rapidly promoted the digital upgrading
of enterprises. ASIMCO Shuanghuan was selected as a smart
manufacturing demonstration factory in Jiangsu Province,
ASIMCO Camshaft was selected as an Internet benchmarking
factory in Jiangsu Province, and ASIMCO Shanxi was awarded
as a smart manufacturing pilot demonstration enterprise in
Shanxi Province, which effectively improved the enterprise’s
technical strength, production efficiency, product quality and
cost competitiveness, realised the intelligence, digitalization and
automation of the manufacturing process, and enhanced the
core competitiveness of enterprise.
3. The project of SEG high-voltage electric motors achieved 3.
a breakthrough and accelerated the transformation to an
integrated electromechanical system supplier
SEG adjusted its management team, continued to optimise its
global structure and layout, continuously increased its market
share, reduced costs and improved efficiency in the European 48V BRM
market, vigorously promoted 48V BRM products, and achieved
rapid development in emerging markets such as India and 12V 48V BRM
South America. While consolidating the business advantages
of 12V power generators and 48V BRM, SEG clarified the
development strategy of comprehensive transformation to high-
voltage electrification. With the vision of “smart drive future
– make travel better for tomorrow”, SEG gave full play to its
deep development capabilities in motor hardware, software
and system integration, excellent production processes and
lean production capabilities, and simultaneously developed a ASPICE
high-voltage drive motor platform around the world, which can
provide a complete set of high-voltage drive solutions according
to customer needs. SEG was awarded the Level 2 certification
of the European Electric Driving Project ASPICE, which is the
Automotive Software Process Improvement and Capability
determination.
During the Review Period, we invested in the establishment of
SEG Automotive Electric Systems Co., Ltd., focusing on local
customers, strengthening global research and development
collaboration, and providing the market with high-voltage drive
solutions with technical advantages and cost competitiveness.
The Company has obtained a purchase order for the high-
voltage flat-wire motor stator rotor mass production project
from a leading new energy smart vehicle solution provider. The
Company has entered the supply chain of electric drive system
for new energy vehicles from a high starting point, completed
the installation of the first high-voltage electric drive production
line, and at the same time, a number of high-voltage electric
drive motor projects for domestic and foreign customers are
under negotiation.
12 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Chairman’s Statement
4. The integration of “Entrepreneurship and Innovation” in 4.
Zhima Street continued to promote investment attraction
and image improvement
Zhima Street continued to promote the operation of the “Zhima
Street 1958 Innovation and Entrepreneurship Park” with the 1958
transformation and upgrading of the Company’s old plant
area as the main content. As the sub-venue of the “National
Mass Entrepreneurship and Innovation” Week for the second
consecutive year, it undertook a number of activities, which
were widely reported by the central, provincial and municipal
governments and major media, and its popularity and influence
were further enhanced, which was fully recognised by the
national ministries and commissions and provincial and
municipal leaders.
5. The Company’s joint stock company was listed on 5.
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, obtained the China Securities Regulatory Commission’s
reply approving the registration after its application for listing 2022 8 1
on the ChiNext Board, and was officially listed on the ChiNext 6%
Board on 1 August 2022. After the listing of Bestway Intelligent
Control, the Company holds approximately 6% of its shares. The
investment brought industrial synergy and capital appreciation
to the Company, which was a successful trial of the Company’s
capital-empowered industry chain.
2022 13
Chairman’s Statement
II. Industry landscape and trends .
(I) Coal mining machinery industry ( )
According to the Guiding Opinions on the High-quality Development
of the Coal Industry in the 14th Five-Year Plan issued by the China
National Coal Association, by the end of the 14th Five-Year Plan 41
period, the domestic coal output will be controlled at approximately 42
4.1 billion tonnes, the national coal consumption will be controlled 1% 4,000
at approximately 4.2 billion tonnes, and the average annual 1,000
consumption will increase by approximately 1%. The number of coal 90%
mines in China is controlled at around 4000, with more than 1000
intelligent mining faces built, and the degree of mechanisation of coal
mining shall be around 90%.
The Central Economic Work Conference pointed out that
“strengthening domestic exploration and development of important
energy and mineral resources, increasing reserves and production,
accelerating the planning and construction of a new energy system,
and improving the ability to safeguard national strategic material
reserve.” The government work report pointed out that “promoting
clean and efficient use of energy and technology research and
development, accelerating the construction of a new energy system,
and increasing the proportion of renewable energy.” As one of the
main energy sources in China, the clean, efficient and low-carbon 2016-
utilisation of coal will be promoted, the green transformation of the 2030
coal industry and the optimisation of the combination of coal and new
energy will be realised. In recent years, China has successively issued
policies such as the “Catalogue of Key Research and Development
of Coal Mine Robot”, the “National Energy Technology Innovation
Action Plan (2016-2030)”, the “Guiding Opinions on Accelerating
the Intelligent Development of Coal Mines” and the “Guidelines for
the Intelligent Construction of Coal Mines”, which, together with
the introduction of supporting policies by major coal-producing
regions, are conducive to promoting safe and efficient intelligent
mining and clean and efficient intensive utilisation of coal, and have
a clear direction for the construction of intelligent coal mines. At the
same time, the intensified and leading effect of the coal industry
has become more obvious, the supply and demand relationship
in the market was further improved, the concentration of the coal
mining machinery industry continued to increase, the competition
was increasingly crowded, and the pace of internationalisation,
informatization, digitization and intelligent transformation was
accelerated. ZMJ will seize the opportunities arising from the rapid
development of intelligent coal mine construction, provide customers
with high reliability, intelligence, green and complete sets of
equipment, and contribute to the protection of customer needs and
national energy security.
14 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Chairman’s Statement
(II) Automobile industry ( )
In recent years, with the full implementation of the China VI emission
standards and the tightening of fuel consumption limits on an annual
basis, the traditional automobile market structure and product
structure will be accelerated and adjusted. The continuous reduction
of financial subsidy policies and the implementation of the trading
mechanism of carbon credits and new energy credits will accelerate 2021-2035
the transformation of the development of new energy vehicle industry 2025 20%
to market-driven. According to the Development Plan of New Energy
Automobile Industry (2021-2035), the sales volume of new energy
vehicles will account for approximately 20% of the total sales volume
by 2025, which will further promote the high-quality development of 2.0
the new energy automobile industry. The electrification, networking, 2025
intelligence and sharing will become the development trend and 50%
trendy practice of the automobile industry. The “Energy-saving and
New Energy Vehicle Technology Roadmap 2.0” issued by the Society
of Automotive Engineers of China proposed that hybrid electric
vehicles shall account for more than 50% of traditional energy
passenger vehicles by 2025. Full electrification will drive a high
degree of integration between the industry chains of energy-saving
and new energy vehicles.
In 2023, China will continue to adhere to the general tone of 2023
making progress while maintaining stability, vigorously boost
market confidence, combine the implementation of the strategy
of expanding domestic demand with the deepening of supply-side
structural reform, highlight the work of stabilising growth, stabilising
employment and stabilising prices, effectively prevent and resolve
major risks, and promote the overall improvement of economic
operation. China will strive to expand domestic demand, prioritise
the recovery and expansion of consumption, increase income of
urban and rural residents through multiple channels, and stabilise
bulk consumption such as automobiles. The further recovery of the
economy, the increase and gradual recovery of consumer confidence,
and the driving force of infrastructure investment are expected to
jointly promote the development of China’s passenger vehicle and
commercial vehicle industries to make steady progress.
With the further advancement of global carbon neutrality, the market
share of fuel-powered vehicles will be further shrinked, the market
share of new energy vehicles will continue to increase, and the
number of new vehicle models developed by traditional automobile
enterprises will decrease. The high-end vehicle market and new
energy vehicle market have greater growth potential, and the leading
effect of the automobile industry will become more obvious. On the
other hand, the automobile market still faces great challenges: the
market competition is becoming increasingly fierce, and the price
of orders has stabilised after hitting the bottom; at the same time,
customers have higher requirements for product production cycle,
technical performance, comfort and quality.
2022 15
Chairman’s Statement
As the upstream industry of the automobile industry, the automobile
parts and components industry are the foundation for the
development of the automobile industry. The automobile industry is
in the window period of new energy transformation, we are facing not
only the opportunities of industry reform, but also the challenges of
sustainable development. The Company will continue to explore the
passenger vehicle market, steadily expand the commercial vehicle
market, vigorously explore the new energy market, actively provide
customers with high-quality products and services, and enhance
market competitiveness in various fields.
III. Future Development Outlook .
(I) Development strategy of the Company ( )
The 20 major reports of the Party pointed out that the focus of
economic development should be placed on the real economy,
promoting new industrialization, and accelerating the construction
of a country with manufacturing and quality power. The Company
will adhere to the development concept of “technology changes the
world, intelligence leads the future” and the vision of “becoming a
high-end intelligent equipment industry group with global influence”, 5 500
continue to strengthen innovation-driven development, accelerate
digital transformation, develop high-end manufacturing and intelligent
manufacturing, and strive to achieve the development goal of “50
billion in 5 years”, and build a high – end intelligent equipment
industry group with international influence.
1. Deeply developing the coal mining machinery segment 1.
based on the current long-term plan
As the main energy source in China, coal will remain
indispensable and important in the energy supply system
for a long time in the future. In the next five years, the coal 5
mining machinery industry will experience rapid development
represented by intelligence and internationalisation. In the 5-10
next five to ten years, the coal mining machinery industry will 10-15
experience rapid development represented by complete sets
of equipment. In the next 10 to 15 years, the coal mining
machinery sector will continue to lead the development of
the coal mining machinery equipment manufacturing industry
by adhering to the principle of “intelligent driving product
development and digital driving business transformation
throughout the whole process”. With the development direction
of whole-set, intelligent, international and socialised, the
Company will increase investment in research and development
to meet customers’ increasing needs for “service experience”
instead of focusing on “equipment itself”, promote the
development of coal mining towards green, intelligent, efficient
and safe development, and build the Company into a supplier
of complete sets of comprehensive mining equipment, a service
provider of full life cycle and a digital operator.
16 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Chairman’s Statement
2. Accelerating the transformation of the auto parts 2.
segment riding on the switch to modern electric
alternatives
With the global wave of electrification of automobiles, the
transformation of the Company’s auto parts segment is
imperative. In terms of ASIMCO, first, we will continue
to maintain the continuous growth of core advantageous
businesses and the continuous increase of market share, further
promote intelligent manufacturing, expand customer base,
broaden product lines, and expand exports, so as to maximise
traditional products. On the other hand, we will accelerate the
transformation of new energy, continue to develop the shock
absorption and noise reduction parts business of new energy
vehicles, rapidly expand the new energy business field, promote
the transformation of ASIMCO from parts to components
and even system integration, and transform from domestic
business to international business. In terms of SEG, we will
focus on profitability and growth, rapidly transform the new
energy business, accelerate the promotion of the new energy
drive motor business, focus on the research, development and
manufacturing of electric control systems for new energy vehicle
motors, base in China, develop in China, and radiate globally,
so as to build a world-class automotive electrification system
solution provider.
3. Focusing on emerging areas and striving to develop new 3.
businesses
We will seize the new industrial opportunities under the
background of “dual carbon” and focus on the existing
segments while unswervingly entering into new fields and
developing new businesses. Adhering to “leaving the industry
without leaving the profession” and paying more attention to
business opportunities in the new energy, high-tech equipment
and intelligent equipment industries.
4. Promoting high-quality development with the help of 4.
capital
The Group will actively study the capital market policies,
cultivate the relevant businesses of the Group to enter the
capital market independently, make full use of the flexibility,
inclusiveness and liquidity of the capital market, increase the
excess income for the Group, expand the scale of the Group
and increase the investment value.
2022 17
Chairman’s Statement
5. Accelerating digital transformation and enhancing new 5.
momentum for development
Digital transformation is the main theme of the Company in the 5-10
next five to ten years. The key is to replace manual labour with
machinery and digital technology, improve per capita labour
efficiency, and help save energy and reduce emissions. The
Company will promote the digital upgrade at all levels of the
Company, promote the interconnection and collaborative sharing
of multiple segments and businesses, build a digital enterprise,
and empower the high-quality development of enterprises with
digitalization and intelligence.
(II) Business Plan for 2023 ( ) 2023
1. Continue to deepen reform and transformation and 1.
consolidate the foundation for high-quality development
(1) Continuing to promote digital transformation and (1)
enhancing new momentum for development
Complete the top-level design of the Group’s digital
management, explore the form of management cockpit,
and assist in management decision-making; Promote
the digital construction of key business processes such
as research, production, sales and operation, and open
up the connexion channels of various business systems;
We will explore the application model of digital products,
continuously promote customer experience improvement,
business efficiency improvement, and business and
operation model innovation, and empower the high-
quality development of enterprises with digitalization and
intelligence.
(2) Starting a second venture and carrying forward the spirit of (2)
hard work
In the face of the complex global economic environment,
the Company will start the “second venture” with a “return
to zero” attitude, carry forward the spirit of hard work,
establish a more market-oriented system and mechanism
through reform and innovation, and achieve people-
oriented, talent-oriented, and struggling people-oriented,
so that people who are willing to work, capable, and hard
work can have a stage, transforming from professional
managers to business partners. We dare to break the
comfort zone, dare to be involved in self-revolution, break
through the ceiling of ideology, seize the first opportunity,
innovate, work hard, and create greater value for
customers and shareholders.
18 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Chairman’s Statement
(3) Focusing on emerging areas and promoting development (3)
with investment
The Group will carefully study the flexible investment
mechanisms and models such as industrial investment and
financial investment, seize the new industrial opportunities
under the background of “dual carbon”, pay attention to
industries such as “new energy, high-tech equipment and
intelligent equipment”, explore and expand new fields and
develop new businesses, and lay out new industries for
the future, so as to further enhance the competitiveness
and profitability of the Group and achieve the benign
complementation between industrial operation and capital
operation.
2. Continue to promote business reform and innovation in 2.
each segment and strive to reach a new high
(1) Coal mining machinery business (1)
Guided by the annual policy of “intelligent complete
market expansion, scientific and technological innovation
to expand advantages, resource integration to improve
production capacity, capacity building to promote
development”, the Company will better meet customer and
market demands, and accelerate the implementation of
the four strategies of “complete, intelligent, international
and social” in the coal mining machinery segment.
Firstly, the Company will expand the market with
intelligent whole-set products, focus on customers,
deepen the development of intelligent comprehensive
procurement technology, make up for the shortcomings
of whole-set single machine, expand the categories of
intelligent products, strengthen comprehensive marketing
services, and continue to provide customers with one-
stop solutions for intelligent comprehensive procurement
technology and equipment. Hengda Intelligent Control
promotes the construction of intelligent manufacturing
demonstration bases and research and development
centres for intelligent control systems with high standards,
expands the production capacity of intelligent control
systems, and leads the intelligent development trend of
the coal mining machinery industry.
2022 19
Chairman’s Statement
Secondly, the Company will expand its advantages
in scientific and technological innovation, strengthen
the construction of technological innovation system and
mechanism, and build a technology system that meets
the requirements of five-year strategic planning and four-
strategy; We will promote product innovation, focus on
customer needs, promote smart mine business planning,
expand new product and new business such as high-
end intelligent pumping stations, roadway repair robots, + +
transportation robots and various special downhole
operation robots, build a multi-tiered business structure
of “core business + growth business + reserve business”
with rapid iteration and upgrading, and improve the core
competitiveness of enterprise technology.
Thirdly, the Company will integrate resources to
improve production capacity, and implement the
guiding ideology of “making sure that there is no room for
improvement, asset-light operation, resource integration,
and internal and external focus”. Through tapping internal
capacity potential, improving external production capacity,
and improving intelligent manufacturing level, the Company
will continue to build a flexible, agile, professional and
timely production supporting system, and establish
flexible production capacity with “large market and large
production capacity”, so as to achieve the shortest time
in the complete set of complete machine delivery industry
and meet market demand.
Fourthly, capacity building promotes development,
carries out organisational capacity building around the
aspects of “process capacity building, digital capacity
building, and human resource capacity building”,
increases the cultivation and introduction of high-end
talents, creates more certainty through organisational
capacity improvement, and responds to uncertainties in
the environment.
20 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Chairman’s Statement
(2) Automotive components business (2)
Firstly, we will continue to consolidate and
enhance the advantageous position of our core
business. To achieve the ultimate goal of traditional
products, rapid internationalisation and cost reduction.
Promote the completion and production of high-end
automotive parts and components manufacturing projects
of ASIMCO Shuanghuan, ASIMCO Anhui and ASIMCO
Shanxi to reduce manpower and improve efficiency with
digital and automated factories, and expand the core 48VBRM
business advantages from domestic to global, leading the
transformation and upgrading of the industry; SEG will
continue to promote the business integration after the
restructuring, continue to promote the 48V BRM products,
strive to increase market share and improve profitability.
Secondly, rapid development of new energy
business. ASIMCO has concentrated its resources to
vigorously develop the new energy shock absorption and
noise reduction market, rapidly promoted the research and
development of new energy products, and successfully
obtained customers’ positioning. At the same time, it
has explored opportunities for the transformation and
development of other potential projects to accelerate the
pace of new energy. Leveraging the advantages of the
global system and the benchmark effect of projects on
hand, SEG rapidly promoted the R & D and sales of high-
voltage electric drive system/electric control/motor/high-
voltage relay, built supporting capacity, completed the
mass production and delivery of orders on hand with high
quality, and obtained more business.
2022 21
Chairman’s Statement
3. Strengthening comprehensive risk management and 3.
promoting healthy development of the enterprise
The Company will accelerate the progress of the digital
transformation of the Group’s management and control,
and achieve all-round penetrating management through the
management of cockpit. The Company will further improve
the risk management system, promote the implementation of
comprehensive risk management, give full play to the functions
of the Board of Supervisors, internal audit, internal control and
discipline inspection and supervision institutions, form a joint
supervision force, ensure the legal compliance of corporate
operations and asset safety, and serve the realisation of
corporate strategic goals.
2023 is the first year for the full implementation of the spirit 2023
of 20th CPC National Congress, an important year for the
continuous implementation of the Company’s five-year strategic
plan, and a critical year for the Company to accelerate industrial
transformation and upgrading. Based on the new development
stage, the Company will fully, accurately and comprehensively
implement the new development concept, focus on the goal
of high-quality development, adhere to the combination of
technological innovation, management innovation and system 2023
and mechanism innovation, maintain our tireless zeal and
combat attitude, adapt to the new normal and meet new
challenges, create new advantages and expand new space, so
as to reach a new record high for 2023, achieve the Company’s
five-year strategic planning goal, and strive to build a high-end
intelligent equipment industry group with international influence!
Jiao Chengyao
Chairman
29 March 2023 2023 3 29
22 TechnologyMachinery Group Co., Ltd. AnnualtheReportWorld
Zhengzhou Coal Mining
Changes 2022
Intelligence Leads the Future
2022 23
Management Discussion and Analysis
Review of the year
For the year ended 31 December 2022, the Group achieved sales revenue 2022 12 31
of RMB32,043.31 million, representing an increase of 9.39% from the 32,043.31 9.39%
corresponding period of last year. Profit Attributable to Owners of the Company 2,538.24
was RMB2,538.24 million, representing an increase of 30.31% from the 30.31% 1.45 2022 12
corresponding period of last year. Earnings per share was RMB1.45. As at 31 31 7,549.97
December 2022, the Group had borrowing balances of RMB7,549.97 million.
Overview
The Group is a leading comprehensive coal mining and excavating equipment
and auto parts manufacturer in the PRC. Our established operating history,
high quality products, strong research and development capabilities, advanced
manufacturing processes and extensive sales and service network are the keys
to our success and allow us to maintain our leading position in the PRC coal SEG Automotive
mining and excavating equipment market. With the completion of ASIMCO and Germany GmbH
SEG Automotive Germany GmbH acquisition, the Group has duly entered the
auto parts market and is engaged in two principal businesses, namely coal
mining machinery and auto parts.
24 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Management Discussion and Analysis
Results of Operations
The following table sets forth a summary, for the year ended 31 December 2022 12 31
2022 indicated, of our consolidated results of operations.
2022 2021
2022 2021
RMB millions RMB millions
Revenue 32,043.31 29,293.53
Cost of sales (25,644.60) (23,221.70)
Gross profit 6,398.71 6,071.83
Other income 476.43 385.25
Other losses,net (120.05) (3.57)
Selling and distribution expenses (831.59) (828.13)
Administrative expenses (1,072.97) (1,284.32)
Research and development expenses (1,385.96) (1,271.74)
Restructuring costs – (210.84)
Net impairment losses on financial and contract assets (137.28) (16.53)
Share of profit of associates 23.15 39.42
Share of profit of joint ventures 5.05 5.64
Finance costs (265.41) (263.69)
Profit before tax 3,090.08 2,623.32
Income tax expense (462.07) (553.45)
Profit for the year 2,628.01 2,069.87
Profit for the year attributable to:
Owners of the Company 2,538.24 1,947.79
Non-controlling interests 89.77 122.08
2,628.01 2,069.87
2022 25
Management Discussion and Analysis
Results of Operations (Continued)
2022 2021
2022 2021
RMB millions RMB millions
Other comprehensive income:
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of post-employment benefit obligations 46.48 70.56
Changes in the fair value of financial assets at fair value
through other comprehensive income
247.31 2.76
Items that may be reclassified to profit or loss:
Exchange differences arising on translation 9.53 24.53
Cash flow hedging 14.72 (12.56)
Other comprehensive income/(loss) for the year,
net of income tax 318.03 85.29
Total comprehensive income for the year 2,946.04 2,155.16
Total comprehensive income for the year attributable to:
Owners of the Company 2,856.27 2,033.07
Non-controlling interests 89.77 122.09
2,946.04 2,155.16
EARNINGS PER SHARE
– Basic (RMB cents) 145.38 112.42
– Diluted (RMB cents) 144.55 111.90
26 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Management Discussion and Analysis
Revenue
Our revenue increased by 9.39% from RMB29,293.53 million for the year 2021 12 31
ended 31 December 2021 to RMB32,043.31 million for the year ended 31 29,293.53 9.39% 2022 12 31
December 2022, mainly because the increase of sales for the year. 32,043.31
The following table sets forth the breakdown of our revenue by product and
business(in RMB millions):
Year ended 31 December 2022
2022 12 31
Manufacture of
coal mining Manufacture of
machinery auto parts Total
RMB millions RMB millions RMB millions
Sales of auto parts – 15,170.89 15,170.89
Sales of hydraulic roof supports 9,239.80 – 9,239.80
Revenue from steel and other materials trading 4,330.81 74.77 4,405.58
Sales of spare parts for coal mining machinery 2,399.57 – 2,399.57
Sales of other coal mining equipment 636.78 – 636.78
Other revenue 150.35 40.34 190.69
16,757.31 15,286.00 32,043.31
Year ended 31 December 2021
2021 12 31
Manufacture of
coal mining Manufacture of
machinery auto parts Total
RMB millions RMB millions RMB millions
Sales of auto parts – 16,080.41 16,080.41
Sales of hydraulic roof supports 6,873.99 – 6,873.99
Revenue from steel and other materials trading 3,730.77 75.69 3,806.46
Sales of spare parts for coal mining machinery 2,202.97 – 2,202.97
Sales of other coal mining equipment 155.52 – 155.52
Other revenue 119.84 54.34 174.18
13,083.09 16,210.44 29,293.53
2022 27
Management Discussion and Analysis
Cost of Sales
As the Group recorded an increase in our revenue, our cost of sales increased 2021
by 10.43% from RMB23,221.70 million for the year ended 31 December 2021 12 31 23,221.70
to RMB25,644.60 million for the year ended 31 December 2022. 10.43% 2022 12 31 25,644.60
Gross Profit
Driven by the above factors, our gross profit increased by 5.38% from 2021 12 31
RMB6,071.83 million for the year ended 31 December 2021 to RMB6,398.71 6,071.83 5.38% 2022 12
million for the year ended 31 December 2022. 31 6,398.71
The decrease of gross profit during the year was primarily contributed to the
increase of raw materials price. The gross profit margin of the coal mining 2021 12 31 25.96%
machinery segment decreased from 25.96% for the year ended 31 December 2022 12 31 24.79% 2022 12
2021 to 24.79% for the year ended 31 December 2022. As of 31 December 31 2021
2022, the gross profit margin of the auto parts segment of the Group decreased 12 31 16.5% 2022 12 31
from 16.5% for the year ended 31 December 2021 to 14.68% for the year 14.68%
ended 31 December 2022.
Therefore, the overall gross profit margin of the Group decreased from 20.73% 2021 12 31
for the year ended 31 December 2021 to 19.97% for the year ended 31 20.73% 2022 12 31
December 2022. 19.97%
Other Income
Our other income increased by 23.67% from RMB385.25 million for the 2021 12 31
year ended 31 December 2021 to RMB476.43 million for the year ended 31 385.25 23.67% 2022 12 31
December 2022, mainly because the group gained more government grants 476.43
and interest income.
Other Losses, Net
Our other losses, net increased by 3,257.59% from a loss of RMB3.58 million 2021 12 31
for the year ended 31 December 2021 to a loss of RMB120.03 million for 3.58 3,257.59% 2022 12 31
the year ended 31 December 2022, primarily as a result of the increase on 120.03
impairment of goodwill.
Selling and Distribution Expenses
Our selling and distribution expenses increased by 0.42% from RMB828.13 2021 12 31
million for the year ended 31 December 2021 to RMB831.59 million for the 828.13 0.42% 2022 12 31
year ended 31 December 2022, which was align with the increase of revenue. 831.59
Administrative Expenses
Our administrative expenses decreased by 16.46% from RMB1,284.32 million 2021 12 31
for the year ended 31 December 2021 to RMB1,072.97 million for the year 1,284.32 16.46% 2022 12 31
ended 31 December 2022, mainly due to the decrease of expense related to 1,072.97 2021
the long-term super profit incentive scheme,which was completed by end of
2021.
28 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Management Discussion and Analysis
Staff Costs and Remuneration Policy
Our staff costs decreased by 13.65% from RMB3,610.84 million for the year 2021 12 31
ended 31 December 2021 to RMB3,117.88 million for the year ended 31 3,610.84 13.65% 2022 12 31
December 2022. The staff remuneration of the Group comprises of basic 3,117.88
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.
Research and Development Expenses
Our research and development expenses increased by 8.98% from 2021 12 31
RMB1,271.74 million for the year ended 31 December 2021 to RMB1,385.96 1,271.74 8.98% 2022 12 31
million for the year ended 31 December 2022, mainly due to more research 1,385.96
and development activities incurred from manufacture of coal mining machinery
segment during the year.
Finance Costs
Our finance costs kept flat in 2022, with only 0.65% increase compared with 2022 2021
2021. 0.65%
Profit Before Tax
Being affected by the factors referred to above in aggregate, our profit before
tax increased by 17.79% from RMB2,623.32 million for the year ended 31 2021 12 31 2,623.32
December 2021 to RMB3,090.08 million for the year ended 31 December 17.79% 2022 12 31 3,090.08
2022.
Income Tax Expense
Our income tax expense decreased by 16.51% from RMB553.45 million for the 2021 12 31
year ended 31 December 2021 to RMB462.07 million for the year ended 31 553.45 16.51% 2022 12 31
December 2022, primarily as a result of the additional deductions for qualified 462.07
equipment expenditure and tax benefits. Our effective tax rate decreased to
14.95% for the year ended 31 December 2022 from 21.10% for the year 2021 12 31 21.10% 2022 12
ended 31 December 2021. 31 14.95%
Total comprehensive income for the year
In view of the combined effect of the above factors, our profit for the year
and the aggregate of comprehensive income increased by 36.70% from 2021 12 31 2,155.16
RMB2,155.16 million for the year ended 31 December 2021 to RMB2,946.04 36.70% 2022 12 31
million for the year ended 31 December 2022. 2,946.04
2022 29
Management Discussion and Analysis
Profit Attributable to Owners of the Company
Based on the factors referred to above, profit attributable to owners of the 2021
Company increased by 30.31% from RMB1,947.79 million for the year ended 12 31 1,947.79 30.31%
31 December 2021 to RMB2,538.24 million for the year ended 31 December 2022 12 31 2,538.24
2022.
Trade and Other Receivables
As at 31 December 2022, trade and other receivables amounted to 2022 12 31
approximately RMB9,118.63 million, representing an increase of approximately 9,118.63 2021 7,374.07
RMB1,744.55 million as compared to approximately RMB7,374.07 million as at 1,744.55
the end of 2021, the increase of trade and other receivables mainly due to the
increase of revenue.
Liquidity
The Group’s net current assets were approximately RMB14,613.54 million (31 14,613.54 2021
December 2021: RMB12,844.18 million) and the current ratio was 1.75 as 12 31 12,844.18 2022 12
at 31 December 2022 (31 December 2021: 1.85). The decrease in current 31 1.75 2021 12 31 1.85
ratio was mainly attributable to the increase in trade and other payables and
borrowings.
Cash Flows and Capital Expenditures
As of 31 December 2022, the Group had RMB3,613.44 million in cash and 2022 12 31
cash equivalents. The Group’s cash and cash equivalents primarily consist of 3,613.44
cash and bank deposits.
2022 2021
2022 2021
RMB millions RMB millions
Net cash from operating activities 2,429.20 2,384.97
Net cash used in investing activities (3,543.68) (1,449.76)
Net cash from/(used in) financing activities 1,475.60 (606.56)
Net increase in cash and cash equivalents 361.12 328.66
Effect of foreign exchange rate changes 56.65 (111.72)
Cash and cash equivalents at the beginning of year 3,195.67 2,978.73
Cash and cash equivalents at the end of year 3,613.44 3,195.67
30 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Management Discussion and Analysis
Operating Activities
Net cash from operating activities in 2022 was RMB2,429.20 million. Cash 2022 2,429.20
inflow primarily comprised profit before taxation of RMB3,090.08 million, 3,090.08
primarily adjusted for: (i) finance cost of RMB265.41 million; (ii) depreciation of (i) 265.41 (ii)
property, plant and equipment of RMB582.89 million; (iii) increase in inventories 582.89 (iii)
of RMB1,892.13 million; (iv) increase in trade and other receivables of 1,892.13 (iv)
RMB2,085.52 million; (v) increase in trade and other payables of RMB1,575.70 2,085.52 (v)
million; (vi) increase in notes receivable of RMB502.91 million; (vii) increase in 1,575.70 (vi) 502.91
contract liabilities of RMB1,471.53 million. (vii) 1,471.53
Investing Activities
Net cash outflow in investing activities in 2022 was RMB3,543.68 million, 2022 3,543.68
primarily comprising: (i) payment of RMB1,300.70 million for the purchase (i)
of property, plant and equipment; (ii) withdrawal of bank deposits with 1,300.70 (ii)
original maturity over three months of RMB2,569.83 million; (iii) payment 2,569.83 (iii)
of RMB8,006.83 million for other financial assets, structured deposits and 8,006.83 (iv)
certificate of deposit; (iv) proceeds of RMB6,109.93 million from other financial 6,109.93 (v)
assets and structured deposits; (v) payment of pledged bank deposits of 665.61 (vi)
RMB665.61 million; (vi) withdrawal of pledged bank deposits of RMB374.27 374.27 (vii)
million; (vii) placement of bank deposits with original maturity over three months 2,736.83
and restricted cash of RMB2,736.83 million.
Financing Activities
Net cash inflow from financing activities in 2022 was RMB1,475.60 million, 2022 1,475.60
primarily consisting of (i) net cash inflow from borrowing of RMB1,777.48 (i) 1,777.48
million; (ii) cash inflow from contribution from non-controlling interests in the (ii) 871.65
amount of RMB871.65 million; (iii) cash outflow used in the dividends paid to (iii)
Company’s shareholders in the amount of RMB774.08 million; and (iv) cash 774.08 (iv) 191.31
outflow used in the lease payments in the amount of RMB191.31 million.
Capital Expenditures
We incurred capital expenditures of RMB1,412.85 million for the year ended 31 2022 12 31
December 2022, for purchase of property, plant and equipment, and intangible 1,412.85
assets.
2022 31
Management Discussion and Analysis
Commitments and Contingent Liabilities
Capital Commitments
As of 31 December 2022, our commitments consisted of capital commitments 2022 12 31
for the acquisition of property, plant and equipment that have been authorized 999.16
and contracted for in the amount of RMB999.16 million.
Contingent Liabilities
During the year, the Group has endorsed and derecognised certain notes
receivable for the settlement of trade and other payables with full recourse. In
the opinion of the directors of the Company, the risk of the default in payment
of the endorsed notes receivable is low because all endorsed notes receivable
are issued and guaranteed by reputable PRC banks. The maximum exposure to
the Group that may result from the default of these endorsed and derecognised
notes receivable at the end of each Reporting Period is as follows:
2022 2021
2022 2021
RMB millions RMB millions
Outstanding endorsed bills receivable with recourse
1,922,511 2,133.20
32 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Management Discussion and Analysis
Working Capital and Indebtedness
The following table sets forth details of our current assets and liabilities as of 31 2022 12 31
December 2022 (in RMB millions):
2022 2021
2022 2021
RMB millions RMB millions
CURRENT ASSETS
Finance lease receivables, current portion 50.96 42.12
Long-term receivables, current portion 88.03 30.32
Inventories 7,909.82 6,242.41
Trade and other receivables 9,118.63 7,374.08
Transferred trade receivables 269.41 687.47
Financial assets at fair value through profit or loss
5,228.18 3,236.29
Financial assets at fair value through other comprehensive
income 4,494.33 4,111.05
Derivative financial instruments 4.89 15.37
Tax recoverable 19.15 43.67
Bank deposits 3,402.44 2,944.10
Cash and cash equivalents 3,613.44 3,195.67
34,199.28 27,922.55
CURRENT LIABILITIES
Trade and other payables 11,480.60 9,978.41
Contract liabilities 3,748.35 2,272.37
Income tax liabilities 115.21 132.29
Borrowings 3,237.23 1,167.95
Lease liabilities 146.26 103.22
Provisions 571.28 687.34
Liabilities associated with transferred trade receivables
269.41 687.47
Derivative financial instruments 17.40 49.32
19,585.74 15,078.37
NET CURRENT ASSETS 14,613.54 12,844.18
As of 31 December 2022, the Group had net current assets of approximately 2022 12 31
RMB14,613.54 million (31 December 2021: RMB12,844.18 million) and 14,613.54 2021 12 31 12,844.18
current ratio of 1.75 (31 December 2021: 1.85). The decrease in current 1.75 2021 12 31 1.85
ratio was mainly attributable to the increase in trade and other payables and
borrowings.
2022 33
Management Discussion and Analysis
Working Capital and Indebtedness (Continued)
As of 31 December 2022, the balance of the Group’s outstanding borrowings 2022 12 31
was RMB7,549.97 million, of which RMB3,237.23 million are current portion (31 7,549.97 3,237.23
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
As of 31 December 2022, our available credit line from various financial 2022 12 31
institutions amounted to RMB28,707.40 million. As of 31 December 2022, 28,707.40 2022 12 31
approximately RMB20,853.13 million of our credit lines from various domestic
and foreign financial institutions remained unused. 20,853.13
Capital Adequacy Ratio
Debt to capital ratio is calculated by dividing the total liabilities at the end of the
year by total equity at the end of the year and multiplying by 100%. 100%
As of 31 December 2022, our debt to capital ratio was 139% (31 December 2022 12 31 139%
2021: 139%). 2021 12 31 139%
Liquidity Risk
Weighted On demand Total
average or less than 3 months to 1 year to 2 years to undiscounted Carrying
interest rate 3 months 1 year 2 years 5 years cashflows amount
3 3 1 1 2 2 5
RMB millions RMB millions RMB millions RMB millions RMB millions RMB millions
The Group
As at 31 December 2022 2022 12 31
Non-derivative financial liabilities
Trade and other payables
(excluding non-financial liabilities) 8,476.54 1,801.58 – – 10,278.12 10,278.12
Liabilities associated with transferred
trade receivables 21.62 247.80 – – 269.42 269.42
Borrowings 2.40 1,498.44 1,866.92 543.48 3,974.97 7,883.81 7,549.97
Lease liabilities 2.90 59.35 109.59 146.35 1,207.14 1,522.44 1,397.00
Derivative financial liabilities
Designated as hedging instruments – – – – – –
Not designated as hedging instruments 17.40 – – – 17.40 17.40
10,073.35 4,025.89 689.83 5,182.11 19,971.18 19,511.90
34 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Management Discussion and Analysis
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 authorization 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 year, the Group has endorsed and derecognized 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 5
recognition. The expected credit loss rates are determined based on historical
credit losses experienced from the past 1 to 5 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.
2022 35
Management Discussion and Analysis
Interest Rate Risk
The Group is exposed to cash flow interest rate risk in relation to variable-
rate borrowings (see Note 32 for details). Currently, the Group does not have 32
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.
Please refer to Note 3(a) of the financial statements prepared under IFRSs for
more quantitative information about the Group’s interest risk. 3(a)
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. Please refer to Note 3(a) of the financial statement
prepared under IFRSs for more quantitative information about the Group’s
currency risk. 3(a)
36 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Directors, Supervisors and Senior Management
Directors
Executive Directors
Jiao Chengyao ( ), male, was born in May 1963 in Gongyi County, 1963 5
Henan. He is a CPC member and a professor-level senior engineer with 1985 7
postgraduate qualifications. He graduated from China Institute of Mining and
Technology ( ) (now known as China University of Mining and 2003 12
Technology ( )), majoring in mechanical design, manufacture 2007 12
and automation, and obtained a bachelor’s degree in engineering in July 1985. 1985 7 1992 5
He obtained a master’s degree in engineering from China University of Mining 1992 5
and Technology in December 2003, and a doctoral degree in economics from 1993 5 1993 5
Huazhong University of Science and Technology ( ) in December 1998 1
2007. From July 1985 to May 1992, he served as a technician, a production 1998 1 2000 7
dispatcher and an engineer of the No. 1 machinery sub-plant of Zhengzhou 2000 7 2002 10
Coal Mining Machinery Factory. From May 1992 to May 1993, he was the 2002 10 2008 12
manager of Zhengshen Import Vehicles Repair Station ( 2015 7 2020 5
). From May 1993 to January 1998, he was the deputy plant manager and 2023 4 14
plant manager of the No. 1 machinery sub-plant of Zhengzhou Coal Mining
Machinery Factory. From January 1998 to July 2000, he was the deputy plant 2008 12
manager of Zhengzhou Coal Mining Machinery Factory. From July 2000 to
October 2002, he was the plant manager of Zhengzhou Coal Mining Machinery
Factory. From October 2002 to December 2008, he served as the chairman and
general manager of Zhengzhou Coal Mining Machinery Group Co., Ltd. (ZCMM).
From July 2015 to May 2020, he acted as the chairman of Henan Machinery
Investment Group Co., Ltd. (which changed its name to “Henan State-owned
Capital Operation Group Investment Co., Ltd. (
)” on 14 April 2023). Since December 2008, he has been the
chairman of the Company.
As at the date of this annual report, Mr. Jiao Chengyao held 4,426,964 A 4,426,964 A
Shares of the Company, representing approximately 0.288% of all its A Shares A 0.288%
and approximately 0.249%of all its Shares. 0.249%
2022
37
Directors, Supervisors and Senior Management
Directors (Continued)
Executive Directors (Continued)
Xiang Jiayu ( ), male, was born in August 1965 in Guangshan 1965 8
County, Henan. He is a CPC member and a senior engineer with postgraduate 1980 9 1984 7
qualifications. From September 1980 to July 1984, he studied at the 1988 9
Department of Electrical and Mechanical Engineering of Jiaozuo Mining 1991 1
Institute ( ), majoring in mechanisation. He studied at the China 1984 7 1988 8
University of Mining and Technology, Master’s Department (Beijing) ( 1991 5 1992 12
) from September 1988 to January 1991, majoring 1992 12 1995 7
in mining mechanical engineering and obtained a master’s degree. From July 1995 8 1998 11
1984 to August 1988, he lectured at Yima Mining Technical School ( 1998 11
). From May 1991 to December 1992, he was a designer at the 2000 7
research centre of Zhengzhou Coal Mining Machinery Factory. From December 2000 7 2002 10
1992 to July 1995, he was the executive officer of the No. 2 research centre 2002 10 2008 10
of Zhengzhou Coal Mining Machinery Factory. From August 1995 to November 2008 10 2008 12
1998, he was the deputy plant manager at Huanghe Electric Vehicle Plant (
) of Zhengzhou Coal Mining Machinery Factory. From November 2008 12 2015 2
1998 to July 2000, he was the executive officer of the hydraulic project centre 2015 2 2018 2 2015 7
of Zhengzhou Coal Mining Machinery Factory. From July 2000 to October 2002, 2020 12
he served as the deputy plant manager of Zhengzhou Coal Mining Machinery 2023 4 14
Factory. From October 2002 to October 2008, he was the deputy general 2014 12 2021 3
manager and standing deputy general manager of ZCMM. From October 2008 2018 2 2021 3
to December 2008, he was a director and the general manager of Zhengzhou 2021 3
Coal Mining Machinery Company. From December 2008 to February 2015, he
was a director and the general manager of the Company. From February 2015
to February 2018, he has been the vice chairman of the Company. From July
2015 to December 2020, he was a director of Henan Machinery Investment
Group Co., Ltd. (which changed its name to “Henan State-owned Capital
Operation Group Investment Co., Ltd. (
)” on 14 April 2023). From December 2014 to March 2021, he was
the secretary to the Party Committee of the Company. From February 2018 to
March 2021, he was a Director of the Company. He has been the vice chairman
of the Company since March 2021.
As at the date of this annual report, Mr. Xiang Jiayu held 2,921,420 A Shares 2,921,420 A
of the Company, representing approximately 0.190% of all its A Shares and A 0.190%
approximately 0.164% of all its Shares. 0.164%
38 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Directors, Supervisors and Senior Management
Directors (Continued)
Executive Directors (Continued)
Jia Hao ( ), male, was born in March 1970 with Han ethnicity. He holds 1970 3 1991
the qualification of a master’s degree. Mr. Jia graduated from University of
Shanghai for Science and Technology with a bachelor’s degree in mechanical 2001
manufacturing technology and equipment in 1991. In 2001, he obtained a (MBA)
Master of Business Administration (MBA) degree from China Europe International
Business School. He successively served as an engineer and an assistant to the
director of Guangzhou Electrical and Mechanical Scientific Research Institute
of China National Machinery Industry Corporation. He also served as a sales
manager of Parker Hannifin Motion & Control (Shanghai) Co., Ltd., a standing 2014 3 2018 2
deputy general manager of Shanghai Ziyan Mould Industry Co., Ltd. of Zijiang 2018 2 2021 3
Group, a general manager of the investment department of Salim Wanye Group 2021 3
(China) Co., Ltd., the president of Shanghai Huili Group Company Limited and 2021 1
the chairman of Zhengzhou Coal Mining Longwall Face Machinery Co., Ltd.
From March 2014 to February 2018, he was the deputy general manager of the
Company. From February 2018 to March 2021, Mr. Jia was the vice chairman
and the general manager of the Company. He has been an employee Director
and the general manager of the Company since March 2021. He has also
served as the chairman of Hong Qian Business Management (Henan) Limited (
) since January 2021.
As at the date of this annual report, Mr. Jia Hao held 1,973,300 A Shares 1,973,300 A
of the Company, representing approximately 0.129% of all its A Shares and A 0.129%
approximately 0.111% of all its Shares. 0.111%
Fu Zugang ( ), male, was born in November 1965 in Gong’an County, 1965 11
Hubei. He is a CPC member and a senior engineer with undergraduate 1981 9 1985
qualifications. From September 1981 to July 1985, he studied at Wuhan 7
Technology College ( ) (now known as Wuhan University of 1985 7 2000 7
Technology ( )), majoring in casting, and obtained a bachelor’s
degree in engineering. From July 1985 to July 2000, he served as a technician,
an assistant engineer, an engineer, a senior engineer, a team leader of 2000 7 2002 10
technology team, an assistant to the plant manager, a deputy plant manager 2002 10 2006 11
and a plant manager of the sub-plant of casting of Zhengzhou Coal Mining 2006 11 2008 12
Machinery Factory. From July 2000 to October 2002, he was the deputy plant 2008 12
manager of Zhengzhou Coal Mining Machinery Factory. From October 2002 2012 2 2012 2 2015
to November 2006, he was the chairman of labour union of ZCMM. From 2 2015 2 2018
November 2006 to December 2008, he was a director and a deputy general 2 2018 2
manager of ZCMM. From December 2008 to February 2012, he was a deputy
general manager of the Company. From February 2012 to February 2015, he
was a director and a deputy general manager of the Company. From February
2015 to February 2018, he served as the general manager of the Company.
Since February 2018, he has been a Director of the Company and the general
manager of the coal mining machinery segment.
As at the date of this annual report, Mr. Fu Zugang held 3,543,620 A Shares 3,543,620 A
of the Company, representing approximately 0.231% of all its A Shares and A 0.231%
approximately 0.199% of all its Shares. 0.199%
2022
39
Directors, Supervisors and Senior Management
Directors (Continued)
Executive Directors (Continued)
Wang Xinying ( ), male, was born in October 1965 in Xin’an County, 1965 10
Henan. He is a CPC member and a senior engineer with postgraduate 1981 9 1985 7
qualifications. From September 1981 to July 1985, he studied at the 2004
Department of Mining Engineering of Chongqing University ( ), 9 2007 7
majoring in mining machinery. From September 2004 to July 2007, he studied 1985 7 1992 10
at the School of Mechanical Engineering of China University of Mining and 1991 1 1992
Technology and obtained postgraduate qualification and a master’s degree 1 1992 10 1994 7
in engineering. From July 1985 to October 1992, he was an engineer of 1994 7 1996
the equipment division of Zhengzhou Coal Mining Machinery Factory, and 12 1996 12
worked and studied in Toyota Motor Corporation between January 1991 and 2000 7 2000 7
January 1992. From October 1992 to July 1994, he was a deputy manager 2005 1 2005
of Zhengshen Import Vehicles Repair Station. From July 1994 to December 1 2008 12
1996, he was a deputy plant manager of the sub-plant of machinery repair 2008 12 2015 2
of Zhengzhou Coal Mining Machinery Factory. From December 1996 to July 2015 2 2016 6
2000, he was a deputy director of the production division of Zhengzhou Coal LYC 2020 5 2023
Mining Machinery Factory. From July 2000 to January 2005, he was the head 3 2023 4 14
of corporate planning department of Zhengzhou Coal Mining Machinery Factory.
From January 2005 to December 2008, he was a deputy general manager of
ZCMM. From December 2008 to February 2015, he was a director and deputy
general manager of the Company. Since February 2015, he has been a Director
of the Company. He has been the chairman of Luoyang LYC Bearing Co., Ltd.
since June 2016. From May 2020 to March 2023, he was a director of Henan
Machinery Investment Group Co., Ltd. (which changed its name to “Henan
State-owned Capital Operation Group Investment Co., Ltd. (
)” on 14 April 2023).
As at the date of this annual report, Mr. Wang Xinying held 1,425,040 A Shares 1,425,040 A
of the Company, representing approximately 0.093% of all its A Shares and A 0.093%
approximately 0.080% of all its Shares. 0.080%
40 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Directors, Supervisors and Senior Management
Directors (Continued)
Non-executive Directors
Cui Kai ( ), male, was born in September 1974 in Jincheng City, Shanxi. 1974 9
He holds postgraduate qualifications, CPC membership and the title of senior 1997
economist. Mr. Cui graduated as a finance major from Henan University 2001
of Economics and Law ( ) with a bachelor’s degree
in economics in 1997, and as a finance major from Zhongnan University 1997 8 2017 9
of Economics and Law ( ) with a master’s degree in
economics in 2001. He successively worked for Henan Provincial Investment 2017 9 2019 12
Company ( ), Henan Venture Investment Co., LTD ( 2019 12
) and Henan Investment Group Company Limited 2018 5
( ) from August 1997 to September 2017. He served 2020 12
as the vice president of Henan Asset Management Co., Ltd. ( 2021 3
) from September 2017 to December 2019. Since December
2019, Mr. Cui has become the president of Henan Asset Management Co.,
Ltd. Since May 2018, he has also served as the chairman of Henan Asset Fund
Management Co., Ltd. ( ). Since December
2020, Mr. Cui has also been the legal representative and general manager of
Hong Qian Business Management (Henan) Limited (
). Since March 2021, he has been a Director of the Company.
2022
41
Directors, Supervisors and Senior Management
Directors (Continued)
Non-executive Directors (Continued)
Fei Guangsheng ( ), male, was born in January 1965 in Hefei City, 1965 1
Anhui Province. He holds CPC membership and postgraduate qualification
with a master’s degree, and serves as a senior economist, an engineer and a
senior human resource manager. He also has the qualifications for serving as 1985
an independent director, secretary to the board and fund practitioner. Mr. Fei 9 1989 7
Guangsheng majored in welding technology and equipment at Hefei University 1995 9 1999
of Technology from September 1985 to July 1989, obtaining undergraduate 4
qualification with a bachelor’s degree. From September 1995 to April 1999, 1989 8 1995 6
he studied at Tsinghua University majoring in business administration, and 1999 5
obtained postgraduate qualification with a master’s degree. From August 1989 2000 4
to June 1995, he successively served as a technician, director assistant and 2000 4 2007 7
manager of the tooling department at Xuzhou Loader Factory ( ).
From May 1999 to April 2000, he headed the securities department of Xugong 2007 7 2009 11
Construction Machinery Science & Technology Co., Ltd. (
). From April 2000 to July 2007, he served as the secretary 2009 11 2010 2
to the board and the head of the securities department of Xugong Construction
Machinery Science & Technology Co., Ltd., as well as the deputy general
manager of Jiangsu Hangao Information Industry Co., Ltd. ( 2010 2 2011 11
). From July 2007 to November 2009, he served as the 2011 11
deputy general manager, secretary to the board and the head of the securities
and audit department of Xugong Construction Machinery Science & Technology 2021
Co., Ltd. From November 2009 to February 2010, he was the secretary to 8 2021
the board and the head of the securities department of XCMG Construction 10
Machinery Co., Ltd. ( ) and the deputy
general manager of the technology branch of XCMG Construction Machinery
Co., Ltd. From February 2010 to November 2011, he served as the secretary
to the board and the head of the securities department of XCMG Construction
Machinery Co., Ltd. Since November 2011, he has been the secretary to
the board and the head of the securities department of XCMG Construction
Machinery Co., Ltd., and the director and general manager of Xuzhou Xu Gong
Investment Company Limited ( ). Since August 2021,
he has been a director of Hong Qian Business Management (Henan) Limited
( ). Since October 2021, he has been a
Director of the Company. Mr. Fei Guangsheng has also served as a director and
the general manager of Xuzhou Xu Gong Equity Investment Company Limited (
), the chairman of Xu Gong Hongshu (Shanghai)
Asset Management Company Limited (
), a director of XCMG Hanyun Technology Co., Ltd. (
) and a director of Qinghai Road and Bridge Construction Co., Ltd. (
).
42 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Directors, Supervisors and Senior Management
Directors (Continued)
Independent Non-executive Directors
Cheng Jinglei ( ), male, was born in September 1967. He is a CPC 1967 9
member and a professor-level senior engineer with a master’s degree in
business administration. Mr. Cheng served for SAIC VOLKSWAGEN as an
engineer in logistics and industrial engineering, head of the planning and
logistics department, head of the production planning department and head
of the product engineering department, and served at SAIC Motor as the
general manager of its technology and quality department, president of the
engineering academy, as well as general manager of the strategy and business
planning department and chief engineer. Mr. Cheng was also the chairman 2018 6
of SAIC Silicon Valley Venture Capital ( ), Dalian 2020 4 2020 1
Sunrise Power Company (Fuel Cell) ( ) and
DIAS Automotive Electronic Systems Co., Ltd. ( ), 2018 4 2020 1
a director of SAIC VOLKSWAGEN and SAIC GM, the vice president of China 2019 8
Society of Automotive Engineers, and the president of Shanghai Society of (603037) 2019 10
Automotive Engineers. From June 2018 to April 2020, he served as the partner 2021 11
and president of AGRC. He has been the founder and chairman of Shanghai
Shengshi Management Consulting Co., Ltd. ( )
since January 2020. From April 2018 to January 2020, he was an independent
director of Dah Chong Hong Holdings Limited. He has been an independent
director of Shanghai Carthane Co., Ltd. (
) (603037) since August 2019. Since October 2019, he has been a Director
of the Company. Since November 2021, he has been the chairman of Qingdao
SunHydro Group Co., Ltd.
Ji Feng ( ), male, was born with Chinese nationality in 1970. He is a 1970
certified public accountant and a certified appraiser with a master’s degree in 1992 7
accounting. In July 1992, he graduated from Jilin College of Finance and Trade 2010 12
( ) (now Jilin University of Finance and Economics) and obtained 1992 7 1992
a bachelor’s degree in accounting. In December 2010, he obtained a master’s 12 1993 1
degree in accounting from the Business School of Jilin University. From July 1995 3
1992 to December 1992, he served as a staff member of the First Division 1995 3 2001 12
of Industry and Finance ( ) of the Bureau of Finance of Changchun. 2002 1
From January 1993 to March 1995, he served as the financial manager of both
Dalian Company and Jilin Company of China National Chemical Construction ( 2015 3 26
). From March 1995 to December 2001, he served as the deputy 2020 4 20
general manager of Jilin Zhaoxian Qiushi Accounting Firm ( 2021 3
). Since January 2002, he has been a partner, a managing
partner, and a quality control managing partner of Dahua Certified Public
Accountants (Special General Partnership). Since 26 March 2015, he has been
an independent director of Beijing Municipal Road and Bridge Co., Ltd. From
20 April 2020, he has been an independent director of Beijing Tieke Shougang
Railway-Tech Co., Ltd. He has been an independent non-executive Director of
the Company since March 2021.
2022
43
Directors, Supervisors and Senior Management
Directors (Continued)
Independent Non-executive Directors (Continued)
Guo Wenqing ( ), female, was born with Chinese nationality in Beijing 1967
in 1967. He possesses postgraduate qualifications and professional lawyer 1990 7
qualifications. In July 1990, she graduated from the Law School of Renmin 1996 1
University of China and obtained a bachelor’s degree in law. She obtained a 2011 8 EMBA
master’s degree in economics from Renmin University of China in January 2010 8 2022 6
1996 and an EMBA degree from China Europe International Business School 1994 2001
in August 2011. From August 2010 to June 2022, She has been a chief legal 2001
counsel of the private banking department of China Minsheng Banking Corp., 2005 2005
Ltd. She served as a partner and lawyer of Beijing Dentons Law Firm ( 2010 2011 3
) from 1994 to 2001, a partner of Beijing Tongwei Law 2017 3
Firm ( ) from 2001 to 2005, and a partner of Beijing 2011 10 2017 9
Kangda Law Firm from 2005 to 2010. She also served as independent director 2021 3
of Shanghai Phichem Material Co., Ltd., from March 2011 to March 2017, and
an independent director of Beijing Ctrowell Technology Corporation Limited from
October 2011 to September 2017. She has been an independent non-executive
Director of the Company since March 2021.
Fang Yuan ( ), male, is the founding managing partner of Starquest
Capital, a China-based private equity investment firm with its investment
strategies focused on consumer, healthcare and technology sectors. Prior to 2018
founding Starquest Capital in 2018, Mr. Fang served as the head of LGT Capital LGT
Partners in China for 12 years. Before joining LGT Capital Partners in early 2007 LGT AXA
2007, Mr. Fang worked for AXA Private Equity Group in Singapore, focusing
on fund investment and direct investment in the Pan-Asia region. Mr. Fang
has a total of 20 years of experience in the financial sector. Mr. Fang holds a INSEAD
bachelor’s degree in accounting from Shanghai Jiao Tong University, a MBA
degree from INSEAD Business School and an EMBA degree from Tsinghua (EMBA)
University PBC School of Finance. Mr. Fang also holds the Chinese certified 2020 8 19
public accountant qualification. He was appointed as an independent non HK02003
– executive director of VCREDIT Holdings Limited (listed on the Hong Kong 2021 3
Stock Exchange; stock code: HK02003) on 19 August 2020. He has been an
independent non-executive Director of the Company since March 2021.
44 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Directors, Supervisors and Senior Management
Supervisors
Liu Qiang ( ), male, was born in June 1969 in Yongcheng City, Henan. He is 1969 6
a CPC member and a senior auditor. From September 1986 to July 1990, Mr. 1986 9 1990 7
Liu studied at Nankai University, majoring in economics management and law,
and obtained bachelor’s degrees in law and economics. From September 2001 2001 9 2004 7
to July 2004, he studied at Wuhan University, majoring in world economics, and 2009 7
obtained a master’s degree. In July 2009, he graduated from Henan University, 2009 12
majoring in regional economics, and was admitted as a doctoral candidate. He 1990 7 2002 11
obtained a doctoral degree in economics in December 2009. From July 1990
to November 2002, he successively worked at the agriculture audit division, 2002 11 2012 7
general office and division of legal affairs under the Department of Audit of 2012 7 2012
Henan Province, and his last position was the department-head-level officer. 11
From November 2002 to July 2012, he was the deputy section-level supervisor 2012 11 2014 9
of the Supervisory Committee for the State-owned Enterprises Administered by 2014 9
Henan Provincial Government ( ). From July 2014 12
2012 to November 2012, he served as the department-head-level supervisor 2014 12
of the Supervisory Committee for the State-owned Enterprises Administered by 2015 2 2018 2 2018
Henan Provincial Government. From November 2012 to September 2014, he 2
was a researcher of Provincially Administered Medium and Small Enterprise
Department ( ) of the State-owned Assets Supervision and
Administration Commission of Henan Provincial People’s Government. He also
served as a researcher of Economic Cooperation Department of the State-owned
Assets Supervision and Administration Commission of Henan Provincial People’s
Government from September 2014 to December 2014. Since December 2014,
he has been the secretary to the Disciplinary Commission of the Company. From
February 2015 to February 2018, he was a Director of the Company. Since
February 2018, he has been the chairman of the Board of Supervisors and the
chairman of the Labor Union of the Company.
As at the date of this annual report, Mr. Liu Qiang held 11,500 A shares of the 11,500 A
Company, which accounted for approximately 0.0007% of all the A shares of A 0.0007%
the Company and approximately 0.0006% of all the shares of the Company. 0.0006%
2022
45
Directors, Supervisors and Senior Management
Supervisors (Continued)
Cheng Xiangdong ( ), male, was born in December 1973 in Qixian 1973 12
County, Henan. He is a CPC member and a political analyst with a master’s 1993 9 1995 7
degree in management. From September 1993 to July 1995, he studied at 1995 7 2000
the History Department of Shangqiu Teachers College ( 9 2000 9 2002 12
). From July 1995 to September 2000, he was a staff member of the 2002 12
Office of the Bureau of Materials of Shangqiu ( ). From 2008 6
September 2000 to December 2002, he was a deputy director of the Office of 1996 9 2000 6
the Party Committee of the Bureau of Materials of Shangqiu. From December 2008 6 2008 8
2002 to June 2008, he was a deputy director of the Office of Shangqiu Material 2008 8 2009 12
Circulation Centre ( ) (during which, he studied 2009
at Zhengzhou University with undergraduate qualifications from September 12 2010 10
1996 to June 2000, majoring in administration management). From June 2008 2010 10 2011 1
to August 2008, he worked at the human resources department of Yongcheng 2011 1 2013 9
Coal and Electricity Group Co., Ltd. From August 2008 to December 2009, he 2013 9 2015
worked at the Beijing Office of Yongcheng Coal and Electricity Group Co., Ltd. 8
From December 2009 to October 2010, he was a general manager assistant 2012 12 2015 1 EMBA
and a sales director of Shangqiu Longyu Chemical Co., Ltd. From October 2015 8 2017 11
2010 to January 2011, he was a deputy general manager of Shangqiu Longyu
Chemical Co., Ltd. From January 2011 to September 2013, he was a director 2017 11 2020 5
of the Case Inspection Office of the Disciplinary Commission ( 2023 4 14
) of Henan Coal Chemical Industry Group. From September 2013 to
August 2015, he was a director of the Case Inspection Office of the Disciplinary 2020 5
Commission of Henan Energy and Chemical Industry Group (during which, he 2023 4 14
enrolled in EMBA studies at Beijing Jiaotong University from December 2012 2021 3
to January 2015 and obtained a master’s degree in management). From
August 2015 to November 2017, he was a director of the Case Supervision
Office of the Disciplinary Commission, a member of the Party Committee and
the secretary to the Disciplinary Commission of the Sales Company of Henan
Energy and Chemical Industry Group. From November 2017 to May 2020, he
was a member of the Party Committee and the secretary to the Disciplinary
Commission of “Henan Machinery Investment Group Co., Ltd. (which changed
its name to Henan State-owned Capital Operation Group Investment Co., Ltd.
( )” on 14 April 2023). Since May
2020, he has been a member of the Party Committee, the secretary to the
Disciplinary Commission, and a director of Henan Machinery Investment Group
Co., Ltd. (which changed its name to “Henan State-owned Capital Operation
Group Investment Co., Ltd. ( )” on
14 April 2023). Since March 2021, he has been a supervisor of the Company.
46 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Directors, Supervisors and Senior Management
Supervisors (Continued)
Wang Yue ( ), male,was born in July 1970 in Nanyang County, Henan. 1970 7
He is a CPC member and a certified public accountant with a master’s degree. 1993 7
In July 1993, he graduated from Henan Institute of Finance and Economics ( 2006 7
) and obtained a bachelor’s degree in economics, majoring in 1993 10 1998 10
industrial economics. In July 2006, he obtained an MBA degree from Zhengzhou 1998 11 2001
University ( ). From October 1993 to October 1998, he was an 3 2004
accountant in Zhengzhou Running Water General Corporation ( 6 2009 12
). From November 1998 to March 2001, he was the deputy head 2009 12 2013 11
of the department of accounting and finance of Zhengzhou Dongzhou Water 2013
Supply Company Limited ( ). From June 2004 to 11 2015 9
December 2009, he was successively the deputy head and head of the finance 2015 9
department and the financial controller of Zhengzhou Running Water General 2023 4 14
Corporation. From December 2009 to November 2013, he was the chief 2018 2
accountant of Zhengzhou Running Water Investment Holdings Co., Ltd. (
). From November 2013 to September 2015, he
was the deputy general manager of Zhengzhou Development Investment Group
Co., Ltd. ( ). Since September 2015, he has
been the deputy general manager of Henan Machinery Investment Group Co.,
Ltd. (which changed its name to “Henan State-owned Capital Operation Group
Investment Co., Ltd. ( )” on 14 April
2023). Since February 2018, he has been a supervisor of the Company.
Zhang Minglin ( ), male, was born in January 1963. He is a CPC 1963 1
member and a professor-level senior engineer with a doctoral degree. From 1979 9 1983 7
September 1979 to July 1983, he studied at Huainan Mining Institute ( 2004 12
), majoring in mining. He obtained an EMBA degree from Huazhong 2007 12
University of Science and Technology ( ) in December 2004 1983 8 1987 8
and a doctoral degree in economics in December 2007 from that university. 1987 8 1996 5
From August 1983 to August 1987, he was a section member of Henan Coal 1995
Mine Supply Company ( ). From August 1987 to May 8 1996 2
1996, he worked as a section member, a deputy senior section member and 1996 5
a senior section member of Henan Coal Industrial Department. From August 1999 5 1999 5
1995 to February 1996, he went to Zhengqiao Village, Huzu Town, Gushi 2004 4
County in Xinyang to participate in the party construction in rural areas which 2000 10 2004 11
was organised by Henan Provincial Committee of Chinese Communist Party. 2004 11 2008 12
From May 1996 to May 1999, he was the deputy general manager of Henan 2008 12 2018
Coal Mine Supply Company. From May 1999 to April 2004, he served as the 2 2018 2
general manager and the secretary to the Party Committee of Henan Coal Mine 2021 3
Supply Company. From October 2000 to November 2004, he served as the
general manager of Henan Coal Sales Company Limited (
). From November 2004 to December 2008, he served as a
deputy general manager of ZCMM. From December 2008 to February 2018, he
has been the deputy general manager of the Company. Since February 2018,
he has been a researcher of the Company. Since March 2021, he has been a
supervisor of the Company.
As at the date of this annual report, Mr. Zhang Minglin held 75,000 A shares of 75,000 A
the Company, which accounted for approximately 0.005% of all the A shares of A 0.005%
the Company and approximately 0.004% of all the shares of the Company. 0.004%
2022
47
Directors, Supervisors and Senior Management
Supervisors (Continued)
Bao Xueliang ( ), male, was born in March 1963 in Jiangyin City, 1963 3
Jiangsu. He holds undergraduate qualifications. He graduated from China 1985
University of Mining and Technology ( ), majoring in mechanical 8 1998 6
design and automation. From August 1985 to June 1998, he successively 1998 7 2000 12
served as a technician, engineer and deputy plant manager of the sub-plant of
Tianjin Coal Mine Specialised Equipment Factory ( ). 2001 1 2007 5
From July 1998 to December 2000, he successively served as an investment 2007 6 2008
manager and a deputy director of the project investment department of Tianjin 10
Science and Technology Development Investment Corporation ( 2008 10 2008 12
). From January 2001 to May 2007, he successively served 2008 12
as the administrative director and standing deputy general manager of Tianjin 2015 2 2015 2
Bohai Venture Capital Investment Management Company ( 2021 3
). From June 2007 to October 2008, he served as the assistant
to the chairman of ZCMM. From October 2008 to December 2008, he served as
the board secretary (deputy general manager level) of ZCMM. From December
2008 to February 2015, he severed as the board secretary of the Company.
Since February 2015, he has been a researcher of the Company. Since March
2021, he has been a supervisor of the Company.
Cui Zonglin ( ), male, was born with Han nationality in May 1963. He, 1963 5
with Chinese nationality but without the right of permanent residence abroad,
is a CPC member, a senior economist and a human resource manager. In July 1983 7
1983, he graduated from Zhengzhou Coal Management Institute, majoring 1986 7 1995
in labour economics. In July 1986, he graduated from Zhengzhou University, 12 1983
majoring in law. In December 1995, he graduated from the Party School of CPC
Central Committee, majoring in economic management. He has been working
in the Company since 1983, successively serving as a principal staff member, 2018 2 2021 3
section chief, an assistant to the head and a deputy head of the human
resources department, and a deputy head (in charge of work) and the head of
the legal affairs department. He has been a special expert of the Company since
February 2018. Since March 2021, he has been a supervisor of the Company.
48 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Directors, Supervisors and Senior Management
Senior Management
Mr. Jia Hao ( ) is a general manager of the Company. Please refer to
“Directors” of this section for his biography.
Fu Qi ( ), male, was born in November 1969 in Biyang, Henan. He is a 1969 11
member of the Chinese Communist Party and a senior engineer. He is a deputy 1988 9 1992
general manager of the Company. From September 1988 to July 1992, he 7 1992
studied at China University of Mining and Technology, majoring in mechanical 7 1995 9
design and theories. From July 1992 to September 1995, he was a section 1995 9 1996 5 1996
member of the first development division of Zhengzhou Coal Mining Machinery 5 1996 12 1996 12
Factory. From September 1995 to May 1996 and from May 1996 to December 2006 1
1996, he was a senior section member and the deputy head of the first 2006 1 2008
development division, respectively. From December 1996 to January 2006, he 3 2008 3 2010
was a section officer and the deputy head of the sales planning division, the 4
deputy head of the marketing department, and the deputy head of the sub – 2010 4 2012 2
plant of installation of the Company. From January 2006 to March 2008, he 2012 2
was the head of the production and manufactory department of the Company.
From March 2008 to April 2010, he was the general manager of Zhengzhou
Coal Mining Machinery Group Material Trading Co., Ltd. From April 2010 to
February 2012, he was the chairman and the secretary of the Party Committee
of Huainan ZMJ Shun Li Machinery Co., Ltd. Since February 2012, he has been
the deputy general manager of the Company.
As at the date of this annual report, Mr. Fu Qi held 611,700 A shares of the 611,700 A
Company, which accounted for approximately 0.040% of all the A shares of the A 0.040%
Company and approximately 0.034% of all the shares of the Company. 0.034%
Zhang Haibin ( ), male, was born in September 1981 in Xinmi, Henan 1981 9
and is a member of the Chinese Communist Party. He is the secretary to the 2005 7
Board and company secretary of the Company. He graduated from China 2005 7
University of Mining and Technology and obtained a bachelor’s degree in law in 2007 3
July 2005. From July 2005 to March 2007, he was a secretary of the general 2007 3 2008 12
office of ZCMM. From March 2007 to December 2008, he served as the chief 2008 12 2010 3
secretary of the general office of ZCMM. From December 2008 to March 2010 3 2010 9
2010, he was the chief secretary of the general office of the Company. From 2010 9 2012 1
March 2010 to September 2010, he served as an assistant to the head of the 2012 1
general office of the Company. From September 2010 to January 2012, he 2015 2
served as the deputy head of capital operation department and representative 2012 7 2015 2
for securities affairs of the Company. From January 2012 to February 2015, 2015 2 2018 2
he was the head of general office, head of capital operation department and 2017 7 2018 2
representative for securities affairs of the Company. From July 2012 to February 2018 2 2021 1
2015, he was the head of division of party and masses’ affairs. From February
2015 to February 2018, he has been the deputy general manager and the
board secretary of the Company. From July 2017 to February 2018, he has
concurrently been the chief financial officer of the Company. Since February
2018, he has been the board secretary of the Company. Since January 2021,
he has also served as the director of Hong Qian Business Management (Henan)
Limited ( ).
As at the date of this annual report, Mr. Zhang Haibin held 611,700 A shares of 611,700 A
the Company, which accounted for approximately 0.040% of all the A shares of A 0.040%
the Company and approximately 0.034% of all the shares of the Company. 0.034%
2022
49
Directors, Supervisors and Senior Management
Senior Management (Continued)
Huang Hua ( ), female, was born in January 1969 in Zhongshan, 1969 1
Guangdong. She is a chartered financial analyst (CFA) and an engineer. She is (CFA) 1987 7
the chief financial officer of the Company. In July 1987, she graduated from
Central South University majoring in metal physics and obtained a bachelor’s 1990 8
degree in science. In August 1990, she obtained a master’s degree in 2000 12
engineering majoring in inorganic non-metal materials granted by the Institution MBA 1990 8 1991 11
of Metal Research under Chinese Academy of Sciences. In December 2000, 1991 12 1999 4
she obtained a master of business administration (MBA) degree from China
Europe International Business School. From August 1990 to November 1991, 2000 9 2001 5
she served as an assistant researcher at the Institution of Metal Research
(Shenyang) under Chinese Academy of Sciences. From December 1991 to 2001 8 2003 7
April 1999, she served as the plant manager of sub-plant, manager of the 2003 8 2005 3
corporate management department, chief engineer and assistant general 2005 5 2006 12
manager of Shenzhen Jinke Special Materials Co., Ltd. From September 2000 2007 1 2008 6
to May 2001, she served as a senior project manager at the capital operation VALEINCOLIMITED
department of China Online (Bermuda) Company Limited ( 2008 7 2017 9
). From August 2001 to July 2003, she served as investment 2017 10
manager of Shenzhen Innovation Centre Co., Ltd. ( 2018 2 2018
). From August 2003 to March 2005, she served as the general manager 2
and director of Shenyang Jinchangpu New Materials Company Limited (
). From May 2005 to December 2006, she served
as the general manager of Jinco Nonferrous Metals Co., Ltd. From January
2007 to June 2008, she served as a project manager and senior analyst at
VALE INCO LIMITED (formerly the headquarters of Inco Ltd. (
)). From July 2008 to September 2017, she served as the treasurer and
risk officer of Vale Minerals (China) Co. Ltd. (
). From October 2017 to February 2018, she has been the consultant for the
acquisition of Bosch by the Company. Since February 2018, she served as the
chief financial officer of the Company.
As at the date of this annual report, Ms. Huang Hua held 611,700 A shares of 611,700 A
the Company, which accounted for approximately 0.040% of all the A shares of A 0.040%
the Company and approximately 0.034% of all the shares of the Company. 0.034%
50 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Directors, Supervisors and Senior Management
Senior Management (Continued)
Li Weiping ( ), female, was born in February 1974 in Hengshan, 1974 2
Hunan. She is a deputy general manager of the Company. From October 2003 10 2005 6
2003 to June 2005, she studied under the MBA programme in the Hong MBA 1995 9 2002 8 ABB
Kong Polytechnic University. From September 1995 to August 2002, she
served as the human resources commissioner/supervisor/manager of ABB 2002 9 2004 9
Xinhui Low Voltage Switchgear Co., Ltd. (ABB ). 2004 9 2008 9
From September 2002 to September 2004, she served as the senior human 2008 7 2009 12
resources manager of Bosch Heating System Co., Ltd. (
). From September 2004 to September 2008, she served as the director 2010 1 2012 3
of human resources at Bosch Automotive Diesel Systems Co., Ltd. ( 2012 1 2018 8
). From July 2008 to December 2009, she served as the 2018 10
director of Asia-Pacific human resources at the German headquarters of Bosch
Rexroth (Rohr, Germany). From January 2010 to March 2012, she served as
the director of human resources at Bosch Rexroth Hydraulic (Beijing) Co., Ltd.
( ). From January 2012 to August 2018,
she served as the director of human resources and chief business officer of
Bosch Automotive Components (Suzhou) Co., Ltd. (
). Since October 2018, she has been the deputy general manager of
Zhengzhou Coal Mining Machinery Group Company Limited.
As at the date of this annual report, Ms. Li Weiping held 617,500 A shares of 617,500 A
the Company, which accounted for approximately 0.040% of all the A shares of A 0.040%
the Company and approximately 0.035% of all the shares of the Company. 0.035%
Company Secretary
Mr. Zhang Haibin is the company secretary. Please refer to “– Senior
Management” of this section for his biography.
Ms. Chan Yin Wah ( ), aged 47, is the assistant to the company 47
secretary. Ms. Chan is an associate director of SWCS Corporate Services
Group (Hong Kong) Limited. She has over 20 years of professional experience 20
in handling the corporate secretarial, compliance and share registry matters
for listed companies in Hong Kong. She has worked for various internationally
well-known professional firms and listed companies in Hong Kong. Ms. Chan
holds a bachelor’s degree in economics and a master’s degree in professional
accounting. She is a fellow member of The Hong Kong Institute of Chartered
Secretaries and The Institute of Chartered Secretaries and Administrators in the
United Kingdom. She is also a fellow member of the Association of Chartered
Certified Accountants.
2022 51
Corporate Governance Report
Corporate Governance
The Board is committed to maintaining a high standard of corporate governance.
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.
During the year ended 31 December 2022 (the “Review Period”), the 2022 12 31
Company complied with the requirements in the code provisions (the “Code
Provisions”) as set out in the Corporate Governance Code and Corporate
Governance Report (the “CG Code”) contained in Appendix 14 to the Rules
Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”).
Board of Directors
Responsibilities and Delegation to the Management
The Board is accountable to the shareholders for leading the Company in
a responsible and effective manner, being responsible for execution of the
resolutions passed at general meetings, deciding on the Company’s operating
plans, investment proposals and the establishment of its internal management
units, preparing the Company’s annual financial budgets, final accounts and
profit distribution plans, and appointing members of its senior management.
Meanwhile, the Board has established four Board committees, namely,
the Strategy and Sustainable Development Committee, the Audit and Risk
Management Committee, the Nomination Committee and the Remuneration
and Assessment Committee. These Board committees are assigned respective
responsibilities according to their terms of reference.
The Board delegated the authority and duties to the senior management to carry
out the daily management, administration and operation of the Company. The
general manager is accountable to the Board.
All Directors have carried out their duties in good faith, in the best interests of
the Company and in compliance with applicable laws and regulations, and act in
the interests of the Company and its shareholders at all times.
52 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Board of Directors (Continued)
Corporate Governance Functions of the Board
The Board is collectively responsible for performing the corporate governance
functions, which at least include the following:
to develop and review the Company’s policies and practices on corporate
governance;
to review and monitor the training and continuous professional
development of the Directors and senior management;
to review and monitor the Company’s policies and practices in compliance
with legal and regulatory requirements;
to develop, review and monitor the code of conduct and compliance
manual (if any) applicable to employees and the Directors; and
to review the Company’s compliance with the CG Code and disclosure in
the Company’s annual report.
Board Meetings
The Board will convene at least four regular meetings each year at
approximately quarterly intervals. Regular Board meetings will involve the active
participation, either in person or through electronic means of communication,
of a majority of Directors entitled to be present. A written notice should be sent
to all the Directors and Supervisors 14 days prior to the regular Board meeting.
For the extraordinary meetings of the Board, the written notice should be sent
to all the Directors and Supervisors five days prior to the meeting. When an
extraordinary meeting of the Board needs to be held as early as possible in
case of an emergency, the meeting notice is allowed to be given by telephone
or in other verbal forms at any time provided that the convener explains at the
meeting. A written notice of meeting shall at least include the business to be
considered and the meeting information as necessary for the Directors to vote.
When a Director and the enterprise(s) involved in a proposal of a Board meeting
have connected relations, such Director shall not exercise his/her voting rights
on such proposal, nor shall he/she exercise any voting rights on behalf of other
Directors.
Draft and final versions of minutes of Board meetings should be sent to all
Directors for their comments and records respectively within a reasonable
time after the Board meeting is concluded. The participating Directors shall
sign the meeting minutes and resolutions records for confirmation on behalf of
themselves and the Directors who authorise them to attend. Any Director who
has different views on the meeting minutes or the resolutions records can make
a written explanation when signing the name; when necessary, he/she shall
report such views to the regulatory authorities timely; he/she can also make a
public statement regarding such views.
2022 53
Corporate Governance Report
Board of Directors (Continued)
Board Meetings (Continued)
During the Review Period, the Board convened 10 meetings in total, one on 2022 3
each of 28 March 2022, 26 April 2022, 8 June 2022, 15 June 2022, 19 July 28 2022 4 26 2022 6 8 2022 6 15
2022, 4 August 2022, 30 August 2022, 6 September 2022, 26 October 2022 2022 7 19 2022 8 4 2022 8 30
and 21 December 2022. 2022 9 6 2022 10 26 2022 12 21
Attendance of meetings by each Director during the Review Period is recorded as
follows:
Number of Number of Number of
Board meetings Board meetings Board meetings Number of
attended required to be attended Board meetings
Name of Directors in person attended by proxy not attended Attendance rate
Mr. Jiao Chengyao 10 10 0 0 100%
Mr. Xiang Jiayu 10 10 0 0 100%
Mr. Jia Hao 10 10 0 0 100%
Mr. Fu Zugang 10 10 0 0 100%
Mr. Wang Xinying 10 10 0 0 100%
Mr. Cui Kai 10 10 0 0 100%
Mr. Fei Guangsheng 10 10 0 0 100%
Mr. Cheng Jinglei 10 10 0 0 100%
Mr. Ji Feng 10 10 0 0 100%
Ms. Guo Wenqing 10 10 0 0 100%
Mr. Fang Yuan 10 10 0 0 100%
54 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Board of Directors (Continued)
General Meetings
During the reporting period, the Company convened a total of two general 2
meetings, which was attended by some of the Directors, Supervisors and senior
management. Attendance of general meetings by the Directors is recorded as
follows:
2022 First
2021 Annual Extraordinary Attendance Actual
Name of Directors General Meeting General Meeting required attendance Attendance rate
2022
2021
Mr. Jiao Chengyao √ √ 2 2 100%
Mr. Xiang Jiayu √ √ 2 2 100%
Mr. Jia Hao √ √ 2 2 100%
Mr. Fu Zugang √ √ 2 2 100%
Mr. Wang Xinying √ √ 2 2 100%
Mr. Cui Kai √ √ 2 2 100%
Mr. Fei Guangsheng √ √ 2 2 100%
Mr. Cheng Jinglei √ √ 2 2 100%
Mr. Ji Feng √ √ 2 2 100%
Ms. Guo Wenqing √ √ 2 2 100%
Mr. Fang Yuan √ √ 2 2 100%
Board Composition
During the Review Period, the Board consisted of eleven Directors, comprising
five executive Directors, two non-executive Directors and four independent
non-executive Directors. One-third or more of the members of the Board of the
Company are independent non-executive Directors.
The executive Directors and non-executive Directors possess extensive
experience in equipment manufacturing industry, and the independent non-
executive Directors have appropriate professional qualifications in law and
accounting as well as financial management expertise. In accordance with the
Listing Rules, the independent non-executive Directors are explicitly identified in
all corporate communications.
As at the end of the reporting period and the date of this annual report, the
members of the Board were:
Executive Directors: Mr. Jiao Chengyao (Chairman), Mr. Xiang Jiayu (Vice
Chairman), Mr. Jia Hao, Mr. Fu Zugang and Mr. Wang Xinying.
Non-executive Directors: Mr. Cui Kai, Mr. Fei Guangsheng.
Independent non-executive Directors: Mr. Cheng Jinglei, Mr. Ji Feng, Ms. Guo
Wenqing and Mr. Fang Yuan.
2022 55
Corporate Governance Report
Board of Directors (Continued)
Board Composition (Continued)
The biographies of all the Directors are set out in the “Directors, Supervisors and
Senior Management” section of this annual report. Save as disclosed in such
section, there is no other material relationship among the members of the Board
(including financial, business, family or other material or relevant relationships).
Independent Non-executive Directors
The Board of the Company has, at all times, complied with the requirements
under the Listing Rules regarding the appointment of at least three independent
non-executive Directors (accounting for more than one-third of the number of
Directors), one of whom shall possess appropriate professional qualifications or
accounting or related financial management knowledge.
The Company has received annual confirmation of independence from all
the independent non-executive Directors. Based on the confirmation, the
Board considers that all the independent non-executive Directors meet the
independence requirements of the Listing Rules of the Stock Exchange.
The Company recognises that the independence of the Board is pivotal in good
corporate governance and board effectiveness. The Board has established a
mechanism to ensure that the independent views and opinions of any Director
of the Company can be communicated to the Board, including but not limited to
reviewing from time to time that independent non-executive Directors possess
appropriate qualifications and professional skills and have devoted sufficient
time to the Group, the number of independent non-executive Directors has
complied with the requirements of the Listing Rules, and channels have been
established to assess the contributions and opinions of the independent non-
executive Directors. The Board reviews the implementation and effectiveness of
the relevant mechanism each year.
During the reporting period, the independent non-executive Directors of the
Company strictly complied with relevant laws and regulations, the Company’s
Articles of Association, the relevant rules of procedure and the provisions of
the Company’s independent Director system, adhered to the independence
of the independent non-executive Directors, performed supervisory functions,
participated in the making of various major decisions and the review of
regular reports, financial reports and related-party transactions, and played an
important role in the Company’s standardized operation, thereby safeguarding
the legitimate rights and interests of minority shareholders.
Chairman and General Manager
The roles of the Chairman and the General Manager of the Company have
been separated and performed by different individuals. During the Review
Period, Mr. Jiao Chengyao was the Chairman of the Company and Mr. Jia
Hao was the General Manager. The Chairman is primarily responsible for the
leadership and effective running of the Board and ensuring that all significant
and key issues are discussed and where required, resolved by the Board timely
and constructively. The General Manager is delegated with the authority and
responsibility to manage the Company’s day-to-day business in all aspects
effectively, implement major strategies and coordinate the overall business
operation.
56 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Internal Control
The Board is fully responsible for evaluating and determining the nature and
extent of the risks that the Company is willing to take in achieving its strategic
objectives. In accordance with the requirements set out in paragraph D.2 of D.2
the CG Code in Appendix 14 to the Listing Rules, the Board has established a
risk management and internal control system, and has continuously supervised
and reviewed the effectiveness of the system’s operation. The system is
aimed at managing, instead of eliminating, the risks of failure to achieve
business objectives, fostering effective and highly efficient operation, and
offering reasonable assurances as to the reliability of the financial reports and
compliance with the applicable laws and regulations, and safeguarding the
Group’s assets.
Structure of Risk Management and Internal Control
Functions
To ensure the adequacy of resources, staff qualifications and experience,
training courses and the related budget available to the Company in respect
of risk management and internal audit, the Company has established a sound
organisational structure of risk management and internal control that includes
the Board, the Audit and Risk Management Committee, the management of the
Company, the Audit and Legal Department, the Risk Management Department
and various departments of the Company.
The Board is ultimately responsible for the risk management and internal control
of the Company by determining the overall risk preference and risk tolerance of
the Company based on the strategic development objectives and ensuring the
effectiveness of the risk management and internal control system. The Audit
and Risk Management Committee under the Board monitors the operation of the
Company’s risk management and internal control system, advises the Board and
makes recommendations on major decisions regarding the building of the risk
management and internal control system. The management of the Company is
responsible for laying down the risk management and internal control structure
and basic requirements, and continuously improving the scope, substance,
methodology and procedure of work of the structure. The Audit and Legal
Department and the Risk Management Department of the Company conducts
internal audit and supervision for risk management, and is responsible to the
management of the Company. As the first line of defence in risk management
and internal control, various departments of the Company organise and carry out
the daily work in risk management and accept the organisation, coordination,
guidance and supervision by the management, the Audit and Legal Department
and the Risk Management Department of the Company in doing their part of risk
management and internal control in their respective professional areas.
2022 57
Corporate Governance Report
Internal Control (Continued)
Structure of Risk Management and Internal Control Functions
(Continued)
Commencement of risk management work
Risk prevention determines the course in building the Company’s system and
internal control structure. During the Review Period, based on the methodology
of risk management covering risk identification, risk assessment, risk response,
risk reporting and monitoring, the Company focused on its overall operating
objectives, combined the internal and external circumstances, as well as the
management conditions of the Company, fully reorganised and identified the
possible risks from different aspects, such as strategy, operation, finance,
market, law and others, and thereby built up a risk incident database that was
unique to the Company.
On the basis of risk identification, each responsible department for risks
performs an in-depth analysis of the risks identified from two perspectives,
namely vulnerability to the occurrence of risk and the extent of impact from
the occurrence of risk, in order to determine the different levels of risk and,
through evaluation, ascertain the major risks the Company is faced with.
This is to ensure that appropriate management resources are allocated to
the management of major risks in an effort to step up the risk prevention and
control in key areas.
The Risk Management Department of the Company is responsible for internal
audit in risk management. By organising and commencing the supervision
and assessment of risk management, the Audit Department of the Company
continuously monitors and controls the major risks and information on changes
in risks in the course of operation and management of each responsible
department for risks, supervises and assesses whether each department is
able to commence risk management work in accordance with the relevant
regulations and the results of the work, and makes recommendations on
improving the effectiveness of implementing risk management work.
58 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Internal Control (Continued)
Structure of Risk Management and Internal Control Functions
(Continued)
Operation of the internal control system
The building and improvement of internal control is an effective response
to risks. Every year, the Company reviews the effectiveness of the risk
management and internal control system, and evaluates all the key areas of
control, including financial control, operations control and compliance control.
On the basis of adequately identifying and evaluating risks, the Company
implements the basic response measures to risks for internal control through
specific business processes. In view of the management and business
processes involved in major risks, the Company has formulated whole-process
control measures covering every stage, including management procedures and
internal control measures for important processes, such as the preparation
and disclosure of financial reports, as well as the handling and dissemination
of inside information. Through gradual formation of a sound internal control
environment, characterised by well-defined powers and responsibilities, effective
checks and balances, and coordinated operation, the Company has laid a solid
foundation for enhancing the level of internal control and risk management.
Risk management and internal control for the Review Period was reviewed at 2023 3 29
the Board meeting on 29 March 2023. The results of the commencement of 2022
risk management and internal control work in 2022 indicated no control failure
for major risks in the Company and revealed no weakness in major risk control.
The Company has been in strict compliance with the requirements about risk
management and internal control in the CG Code. The Board has assessed
the Company’s risk management and internal control system as effective and
adequate.
2022 59
Corporate Governance Report
Internal Control (Continued)
Appointment, Re-election and Removal of Directors
The procedures and process of appointment, re-election and removal of
Directors are laid down in the Company’s corporate documents such as the 153
articles of association of the Company (the “Articles of Association”). In
accordance with Article 153 of the Articles of Association, the Directors shall be 3
elected or replaced at the shareholders’ general meeting and can be removed
from their office prior to the expiry of their term by the general meeting, with a
term of 3 years. At the expiry of such term of office, the term is renewable upon
re-election.
Employee representatives in the Board shall be elected or removed at employee
representatives’ general meetings, employees’ general meetings or other
democratic elections.
The Company has not entered into any service contract (except for any contract
expiring or determinable by the Company within one year without payment of
compensation other than statutory compensation) with any of the Directors/
Supervisors.
Directors’ Training and Professional Development
Each newly appointed Director has received formal, comprehensive and tailored
induction after his/her initial appointment to ensure appropriate understanding
of the business and operation of the Company and full awareness of Director’s
responsibilities and obligations under the Listing Rules of the Stock Exchange
and relevant statutory requirements.
The Directors also reviewed the amendments to or up-to-date version of the
relevant laws, rules and regulations regularly. In addition, the Company has
been encouraging the Directors and executives to enroll in a wide range of
professional development courses and seminars relating to the Listing Rules,
companies ordinance/act and corporate governance practices organised by
professional bodies, independent auditors and/or chambers in Hong Kong so
that they can continuously update and further improve their relevant knowledge
and skills. From time to time, the Directors are provided with written training
materials to develop and refresh their professional skills.
The Directors are encouraged by the Company to participate in continuous
professional development so that their relevant knowledge and skills can be
improved and updated. The Company has arranged internal training for the
Directors by seminars and provision of training information.
During the year ended 31 December 2022, all the Directors had been given 2022 12 31
relevant guideline materials and attended trainings regarding the duties and
responsibilities of being a Director, as well as the relevant laws and regulations
applicable to the Directors.
60 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Internal Control (Continued)
Insurance for Directors
To mitigate the exposure to liabilities of the Directors, at the annual general 2013 6 7
meeting held on 7 June 2013, the Company resolved to take out an insurance
plan at a total premium of not more than US$30 million for the Directors,
Supervisors and chief executives to cover their liabilities (the “Liability
Insurance”) and confirmed that arrangements regarding the Liability Insurance 2014 7 19 2015 7 18 2015 7
had been completed. The Liability Insurance covered the periods from 19 July 19 2016 7 18 2016 7 19 2017 7
2014 to 18 July 2015, from 19 July 2015 to 18 July 2016, from 19 July 2016 18 2017 7 18 2018 7 17 2018 7
to 18 July 2017, from 18 July 2017 to 17 July 2018 and from 18 July 2018 18 2019 7 17 2019 6 20
to 17 July 2019. At the annual general meeting held on 20 June 2019, the
Company resolved to take out an Liability Insurance plan at a total premium of 2019 7 18 2020 7 17 2020
not more than US$10 million, the Liability Insurance covered the periods from 7 18 2021 7 17 2021 7 18 2022
18 July 2019 to 17 July 2020, from 18 July 2020 to 17 July 2021 and from 7 17 2022 5 30
18 July 2021 to 17 July 2022. At the annual general meeting held on 30 May
2022, the Company resolved to take out an Liability Insurance plan at a total 2022 7 18 2023 7 17
premium of not more than US$10 million, the Liability Insurance covered the
period from 18 July 2022 to 17 July 2023.
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
Listing Rules of the Stock Exchange as its code of conduct regarding securities
transactions by the Directors and the Supervisors. The Company has made
specific enquiries with all the Directors and Supervisors, who have confirmed
their compliance with the Model Code during the Review Period.
Remuneration Policy
The Company has endeavored to improve its remuneration management
measures for its Directors, Supervisors and senior management under the
guidance of relevant policies of the PRC. The Company’s remuneration system
for Directors, Supervisors and senior management is based on the principle
of combining incentives and disciplines, and market-oriented adjustment and
governmental regulation.
The Directors receive remuneration in different forms, including salaries,
allowances, benefits in kind, discretionary bonuses and retirement scheme
contributions made on their behalf.
During the Review Period, Ms. Guo Wenqing, as an independent non-executive 2022
Director, has waived her remuneration for January to May 2022. 1-5
Save as disclosed above, there was no other arrangement under which a
Director waived or agreed to waive any remuneration.
2022 61
Corporate Governance Report
Internal Control (Continued)
Responsibility Statement of Directors Regarding Preparation
of Account
All the Directors of the Company acknowledged their responsibilities to the 2022 12 31
preparation of the Company’s account for the year ended 31 December 2022.
The Board was not aware of any material uncertainties relating to events or
conditions that might cast significant doubt upon the Group’s ability to continue
as a going concern and the Board prepared the financial statements on a going
concern basis.
Board Committees
During the Review Period, the Board has set up four committees, namely,
the Strategy and Sustainable Development Committee, the Audit and Risk
Management Committee, the Nomination Committee and the Remuneration
and Assessment Committee, in accordance with the CG Code. These Board
committees are assigned respective responsibilities according to their terms of
reference. The composition and main functions of these committees and their
work during the Review Period are set out as follows:
Strategy and Sustainable Development Committee
As of the date of this annual report, the members of the Strategy and
Sustainable Development Committee comprised Mr. Jiao Chengyao (Chairman),
Mr. Xiang Jiayu, Mr. Fei Guangsheng, Mr. Jia Hao and and Mr. Cheng Jinglei.
The primary responsibilities of the Strategy and Sustainable Development
Committee are:
(i) to study the long-term development strategies and key investment (i)
decisions of the Company and table proposals;
(ii) to study and table proposals on major investment and financing plans that (ii)
are required to be approved by the Board of Directors under the “Articles
of Association”;
(iii) to study and table proposals on major capital operation and asset (iii)
management projects that are required to be approved by the Board of
Directors under the “Articles of Association”;
(iv) to study and table proposals on other major matters affecting the (iv)
development of the Company;
(v) to conduct inspections on the implementation of the above matters; (v)
(vi) to study and table proposals on the Company’s sustainable development (vi)
strategies, plans and programmes, and to assist the Board in discharging
its responsibilities regarding sustainable development management; and
(vii) exercising other functions and duties as authorised by the Board. (vii)
The Strategy and Sustainable Development Committee did not convene any
meeting during the year.
62 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Board Committees (Continued)
Audit and Risk Management Committee
As of the date of this annual report, the members of the Audit and Risk
Management Committee comprised Mr. Ji Feng (Chairman), Mr. Cui Kai and
Ms. Guo Wenqing. The Audit and Risk Management Committee is chaired by an
independent non-executive Director and comprises a majority of independent
non-executive Directors.
The primary responsibilities of the Audit and Risk Management Committee
are to review and supervise the Company’s financial reports and auditing (i)
work, including: (i) proposing appointment and replacement of the Company’s (ii)
independent auditors; (ii) supervising the Company’s internal auditing policies
and their implementation, supervising the financial statements and annual (iii)
reports and accounts of the Company, and reviewing material opinions (iv)
regarding financial reporting as stated in financial statements and reports; (iii) (v)
coordinating the communication between our internal Audit Department and (vi)
the independent auditors; (iv) reviewing the Company’s financial information
and disclosure of such information; (v) reviewing the Company’s internal control (vii)
system and auditing on the material connected or related party transactions; (vi)
reviewing the Company’s financial control, internal control and risk management (viii)
systems and to evaluate whether there is material failure or weakness in the
risk management and internal control of the Company; (vii) discussing the risk (ix)
management and internal control system with the management to ensure that
the management has performed its duty to establish such effective systems; (viii) (x)
researching on major investigation findings on risk management and internal
control matters and the management’s response to these findings as delegated
by the Board or on its own initiative; (ix) evaluating the changes in the nature
and extent of significance of the material risks the Company faces after the
previous year and its ability to respond to the changes in the business and the
changes in external environment; and (x) exercising other functions and duties as
authorised by the Board.
2022 63
Corporate Governance Report
Board Committees (Continued)
Audit and Risk Management Committee (Continued)
During the Review Period, the Audit and Risk Management Committee convened
four meetings, with full attendance of the entire committee:
(1) On 25 March 2022, the Audit and Risk Management Committee of the (1) 2022 3 25
fourth session of the Board convened its first meeting in 2022, where it 2022
considered and approved the Proposal on 2021 Audited Domestic and 2021
Overseas Financial Report of the Company, the Proposal on 2021 Annual 2021
Report and Summary of the Company, the Proposal on the 2021 Report 2021
on Internal Control Assessment of the Company, the Proposal on the 2021 2021
Report on the Performance of Duties of the Audit Committee of the Board 2022
of the Company, the Proposal on the Provision for Impairment of asset, the
Proposal on the Reappointment of External Audit Institution and Internal 2021 2022
Control Audit Institution for 2022, the Proposal on the Daily Connected
Transactions of the Company in 2021 and the Expected Daily Connected
Transactions of the Company in 2022, the Proposal on the Changes of < >
the Company’s accounting policies; the Proposal on the Adjustment of <
the name and functions of the Audit Committee and amendment of the > <
Implementation Rules of the Audit Committee, the Proposal on Reviewing >
the Comprehensive Risk Management System of Zhengzhou Coal Mining
Machinery Group Company Limited and the Proposal on Reviewing the
Internal Control System of Zhengzhou Coal Mining Machinery Group
Company Limited;
(2) On 26 April 2022, the Audit and Risk Management Committee of the (2) 2022 4 26
fifth session of the Board convened its first meeting in 2022, where it 2022
considered and approved the Proposal on the 2022 First Quarterly Report 2022
of the Company;
(3) On 29 August 2022, the Audit and Risk Management Committee of the (3) 2022 8 29
fifth session of the Board convened its second meeting in 2022, where 2022
it considered and approved the Proposal on 2022 Interim Report of the 2022
Company;
(4) On 26 October 2022, the Audit and Risk Management Committee of the (4) 2022 10 26
fifth session of the Board convened its third meeting in 2022, where it 2022
considered and approved the Proposal on the 2022 Third Quarterly Report 2022
of the Company.
64 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Board Committees (Continued)
Nomination Committee
As of the date of this annual report, the members of the Nomination Committee
comprised Ms. Guo Wenqing (Chairman), Mr. Xiang Jiayu and Mr. Cheng
Jinglei. The Nomination Committee is chaired by an independent non-executive
Director and is composed of a majority of independent non-executive Directors.
The primary responsibilities of the Nomination Committee are to: (i) advise (i)
on the size and structure of the Board in accordance with the position of
the Company’s operation, scale of assets and shareholding structure; (ii) (ii)
formulate the selection criteria and procedures for candidates of the Company’s (iii) (iv)
Directors and management personnel; (iii) search for qualified candidates of (v)
Directors and management personnel; (iv) review the qualifications and other (vi)
credentials of the candidates of Directors and management personnel; (v) (vii)
assess the independence of independent non-executive Directors; (vi) make
recommendations on the appointment and re-appointment of the Company’s
Directors; and (vii) exercise other functions and duties as authorised by the
Board.
During the Review Period, the Nomination Committee reviewed the structure,
size and composition of the Board. Given its view that the Company had no
reason for urgency to change the structure, size and composition of the Board,
the Nomination Committee did not hold any meeting during the reporting period.
Remuneration and Assessment Committee
As of the date of this annual report, the members of the Remuneration and
Assessment Committee comprised Mr. Ji Feng (Chairman), Mr. Jia Hao and
Mr. Fang Yuan. The Remuneration and Assessment Committee is chaired
by an independent non-executive Director and is composed of a majority of
independent non-executive Directors.
The primary responsibilities of the Remuneration and Assessment Committee (i)
are to: (i) formulate the remuneration and compensation policies and schemes (ii)
for the Company’s Directors and management personnel; (ii) evaluate the
performance of the Company’s Directors and management personnel and (iii) (iv)
assess the appropriate remuneration package for such Directors and officers;
(iii) supervise the implementation of remuneration policies and schemes; and (iv)
exercise other functions and duties as authorised by the Board.
2022 65
Corporate Governance Report
Board Committees (Continued)
Remuneration and Assessment Committee (Continued)
During the Review Period, the Remuneration and Assessment Committee
convened three meetings, with full attendance of the entire committee:
(1) On 28 March 2022, the Remuneration and Assessment Committee of (1) 2022 3 28
the fifth session of the Board convened its first meeting in 2022, where it 2022 2019-
considered and approved the Proposal on Confirming the Provision Amount 2021 <
of Super Profit Incentive Payment for the years 2019 to 2021, and the 2019-2021
Proposal on Distribution plan of 2019-2021 super profit incentive scheme >
of Zhengzhou Coal Mining Machinery Group Co., Ltd.;
(2) On 15 June 2022, the Remuneration and Assessment Committee of the (2) 2022 6 15
fifth session of the Board convened its second meeting in 2022, where it 2022 2021
considered and approved the “Proposal on Reviewing the Results of the 2021
2021 Annual Performance Assessment of the Participants of the 2021 2021
Restricted Share Incentive Scheme”, the “Proposal on the Adjustment to 2021
the repurchase price of the 2021 Restricted Share Incentive Scheme”,
the “Proposal on the Repurchase and cancellation of partially Restricted 2021
Shares which are granted but not yet released under the 2021 Restricted
Share Incentive Scheme”, and the “Proposal on Meeting the Unlocking
Conditions for the First Unlocking Period of the 2021 Restricted Share
Incentive Scheme”;
(3) On 21 December 2022, the Remuneration and Assessment Committee of (3) 2022 12 21
the fifth session of the Board convened its third meeting in 2022, where 2022
it considered and approved the “Proposal on the Adjustment to the List 2019
of Participants and the Number of Options under the 2019 Share Option 2019
Incentive Scheme and Cancellation of Certain Options”, the “Proposal
on Reviewing the Results of the Annual Performance Assessment of the 2019
Participants for the Second Exercise Period of the 2019 Share Option
Incentive Scheme”, and the “Proposal on Meeting the Conditions of
Exercise for the Second Exercise Period of the 2019 Share Option Incentive
Scheme”.
Pursuant to Code Provision E.1.5 of the CG Code, the annual remuneration E.1.5 2022 12
of the members of the senior management by band for the year ended 31 31
December 2022 is set out below:
Remuneration band (RMB’000) Number of individuals
0-500 3
500-750 0
750-1,000 0
>1,000 8
66 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Board Diversity Policy
Purpose
With a view to achieving sustainable and balanced development, the Company
sees the increasing diversity of the Board as an essential element in supporting
the attainment of its strategic objectives and maintaining its sustainable
development. In designing the Board’s composition, Board diversity has been
considered from a number of aspects, including but not limited to gender, age,
cultural and educational background, ethnicity, professional experience, skills,
knowledge and length of service. All Board appointments will be based on
meritocracy, and candidates will be considered against objective criteria, having
due regard for the benefits of diversity on the Board.
Measurable Objectives
Candidates for the Company’s Directors will be selected based on a range of
diversity perspectives, including but not limited to gender, age, cultural and
educational background, ethnicity, professional experience, skills, knowledge
and length of service. The ultimate decision will be based on merit and
contribution that the selected candidates will bring to the Board. The Board’s
composition (including gender and age) will be disclosed in the annual report of
the Company each year.
In order to implement the board diversity policy, the following measurable
objectives have been adopted: (i) the Company shall comply with the (i)
requirements of the Listing Rules regarding the composition of the Board from (ii)
time to time; (ii) the number of independent non-executive Directors shall not (iii)
be less than three and one-third of the number of Board members; (iii) at least (iv)
one Director shall possess appropriate professional qualifications or accounting
or related financial management expertise; and (iv) at least one female Director.
The Board has achieved such measurable objectives for the year.
The Company has also taken, and will continue to take, steps to promote
diversity in its workforce at all levels. All qualified employees shall have access
to equal employment, training and career development opportunities without
discrimination. During the year, female employees accounted for 23.7% of the 23.7%
total number of employees of the Company. During the year, the training rate,
average number of training hours and employee turnover rate by gender are as
follows:
Indicator 2022
2022
Training rate
Male 97%
Female 99%
Average number of training hours
Male 23.93
Female 31.94
Employee turnover rate
Male 14%
Female 12%
In order to promote the diversification of the Company’s management and
employees, the Company will give due consideration to increasing the proportion
of female members when selecting and recruiting employees.
2022 67
Corporate Governance Report
Board Diversity Policy (Continued)
Monitoring and Reporting
The Nomination Committee will review annually on the Board’s composition
in respect of diversity, and monitor the implementation of the Board Diversity
Policy.
Auditors’ Remuneration
The Company has appointed PricewaterhouseCoopers and BDO China Shu Lun
Pan Certified Public Accountants LLP as the international and domestic auditors
of the Company, respectively. The Company has not changed auditors in the 2022 12
past three years. Details of fees paid or payable to the auditors by the Group for 31
the year ended 31 December 2022 are as follows:
Services rendered Fees
(RMB’000)
2022 annual audit 2022 15,320
Non-audit services 1,919
Total 17,239
Company Secretary
The company secretary of the Company is Mr. Zhang Haibin (“Mr. Zhang”),
who also acts as the Board secretary of the Company, is an employee of the
Company and has knowledge of the Company’s day-to-day affairs.
In addition, the Company appointed Ms. Chan Yin Wah (“Ms. Chan”) as the
assistant to the company secretary, to work closely with Mr. Zhang and to
provide assistance to Mr. Zhang to discharge his duties and responsibilities as H
company secretary such as organising meetings of the Board and meetings 3.28
of holders of the H Shares and gaining the relevant experience as required
under Rule 3.28 of the Listing Rules of the Stock Exchange. Ms. Chan is an
associate director of a corporate service provider, SWCS Corporate Services
Group (Hong Kong) Limited. The primary corporate contact person at the
Company is Mr. Zhang, whom Ms. Chan will contact on matters relating to
corporate governance, the Listing Rules of Hong Kong as well as other laws
and regulations which are relevant to the Company and other affairs of the
Company.
Mr. Zhang and Ms. Chan took not less than 15 hours of relevant professional
training during the Review Period, respectively. 15
68 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Investor Relations, Communication with Shareholders
and General Meeting
The Company believes that effective communication with shareholders is
essential for enhancing investor relations and investors’ understanding of the
Group’s business performance and strategies. The Company also recognises the
importance of transparency and timely disclosure of corporate information. The
Company formulated the “Investor Relations Management System of Zhengzhou
Coal Mining Machinery Group Co., Ltd.,” which clarifies the communication
methods of shareholders and the organisation and implementation of investor
relations activities.
Information of the Company is communicated mainly through the Company’s
corporate communications including interim and annual reports, announcements
and circulars, etc. These publications are sent to the shareholders in
a timely manner and are also available on the website of the Company (http://www.zmj.com)
(http://www.zmj.com). The means of communication between the Company and
the shareholders also include general meetings, analysts meetings or seminars,
one-on-one meetings, telephone consultation, advertisements, media interviews
and coverage, site visits and roadshows, etc.
The Company publishes its solutions and products, market expansion
information and updates on its official website, so that investors can keep
abreast of the Company’s latest developments. At the same time, in order to
promote the communication between the Company and investors, the Company
will report the annual operating conditions and financial data and answer the
questions of investors and analysts in the form of results presentations. The
Company regards the annual general meeting as an important event of the
Company during the year, and the Directors and key senior management try
their best to attend and communicate with investors.
The Board has reviewed the implementation and effectiveness of the Company’s
investor relations policies. Taking into account the implementation of diversified
communication channels and participation channels, the Board believes that the 2022 12 31
Company has properly implemented effective investor relations policies for the
year ended 31 December 2022.
2022 69
Corporate Governance Report
Shareholders’ Rights
According to the “Articles of Association”, shareholder(s) individually or in 10%
aggregate holding 10% or above of the shares of the Company shall have the
right, by written requisition to the Board to propose an extraordinary general
meeting to be called. The Board shall, in accordance with laws, administrative
regulations, and the Articles of Association, make a response in writing on
whether or not it agrees to convene an extraordinary general meeting, within
ten days upon receipt of such requisition. If the Board agrees to convene the
extraordinary general meeting, a notice convening the extraordinary general 10%
meeting shall be issued within five days to all shareholders after the Board
resolves to do so. If the Board does not agree to convene the extraordinary
general meeting or does not reply within 10 days upon receiving the request,
shareholder(s) individually or jointly holding 10% or above of the Company’s
shares shall have the right to propose to the Board of Supervisors to convene
an extraordinary general meeting by way of written request. If the Board of 90 10%
Supervisors agrees to convene the extraordinary general meeting, a notice
convening the extraordinary general meeting shall be issued within five days
upon receiving the request. Should there be alterations to the original proposals
in the notice, consent has to be obtained from the related shareholders. If the
Board of Supervisors does not issue a notice of the general meeting within the
required period, it will be considered as not going to convene and preside over
the general meeting, and shareholder(s) individually or jointly holding 10% or
above of the shares of the Company for over 90 consecutive days shall have
the right to convene and preside over the meeting on their own. All reasonable
expenses incurred for such meeting convened by the shareholders as a result of
the failure of the Board and the Board of Supervisors to convene a meeting as
required by the above request(s) shall be borne by the Company, and any sum
so compensated shall be set-off against sums owed by the Company to the
defaulting Directors.
When a general meeting is convened, shareholder(s) individually or jointly 3%
holding 3% or above of the Company’s shares shall have the right to submit
proposals to the Company. Shareholder(s) individually or jointly holding 3% 3%
or above of the Company’s shares can submit a temporary proposal to the
convener 10 days prior to the general meeting.
Shareholders have the right to make enquiries and copies of the minutes of
general meetings, resolutions of Board meetings and resolutions of the Board of
Supervisors.
70 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Shareholders’ Rights (Continued)
Shareholders may make enquiries about the Company’s affairs through our
investor relations department of the Company:
Strategic Development Department of Zhengzhou Coal Mining Machinery Group
Company Limited
Address: No. 167, 9th Street,
Zhengzhou Section (Econ-Tech Development Zone) of
China (He’nan) Pilot Free Trade Zone, PRC 167
Telephone: (86 371) 6789 1199 (86 371) 6789 1199
Fax: (86 371) 6789 1000 (86 371) 6789 1000
Postal Code: 450016 450016
Amendments to the Articles of Association
During the Review Period, the Articles of Association of the Company has been
revised once. The amendments were considered and approved at the Annual 2022 5 30
General Meeting held on 30 May 2022. Please refer to the announcement of 2022 3 28
the Company dated 28 March 2022 and the circular of the Company dated 14 2022 5 14
May 2022 respectively for details.
Dividend Policy
The Company has adopted a dividend policy, pursuant to which the Company
may declare and distribute dividends to the shareholders of the Company to
allow the shareholders to share the Company’s profits and the Company to
retain adequate reserves for future growth (the “Dividend Policy”).
In accordance with the “Articles of Association”, the Dividend Policy is as
follows:
(I) Profit distribution of the Company shall reflect reasonable investment
returns to the investors and, by giving considerations to the reasonable
capital demands of the Company, work out a profit distribution plan in
conformity with the sustainable development requirement and profit
optimisation principle of the Company by referring to factors such as the
size of share capital, development strategies, investment plans, profit
growth and cash flows.
(II) The Company may pay dividends in the form of cash or shares and may
conduct interim dividend distribution in the form of cash. If the cash flow
allows, profit distribution should be conducted in the form of cash dividend.
2022 71
Corporate Governance Report
Dividend Policy (Continued)
(III) The conditions of cash dividend of the Company: when the Company
records a profit for the year and the cumulative undistributed profit for the
year, after making up for losses in previous years and allocation to the
common reserve fund in accordance with laws, is positive in value, and
where the auditing firm issues an unqualified audit opinion on the financial
report of the Company for the year, the Company may prioritise distribution
of dividend in cash. If the Company distributes dividend in cash, it shall
follow the rules below:
1. If the Company is in a mature development stage without significant 1.
capital expenditure plans, the minimum percentage of cash dividend
in profit distribution shall be 80%; 80%
2. If the Company is in a mature development stage with significant 2.
capital expenditure plans, the minimum percentage of cash dividend
in profit distribution shall be 40%; 40%
3. If the Company is in a growth stage with significant capital 3.
expenditure plans, the minimum percentage of cash dividend in profit
distribution shall be 20%; 20%
If it is difficult to determine the Company’s stage of development while
it has a significant capital expenditure plan, the profit distribution may
be dealt with pursuant to the rules applied in the previous distribution.
Major investment or significant cash expenditure refers to the proposed
external investment by the Company within the next twelve months, 10%
asset acquisition (including land use rights) or facilities procurement with
accumulated expenditure amounting to or exceeding 10% of the latest
audited net assets of the Company.
(IV) Specific conditions for share dividend distribution: provided that the
Company’s business is in a sound condition and the reasonable scale
of share capital of the Company is ensured, and when the Board of the
Company believes the share dividend distribution will be in the interests of
all shareholders of the Company, the Company may propose to distribute
the share dividend and implement upon the consideration and approval at
the general meeting.
72 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Dividend Policy (Continued)
(V) The profits of the Company to be distributed shall not go beyond the scope
of cumulative distributable profits.
(VI) When profits are recorded in the current year and after the Company has
sufficiently allocated to the statutory reserve fund, the cumulative profits
distributed in cash for the last three years shall not be less than 30% of 30%
the average distributable profits realised for the last three years.
(VII) Where there is a change in the Company’s control resulting from securities
issuance, material asset reorganisation, merger, division or acquisition,
the Company shall disclose in details the cash dividend policy and relevant
arrangements after such offering, issuance, reorganisation or change in
the control, as well as the Board’s explanation of the aforesaid, in the
prospectus, offering proposal, material asset reorganisation report, report
of change of interest or acquisition report.
(VIII) On the premise that the returns to shareholders has been thoroughly
considered and the legitimate rights and interests of the public
shareholders are guaranteed, if the Company realises profits at the current
year, the Board of Directors shall bring forward scientific and reasonable
profit distribution suggestions and proposal and submit them to the
shareholders’ general meeting for voting. The Company shall practically
secure the right of public shareholders to attend the shareholders’
general meeting; and the Board of Directors, independent Directors and
shareholders meeting certain conditions may solicit the right to vote at the
shareholders’ general meeting from shareholders of the Company.
2022 73
Corporate Governance Report
Dividend Policy (Continued)
(IX) Decision-making processes and mechanisms for profit distribution of the
Company:
1. The Board of Directors of the Company shall devise a reasonable 1.
dividend distribution recommendation and proposal based on the
profitability, capital requirements and shareholders’ returns plan of
the Company and implement after the consideration and approval
at the general meeting upon the consideration and approval by the
Board. Any adjustment thereof shall go through the procedures above
again. The independent Directors of the Company shall examine the
profit distribution proposal and issue independent opinions thereon;
independent Directors may solicit opinions of minority shareholders,
prepare a dividend distribution proposal and submit it directly to the
Board for consideration.
2. The Company shall strictly implement its cash dividend policy as 2.
determined in the Articles of Association and the specific cash
dividend proposal as considered and approved at the general
meeting. If the Company needs to adjust or change the cash dividend
policy as determined in the Articles of Association, it is required to
satisfy the conditions under the Articles of Association and execute
appropriate decision-making procedures after substantiation. The 2/3
adjustment or changes shall be passed by shareholders representing
not less than two-thirds of voting rights held by all shareholders
present at the meeting; the independent Directors shall give
explicit opinion on matters such as the truthfulness, adequacy
and reasonableness of the reasons for adjustments and changes,
truthfulness and validity of the approval procedures as well as its
compliance with the conditions required in the Articles of Association,
and communicate and exchange ideas with minority shareholders
before the general meeting and give timely reply to issues that
concern minority shareholders. Independent Directors may collect
opinions from shareholders through the online voting system, if
necessary.
3. Specific conditions for the Company to adjust the cash dividend 3. (1)
policy: (1) the Company suffers from losses or has issued a loss (2)
warning announcement; (2) the balance of cash, excluding cash
raised from capital markets and cash within special funding for
special purposes or special account management funding such as
government special financial funds (including bank deposits and
bonds with high liquidity), is not sufficient to pay the cash dividends (3)
within two months from the date of general meeting approving the
profit distribution; (3) execution of the established dividend policy (4)
will render it impossible for the material investment projects and
material transactions approved by the general meeting or the Board
to be implemented according to established transaction plans; (4)
the Board has reasonable grounds to believe that execution of the
established dividend policy will have a material adverse impact on the
continuing operation and profitability of the Company.
74 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Dividend Policy (Continued)
(X) Mechanism for supervision and restraint on cash dividend
1. The Board of Supervisors shall supervise the implementation of the 1.
Company’s dividend distribution policy and shareholders’ returns
plan by the Board and the management, and the decision-making
procedures thereof;
2. The Board and the general meeting of the Company shall, in the 2.
decision-making and substantiation process in respect of the
profit distribution policy, fully consider the opinions of independent
Directors and minority shareholders. When considering the specific
plan on cash dividend distribution in the general meeting, active
communication and exchange with shareholders, especially minority
shareholders, shall be conducted via different channels, including but
not limited to telephone, facsimile, e-mails, letters and the Internet,
to thoroughly listen to the views and needs of minority shareholders,
and reply to questions concerned by minority shareholders shall also
be made in a timely manner;
3. If profit is recorded but the Board of the Company does not put 3.
forth a cash dividend distribution proposal, reasons therefor and
the capital retained by the Company that may otherwise be used as
dividends shall be disclosed in its periodic report, and independent
non-executive Directors shall express explicit independent opinions
thereon;
4. The Company shall fully disclose the formulation and execution 4.
of the cash distribution policy in its periodic reports. The report
shall explain: whether the profit distribution is in compliance with
the Company’s Articles of Association or with the general meeting
resolution; whether the standard and proportion of profit distribution
is precise and clear; whether the decision-making procedures and
mechanisms are adequate; whether the independent Directors
have fulfilled their responsibilities and played their role; whether
the minority shareholders have the opportunity to fully express their
views and needs; whether the legitimate rights and interests of
minority shareholders are fully protected and so forth. In the event
that adjustment or change of the cash distribution policy is carried
out, full explanation shall also be given as to whether the conditions
and procedures for the adjustment or change are compliant and
transparent.
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Corporate Governance Report
Board of Supervisors
Composition of the Board of Supervisors
As of the date of this annual report, the Board of Supervisors was composed 6 3
of six members, three of whom were nominated by the shareholders and three 3 3
were nominated by the employees. The Supervisors are appointed for a term of
three years, upon the expiry of which they may be re-elected.
As at the end of the Review Period, the members of the Board of Supervisors
were Mr. Liu Qiang, Mr. Cheng Xiangdong, Mr. Wang Yue, Mr. Zhang Yonglong,
Mr. Zhang Minglin, Mr. Bao Xueliang and Mr. Cui Zonglin.
As at the date of this annual report, the members of the Board of Supervisors
were Mr. Liu Qiang, Mr. Cheng Xiangdong, Mr. Wang Yue, Mr. Zhang Minglin,
Mr. Bao Xueliang and Mr. Cui Zonglin.
The list and biographies of the Supervisors of the Company are set out under
the section “Directors, Supervisors and Senior Management” of this annual
report. Save as disclosed in that section, there is no other material relationship
among members of the Board of Supervisors.
Duties of the Board of Supervisors
The Board of Supervisors shall be accountable to the general meetings and
exercise the following duties and powers in accordance with law:
reviewing regular corporate reports prepared by the Board and submitting
written opinions regarding the same;
examining the financial affairs of the Company;
monitoring the performance of duties of Directors and senior management,
and proposing the dismissal of Directors and senior management who
have violated laws, administrative regulations and the Articles of Association
or resolutions of the general meetings;
demanding for remedy in the event of any damage to the interests of the
Company caused by the Directors or senior management;
proposing the convening of extraordinary general meetings, and convening
and chairing general meetings in the event that the Board fails to perform
its duties to convene and chair the general meeting pursuant to the
“Company Law”;
76 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Corporate Governance Report
Board of Supervisors (Continued)
Duties of the Board of Supervisors (Continued)
proposing motions to general meetings;
liaising with the Directors on behalf of the Company or instituting legal
proceedings against the Directors and senior management pursuant to the
provisions of Article 151 of the “Company Law”;
in case of any irregularity related to the operation of the Company
identified, to investigate; and if necessary, to engage professional
institutions such as accounting firms or law firms to assist in its work at
the expense of the Company;
reviewing the financial information, such as financial report, operation
report and profit distribution plan, to be submitted by the Board to the
general meetings; and may, in the name of the Company, appoint a
certified public accountant or a qualified auditor to re-examine such
documents if a suspicious item is identified;
exercising other duties and powers specified in the “Articles of Association”.
During the Review Period, the Board of Supervisors held eight meetings in total.
Details of the meeting of the Board of Supervisors are set out under the section 2022
“Report of the Board of Supervisors for 2022” of this annual report.
2022 77
Report of the Board of Directors
The Board is pleased to present its report together with the audited financial 2022 12
statements of the Group for the year ended 31 December 2022. 31
Principal Activities and Subsidiaries
The principal activities of the Company are the manufacturing of comprehensive
coal mining and excavating equipment. Details of the principal activities of 48
its subsidiaries are set out in note 48 to the financial statements. During the
Review Period, the Group was engaged in two principal businesses, namely,
coal mining machinery and auto parts.
Compliance with Laws and Regulations
During the Review Period, to the knowledge of the Company, the Group
complied with the relevant laws and regulations that had a material impact on
the business of the Group in all material aspects and there were no material
breaches of or non-compliance with applicable laws and regulations.
Environmental Policies and Performance
The Group endeavours to achieve long-term sustainable development in the
environment and community where it operates. The Group actively gives back
to society and engages in public welfare activities in addition to striving for good
performance, with an aim to foster credibility and build a good corporate image.
Besides, the Group acts in an environmentally responsible way and strives
to comply with the relevant environmental laws and regulations. In addition,
the Group also adopts effective measures to achieve efficient utilisation of
resources, reduces wastage, and advocates water and electricity conservation.
Business Review
Please refer to the sections of Chairman’s Statement and Management
Discussion and Analysis. The sections of Chairman’s Statement and
Management Discussion and Analysis form part of this Report of the Board of
Directors.
Results and Dividends
The Group’s results for the year ended 31 December 2022 and the financial 2022 12 31
position of the Group as at that date are set out in the audited consolidated 117 275
financial statements on pages 117 to 275 of this annual report.
A relevant resolution was passed at a meeting of the Board held on 29 March 2023 3 29
2023, and the Board proposed the payment of a final dividend (the “Dividend”) 2022 12 31
of RMB5.60 (tax inclusive) per 10 shares for the year ended 31 December 10 5.60 2023 3 29
2022. Based on the Company’s total share capital of 1,782,245,970 shares as 1,782,245,970
at 29 March 2023, the total dividend is RMB998,057,743.20.If the proposal 998,057,743.20 2023 5 25
in relation to the profit distribution is approved by the shareholders at the 2022 2022
2022 annual general meeting to be held on 25 May 2023 (the “2022 Annual H 2023 7 14
General Meeting”),the final Dividend for H Shares of the Company will be
distributed on or before 14 July 2023.
78 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Directors
Results and Dividends (Continued)
If the total share capital of the Company changes from the date of announcement
of the proposed payment of annual dividend to the Record Date for implementation
of interest distribution, the Company will propose to maintain the same total
amount of distribution and adjust the distribution ratio per share accordingly. For
any subsequent changes to the total share capital, the Company will make further
announcement(s) on the specific adjustments.
According to the Enterprise Income Tax Law of the PRC (
) and its implementation regulations (the “EIT Law”), the tax
rate of the enterprise income tax applicable to the income of a non-resident 10%
enterprise deriving from the PRC is 10%. For this purpose, any H Shares
registered under the name of a non-individual enterprise, including the H Shares H
registered under the name of HKSCC Nominees Limited, other nominees or
trustees, or other organisations and entities, shall be deemed as shares held 10%
by non-resident enterprise shareholders (as defined under the “EIT Law”).
The Company will distribute the final Dividend to those non-resident enterprise
shareholders subject to a deduction of 10% enterprise income tax withheld and
paid by the Company on their behalf.
Any resident enterprise (as defined under the “EIT Law”) which is legally H
incorporated in the PRC or established pursuant to the laws of foreign countries
(regions) but has its effective administrative entity located in the PRC and whose
name appears on the Company’s H Share register of members should deliver 10%
a legal opinion ascertaining its status as a resident enterprise furnished by a
practicing PRC lawyer (with the official chop of the law firm affixed thereon) and
relevant documents to Computershare Hong Kong Investor Services Limited in
due course, if the enterprise does not wish to have the 10% enterprise income
tax withheld and paid on their behalf by the Company.
Pursuant to the Notice on the Issues on Levy of Individual Income Tax after the 2011 6 28
Abolishment of Circular SAT No. [1993]045 ( [1993]045 [1993]045
) (the “Notice”) issued by the
State Taxation Administration on 28 June 2011, the dividend to be distributed 10%
by a domestic non-foreign invested enterprise, which has issued shares in
Hong Kong, to overseas resident individual shareholders is subject to individual
income tax at a tax rate of 10% in general. However, the tax rates for respective H
overseas resident individual shareholders may vary, depending on the relevant H 10%
tax agreements between the countries of their residence and Mainland China.
Accordingly, 10% individual income tax will be withheld from the final Dividend
upon such Dividend payment to any individual shareholders of H Shares whose
names appear on the H Share register of members of the Company on the
record date, unless otherwise stated in the relevant taxation regulations, taxation
agreements or the Notice.
2022 79
Report of the Board of Directors
Results and Dividends (Continued)
The Company will not be liable for any claim arising from any delay in, or
inaccurate determination of the identity of shareholders or any disputes over the
mechanism of withholding.
The Board is not aware of any shareholders who have waived or agreed to waive
any dividends.
Profit Distribution to Investors of Northbound Trading
For investors of the Hong Kong Stock Exchange (including enterprises and
individuals) investing in the A Shares of the Company listed on the Shanghai A
Stock Exchange (the “Northbound Trading”), their dividends will be distributed
in RMB by the Company through the Shanghai Branch of China Securities 10%
Depository and Clearing Corporation Limited to the account of the nominal
holder holding such shares. The Company will withhold and pay income taxes
at the rate of 10% on behalf of those investors and will report to the competent 10%
tax authorities for the withholding. For investors of the Northbound Trading who
are tax residents of other countries and whose country of domicile has entered
into a tax treaty with the PRC stipulating a dividend income tax rate of lower
than 10%, those enterprises or individuals may apply to the competent tax
authorities of the Company for the entitlement of the rate under such tax treaty
or may entrust a withholding agent to do so. Upon approval by the competent
tax authorities, the paid tax amount in excess of the tax payable based on the
tax rate according to such tax treaty will be refunded.
The record date and the date of distribution of cash dividends and other
arrangements for the investors of the Northbound Trading will be the same as A
those for the holders of A Shares of the Company.
Profit Distribution to Investors of Southbound Trading
For investors of the Shanghai Stock Exchange and the Shenzhen Stock
Exchange (including enterprises and individuals) investing in the H Shares of H
the Company listed on the Hong Kong Stock Exchange (the “Southbound
Trading”), the Company has entered into the Agreement on Distribution of H
“Cash Dividends of H Shares for the Southbound Trading” ( H H
) with China Securities Depository and Clearing
Corporation Limited, pursuant to which, China Securities Depository and H
Clearing Corporation Limited or its branches, as the nominal investors of H
Shares for the Southbound Trading, will receive cash dividends distributed by
the Company and distribute the cash dividends to relevant investors of H Shares
of the Southbound Trading through its depository and clearing system.
80 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Directors
Profit Distribution to Investors of Northbound Trading (Continued)
Cash dividends for the investors of H Shares of the Southbound Trading will H
be paid in RMB. Pursuant to the relevant requirements under the “Notice on
the Tax Policies Concerning the Pilot Programme of the Shanghai-Hong Kong [2014]81
Stock Connect” (Cai Shui No. [2014]81) ( [2016]127
[2014]81 ) and the
“Notice on the Tax Policies Concerning the Pilot Programme of the Shenzhen- H H
Hong Kong Stock Connect” (Cai Shui No. [2016]127) ( 20%
[2016]127
), for dividends received by domestic individual investors from investing in H
H Shares listed on the Hong Kong Stock Exchange through the Shanghai-Hong
Kong Stock Connect or the Shenzhen-Hong Kong Stock Connect, the companies
of such H Shares shall withhold individual income tax at the rate of 20% on
behalf of the investors. For dividends received by domestic securities investment
funds from investing in shares listed on the Hong Kong Stock Exchange through
the Shanghai-Hong Kong Stock Connect or the Shenzhen-Hong Kong Stock
Connect, the tax payable shall be the same as that for individual investors. The
companies of such H Shares will not withhold the income tax of dividends for
domestic enterprise investors and such investors shall report and pay relevant
tax by themselves.
The record date and the date of distribution of cash dividends and other
arrangements for the investors of the Southbound Trading will be the same as H
those for the holders of H Shares of the Company.
Use of Proceeds from Initial Public Offering on the
Stock Exchange
The H Shares of the Company were listed on the Stock Exchange on 5 H 2012 12 5
December 2012 and the net proceeds were HK$2,155.55 million after 2,155.55
deducting relevant expenses. During the Review Period, save as described in 2014 3 31
the announcement of the Company dated 31 March 2014 in relation to the 2017 5 23 H
update on the use of proceeds and the announcement dated 23 May 2017 in
relation to the proposed change to the use of proceeds from H Share offering,
the use of proceeds was in line with the usage disclosed in the prospectus of
the Company.
As of 31 December 2021, all the proceeds raised from H Share offering have 2021 12 31 H
been used up.
Reserves
Details of movements in the reserves of the Group and the Company for the 2022 12 31
year ended 31 December 2022 are set out in the consolidated statements of 49
changes in equity and note 49 to the financial statements, respectively.
2022 81
Report of the Board of Directors
Distributable Reserves
As at 31 December 2022, the reserves of the Company available for 2022 12 31
cash distribution or distribution in specie amounted to approximately 8,773,959,000 2021
RMB8,773,959,000 (2021: RMB7,148,930,000). 7,148,930,000
Bank Loans
As at 31 December 2022, details of bank loans of the Group are set out in note 2022 12 31
32 to the financial statements. 32
Share Capital
Details of movements in share capital of the Company for the year ended 31 2022 12 31
December 2022 are set out in note 36 to the financial statements. 36
Pre-Emptive Rights
There are no provisions on pre-emptive rights under the “Articles of Association”
and the laws of the PRC which would oblige the Company to offer new shares
on a pro rata basis to existing shareholders.
Donations
For the year ended 31 December 2022, the Group made charitable and other 2022 12 31
donations of a total amount of RMB1,683,090. 1,683,090
Five-Year Financial Highlights
A summary of the results and of the assets and liabilities of the Group for the
last five financial years is set out on page 276 of this annual report. 276
82 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Directors
2019 Share Option Incentive Scheme 2019
The establishment of The A Share Option Incentive Scheme was approved by 2019 10 21 2019
shareholders at The Second Extraordinary General Meeting of 2019, The First 2019 A 2019 H
A Shareholders Class Meeting of 2019 and The First H Shareholders Class A
Meeting of 2019 held on 21 October 2019. In accordance with the Share
Option Incentive Scheme, the Company would grant a number of options to A
the qualified participants to purchase A Shares of the Company. Under the
plan, participants are granted options which only vest if certain performance
standards are met. Participation in the plan is at the board’s discretion and
no individual has a contractual right to participate in the plan or to receive any
guaranteed benefits.
The amount of options that will vest depends on the performance of the
Company and the individual participant. Once vested, the options remain 12
exercisable for a period of 12 months.
The Company has provided RMB7,116,000 (2021: RMB8,578,000) in respect 2022 7,116,000
of these options as share-based payment expenses in 2022. 2021 8,578,000
The source of the underlying Shares of the Scheme shall be ordinary A Shares
in RMB to be directly issued by the Company to the participants. A
2022 2021
2022 2021
Average Average
exercise price exercise price
per share Number of per share Number of
option options option options
As at 1 January 1 1 5.5851 10,063,400 5.795 16,030,000
Granted during the year – – – –
Exercised during the year (Note) 5.1501 (3,600,300) 5.5851 (4,722,300)
Forfeited during the year 5.1501 (662,500) 5.5851 (1,244,300)
As at 31 December 12 31 5.1501 5,800,600 5.5851 10,063,400
Vested and exercisable 12 31
at 31 December 5.1501 891,000 5.5851 –
Note: The consideration of the share options exercised was already received in December 2022 12
2022, but the new shares registration procedures were completed in January 2023. 2023 1
2022 83
Report of the Board of Directors
2019 Share Option Incentive Scheme (Continued) 2019
Share options outstanding at the end of the year have the following expiry dates
and exercise prices:
Share options Share options
outstanding at outstanding at
Exercise 31 December 31 December
Grant Date Expiry date price 2022 2021
2022 2021
12 31 12 31
04 November 2019 19 December 2022 5.1501 – –
2019 11 4 2022 12 19
04 November 2019 19 December 2023 5.1501 891,000 4,956,600
2019 11 4 2023 12 19
04 November 2019 19 December 2024 5.1501 4,909,600 5,106,800
2019 11 4 2024 12 19
Total 5,800,600 10,063,400
Weighted average remaining contractual life of options outstanding at end of period 0.66 years 1.49 years
(i) Fair value of options granted (i)
The assessed fair value at grant date of options granted during the year 2022 12 31
ended 31 December 2022 was RMB0.49 per share. The fair value at 0.49
grant date is independently determined using an adjusted form of the (Black
Black Scholes Model which includes a Monte Carlo simulation model that Scholes) (Monte
takes into account the exercise price, the term of the option, the impact of Carlo)
dilution (where material), the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield, the risk free
interest rate for the term of the option and the correlations and volatilities
of the peer group companies.
84 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Directors
2019 Share Option Incentive Scheme (Continued) 2019
(i) Fair value of options granted (Continued) (i)
The model inputs for options granted during the year ended 31 December 2022 12 31
2022 included:
(a) options are granted for no consideration and vest based on (a) 20
Company’s ranking within a peer group of 20 selected companies
over a three year period. Vested options are exercisable for a period
of two years after vesting
(b) exercise price: RMB5.795 (the exercise price changed to RMB5.1501 (b) 5.795 20222
per share in 2022) 5.1501
(c) grant date: 4 November 2019 (c) 2019 11 4
(d) expiry date: 19 December 2022, 19 December 2023 and 19 (d) 2022 12 19 2023 12 19
December 2024 2024 12 19
(e) share price at grant date: RMB6.05 per share (e) 6.05
(f) expected price volatility of the Company’s shares: (f)
30.38% First phase 29.93% Second phase 40.83% Third phase
30.38% 29.93% 40.83%
(g) expected dividend yield: Nil (g)
(h) risk-free interest rate: (h)
2.8219% Two years 2.9280% Three years 3.0197% Four years
2.8219% 2.9280% 3.0197%
The expected price volatility is based on the historic volatility (based on the
remaining life of the options), adjusted for any expected changes to future
volatility due to publicly available information.
2022 85
Report of the Board of Directors
2021 Restricted Share Incentive Scheme 2021
On 4 June 2021, the Annual General Meeting of the Group adopted a restricted 2021 6 4
share incentive scheme (the “Scheme”). Under the Scheme, a total number 186
of 42,300,000 A shares of the Group issued and granted to the selected 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.
Upon expiry of the unlocking 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.
On 7 June 2021, 42,300,000 A shares were issued at the price of RMB5.88 2021 6 7 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 (Note 248,724,000
31). In 2022, upon the unlocking period due, except for some forfeited shares 31 2022
which were repurchased, the related repurchase liabilities for these unlocked
shares were derecognized. As at 31 December 2022, the remaining balance of 2022 12 31
repurchase liability is RMB118,198,000 (2021: RMB248,724,000) recorded in 118,198,000 2021
trade and other payables (set out in note 31 to the financial statement). 248,724,000 31
In 2022, the Company has provided RMB84,743,000 (2021: RMB79,364,000) 2022
as share-based payment expenses in respect of these restricted shares. 84,743,000 2021 79,364,000
86 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Directors
2021 Restricted Share Incentive Scheme (Continued) 2021
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:
Unlocking
Arrangement of Unlocking Period Unlocking duration percentage
First Unlocking Period Commencing from the first trading day upon the expiry of 12 months from the Date 40%
of Grant to the last trading day upon the expiry of 24 months from the Date of
Grant
12 24
Second Unlocking Period Commencing from the first trading day upon the expiry of 24 months from the Date 30%
of Grant to the last trading day upon the expiry of 36 months from the Date of
Grant
24 36
Third Unlocking Period Commencing from the first trading day upon the expiry of 36 months from the Date 30%
of Grant to the last trading day upon the expiry of 48 months from the Date of
Grant
36 48
The evaluation period for unlocking the restricted shares under the Scheme 2021
shall be from 2021-2023 and the evaluation shall be conducted annually. 2023
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:
2022 2021
2022 2021
Number of Number of
restricted restricted
Issued price shares Issued price shares
Opening balance 1 January 1 1 5.88 42,300,000 5.88 –
Issued during the year 5.88 – 5.88 42,300,000
Forfeited during the year 5.88 (848,000) 5.88 –
Unlocked during the year 5.88 (16,804,000) 5.88 –
Balance 31 December 12 31 5.88 24,648,000 5.88 42,300,000
2022 87
Report of the Board of Directors
Major Suppliers and Customers
For the year ended 31 December 2022, the total sales attributable to the 2022 12 31
Group’s five largest customers accounted for approximately 21.34% of the 21.34% 30%
Group’s total sales, less than 30%, while the sales attributable to the Group’s 6.53%
largest customer accounted for approximately 6.53% of the Group’s total sales.
For the year ended 31 December 2022, the total purchases attributable to 2022 12 31
the Group’s five largest suppliers accounted for approximately 20.99% of the 20.99% 30%
Group’s total purchases, less than 30%, while the purchases attributable to the
Group’s largest supplier accounted for approximately 10.05% of the Group’s 10.05%
total purchases.
To the knowledge of the Directors, except for Henan Machinery Investment
Group Co., Ltd. (which changed its name to “Henan State-owned Capital 2023 4 14
Operation Group Investment Co., Ltd. ( 5%
)” on 14 April 2023, and is a substantial shareholder which is interested
in more than 5% of the issued share capital of the Company), none of the 5%
Directors, their associates or substantial shareholders who were interested
in more than 5% of the issued share capital of the Company has any equity
interest in the Group’s five largest customers or five largest suppliers.
The Group maintains ongoing and steady relationship with each of the
customers and suppliers. The business of the Group does not rely on any
individual customer or supplier which may cause any material impact on the
Group.
Property, Plant and Equipment
For the year ended 31 December 2022, details of movements in property, 2022 12 31
plant and equipment during the year are set out in notes 16 to the financial 16
statements.
Purchase, Sale or Redemption of the Shares of the
Company
In September 2022, the Company repurchased 848,000 Restricted A Shares 2022 9 2021
from 7 participants under the 2021 Restricted Share Incentive Scheme at 7 848,000 A
an average price of RMB5.3156 per A Share, for which a total consideration 4,507,653.35
of RMB4,507,653.35 has been paid, and completed the repurchase and A 5.3156 2022 10 11
cancellation procedures at the Shanghai Branch of China Securities Depository
and Clearing Corporation Limited on 11 October 2022.
Save as disclosed above, neither the Company nor any of its subsidiaries
purchased, sold or redeemed any of the Company’s listed securities during the
Review Period.
Equity-Linked Agreement
During the year ended 31 December 2022, the Company and its subsidiaries 2022 12 31
neither entered into any agreement in relation to equity-linked products nor
participated in any arrangement to subscribe for equity-linked financial products.
88 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Directors
Material Related Party Transactions
For details of the related party transactions under relevant accounting 41
standards, please refer to note 41 of this report. The Company confirms that the A
related-party transactions were not categorised as the “connected transactions”
or the “continuing connected transactions” as defined in Chapter 14A of the A
Hong Kong Listing Rules (as the case may be), and were in compliance with the
disclosure requirements under Chapter 14A of the Hong Kong Listing Rules.
Connected Transaction - Entering Into the Capital
Increase Agreement
As disclosed in the announcement of the Company dated 9 September 2022, 2022 9 9 2022
on 9 September 2022, Zhengzhou Coal Mining Machinery Hydraulic Electric 9 9
Control Co., Ltd. ( ) (“Electric Control
Company”) entered into the capital increase agreement with the Company,
the business partners and investors of the Group, the core shareholder of
Electric Control Company and the Strategic Investors (the “Capital Increase 87,165
Agreement”). Pursuant to the Capital Increase Agreement, the business
partners and investors of the Group, the core shareholder of Electric Control
Company and the Strategic Investors will contribute a total of RMB871.65
million to Electric Control Company.
The amount of the capital increase under the Capital Increase Agreement was 2022 4
jointly negotiated by the relevant parties of the capital increase based on the 30 547,700.00
appraisal value of all shareholders’ equity interest of Electric Control Company as
at 30 April 2022 of RMB5,477 million on normal commercial terms and under
the principles of willingness, fairness and impartiality, taking into account the
impact of profit distribution.
Prior to the entering into and implementation of the Capital Increase Agreement, 100%
the Company held 100% equity interest in Electric Control Company, and
Electric Control Company was a wholly-owned subsidiary of the Company. 85.02%
After the Completion of the capital increase, the Company holds 85.02% equity
interest in Electric Control Company, and Electric Control Company is a non- 14
wholly-owned subsidiary of the Company. The entering into of the Capital
Increase Agreement and the transactions thereunder constitute a deemed
disposal under Chapter 14 of the Listing Rules.
As Henan Assets Enterprise Transformation and Development Fund (Limited
Partnership) ( ) (“Henan
Transformation and Development Fund”) and Henan Hongsong Equity
Investment Fund Partnership (Limited Partnership) (
) (“Henan Hongsong”) are funds under de facto
control of Henan Asset Management Co., Ltd. ( ), a
Shareholder of the Company, and Henan Asset Management Co., Ltd. (
) is a person acting in concert with Hongyi Investment
Management (Henan) Partnership (Limited Partnership) (
), a substantial Shareholder of the Company,
Henan Transformation and Development Fund and Henan Hongsong constitute
connected persons of the Company, and the entering into of the capital increase
agreement and the transactions thereunder constitute connected transactions
2022 89
Report of the Board of Directors
of the Company. The capital contributions from Henan Transformation and
Development Fund and Henan Hongsong were RMB100 million and RMB150 10,000
million, respectively. Upon completion of the capital increase, Electric Control 15,000
Company was held as to 1.61% and 2.42% by Henan Transformation and 1.61% 2.42%
Development Fund and Henan Hongsong, respectively.
As one or more of the applicable percentage ratios of the capital increase
agreement and the transactions thereunder is more than 0.1% but less than 5%, 0.1% 5% 14A
they are subject to the reporting and announcement requirements but exempt
from the independent shareholders’ approval requirement under Chapter 14A of
the Hong Kong Listing Rules.
Directors and Supervisors
During the Review Period and as of the date of this report, the Directors and the
Supervisors were as follows:
Directors:
During the Review Period and as of the date of this report, the Directors were:
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:
During the Review Period and as of the date of this report, the Supervisors were:
From 1 January 2022 to 18 January 2023: 2022 1 1 2023 1 18
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
90 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Directors
From 19 January 2023 to the date of this report: 2023 1 19
Mr. Liu Qiang (Chairman of the Board of Supervisors)
Mr. Cheng Xiangdong
Mr. Wang Yue
Mr. Zhang Minglin
Mr. Bao Xueliang
Mr. Cui Zonglin
Directors’ and Supervisors’ Service Contracts
During the Review Period, none of the Directors or Supervisors entered into or
proposed to enter into any service agreement with any member of the Group,
other than agreements expiring or determinable by the employer within one year
without payment of compensation (excluding statutory compensation).
Management Contracts
No contracts concerning the management and administration of the whole 2022 12 31
or any substantial part of the business of the Company were entered into or
subsisted during the year ended 31 December 2022.
Remuneration of Directors and Supervisors
Details of the remuneration of the Directors and the Supervisors for the year 2022 12 31
ended 31 December 2022 are set out in note 12 to the financial statements. 12
Biographical Details of Directors, Supervisors and
Senior Management
Biographical details of Directors, Supervisors and senior management of the
Company are set out on pages 36 to 50 of this annual report. 36 50
Insurance for Directors
The Company has taken out valid insurance for the Directors.
Directors’ and Supervisors’ Interests in Material
Contracts
No contracts of significance (as defined in Appendix 16 to the Listing Rules of
the Stock Exchange) in which a Director or a Supervisor is or was materially
interested, directly or indirectly, subsisted during the Review Period. 16
During the Review Period, no contracts of significance in relation to the
Company’s business in which the Company, its subsidiaries, its holding
company or any subsidiary of its holding company was a party and in which a
Director or a Supervisor is or was materially interested in any way, directly or
indirectly, subsisted at any time during the period.
No contracts or proposed contracts with the Company in relation to its business
and in which a Director or a Supervisor was materially interested in any way,
directly or indirectly, subsisted during the Review Period.
2022 91
Report of the Board of Directors
Directors’ Interests in Competing Business
Pursuant to Rule 8.10 of the Listing Rules of the Stock Exchange, the Company 8.10
hereby discloses that none of the Directors had any interest in any business (other
than the business of the Group) which competes or is likely to compete, either
directly or indirectly, with the business of the Group.
Directors’ and Supervisors’ Rights to Acquire Shares
or Debentures
Save as disclosed in “Directors’, Supervisors’ and Chief Executives’ Interests
and Short Positions in Securities of the Company and its Associated
Corporations” of this report, at no time during the Review Period were there
rights to acquire benefits by means of acquisition of shares in or debentures of
the Company granted to Directors or Supervisors or their respective spouses or
minor children, or any such rights exercised by them; nor was the Company, its
holding company, or any of its subsidiaries and fellow subsidiaries a party to any
arrangement to enable the Directors or the Supervisors to acquire such rights in
any other body corporate.
92 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Directors
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 31 December 2022, the Directors, 2022 12 31
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 XV 7 8
the 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, 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 number Short position/
Name Chief executive Nature of interest shares shares of capital % of shares % Lending pool
% %
Jiao Chengyao(1) Director Beneficial owner A Share 4,426,964 0.288 0.249 Long position
(1) A
Xiang Jiayu(1) Director Beneficial owner A Share 2,921,420 0.190 0.164 Long position
(1) A
Jia Hao(1)(2) Director Beneficial owner A Share 1,973,300 0.129 0.111 Long position
(1)(2) A
Fu Zugang(1)(2) Director Beneficial owner A Share 3,543,620 0.231 0.199 Long position
(1)(2) A
Wang Xinying Director Beneficial owner A Share 1,425,040 0.093 0.080 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 75,000 0.005 0.004 Long position
A
2022 93
Report of the Board of Directors
Interests in Underlying Shares
Approximate Approximate
percentage of percentage of
Number of share the relevant class the total number
Name of Directors Nature of interest Class of shares options held of capital % of 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
Save as disclosed above, as at 31 December 2022, none of the directors, 2022 12 31
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 XV
required to be notified to the Company and the Stock Exchange pursuant to the 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.
Structure and Number of Shareholders
Details of the shareholders recorded in the register of members of the Company 2022 12 31
as at 31 December 2022 are as follows:
Shareholders of A Shares A 43,016
Shareholders of H Shares H 56
Total number of shareholders 43,072
94 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Directors
Substantial Shareholders’ Interests and Short
Positions in Shares and Underlying Shares of the
Company
To the knowledge of the Directors, as at 31 December 2022, the following 2022 12 31
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/ Number of class number Short position/
Name Nature of interest Class of shares shares of shares % of shares % Lending pool
% %
Henan Asset Management Co., Ltd.(1) Interest of beneficial A Share 346,404,576 22.56 19.48 Long position
owner and party
acting in concert
(1) A
Hong Yi Investment Management (Henan) Beneficial owner A Share 277,195,419 18.05 15.58 Long position
Partnership (Limited Partnership)(1)
A
(1)
State-owned Assets Supervision and Beneficial owner A Share 243,815,581 15.88 13.71 Long position
Administration Commission of Henan
Provincial People’s Government(2)
A
(2)
Henan Machinery Investment Group Co., Ltd.(2) Beneficial owner A Share 243,815,581 15.88 13.71 Long position
(2) A
UBS Group AG.(3) Interest in a controlled H Share 20,063,051 8.25 1.13 Long position
corporation
H
2022 95
Report of the Board of Directors
Substantial Shareholders’ Interests and Short
Positions in Shares and Underlying Shares of the
Company (Continued)
Notes:
(1) Henan Asset Management Co., Ltd. directly holds 69,209,157 A Shares of the (1) 69,209,157 A
Company. Pursuant to Article 317(1)(a) of the SFO, Henan Asset Management Co., 317(1)(a)
Ltd. is deemed a party acting in concert with Hong Yi Investment Management
(Henan) Partnership (Limited Partnership). Hence, Henan Asset Management Co.,
Ltd. is deemed to own the same batch of 277,195,419 A Shares of the Company
directly held by Hong Yi Investment Management (Henan) Partnership (Limited 277,195,419 A
Partnership). Henan Asset Management Co., Ltd. directly owns and is deemed to 346,404,576 A
own an aggregate of 346,404,576 A Shares of the Company.
(2) Henan Machinery Investment Group Co., Ltd. directly holds 243,815,581 A Shares (2) 243,815,581
of the Company. Henan Machinery Investment Group Co., Ltd. is a wholly owned A
subsidiary of the State-owned Assets Supervision and Administration Commission
of Henan Provincial People’s Government. Pursuant to the SFO, the State-owned
Assets Supervision and Administration Commission of Henan Provincial People’s
Government is deemed to own the same batch of 243,815,581 A Shares of the 243,815,581 A
Company directly held by Henan Machinery Investment Group Co., Ltd.
Henan Machinery Investment Group Co., Ltd. involves in the refinancing business. As
at 31 December 2022, 76,800 A shares held by it were outstanding, if fully repaid, 2022 12 31 76,800 A
the number of A Shares actually held by it will be 243,892,381.
243,892,381 A
On 14 April 2023, Henan Machinery Investment Group Co., Ltd. changed its name 2023 4 14
to “Henan State-owned Capital Operation Group Investment Co., Ltd. (
)”.
(3) UBS Group AG holds a total of 20,063,051 (long position) H Shares of the Company. (3) UBS Group AG 20,063,051 H
3,146,600 (long position) H Shares are held by non-listed derivative instrument 3,146,600 H
through cash settlement. As disclosed in the notice of interest submitted by UBS UBS Group AG
Group AG (with the relevant event dated 28 December 2022), UBS Group AG holds 2022 12 28 H UBS
the following H Shares: Group AG
Name of Name of
controlled Corporation controlling person % control Direct interest (Y/N) Number of shares
UBS AG UBS Group AG 100.00 Y Long position 2,237,045
UBS Asset Management (Hong Kong) Ltd UBS Group AG 100.00 Y Long position 5,469,616
UBS O’Connor LLC UBS Group AG 100.00 Y Long position 8,768,400
UBS Switzerland AG UBS Group AG 100.00 Y Long position 799,999
UBS Asset Management Switzerland AG UBS Group AG 100.00 Y Long position 2,470,391
UBS Asset Management (Singapore) Ltd UBS Group AG 100.00 Y Long position 317,600
96 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Directors
Material Contracts
Save as disclosed in the section headed “Connected Transaction” of this Annual 88
Report on page 88, none of the Company or any of its subsidiaries entered into
any material contracts with the controlling shareholder or any of its subsidiaries
other than the Group.
Public Float
Based on the public information available to and the knowledge of the Directors,
as of the date of this annual report, the Company has maintained sufficient
public float as required by the Listing Rules of the Stock Exchange.
Retirement Benefit Scheme
The Group’s full-time employees in the PRC are covered by a defined
contribution pension scheme operated by the government, and are entitled
to a monthly pension from the date of retirement. The PRC government is
responsible to perform the pension obligation for these retired employees. The 20%
Group is required to make annual contributions to the retirement scheme at a
rate of 20% of employees’ basic salaries, which are charged as an expense 2022 12 31
when the employees have rendered services entitling them to the contributions 148.51
and when the contributions are due. For the year ended 31 December 2022,
a total contribution of RMB148.51 million made by the Group to the retirement
scheme was charged to the statement of income.
Corporate Governance Code
During the Review Period, the Company complied with the applicable Corporate
Governance Code set out in Appendix 14 to the Listing Rules of the Stock 14
Exchange.
Permitted Indemnity Provisions
During the financial year and as of the date of this annual report, the Company
had in force indemnity provisions as permitted under relevant regulations for
the benefit of the Directors (including former Directors) of the Company or
its associated companies. Such permitted indemnity provisions are set out in
the Liability Insurance maintained by the Company for its Directors and chief
executives, in respect of potential liability and costs associated with legal
proceedings that may be brought against such Directors.
Subsequent Events
The Board held a meeting on 21 December 2022 and passed a resolution, 2022 12 21
pursuant to which it agreed to handle the matters in relation to the exercise by 2019 A
292 eligible participants during the second exercise period in accordance with 292
the relevant requirements of the 2019 A Share Option Incentive Scheme of the 4,491,300
Company, involving 4,491,300 exercisable shares.
On 29 December 2022, the Company received capital contributions of 2022 12 29 286
RMB18,541,905.03 from 286 participants, involving 3,600,300 exercised 18,541,905.03
shares. 3,600,300
2022 97
Report of the Board of Directors
On 5 January 2023, the Company completed the registration procedures 2023 1 5 286
for the additional 3,600,300 A Shares underlying the exercise for such 286 3,600,300 A
participants. The number of issued A Shares of the Company was changed A 1,535,411,470
from 1,535,411,470 shares to 1,539,011,770 shares; and the total number 1,539,011,770
of issued shares of the Company was changed from 1,778,645,670 shares to 1,778,645,670 1,782,245,970
1,782,245,970 shares.
Closure of the Register of Members
The 2022 Annual General Meeting of the Company will be held on Thursday, 25 2022 2023 5 25
May 2023. In order to determine the H Shareholders’ entitlement to attend the H
Annual General Meeting, the register of members of the Company will be closed 2023 5 22 5 25
from Monday, 22 May 2023 to Thursday, 25 May 2023 (both days inclusive),
during which no transfer of shares will be registered. For the H Shareholders 2022
of the Company who wish to attend the 2022 Annual General Meeting but H 2023 5 19
are not yet registered, all transfer documents accompanied by relevant share 4 30
certificates must be lodged with the Company’s Hong Kong share registrar,
Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 183 17 1712–1716
17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no
later than 4:30 p.m. on Friday, 19 May 2023.
If the resolution in relation to declaration of dividends is approved at the 2022 2022
Annual General Meeting, the H Share dividends will be paid to H Shareholders H 2023 6 14
whose names appear on the Company’s H Share register of members after H H 2023
the close of trading on Wednesday, 14 June 2023. The Company’s register of 6 9 2023 6 14
members will be closed from Friday, 9 June 2023 to Wednesday, 14 June 2023
(both days inclusive), during which no transfer of shares will be registered. For H
the H Shareholders of the Company who wish to receive the final Dividend but 2023 6 8 4 30
are not yet registered, all transfer documents accompanied by relevant share
certificates must be lodged with the Company’s Hong Kong share registrar,
Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 183 17 1712–1716
17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no
later than 4:30 p.m. on Thursday, 8 June 2023.
Audit and Risk Management Committee
The Audit and Risk Management Committee has reviewed the accounting
principles and policies adopted by the Group and the audited annual 2022 12 31
consolidated financial statements for the year ended 31 December 2022 with
the management and the external auditor.
By order of the Board
Jiao Chengyao
Chairman
Zhengzhou, the People’s Republic of China
29 March 2023 2023 3 29
98 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Supervisors for 2022
In 2022 (the Reporting Period), in accordance with the “Company Law of the 2022
People’s Republic of China” (the “Company Law”), “Securities Law of the
People’s Republic of China” (the “Securities Law”) and other relevant laws and
regulations as well as the requirements of “Zhengzhou Coal Mining Machinery
Group Company Limited’s Articles of Association” (the “Articles of Association”),
Rules of Procedure of the Board of Supervisors of Zhengzhou Coal Mining
Machinery Group Company Limited, Zhengzhou Coal Mining Machinery Group
Company Limited’s Board of Supervisors earnestly safeguarded the interests of
the Company and all shareholders as a whole and strictly and legally performed
the relevant duties of the Board of Supervisors. During the Reporting Period,
the Board of Supervisors supervised the Company’s production and operation,
financial position and the performance of duties by the Directors and senior 2022
management of the Company mainly through convening meetings, attending
meetings, face-to-face communication and reviewing materials, so as to ensure
the Company’s standardised operation and safeguard the interests of the
Company’s shareholders as a whole. The work of the Board of Supervisors in
2022 is set out below:
I. Basic Evaluation on Operation Behavior of the 2022
Board of Directors and the Management and the
Performance Achieved in 2022
Through its supervision over the Directors and senior management of
the Company, the Board of Supervisors considered that the Board of
the Company was able to strictly comply with the requirements of the
“Company Law”, the “Articles of Association” and other relevant laws,
regulations and systems, and operated in accordance with the laws. All
major operation decisions of the Company were rational and the decision-
making process was lawful and valid. The Company has established
and enhanced its internal management system and internal control
mechanism. The Directors and senior management of the Company
conscientiously executed their respective duties in accordance with the
national laws, regulations, the “Articles of Association”, and the resolutions
of the general meetings and the Board meetings. None of the Directors or
senior management of the Company were found to have violated any laws,
regulations or the Articles of Association in discharging their duties for the
Company or engaged in any acts which contravened the interests of the
Company or its shareholders.
2022 99
Report of the Board of Supervisors for 2022
II. Work Overview of the Board of Supervisors in 2022
2022
During the Reporting Period, the Board of Supervisors of the Company
convened a total of 8 meetings in accordance with the relevant 8 31
requirements of the “Company Law” and the “Articles of Association”,
at which 31 resolutions were considered and approved. Details are as
follows:
Meetings of the Board of Supervisors Proposals Considered and Approved at the Meeting
The Ninth Meeting of the Fifth Session of the 1. “The Proposal on the 2021 Report of the Board of Supervisors of the Company”
Board of Supervisors Held on 28 March 1 2021
2022
2022 3 28 2. “The Proposal on the 2021 Audited Domestic and Overseas Financial Report of
the Company”
2 2021
3. “The Proposal on the 2021 Annual Report and Summary thereof of the Company”
3 2021
4. “The Proposal on the 2021 Verification Report on the Deposit and Actual Use of
Proceeds of the Company”
4 2021
5. “The Proposal on the 2021 Special Report on the Occupation of Non-operating
Funds and Other Connected Fund Movements of the Company”
5 2021
6. “The Proposal on the 2021 Assessment Report on Internal Control of the
Company”
6 2021
7. “The Proposal on the 2021 Environmental, Social and Governance Report”
7 <2021 >
8. “The Proposal on the 2021 Profit Distribution Plan”
8 2021
9. “The Proposal on Confirming the Provision Amount of 2019-2021 Super Profit
Incentive Payment”
9 2019-2021
100 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Supervisors for 2022
II. Work Overview of the Board of Supervisors in 2022
2022 (Continued)
Meetings of the Board of Supervisors Proposals Considered and Approved at the Meeting
10. “The Proposal on Provision for Goodwill Impairment Loss”
10
11. “The Proposal on the Appointment of External Audit Institution and Internal Control
Audit Institution for 2022”
11 2022
12. “The Proposal on the Daily Connected Transactions of the Company in 2021 and
the Expected Daily Connected Transactions of the Company in 2022”
12 2021 2022
13. “The Proposal on Provision of Guarantees for Controlling Subsidiaries and Mutual
Guarantees between Controlling Subsidiaries”
13
14. “The Proposal on Provision of Repurchase Guarantee for Customers in Financial
Leasing Business”
14
15. The Proposal on the Use of Idle Funds to Invest in Financial Wealth Management
Products”
15
16. “The Proposal on Commencement of the Hedging Business”
16
17. “The Proposal on Changes in Accounting Policies of the Company”
17
18. “The Proposal on the Dividend Distribution Plan for Shareholders for the Next
Three Years (2022-2024)”
18 2022 2024
19. “The Proposal on the Change of Registered Capital, Registered Address, Business
Scope and Amendments to the Articles of Association of the Company”
19 < >
2022 101
Report of the Board of Supervisors for 2022
II. Work Overview of the Board of Supervisors in 2022
2022 (Continued)
Meetings of the Board of Supervisors Proposals Considered and Approved at the Meeting
The Tenth Meeting of the Fifth Session of 1. “The Proposal on the 2022 First Quarterly Report of the Company”
the Board of Supervisors held on 26 April 1 2022
2022
2022 4 26 2. “The Proposal on Purchase of Liability Insurance for the Company and its
Directors, Supervisors and Senior Management”
2
The Eleventh Meeting of the Fifth Session of 1. “The Proposal on Adjustment of the Repurchase Price under the 2021 Restricted
the Board of Supervisors Held on 15 June Share Incentive Scheme”
2022 1 2021
2022 6 15
2. “The Proposal on the Repurchase and Cancellation of Certain Restricted Shares
Granted But Not Yet Unlocked under the 2021 Restricted Share Incentive
Scheme”
2 2021
3. “The Proposal on the Fulfilment of Conditions for Unlocking the First Unlocking
Period under the 2021 Restricted Share Incentive Scheme”
3 2021
The Twelfth Meeting of the Fifth Session of 1. “The Proposal on the Proposed Joint Acquisition of 43.33% Equity Interest
the Board of Supervisors Held on 19 July in Luoyang LYC Bearing Co., Ltd. through Public Delisting and Related Party
2022 Transaction”
2022 7 19 1 LYC 43.33%
The Thirteenth Meeting of the Fifth Session 1. “The Proposal on the 2022 Interim Report of the Company”
of the Board of Supervisors Held on 30 1 2022
August 2022
2022 8 30
102 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Supervisors for 2022
II. Work Overview of the Board of Supervisors in 2022
2022 (Continued)
Meetings of the Board of Supervisors Proposals Considered and Approved at the Meeting
The Fourteenth Meeting of the Fifth Session 1. “The Proposal on the Increase in Registered Capital of a Wholly-owned Subsidiary
of the Board of Supervisors Held on 6 of the Company and Related Party Transaction”
September 2022 1
2022 9 6
The Fifteenth Meeting of the Fifth Session 1. “The Proposal on the 2022 Third Quarterly Report of the Company”
of the Board of Supervisors Held on 26 1 2022
October 2022
2022 10 26
The Sixteenth Meeting of the Fifth Session 1. “The Proposal on Adjustment of the Exercise Price of the 2019 Share Option
of the Board of Supervisors Held on 21 Incentive Scheme of the Company”
December 2022 1 2019
2022 12 21
2. “The Proposal on Adjustment of the List of Participants and the Number of
Options and Cancelling Certain Options under the 2019 Share Option Incentive
Scheme of the Company”
2 2019
3. “The Proposal on the Fulfilment of Exercise Conditions for the Second Exercise
Period of the 2019 Share Option Incentive Scheme of the Company”
3 2019
Over the past year, the Board of Supervisors of the Company performed
its duties conscientiously in accordance with the law, strengthened
the supervision of the performance of the Board and the management,
supervised and inspected the production and operation of the Company
and the decision-making of major issues in accordance with the law, and
strived to promote the standardisation and improvement of the Company’s
system, and fulfilled its duties and responsibilities for the development of
the Company.
2022 103
Report of the Board of Supervisors for 2022
3. Opinions of the Board of Supervisors on the 2022
Company’s Relevant Issues in 2022
1. Legal Operation of the Company 1
In 2022, the Supervisors of the Company were present as nonvoting 2022
delegates at or attended the Company’s Board meetings and
general meetings according to law, with rigorous supervision carried
out over the Company’s decision-making procedures as well as
the performance of duties of the Company’s Directors and senior
management. The Board of Supervisors considers that the Board
of the Company has complied with the laws and regulations such
as the “Company Law” and the “Securities Law”, as well as the
requirements of the “Articles of Association” and the “Rules of
Procedure of the Board of Directors”, with regulated operations as
well as lawful and valid decision-making procedures. The Company
has established and improved its internal control system, under which
the Directors and senior management of the Company discharged
their duties conscientiously with no acts found in violation of laws,
regulations and the “Articles of Association” or prejudice to the
Company’s interests.
2. Inspection of Financial Status of the Company 2
The Board of Supervisors has reviewed the financial position of the 2022
Company for 2022 and is of the view that the Company has a sound
financial system, a standardised financial operation and a good
financial position. The financial report of the Company truly reflects 2022
the financial position and operating results of the Company for 2022,
which is conducive to the shareholders’ correct understanding of 2022
the financial position and operating conditions of the Company. The
2022 Annual Report prepared by the Board of the Company reflects
the Company’s position in a truthful, accurate and complete manner,
without any false record, misleading statement or material omissions.
104 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Supervisors for 2022
3. Opinions of the Board of Supervisors on the 2022
Company’s Relevant Issues in 2022 (Continued)
3. Inspection of the Company’s Share Incentives 3
In 2022, the Board of Supervisors inspected the implementation 2022
of the Company’s share incentive in accordance with the laws and
regulations.
During the Reporting Period, the Company adjusted the repurchase 2021
price of the 2021 Restricted Share Incentive Scheme (hereinafter
referred to as the “Restricted Share Incentive Scheme”), repurchased
and cancelled the restricted shares granted to some participants but
not yet unlocked. The conditions for unlocking the first unlocking
period under the Restricted Share Incentive Scheme have been 184
fulfilled. The Company handled the first unlocking and trading
matters of the restricted shares for 184 eligible participants. Upon
verification, the Board of Supervisors considers that the above
adjustments and unlocking of the Restricted Share Incentive Scheme
are in compliance with the provisions of the Administrative Measures
on Share Incentives of Listed Companies (hereinafter referred to
as the “Administrative Measures”), and the above adjustments and
unlocking do not prejudice the interests of the Company and all
Shareholders.
During the Reporting Period, the exercise conditions for the second 2019
exercise period under the 2019 Share Option Incentive Scheme of
the Company (hereinafter referred to as the “Share Option Incentive
Scheme”) have been fulfilled. The Board of Supervisors reviewed
the exercise price, the list of participants and the adjustment of the
number of share options under the Share Option Incentive Scheme,
and the fulfilment of the exercise conditions for the second exercise
period, and considered that the above adjustments and exercise
matters were in compliance with the relevant provisions of the
“Administrative Measures”; The performance appraisal indicators for 292
the second exercise period of the Share Option Incentive Scheme and
the individual performance appraisal results of the participants are
in compliance with the exercise conditions for the second exercise
period under the Share Option Incentive Scheme, and 292 eligible
participants have been approved to exercise the share options.
4. Inspection of the Utilization of Proceeds 4
The proceeds raised from H shares of the Company have been fully H 2021
used in 2021, and there was no use of proceeds during the year.
2022 105
Report of the Board of Supervisors for 2022
3. Opinions of the Board of Supervisors on the 2022
Company’s Relevant Issues in 2022 (Continued)
5. Acquisition and Disposal of Assets by the Company 5
The Board of Supervisors reviewed the Company’s joint transfer of LYC
43.33% equity interest in Luoyang LYC Bearing Co., Ltd. and related 43.33%
transactions, and considered that the Company and other intended
transferees jointly formed a partnership enterprise to participate LYC 43.33%
in the public delisting and transfer of 43.33% equity interest in
Luoyang LYC Bearing Co., Ltd., which is in line with the Company’s
strategic needs. This transfer is for all investors to form a partnership
enterprise to participate in the application for transfer. The form
of capital contribution is cash. The investors of the partnership
enterprise determined the capital contribution amount of each party
according to the proportion to be transferred. The price of joint
investment between the Company and related parties is fair and
follows the principles of openness, fairness and impartiality, and
there is no behavior that damages the interests of the Company and
small and medium shareholders, which is in line with the overall
interests of the Company.
6. Connected Transactions of the Company 6
The Board of Supervisors reviewed the daily connected transactions 2022
of the Company in 2022, and considered that the daily connected 2022
transactions of the Company in 2022 took place in strict compliance
with the provisions of the “Articles of Association” of the Company,
were strictly carried out in accordance with the regulations of the
connected transaction regulations, and the transactions were fair
and reasonable. Such connected transactions were conducted on an
arm’s length basis, with the statutory approval process performed
and no act prejudicial to the interests of the Company and its
shareholders.
The Board of Supervisors reviewed the increase in registered capital
and related party transactions of the wholly-owned subsidiary of the
Company, and considered that the capital increase and related party
transactions of Zhengzhou Coal Mining Machinery Hydraulic Electrical
Control Co., Ltd. (referred to as “Electronic Control Company”), a
wholly-owned subsidiary of the Company, were fair and reasonable
and followed the principles of openness, fairness and impartiality.
It would not affect the Company’s control over Electronic Control
Company, the combined statement scope of the Company, and would
not adversely affect the existing assets and ongoing operation ability
of the Company, and would not damage the interests of the Company
and its all shareholders.
106 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Report of the Board of Supervisors for 2022
3. Opinions of the Board of Supervisors on the 2022
Company’s Relevant Issues in 2022 (Continued)
7. Internal Control of the Company 7
The Board of Supervisors has reviewed the 2022 self-assessment 2022
report on the Company’s internal control prepared by the Board as
well as the establishment and operation of the Company’s internal
control system, and considers that the Company has established a
robust internal control system that enables effective execution. The
self-assessment report on the Company’s internal control reflects
the establishment and operation of such system in the Company in a
truthful and objective manner.
8. Opinions of the Board of Supervisors on the Review 8 2022
of the 2022 Annual Report of the Company
The Board of Supervisors has reviewed the Company’s 2022 2022
Annual Report and the summary thereof, and considers that the 2022
preparation and review procedures of the 2022 Annual Report of
the Company complied with relevant laws and regulations and the 2022
“Articles of Association”, as well as the requirements under the
internal control system of the Company; that the content and format
thereof are in line with the relevant requirements of China Securities
Regulatory Commission and the Shanghai Stock Exchange; and
that the information contained therein gives a true, accurate and 2022
complete view of the actual situation of the Company in various
aspects and does not give rise to any detriment to the interests of the
shareholders of the Company. No staff engaged in the preparation,
review or information disclosure of the 2022 Annual Report of the
Company was found to have violated the confidentiality requirement
during the course of his/her work.
2022 107
Report of the Board of Supervisors for 2022
IV. Work Plan of the Board of Supervisors in 2023 2023
In 2023, the Board of Supervisors of the Company will continue to strictly 2023
comply with the requirements of the “Company Law”, the “Securities Law”,
the “Articles of Association” and the relevant regulations and policies of
the country, perform its duties faithfully, and further facilitate regulated
operations of the Company.
(1) Comply with Laws and Regulations and Discharge
Duties Conscientiously
In 2023, the Board of Supervisors will strictly implement the relevant 2023
requirements of the “Company Law”, the “Securities Law”, and the
“Articles of Association”, supervise the Board and the management
in performing the obligation in accordance with law, and facilitate
the Company to further improve corporate governance structure and
improve its level of governance.
(2) Strengthen Supervision and Inspection to Avert
Operational Risks
Firstly, the Board of Supervisors will focus on financial supervision,
and monitor and inspect the financial position of the Company in
line with the law. Secondly, the Board of Supervisors will maintain
communication and liaison with the internal auditors and external
accounting firms, so as to make full use of internal and external audit
information to keep abreast of relevant situations. Thirdly, the Board
of Supervisors will pay particular attention to high risk areas of the
Company and carry out inspections on critical aspects such as major
investments, connected transactions, external guarantees, financial
endorsement and fund utilization.
(3) Bolster Professional Capabilities through Greater
Self-improvement
Members of the Board of Supervisors will constantly broaden their
professional knowledge and improve their professional capabilities
by receiving more training in banking, finance, law, auditing and
securities, so as to enhance the supervisory role, actively explore
innovative ways of supervision, and better perform the supervisory
function of the Board of Supervisors.
The Board of Supervisors of
Zhengzhou Coal Mining Machinery Group Company Limited
29 March 2023 2023 3 29
108 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Independent Auditor’s Report
To t he S hare ho ld r s o f Zheng zh ou C oal Mining M ac i ne ry Group
Company Limited
(incorporated in the People’s Republic of China wi lim d liability)
Opinion
Wha we ha e audited
The consolidated financial statements of Zhengzhou Coal Mining Machinery
Group Compa y Limited (the “Company”) and its subsidiaries (the “Group”), 117 275
which are set out on pages 117 to 275, comprise:
the consolidated statement of financial position as at 31 December 2022; 2022 12 31
the consolidated statement of profit or loss and other comprehensive
income for the year then ended;
the consolidated statement of changes in equity for the year then ended;
the consolidated statement of cash flows for the year then ended; and
the notes to the consolidated financial statements, which include
significant accounting policies and other explanatory information.
Our opinion
In our opinion, the consolidated financial statements give a true and fair view of
the consolidated financial position of the Group as at 31 December 2022, and 2022 12 31
of its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with International Financial Reporting Standards
(“IFRSs”) and have been properly prepared in compliance with the disclosure
requirements of the Hong Kong Companies Ordinance.
2022 109
Independent Auditor’s Report
Basis for Opinion
We conducted our audit in accordance with Hong Kong Standards on Auditing
(“HKSAs”) issued by the HKICPA. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the HKICPA’s Code of
Ethics for Professional Accountants (“the Code”), and we have fulfilled our other
ethical responsibilities in accordance with the Code.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the consolidated financial statements of the
current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Key audit matters identified in our audit are summarised as follows:
Determination of loss allowance for trade receivables
Impairment assessment of goodwill
110 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Independent Auditor’s Report
Key Audit Matters (Continued)
Key Aud t Matter How our audit addressed the Key Audit Matter
Determination of loss allowanc for trade receivables
Refer to not 2, 3, 4 and 29 to the consolidated financial statements. We performed the following procedures in relation to
management’s assessment when determining the loss
As at 31 December 2022, the carrying amounts of the Group’s trade receivables allowance for trade receivables:
were RMB6,531 million for which a loss allllowan of RMB570 million was
provided We obtained an understanding of, evaluated and
tested management’s key controls which management
nage
Mana me nt asssses se s th e lo ss a llow an ce for trade receivables on a adopted for the determination of loss allowance for trade
periododical basis. Loss allowances for trade receivables are calculated based receivables and assessed the inherent risk of material
on management’s estimate of the lifetime expected credit losses, which is misstatement by considering the degree of estimation
determined by taking into ac a) the customers’ repayment history, aging uncertainty and level of other inherent risk factors such
profile of their overdue balances, their current financial positions and other as complexity, subjectivity, changes and susceptibility to
relevant circumstances; and b) forecasts of future economic conditions. management bias or fraud.
We identified the determination of loss allowance for trade receivables as a We assessed the reasonableness of management’s loss
key audit matter because the expected credit loss is subject to high degree of allowance estimates by examining the information used
estimation uncertainty. The inherent risk in relation to the expected credit loss by management to form such judgements and estimates,
is considered significant due to the complexity of the models, subjectivity of including:
significant assumptions used, and the significant judgements and estimates
involved in the process. i) Evaluated the customer’s repayment history by
checking the settlement evidence of the trade
receivables to cash receipt and testing the aging
profile of trade receivables to sales invoices and other
relevant documents, on a sample basis;
ii) On customers having a higher risk of default:
Understood management’s process in
identifying customers having a higher risk of
default;
Obtained and reviewed those customers’
background information and their current
financial position provided by management;
Reviewed transactions with those customers
and their respective collection patterns in the
past, and discussed with management to
understand the circumstances applicable to
relevant customers; and
iii) Evaluated whether the historical loss rates were
appropriately adjusted based on current economic
conditions and forward-looking information by making
reference to market data.
We assessed the adequacy of the disclosures related to
the loss allowance for trade receivables in the context of
the applicable financial reporting framework.
We also considered whether the judgements made in
selecting the models, significant assumptions and data
would give rise to indicators of possible management bias.
Based on the procedures performed, we found that the risk
assessment of determination of loss allowance for trade
receivables remained appropriate and we found the judgement
and estimates adopted by management in determining the
determination of loss allowance for trade receivables are
supported by available evidence.
2022 111
Independent Auditor’s Report
Key Audit Matters (Continued)
Key Audit Matter How our audit addressed the Key Audit Matter
Determination of loss allowance for trade receivables (Continued)
2 3 4 29
2022 12 31 6,531
570
a)
b)
i)
ii)
iii)
112 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Independent Auditor’s Report
Key Audit Matters (Continued)
Key Aud t Matter How our audit addressed the Key Audit Matter
Impairment assessmennt of goo ill
oodw
Refer to not 2, 4 and 19 to the consolidated financial statements. We performed the following procedures in relation to
management’s impairment assessments of goodwill:
At 31 December 2022, the Group’s goodwill amounted to RMB132 million,
ag ai ns t wh ic h a pr v is io n of RMB277 mi ll io n w a s made to certain cash We obtained an understanding of the management’s
gene ti g units (“CGUs”s”). internal control and assessment process of goodwill
impairment and assessed the inherent risk of material
Goodwill was being allocate to CG s for the goodwill impairment assessment. misstatement by considering the degree of estimation
Mana ge me nt has engaged an external valuer to assist with the annual uncertainty and level of other inherent risk factors such
im pa irmeent assessment. The recoverable amounts of the CGUs were as complexity, subjectivity, changes and susceptibility to
rmin
determ ed based on the value-in-use calculations using cash flow projections, management bias or fraud.
wh h invovolved using key assumptions such as revenue growth rate, gross profit
rate, and pre-tax discount rate. We evaluated the outcome of prior period assessment
of th goodwill t assess th effectiveness of th
We focused on this area due to (a) the magnitude of the carrying amount management’s estimation process.
of goodwill; and (b) the estimation of recoverable amount is subject to high
degree of estimation uncertainty. The inherent risk in relation to the impairment We evaluated and tested the key controls over the
assessment of goodwill is considered significant due to the complexity of the impairment of goodwill.
models, subjectivity of significant assumptions used, and significant judgements
involved in the goodwill impairment assessment process. We obtained and reviewed the valuation reports issued
by the external valuers, and evaluated its independence,
competence and objectivity.
We evaluated the appropriateness of the valuation
models and management’s key assumptions used, with
the involvement of our internal valuation experts and
performed the following procedures:
i) Compared the revenue growth rate and gross
profit rate with the Group’s historical results and
the Group’s approved business plan, taking into
consideration market trends;
ii) Assessed the pre-tax discount rates used by
benchmarking the discount rates against external
market data;
iii) Evaluated management’s sensitivity analysis around
the key assumptions used, to ascertain the extent
to which adverse changes would result in goodwill
being impaired.
We tested the accuracy of the calculations applied in
the valuation models for the calculation of impairment
provisions.
We assessed the adequacy of the disclosures related
to goodwill impairment in the context of the applicable
financial reporting framework.
We also considered whether the judgements made in
selecting the models, significant assumptions and data
would give rise to indicators of possible management bias.
Based on the procedures performed, we considered that the
risk assessment of goodwill impairment remained appropriate
and management’s judgement in the impairment assessments is
supported by available evidence.
2022 113
Independent Auditor’s Report
Key Audit Matters (Continued)
Key Audit Matter How our audit addressed the Key Audit Matter
Impairment assessment of goodwill (Continued)
2 4 19
2022 12 31 132
277
(a) (b)
i)
ii)
iii)
114 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Independent Auditor’s Report
Other Information
The directors of the Company are responsible for the other information. The
other in fo rm at io n co mp ri s e s all of the i nf or ma ti on i nclulude d in Zheng
ngzhou 2022
Coal Mining Machinery Group Co., Ltd. Annual Report 2022 (the “annual
re ort”) other than the consolidated financial statements and our auditor’s
repo rt thereon. We have obtained some of the other information including
chairman’s statement prior to the date of this auditoror’s report. The remaining
othe informat incncluluding Manage ent Discusussion and Analysis, Directors, 2022
Suuperviso s and Seeninior Managem t Corporarate Governance Report, Report
of the Board of Directors and Report of th Bo d of Supervisors for 2022 and
the othe se tions to be included in the annual report, is expected to be made
available to us after that date.
onso
Our opin ion on the con li da t e d fi nancial statements does not cover the
oth r information and we do not and will not express any form of assurance
conclu on thereon.
In connection with our audit of the consolidated financial statements, our
responsibility is to read the other information identified above and, in doing
so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we
obtained prior to the date of this auditor’s report, we conclude that there is a
material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
When we read the remaining other information to be included in the annual
report, if we conclude that there is a material misstatement therein, we
are required to communicate the matter to the Audit Committee and take
appropriate action considering our legal rights and obligations.
Responsibilities of Directors and the Audit Committee
for the Consolidated Financial Statements
The directors of the Company are responsible for the preparation of the
consolidated financial statements that give a true and fair view in accordance
with IFRSs and the disclosure requirements of the Hong Kong Companies
Ordinance, and for such internal control as the directors determine is necessary
to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible
for assessing the Group’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or to
cease operations, or have no realistic alternative but to do so.
The Audit Committee is responsible for overseeing the Group’s financial
reporting process.
2022 115
Independent Auditor’s Report
Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. We report our opinion solely to you, as a body, and for
no other purpose. We do not assume responsibility towards or accept liability to
any other person for the contents of this report. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance
with HKSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with HKSAs, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order
to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by
the directors.
Conclude on the appropriateness of the directors’ use of the going
concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
116 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Independent Auditor’s Report
Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements (Continued)
Evaluate the overall presentat on, structure and content of the consololidated
fi na nc st at em en incllud uding th e di s c lo su s and w he th er the
conso idated financial statements represent the underlying transactions
and events in a mann that achieves fair presentatition.
Ob ta n sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Group to express
an opiininion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the group audit. We
remain solely respponsible for our audit op
We communicate with the Audit Committee regarding, among other matters, the
planned scope and ti n of the audit and significant audit findings, including
any signific t deficiencies in internal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate
with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the Audit Committee, we determine those
matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s
report is Lee Chung Bor.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 29 March 2023 2023 3 29
2022 117
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2022 2022 12 31
2022 2021
2022 2021
Note RMB’000 RMB’000
(Restated,
Note 2.1)
2.1
Revenue 5 32,043,306 29,293,527
Cost of sales 11 (25,644,599) (23,221,695)
Gross profit 6,398,707 6,071,832
Other income 7 476,430 385,249
Other losses, net 8 (120,034) (3,575)
Selling and distribution expenses 11 (831,593) (828,126)
Administrative expenses 11 (1,072,973) (1,284,318)
Research and development expenses 11 (1,385,962) (1,271,736)
Restructuring costs 11 – (210,841)
Net impairment losses on financial and
contract assets (137,284) (16,533)
Share of profit of associates 21 23,147 39,416
Share of profit of joint ventures 22 5,050 5,639
Finance costs 9 (265,410) (263,691)
Profit before income tax 3,090,078 2,623,316
Income tax expense 10 (462,073) (553,448)
Profit for the year 2,628,005 2,069,868
Profit for the year attributable to:
Owners of the Company 2,538,235 1,947,785
Non-controlling interests 89,770 122,083
2,628,005 2,069,868
118 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2022 2022 12 31
2022 2021
2022 2021
Note RMB’000 RMB’000
(Restated,
Note 2.1)
2.1
Other comprehensive income:
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of post-employment benefit
obligations 46,477 70,562
Changes in the fair value of financial assets at fair
value through other comprehensive income 247,305 2,758
Items that may be reclassified to profit or loss:
Exchange differences arising on translation 9,528 24,524
Cash flow hedging 14,723 (12,555)
Other comprehensive income/(loss) for the year,
net of income tax 318,033 85,289
Total comprehensive income for the year 2,946,038 2,155,157
Total comprehensive income for the year
attributable to:
Owners of the Company 2,856,268 2,033,074
Non-controlling interests 89,770 122,083
2,946,038 2,155,157
EARNINGS PER SHARE
– Basic (RMB cents) 15 145.38 112.42
– Diluted (RMB cents) 15 144.55 111.90
2022 119
Consolidated Statement of Financial Position
As at 31 December 2022 2022 12 31
As at 31 December
12 31
2022 2021
2022 2021
Note RMB’000 RMB’000
NON-CURRENT ASSETS
Property, plant and equipment 16 5,434,083 4,843,738
Right-of-use assets 17 1,835,441 1,668,455
Investment properties 18 336,004 377,593
Goodwill 19 131,905 412,850
Intangible assets 20 927,015 1,176,924
Investments in associates 21 186,840 171,961
Investments in joint ventures 22 92,028 86,978
Financial assets at fair value through other
comprehensive income 23 796,876 143,752
Deferred income tax assets 24 313,657 383,830
Finance lease receivables 25 49,994 23,149
Long-term receivables 26 166,468 116,849
Assets classified as held for sale – 1,685
10,270,311 9,407,764
CURRENT ASSETS
Finance lease receivables, current portion 25 50,963 42,122
Long-term receivables, current portion 26 88,032 30,324
Inventories 28 7,909,823 6,242,407
Trade and other receivables 29 9,118,627 7,374,073
Transferred trade receivables 34 269,411 687,473
Financial assets at fair value through
profit or loss 23 5,228,176 3,236,286
Financial assets at fair value through other
comprehensive income 23 4,494,325 4,111,050
Derivative financial instruments 23 4,890 15,372
Tax recoverable 19,153 43,667
Bank deposits 30 3,402,435 2,944,102
Cash and cash equivalents 30 3,613,443 3,195,674
34,199,278 27,922,550
Total assets 44,469,589 37,330,314
120 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Consolidated Statement of Financial Position
As at 31 December 2022 2022 12 31
As at 31 December
12 31
2022 2021
2022 2021
Note RMB’000 RMB’000
NON-CURRENT LIABILITIES
Borrowings 32 4,312,744 4,630,658
Lease liabilities 17 1,250,741 1,142,850
Deferred income tax liabilities 24 179,464 246,853
Contract liabilities 27 21,510 26,528
Provisions 33 19,628 62,157
Employee benefit obligations 35 222,324 303,261
Other non-current liabilities 239,157 188,657
6,245,568 6,600,964
CURRENT LIABILITIES
Trade and other payables 31 11,480,609 9,978,408
Contract liabilities 27 3,748,349 2,272,366
Income tax liabilities 115,214 132,287
Borrowings 32 3,237,226 1,167,952
Lease liabilities 17 146,261 103,221
Provisions 33 571,275 687,344
Liabilities associated with transferred trade
receivables 34 269,411 687,473
Derivative financial instruments 23 17,395 49,322
19,585,740 15,078,373
Total liabilities 25,831,308 21,679,337
2022 121
Consolidated Statement of Financial Position
As at 31 December 2022 2022 12 31
As at 31 December
12 31
2022 2021
2022 2021
Note RMB’000 RMB’000
CAPITAL AND RESERVES
Share capital 36 1,782,245 1,779,493
Share premium 4,538,675 4,426,102
Reserves 11,486,347 8,589,896
Equity attributable to owners of the Company 17,807,267 14,795,491
Non-controlling interests 39 831,014 855,486
Total equity 18,638,281 15,650,977
Total equity and liabilities 44,469,589 37,330,314
The consolidated financial statements on pages 117 to 275 were 117 275 2023 3 29
approved and authorised for issue by the Board of Directors on
29 March 2023 and are signed on its behalf by:
Jiao Chengyao Jia Hao
DIRECTOR DIRECTOR
122 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022 2022 12 31
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) (Note d)
a b d
At 31 December 2021 and at 2021 12 31
1 January 2022 2022 1 1 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 year – – – – – – – – 2,538,235 2,538,235 89,770 2,628,005
Other comprehensive income for
the year – – – 293,782 – 9,528 14,723 – – 318,033 – 318,033
Total comprehensive income for
the year – – – 293,782 – 9,528 14,723 – 2,538,235 2,856,268 89,770 2,946,038
Share options 3,600 32,271 – – – – – (10,255) – 25,616 13 25,629
Restricted share incentive scheme 38
(Note 38) (848) 80,302 130,526 – – – – 90 547 210,617 213 210,830
Disposal of a subsidiary (Note 43) 43 – – – – – – – – – – (152,669) (152,669)
Disposal of listed equity securities – – – – – – – – 35,666 35,666 – 35,666
Transaction with non-controlling 39
interests (Note 39) – – – – – – – 654,942 – 654,942 216,708 871,650
Employee stock ownership plan of
a subsidiary – – – – – – – 2,747 – 2,747 484 3,231
Dividends (Note 14) 14 – – – – – – – – (774,080) (774,080) (178,991) (953,071)
At 31 December 2022 2022 12 31 1,782,245 4,538,675 (118,198) 331,708 1,198,347 (111,738) – 808,895 9,377,333 17,807,267 831,014 18,638,281
2022 123
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022 2022 12 31
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) (Note c) (Note c)
a b c c
At 1 January 2021 2021 1 1 1,732,471 4,199,421 – (35,394) 1,023,520 (145,790) (2,168) 115,203 6,176,532 13,063,795 970,036 14,033,831
Profit for the year
Other comprehensive income
(lose) for the year – – – – – – – – 1,947,785 1,947,785 122,083 2,069,868
Total comprehensive income
(lose) for the year – – – 73,320 – 24,524 (12,555) – – 85,289 – 85,289
Transfer (Note a) a – – – – 174,827 – – – (174,827) – – –
Share options 4,722 21,614 – – – – – 8,578 – 34,914 – 34,914
Restricted share incentive 38
scheme (Note 38) 42,300 205,067 (248,724) – – – – 79,364 – 78,007 – 78,007
Return of contributions to c
State-owned investors (Note c) – – – – – – – (95,000) – (95,000) – (95,000)
Disposal of associates (Note 21) 21 – – – – – – – (3,756) – (3,756) – (3,756)
Transaction with non-controlling e
interests (Note e) – – – – – – – 56,982 – 56,982 (177,846) (120,864)
Dividends (Note 14) 14 – – – – – – – – (372,525) (372,525) (58,787) (431,312)
At 31 December 2021 2021 12 31 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
124 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022 2022 12 31
Note a: In accordance with the Company Law of PRC and the Articles of Association a
of the Company and all subsidiaries established in the PRC, the Company and
these subsidiaries are required to transfer 10% of the profit after taxation to the 10%
statutory surplus reserve until the reserve reaches 50% of the registered capital. 50%
Transfer to this reserve must be made before distributing dividends to equity
holders. The statutory surplus reserve can be used to make up for previous years’
losses, expand the existing operations or convert into additional capital of the
Company and these subsidiaries.
Note b: The cash flow hedging reserve presents the cumulative effective portion of gains b
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 c: The other reserves as at 1 January 2021 mainly represent the contribution from c 2021 1 1
the State-owned Assets Supervision and Administration Commission of Henan
Provincial People’s Government (“Henan SASAC”), the former ultimate controlling 2021 1 1
party of the Company, and was recognised as contribution from the ultimate 2021 1 18
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 2021 1
the capital contribution made before, and the Company repaid RMB95,000,000 to 95,000,000
Henan Machinery Investment Group Co., Ltd in January 2021.
Note d: The reserves available for distribution to shareholders by the Group as at 31 d 2022 2021 12 31
December 2022 and 2021 was RMB8,773,959,000 and RMB7,148,930,000, 8,773,959,000
respectively. 7,148,930,000
Note e: In 2021, the non-controlling investor divested its interests in Zhengzhou Coal e 2021
Mining Machinery Comprehensive Equipment Co., Ltd., a subsidiary of the Group,
which resulted in the decrease of non-controlling interests by RMB173,898,000. 173,898,000 2021
In 2021, the Group’s subsidiary, ASIMCO Shuanghuan Piston Ring (Yizheng) Co.,
Ltd (“ASIMCO Shuanghuan”) acquired 20% shares of ASM ALLOY MATERIALS 20%
(YIZHENG) CO.,LTD, which resulted in the decrease of non-controlling interests by 3,948,000
RMB3,948,000.
2022 125
Consolidated Statement of Cash Flows
For the year ended 31 December 2022 2022 12 31
Year ended 31 December
12 31
2022 2021
2022 2021
RMB’000 RMB’000
OPERATING ACTIVITIES
Profit before tax 3,090,078 2,623,316
Adjustments for:
Finance costs 265,410 263,691
Interest income on bank deposits, long-term
receivables and finance lease receivables (161,326) (130,724)
Share of profit of associates (23,147) (39,416)
Share of profit of joint ventures (5,050) (5,639)
Net gains on disposal of property,
plant and equipment (4,800) (11,598)
Gain on disposal of associates - (56,596)
Gain on disposal of a subsidiary (195,494) -
Gain on disposal of loans receivable from
associates and a joint venture - (22,550)
Dividend from financial assets at fair value through
other comprehensive income - (3,719)
Dividend from financial assets at fair value through
profit and loss - (240)
Net fair value loss/(gain) of derivative financial
instruments 73,221 (5,069)
Net fair value gains on financial assets at
fair value through profit or loss (94,989) (109,557)
Depreciation of property, plant and equipment 582,889 671,359
Depreciation of investment properties 18,815 11,682
Amortisation of intangible assets 190,402 239,999
Depreciation of right-of-use assets 152,526 155,729
Net impairment losses on financial and
contract assets 137,284 16,533
Impairment of property, plant and equipment 1,491 1,732
Impairment of goodwill 276,651 78,935
Impairment of intangible assets 99,116 83,739
Share options (Note 37) 37 7,116 8,578
Restricted share incentive scheme (Note 38) 38 84,743 79,364
Employee stock option plan of a subsidiary 3,231 -
Accrual of inventory provision 44,879 24,775
Effect of foreign exchange rate changes (37,760) 31,086
Operating cash flows before movements in
working capital 4,505,286 3,905,410
Increase in inventories (1,892,131) (1,727,594)
Increase in trade and other receivables (2,085,517) (316,786)
Increase in notes receivable (502,908) (305,952)
(Increase)/decrease in long-term receivables and
finance lease receivables (143,013) 257,166
Increase in trade and other payables 1,575,698 533,681
Increase in contract liabilities 1,471,530 663,138
Cash generated from operations 2,928,945 3,009,063
Income tax paid (499,749) (624,094)
NET CASH GENERATED FROM
OPERATING ACTIVITIES 2,429,196 2,384,969
126 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Consolidated Statement of Cash Flows
For the year ended 31 December 2022 2022 12 31
Year ended 31 December
12 31
2022 2021
2022 2021
RMB’000 RMB’000
INVESTING ACTIVITIES
Interest income on bank deposits, long-term
receivables and finance lease receivables 161,326 130,724
Government grants related to assets received 91,487 43,658
Dividends from financial assets at fair value through
other comprehensive income – 3,719
Dividends from financial assets at fair value through
profit and loss – 240
Dividends from associates 5,989 –
Proceeds on disposal of associates 17,153 131,654
Proceeds on disposal of a subsidiary,
net of cash disposed 274,613 –
Proceeds from sale of financial assets at fair value
through other comprehensive income 64,960 –
Purchase of financial assets at fair value through
other comprehensive income (389,323) –
Proceeds on disposal of derivative
financial instruments 14,723 (12,555)
Proceeds on disposal of property,
plant and equipment 56,703 27,323
Purchases of property, plant and equipment (1,300,700) (1,032,547)
Purchases of intangible assets (112,152) (91,992)
Payments for other financial assets,
structured deposits and certificate of deposits (8,006,832) (3,234,990)
Proceeds from other financial assets and
structured deposits 6,109,931 2,853,566
Repayment of loans receivable from associates and
a joint venture – 29,050
Repayment of contributions to non-controlling interests – (120,864)
Payments for capital contribution to an associate – (1,000)
Placement of bank deposits with original maturity
over three months and restricted cash (2,736,826) (2,569,828)
Withdrawal of bank deposits with original maturity
over three months 2,569,828 1,789,743
Payment of pledged bank deposits (665,609) (374,274)
Withdrawal of pledged bank deposits 374,274 973,546
Net settlement amount of derivative
financial instruments (73,221) 5,069
NET CASH USED IN INVESTING ACTIVITIES (3,543,676) (1,449,758)
2022 127
Consolidated Statement of Cash Flows
For the year ended 31 December 2022 2022 12 31
Year ended 31 December
12 31
2022 2021
2022 2021
RMB’000 RMB’000
FINANCING ACTIVITIES
Proceeds from new borrowings 4,920,439 2,399,132
Proceeds from exercise of share options 18,513 26,336
(Repayment of)/proceeds from restricted share
incentive scheme (Note 38) 38 (4,508) 247,367
Repayment of borrowings (3,142,964) (945,000)
Interests paid (221,602) (228,708)
Contribution from non-controlling interests 871,650 –
Repayment of redemption liabilities – (1,425,868)
Dividends paid to Company’s shareholders (774,080) (372,525)
Dividends paid to non-controlling interests (541) (58,787)
Repayment of contributions to
State-owned investors – (95,000)
Lease payments (191,312) (153,498)
NET CASH GENERATED FROM/(USED IN)
FINANCING ACTIVITIES (Note 44) 44 1,475,595 (606,551)
NET INCREASE IN CASH AND CASH EQUIVALENTS 361,115 328,660
EFFECT OF FOREIGN EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS 56,654 (111,713)
CASH AND CASH EQUIVALENTS AT 1 JANUARY 1 1 3,195,674 2,978,727
CASH AND CASH EQUIVALENTS 12 31
AT 31 DECEMBER (Note 30) 30 3,613,443 3,195,674
128 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
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 2008 12
under the Company Law of the PRC after a reorganisation of Zhengzhou 28 2015 10
Coal Mining Machinery Group Co., Ltd., a state owned enterprise in the 28
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 Co., Ltd., 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 Co., Ltd. and its
ultimate controlling party was Henan SASAC of the PRC Government.
On 3 August 2010, the Company completed its initial public offering and 2010 8 3 140,000,000 A
listing of 140,000,000 A shares on the Shanghai Stock Exchange under
the stock code 601717.SS. The Company was listed on the Main Board of 601717.SS 2012 12 5
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 2017 3 9
to ASIMCO (China) Limited. On 22 March 2017, the Company issued 93,220,338 2017 3 22
18,129,032 ordinary shares to Zhengzhou Coal Mining Machinery Group 1
Company Limited – the first phase of ESOP, Bridge Trust Co., Ltd., Jinxiu
Zhonghe (Beijing) Capital Management Co., Ltd. – Jinxiu Tianyou No. 106 106
Private Investment Fund, Tianhong Asset Management – Bank of Ningbo
– HANG TANG WEALTH, Tianhong Asset Management – Bank of Ningbo 2
– No. 2 Wealth Management Plan of Tianhong Dashu Dingzengbao and
Anhui Railway Development Funds Co., Ltd. After the issuance, Henan 18,129,032
Machinery Investment Group Co., Ltd. held 30.08% of the Company’s total
issued share capital. 30.08%
On 26 February 2021, Henan Machinery Investment Group Co., Ltd. 2021 2 26
transferred 277,195,419 A shares of the Company to Hong Yi Investment
Management (Henan) Partnership (Limited Partnership) (“Hong Yi 277,195,419 A
Investment”). After the transfer, Henan Machinery Investment Group Co.,
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.
2022 129
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
1 GENERAL INFORMATION (Continued) 1
On 4 June 2021, the Annual General Meeting of the Group adopted a 2021 6 4
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 1,732,471,370
share capital of the Company increased from 1,732,471,370 Shares to 1,774,771,370
1,774,771,370 Shares. As a result, the aggregate shareholding of Hong Yi 19.99%
Investment and Henan Asset Management Limited has been changed from 19.52%
19.99% to 19.52%.
On 18 December 2021, the first vesting period of the share options 2021 12 18 2019
granted under the 2019 Option Incentive Scheme was due, and 301
participants with number of 4,722,300 shares were eligible for option 301
exercise in accordance with the relevant provisions of the Option Incentive 4,722,300 37
Scheme (Note 37). After the completion of the exercise of share options, 1,774,771,370
the total share capital of the Company increased from 1,774,771,370 1,779,493,670
shares to 1,779,493,670 shares. As a result, the aggregate shareholding 19.52% 19.47%
of Hong Yi Investment and Henan Asset Management Limited has been
changed from 19.52% to 19.47%.
On 11 October 2022, due to the reasons, such as resignation, job transfer 2022 10 11
or position change of incentive employees under the Scheme (Note 38),
the Company repurchased and cancelled 848,000 restricted A shares 848,000 A
granted to certain employees.
On 18 December 2022, the second vesting period of the share options 2022 12 18 2019
granted under the 2019 Option Incentive Scheme was due, and 292
participants with number of 4,491,300 shares were eligible for option 292
exercise in accordance with the relevant provisions of the Option Incentive 4,491,300 37 2022 12
Scheme (Note 37). As at 31 December 2022, the total outstanding shares 31 1,778,645,670
of the Company were 1,778,645,670 shares and additional 3,600,300 3,600,300 2019
shares were exercised under the 2019 Option Inventive Scheme but the 37
shares registration were not completed (Note 37).
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.
130 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
The principal accounting policies applied in the preparation of the
consolidated financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise
stated. The consolidated financial statements are for the Group consisting
of the Company and its subsidiaries.
2.1 Basis of preparation 2.1
(i) Compliance with IFRSs (i)
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards 622
(“IFRSs”) and disclosure requirements of the Hong Kong
Companies Ordinance Cap. 622 (“HKCO”).
The preparation of the financial statements in conformity with
IFRSs requires the use of certain critical accounting estimates.
It also requires management to exercise its judgment in the
process of applying the Group’s accounting policies. The
areas involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the 4
consolidated financial statements are disclosed in Note 4 below.
(ii) Historical cost convention (ii)
The financial statements have been prepared on a historical
cost basis, except for the following:
certain financial assets and liabilities (including derivative
instruments) – measured at fair value, and
defined benefit pension plans – plan assets measured at
fair value.
2022 131
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.1 Basis of preparation (Continued) 2.1
(iii) New standards, amendments and annual improvements (iii) 2022
adopted by the Group in 2022
The Group has applied the following amendments for the first 2022 1 1
time for their annual reporting period commencing 1 January
2022:
Property, Plant and Equipment: Proceeds before Intended
Use – Amendments to IAS 16 16
Onerous Contracts – Cost of Fulfilling a Contract –
Amendments to IAS 37 37
Reference to the Conceptual Framework – Amendments to
IFRS 3 3
Covid-19 Related Rent Concessions beyond 30 June 2021 2021 6 30
– Amendment to IFRS 16 (March 2021), and 16
2021 3
Annual Improvements to IFRS Standards 2018-2020. 2018 2020
The standards, amendments and annual improvements listed 16
above are either currently not relevant to the Group or had no
material impact on the Group’s financial statements for the
current and prior financial years except for the Amendment to
IAS 16 Property, Plant and Equipment.
16
The adoption of the Amendment to IAS 16 Property, Plant and
Equipment has been applied retrospectively and comparative
figures have been reclassified accordingly. It leads to the 135,483,000
reclassification of RMB135,483,000 from "research and
development expenses" into "cost of sales" in the reporting 166,224,000 2021
p e r i o d a n d o f R M B166,224,000 f r o m " r e s e a r c h a n d
development expenses" into "cost of sales" in 2021 annual
financial report disclosed.
132 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.1 Basis of preparation (Continued) 2.1
(iii) New standards, amendments and annual improvements (iii) 2022
adopted by the Group in 2022 (Continued)
The amendment to IAS 16 prohibits an entity from deducting 16
from the cost of an item of property, plant and equipment
any proceeds received from selling items produced while the
entity is preparing the asset for its intended use. The proceeds
from selling such samples and the costs relating to items
produced are now recognised in profit or loss. This amendment
also clarifies that an entity is 'testing whether the asset is
functioning properly' when it assesses the technical and
physical performance of the asset. The financial performance
of the asset is not relevant to this assessment. Entities must
disclose separately the amount of proceeds and cost relating to
items produced that are not an output of the entity's ordinary
activities.
(iv) Impact of new standard and amendments issued but not (iv)
yet adopted by the Group
Certain new accounting standard and amendments have 2022
been published but are not mandatory for 31 December 2022 12 31
reporting period and have not been early adopted by the Group.
These new standards and amendments are not expected to
have a material impact on the Group’s consolidated financial
statements when they become effective.
2022 133
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies 2.2
Principles of consolidation and equity accounting
(a) Subsidiaries (a)
Subsidiaries are all entities (including structured entities) over
which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are deconsolidated
from the date that control ceases.
The acquisition method of accounting is used to account for
business combinations by the Group.
Intercompany transactions, balances and unrealised gains
on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred asset.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by
the Group.
Non-controlling interests in the results and equity of subsidiaries
are shown separately in the consolidated statement of profit or
loss and other comprehensive income, statement of changes in
equity and statement of financial position respectively.
(b) Associates (b)
Associates are all entities over which the Group has significant
influence but not control or joint control. This is generally the
case where the Group holds between 20% and 50% of the 20%
voting rights. Investments in associates are accounted for using 50%
the equity method of accounting, after initially being recognised
at cost.
134 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Principles of consolidation and equity accounting (Continued)
(c) Joint arrangements (c)
Under IFRS 11 Joint Arrangements, investments in joint 11
arrangements are classified as either joint operations or joint
ventures. The classification depends on the contractual rights
and obligations of each investor, rather than the legal structure
of the joint arrangement. The Group has assessed the nature of
its joint arrangements and determined them to be joint ventures.
Interests in joint ventures are accounted for using the
equity method, after initially being recognised at cost in the
consolidated statement of financial position.
(d) Equity accounting (d)
Under the equity method of accounting, the investments are
initially recognised at cost and adjusted thereafter to recognise
the Group’s share of the post-acquisition profits or losses of the
investee in profit or loss, and the Group’s share of movements
in other comprehensive income of the investee in other
comprehensive income. Dividends received or receivable from
associates and joint ventures are recognised as a reduction in
the carrying amount of the investment.
Where the Group’s share of losses in an equity-accounted
investment equals or exceeds its interest in the entity, including
any other unsecured long-term receivables, the Group does not
recognise further losses, unless it has incurred obligations or
made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its
associates and joint ventures are eliminated to the extent of
the Group’s interest in these entities. Unrealised losses are
also eliminated unless the transaction provides evidence of
an impairment of the asset transferred. Accounting policies
of equity accounted investees have been changed where
necessary to ensure consistency with the policies adopted by
the Group.
The carrying amount of equity-accounted investments is tested
for impairment in accordance with the policy described in
“Impairment of non-financial assets” below.
2022 135
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Principles of consolidation and equity accounting (Continued)
(e) Changes in ownership interests (e)
The Group treats transactions with non-controlling interests
that do not result in a loss of control as transactions with equity
owners of the Group. A change in ownership interest results in
an adjustment between the carrying amounts of the controlling
and non-controlling interests to reflect their relative interests
in the subsidiary. Any difference between the amount of the
adjustment to non-controlling interests and any consideration
paid or received is recognised in a separate reserve within
equity attributable to owners of the Company.
When the Group ceases to consolidate or equity account
for an investment because of a loss of control, joint control
or significant influence, any retained interest in the entity is
remeasured to its fair value with the change in carrying amount
recognised in profit or loss. This fair value becomes the initial
carrying amount for the purposes of subsequently accounting for
the retained interest as an associate, joint venture or financial
asset. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted
for as if the Group had directly disposed of the related assets or
liabilities. This may mean that amounts previously recognised in
other comprehensive income are reclassified to profit or loss or
transferred to another category of equity as specified/permitted
by applicable IFRSs.
If the ownership interest in a joint venture or an associate is
reduced but joint control or significant influence is retained, only
a proportionate share of the amounts previously recognised in
other comprehensive income are reclassified to profit or loss
where appropriate.
136 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Business combinations
The Group applies the acquisition method to account for all business
combinations, regardless of whether equity instruments or other
assets are acquired. The consideration transferred for the acquisition
of a subsidiary comprises the:
fair values of the assets transferred
liabilities incurred to the former owners of the acquired business
equity interests issued by the Group
fair value of any asset or liability resulting from a contingent
consideration arrangement, and
fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired, liabilities and contingent liabilities
assumed in a business combination are measured initially at their
fair values at the acquisition date. The Group recognises any non-
controlling interest in the acquired entity on an acquisition-by-
acquisition basis either at fair value or at the non-controlling interest’s
proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred, amount of any non-
controlling interest in the acquiree, and the acquisition-date fair value
of any previous equity interest in the acquiree over the fair value of
the identifiable net assets acquired is recorded as goodwill.
Contingent consideration is classified either as equity or a financial
liability. Amounts classified as a financial liability are subsequently
remeasured to fair value with changes in fair value recognised in
profit or loss. Amounts classified as equity is not re-measured, and
its subsequent settlement is accounted for within equity.
If the business combination is achieved in stages, the acquisition
date carrying value of the acquirer’s previously held equity interest in
the acquiree is remeasured to fair value at the acquisition date. Any
gains or losses arising from such remeasurement are recognised in
profit or loss.
2022 137
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
(“CODM”). The chief operating decision-maker, who is responsible
for allocating resources and assessing performance of the operating
segments, has been identified as executive directors of the Company.
Foreign currency translation
(a) Functional and presentation currency (a)
Items included in the historical financial information of each of
the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the
“functional currency”). The Company’s functional currency is
RMB as its key activities and transactions are denominated in
RMB. The Group’s presentation currency is RMB.
(b) Transactions and balances (b)
Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are generally recognised
in profit or loss. They are deferred in equity if they relate to
qualifying cash flow hedges and qualifying net investment
hedges or are attributable to part of the net investment in a
foreign operation.
Foreign exchange gains and losses that relate to borrowings
are presented in the statement of profit or loss and other
comprehensive income, within finance costs. All other foreign
exchange gains and losses are presented in the statement of
profit or loss and other comprehensive income on a net basis
within “other gains/losses, net”.
138 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Foreign currency translation (Continued)
(b) Transactions and balances (Continued) (b)
Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date
when the fair value was determined. Translation differences on
assets and liabilities carried at fair value are reported as part of
the fair value gain or loss. For example, translation differences
on non-monetary assets and liabilities such as equities held at
fair value through profit or loss are recognised in profit or loss
as part of the fair value gain or loss and translation differences
on non-monetary assets such as equities classified as fair value
through other comprehensive income are recognised in other
comprehensive income.
(c) Group companies (c)
The results and financial position of foreign operations (none
of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
assets and liabilities for each statement of financial
position presented are translated at the closing rate at the
date of that statement of financial position
income and expenses for each statement of profit or
loss and other comprehensive income are translated at
average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the
transactions), and
all resulting exchange differences are recognised in other
comprehensive income.
2022 139
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Foreign currency translation (Continued)
(c) Group companies (Continued) (c)
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated
as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any
borrowings forming part of the net investment are repaid, the
associated exchange differences are reclassified into profit or
loss, as part of “other gains/losses, net”.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
Property, plant and equipment
All property, plant and equipment are stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of any component accounted for as a
separate asset is derecognised when replaced. All other repairs and
maintenance are charged to profit or loss during the reporting period
in which they are incurred.
The above items of property, plant and equipment except for
construction in progress are depreciated on a straight-line basis,
taking into account their residual value, at the following rates per
annum:
Buildings 2.71%-3.17% 2.71% 3.17%
Plant and machinery 9.00%-18.00% 9.00% 18.00%
Motor vehicles 18.00%-19.00% 18.00% 19.00%
Other equipment 18.00%-33.33% 18.00% 33.33%
140 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Property, plant and equipment (Continued)
Property, plant and equipment arising from business acquisition is
depreciated over the remaining useful life.
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds
with carrying amount, and are recognised in “other gains/losses, net”
in the profit or loss.
Construction in progress represents a building under construction,
which is stated at cost less any impairment losses, and is not
depreciated. Cost comprises the direct costs of construction and
capitalised borrowing costs on related borrowed funds during the
period of construction. Construction in progress is reclassified to the
appropriate category of property, plant and equipment, investment
properties and intangible assets when completed and ready for use.
Investment properties
Investment properties are held for long-term rental yields and are
not occupied by the Group. Investment property is initially measured
at cost, including related transaction costs and where applicable
borrowing costs. Subsequent to initial recognition, investment
properties are stated at cost less accumulated depreciation and any
impairment losses.
Investment properties are depreciated on a straight-line basis, taking
into account their residual value, at the following rates per annum:
Land use right 2% 2%
Buildings 3.17%-4.75% 3.17% 4.75%
2022 141
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Intangible assets
(a) Goodwill (a)
Goodwill arises on the acquisition of subsidiaries represents the
excess of the aggregate purchase consideration transferred,
the amount of any non-controlling interest in the acquiree and
the acquisition-date fair value of any previous equity interest
in the acquiree over the fair value of the net identifiable assets
acquired. Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill is not amortised but it is tested for
impairment annually, or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried
at cost less accumulated impairment losses. Gains and losses
on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are
expected to benefit from the business combination in which
the goodwill arose. The units or groups of units are identified
at the lowest level at which goodwill is monitored for internal
management purposes at the operating segments.
(b) Trademarks, patents and customer relationship (b)
Separately acquired trademarks and licences are shown at
historical cost. Trademarks, patents and customer relationship
acquired in a business combination are recognised at fair value
at the acquisition date. They have a finite useful life and are
subsequently carried at cost less accumulated amortisation and
impairment losses.
142 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Intangible assets (Continued)
(c) Development cost (c)
Costs associated with project development are recognised as
an expense as incurred. Development costs that are directly
attributable to the design and testing of identifiable and unique
products controlled by the Group are recognised as intangible
assets when the following criteria are met:
it is technically feasible to complete the technology so that
it will be available for use
management intends to complete the technology and use
or sell it
there is an ability to use or sell the technology
it can be demonstrated how the technology will generate
probable future economic benefits
adequate technical, financial and other resources
to complete the development and to use or sell the
technology are available, and
the expenditure attributable to the technology during its
development can be reliably measured.
Directly attributable costs that are capitalised as part of the
technology include employee costs and an appropriate portion
of relevant overheads.
Capitalised development costs are recorded as development
costs in intangible assets and would be transferred to completed
development projects or patents, and amortised from the point
at which the asset is ready for use over its estimated use life.
2022 143
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Intangible assets (Continued)
(d) Research and development (d)
Research expenditure and development expenditure that do (c)
not meet the criteria in (c) above are recognised as an expense
as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period.
(e) Amortisation methods and periods (e)
The Group amortises intangible assets with a limited useful life
using the straight-line method over the following period:
Trademark 10 years 10
Software 4-5 years 4 5
Development costs 4 years 4
Patent right 5-10 years 5 10
Customer relationship 10 years 10
Non-current assets (or disposal groups) held for sale and
discontinued operations
Non-current assets (or disposal groups) are classified as held for
sale if their carrying amount will be recovered principally through
a sale transaction rather than through continuing use and a sale is
considered highly probable. They are measured at the lower of their
carrying amount and fair value less costs to sell, except for assets
such as deferred tax assets, assets arising from employee benefits,
financial assets and investment property that are carried at fair
value and contractual rights under insurance contracts, which are
specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-
down of the asset (or disposal group) to fair value less costs to sell.
A gain is recognised for any subsequent increases in fair value less
costs to sell of an asset (or disposal group), but not in excess of any
cumulative impairment loss previously recognised. A gain or loss not
previously recognised by the date of the sale of the non-current asset
(or disposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group)
are not depreciated or amortised while they are classified as held
for sale. Interest and other expenses attributable to the liabilities of a
disposal group classified as held for sale continue to be recognised.
144 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Non-current assets (or disposal groups) held for sale and
discontinued operations (Continued)
Non-current assets classified as held for sale and the assets of a
disposal group classified as held for sale are presented separately
from the other assets in the statement of financial position. The
liabilities of a disposal group classified as held for sale are presented
separately from other liabilities in the statement of financial position.
A discontinued operation is a component of the entity that has been
disposed of or is classified as held for sale and that represents a
separate major line of business or geographical area of operations,
is part of a single co-ordinated plan to dispose of such a line of
business or area of operations, or is a subsidiary acquired exclusively
with a view to resale. The results of discontinued operations are
presented separately in the statement of profit or loss and other
comprehensive income.
Impairment of non-financial assets
Goodwill, development costs not yet ready for use and intangible
assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they
might be impaired. Other assets are tested for impairment whenever
events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair
value less costs of disposal and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets
(cash-generating units). Non-financial assets other than goodwill
that suffered an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.
2022 145
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Financial assets
(a) Classification (a)
The Group classifies its financial assets in the following
measurement categories:
those to be measured subsequently at fair value (either
through other comprehensive income or through profit or
loss), and
those to be measured at amortised cost.
The classification depends on the entity’s business model for
managing the financial assets and the contractual terms of the
cash flows.
For assets measured at fair value, gains and losses will either
be recorded in profit or loss or other comprehensive income
(“OCI”). For investments in debt instruments, this will depend
on the business model in which the investment is held. For
investments in equity instruments that are not held for trading,
this will depend on whether the Group has made an irrevocable
election at the time of initial recognition to account for the equity
investment at fair value through other comprehensive income
(“FVOCI”).
The Group reclassifies debt investments when and only when its
business model for managing those assets changes.
(b) Recognition and derecognition (b)
Regular way purchases and sales of financial assets are
recognised on trade-date, the date on which the Group commits
to purchase or sell the asset. Financial assets are derecognised
when the rights to receive cash flow from the financial assets
have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
146 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Financial assets (Continued)
(c) Measurement (c)
At initial recognition, the Group measures a financial asset at its
fair value plus, in the case of a financial asset not at fair value
through profit or loss (“FVPL”), transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at FVPL are expensed in profit
or loss.
Financial assets with embedded derivatives are considered in
their entirety when determining whether their cash flows are
solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the
Group’s business model for managing the asset and the cash
flow characteristics of the asset. There are three measurement
categories into which the Group classifies its debt instruments:
Amortised cost: Assets that are held for collection of
contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at
amortised cost. Interest income from these financial assets
is included in finance income using the effective interest
rate method. Any gain or loss arising on derecognition is
recognised directly in profit or loss and presented in “other
gains/losses, net” together with foreign exchange gains
and losses. Impairment losses are presented as separate
line item in the profit or loss.
FVOCI: Assets that are held for collection of contractual
cash flows and for selling the financial assets, where the
assets’ cash flows represent solely payments of principal
and interest, are measured at FVOCI. Movements in
the carrying amount are taken through OCI, except for
the recognition of impairment gains or losses, interest
income and foreign exchange gains and losses which
are recognised in profit or loss. When the financial asset
is derecognised, the cumulative gain or loss previously
recognised in OCI is reclassified from equity to profit or
loss and recognised in “other gains/losses, net”. Interest
income from these financial assets is included in finance
income using the effective interest rate method. Foreign
exchange gains and losses are presented in “other gains/
losses, net” and impairment expenses are presented as
separate line item in the profit or loss.
2022 147
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Financial assets (Continued)
(c) Measurement (Continued) (c)
Debt instruments (Continued)
FVPL: Assets that do not meet the criteria for amortised
cost or FVOCI are measured at FVPL. A gain or loss on a
debt investment that is subsequently measured at FVPL is
recognised in profit or loss and presented net within “other
gains/losses, net” in the period in which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair
value. Where the Group’s management has elected to present
fair value gains and losses on equity investments in OCI, there
is no subsequent reclassification of fair value gains and losses
to profit or loss following the derecognition of the investment.
Dividends from such investments continue to be recognised
in profit or loss when the Group’s right to receive payments is
established.
Changes in the fair value of financial assets measured at FVPL
are recognised in “other gains/losses, net” in profit or loss
as applicable. Impairment losses (and reversal of impairment
losses) on equity investments measured at FVOCI are not
reported separately from other changes in fair value.
(d) Impairment (d)
The Group assesses on a forward looking basis the expected
credit losses associated with its debt instruments carried at
amortised cost, FVOCI and FVPL. The impairment methodology
applied depends on whether there has been a significant
increase in credit risk.
The Group has certain types of financial assets that are subject
to IFRS 9’s ECL model. Please refer to Note 3 for details. 9
3
148 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported
in the statement of financial position where the Group currently has
a legally enforceable right to offset the recognised amounts, and
there is an intention to settle on a net basis or realise the asset and
settle the liability simultaneously. The Group has also entered into
arrangements that do not meet the criteria for offsetting but still allow
for the related amounts to be set off in certain circumstances, such as
bankruptcy or the termination of a contract.
Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date a
derivative contract is entered into and are subsequently remeasured
to their fair value at the end of each reporting period. The accounting
for subsequent changes in fair value depends on whether the
derivative is designated as a hedging instrument, and if so, the nature
of the item being hedged. The Group designates certain derivatives as
either:
hedges of the fair value of recognised assets or liabilities or a
firm commitment (fair value hedges), or
hedges of a particular risk associated with the cash flows of
recognised assets and liabilities and highly probable forecast
transactions (cash flow hedges).
At the inception of the hedging, the Group documents the economic
relationship between hedging instruments and hedged items,
including whether changes in the cash flows of the hedging
instruments are expected to offset changes in the cash flows of
hedged items. The Group documents its risk management objective
and strategy for undertaking its hedge transactions.
The fair values of derivative financial instruments designated in hedge
relationships are disclosed in Note 23. The full fair value of a hedging 23 12
derivative is classified as a non-current asset or liability when the
remaining maturity of the hedged item is more than 12 months; it is
classified as a current asset or liability when the remaining maturity 12
of the hedged item is less than 12 months. Trading derivatives are
classified as a current asset or liability.
2022 149
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Derivatives and hedging activities (Continued)
(a) Cash flow hedges that qualify for hedge accounting (a)
The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges is
recognised in cash flow hedge reserve within equity. The gain or
loss relating to the ineffective portion is recognised immediately
in profit or loss within “other gains/losses, net”.
When option contracts are used to hedge forecast transactions,
the Group designates only the intrinsic value of the options as
the hedging instrument. The Group classified foreign currency
options and commodity option as held-for-trading derivatives
and accounted for them at FVPL.
Gains or losses relating to the effective portion of the change
in intrinsic value of the options are recognised in the cash flow
hedge reserve within equity. The changes in the time value of
the options that relate to the hedged item (‘aligned time value’)
are recognised within OCI in the costs of hedging reserve within
equity.
When forward contracts are used to hedge forecast
transactions, the Group generally designates only the change in
fair value of the forward contract related to the spot component
as the hedging instrument. Gains or losses relating to the
effective portion of the change in the spot component of the
forward contracts are recognised in the cash flow hedge reserve
within equity. The change in the forward element of the contract
that relates to the hedged item (‘aligned forward element’) is
recognised within OCI in the costs of hedging reserve within
equity. In some cases, the Group may designate the full change
in fair value of the forward contract (including forward points)
as the hedging instrument. In such cases, the gains or losses
relating to the effective portion of the change in fair value of the
entire forward contract are recognised in the cash flow hedge
reserve within equity.
150 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Derivatives and hedging activities (Continued)
(a) Cash flow hedges that qualify for hedge accounting (Continued) (a)
Amounts accumulated in equity are reclassified in the periods
when the hedged item affects profit or loss, as follows:
Where the hedged item subsequently results in the
recognition of a non-financial asset (such as inventory),
both the deferred hedging gains and losses and the
deferred time value of the option contracts or deferred
forward points, if any, are included within the initial cost of
the asset. The deferred amounts are ultimately recognised
in profit or loss as the hedged item affects profit or loss (for
example through cost of sales).
The gain or loss relating to the effective portion of the
interest rate swaps hedging variable rate borrowings is
recognised in profit or loss within finance cost at the same
time as the interest expense on the hedged borrowings.
When a hedging instrument expires, or is sold or terminated,
or when a hedge no longer meets the criteria for hedge
accounting, any cumulative deferred gain or loss and deferred
costs of hedging in equity at that time remains in equity until
the forecast transaction occurs, resulting in the recognition
of a non-financial asset such as inventory. When the forecast
transaction is no longer expected to occur, the cumulative gain
or loss and deferred costs of hedging that were reported in
equity are immediately reclassified to profit or loss.
(b) Derivatives that do not qualify for hedge accounting (b)
Certain derivative instruments do not qualify for hedge
accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting are
recognised immediately in profit or loss and are included in
“other gains/losses, net”.
2022 151
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined using the weighted average method. The cost of
finished goods and work in progress comprises raw materials, direct
labour, other direct costs and related production overheads (based
on normal operating capacity). It excludes borrowing costs. Net
realisable value is the estimated selling price in the ordinary course
of business, less the estimated costs of completion and the estimated
costs necessary to make the sale.
Trade receivables
Trade receivables are amounts due from customers for goods sold
or services performed in the ordinary course of business. They
are generally due for settlement within a year and therefore are all
classified as current.
Trade receivables are recognised initially at the amount of
consideration that is unconditional unless they contain significant
financing components, when they are recognised at fair value. The
Group holds the trade receivables with the objective to collect the
contractual cash flows and therefore measures them subsequently at
amortised cost using the effective interest method. See Note 29 for
further information about the Group’s accounting for trade receivables 29 3
and Note 3 for a description of the Group’s impairment policies.
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash
and cash equivalents includes cash on hand, deposits held at call
with financial institutions, other short-term, highly liquid investments
with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value, and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities in the
statement of financial position.
152 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the
proceeds.
Where any group company purchases the Company’s equity
instruments, for example as the result of a share buy-back or a
share-based payment plan, the consideration paid, including any
directly attributable incremental costs (net of income taxes) is
deducted from equity attributable to the owners of the Company as
treasury shares until the shares are cancelled or reissued. Where
such ordinary shares are subsequently reissued, any consideration
received, net of any directly attributable incremental transaction costs
and the related income tax effects, is included in equity attributable
to the owners of the Company.
Trade and other payables
Trade payables are obligations to pay for goods or services that have
been acquired in the ordinary course of business from suppliers.
Trade payables are classified as current liabilities unless payment is 12
not due 12 months after the reporting period.
Trade payables and other payables are recognised initially at fair
value and subsequently measured at amortised cost using the
effective interest method.
2022 153
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Borrowings
Borrowings are recognised initially at fair value, net of transaction
costs incurred. Borrowings are subsequently carried at amortised
cost; any difference between the proceeds (net of transaction costs)
and the redemption value is recognised in the profit or loss over the
period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee
is deferred until the draw-down occurs. To the extent there is no
evidence that it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a pre-payment for liquidity
services and amortised over the period of the facility to which it
relates.
Borrowings are classified as current liabilities unless the Group has
an unconditional right to defer settlement of the liability for at least 12
12 months after the end of the reporting period.
Borrowing cost
General and specific borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready
for their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their intended
use or sale.
Investment income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period
in which they are incurred.
154 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Current and deferred income tax
The income tax expense for the period comprises current and
deferred tax. Income tax is recognised in the profit or loss, except to
the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case the income tax is also
recognised in other comprehensive income or directly in equity,
respectively.
(a) Current income tax (a)
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the date of the
statement of financial position in the areas where the Company,
its subsidiaries, associates and joint ventures operate and
generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
(b) Deferred income tax (b)
Inside basis differences
Deferred income tax is recognised on temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. However, deferred
income tax liabilities are not recognised if they arise from the
initial recognition of goodwill, the deferred income tax is not
accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred income tax is determined using
tax rates (and laws) that have been enacted or substantively
enacted by the date of the statement of financial position and
are expected to apply when the related deferred income tax asset
is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent
that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
2022 155
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Current and deferred income tax (Continued)
(b) Deferred income tax (Continued) (b)
Outside basis differences
Deferred income tax is provided on temporary differences
arising from investments in subsidiaries, joint ventures and
associates, except for deferred income tax liability where the
timing of the reversal of the temporary difference is controlled
by the Group and it is probable that the temporary difference
will not reverse in the foreseeable future. Generally the Group
is unable to control the reversal of the temporary difference for
joint ventures and associates. Only when there is an agreement
in place that gives the Group the ability to control the reversal
of the temporary difference in the foreseeable future, deferred
income tax liability in relation to taxable temporary differences
arising from the joint ventures and associates’ undistributed
profits is not recognised.
(c) Offsetting (c)
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current income tax assets
against current income tax liabilities and when the deferred
income tax assets and liabilities relate to income taxes levied
by the same taxation authority on either the taxable entity or
different taxable entities where there is an intention to settle the
balances on a net basis.
156 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Employee benefits
Employee benefits include short-term employee benefits, post-
employment benefits, termination benefits and other long-term
employee benefits provided in various forms of consideration in
exchange for service rendered by employees or compensations for
the termination of employment relationship.
(a) Short-term obligations (a)
Short-term employee benefits include employee wages or
salaries, bonus, allowances and subsidies, staff welfare,
premiums or contributions on medical insurance, work injury
insurance and maternity insurance, housing funds, short-
term paid absences, labour union running costs and employee
education costs, etc. The short-term employee benefit liabilities
are recognised in the accounting period in which the service is
rendered by the employees, with a corresponding charge to the
profit or loss for the current period or the cost of relevant assets.
Non-monetary benefits are measured at fair value.
(b) Pension obligations (b)
The Group operates various pension schemes, including both
defined contribution and defined benefit plans.
Defined contribution plans
A defined contribution plan is a pension plan under which
the Group pays fixed contributions into a separate entity. The
Group’s legal or constructive obligation for the plan is limited to
the contributions.
The Group pays contributions to publicly or privately
administered pension insurance plans on a mandatory,
contractual or voluntary basis. The Group has no further
payment obligations once the contributions have been paid. The
contributions are recognised as employee benefit expense when
they are due. Prepaid contributions are recognised as an asset
to the extent that a cash refund or a reduction in the future
payments is available.
2022 157
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Employee benefits (Continued)
(b) Pension obligations (Continued) (b)
Defined benefit plans
A defined benefit plan is a pension plan that is not a defined
contribution plan.
Typically defined benefit plans define an amount of pension
benefit that an employee will receive on retirement, usually
dependent on one or more factors such as age, years of service
and compensation.
The liability recognised in the statement of financial position in
respect of defined benefit pension plans is the present value
of the defined benefit obligation at the end of the reporting
period less the fair value of plan assets. The defined benefit
obligation is calculated annually by independent actuaries
using the projected unit credit method. The present value of
the defined benefit obligation is determined by discounting the
estimated future cash outflows using interest rates of high-
quality corporate bonds that are denominated in the currency in
which the benefits will be paid, and that have terms to maturity
approximating to the terms of the related pension obligation.
In countries where there is no deep market in such bonds, the
market rates on government bonds are used.
The current service cost of the defined benefit plan, recognised
in the profit or loss in employee benefit expense, except where
included in the cost of an asset, reflects the increase in the
defined benefit obligation resulting from employee service in the
current year, benefit changes, curtailments and settlements.
Actuarial gains and losses arising from experience adjustments
and changes in actuarial assumptions are charged or credited in
other comprehensive income in the period in which they arise.
Past-service costs are recognised immediately in the profit or
loss.
The net interest cost is calculated by applying the discount rate
to the net balance of the defined benefit obligation and the fair
value of plan assets. This cost is included in employee benefit
expense in the profit or loss.
158 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Employee benefits (Continued)
(c) Other post-employment obligations (c)
Some group companies provide other post-retirement benefits
to their retirees. The entitlement to these benefits is usually
conditional on the employee remaining in service up to
retirement age and the completion of a minimum service period.
The expected costs of these benefits are accrued over the
period of employment using the same accounting methodology
as used for defined benefit pension plans. Actuarial gains
and losses arising from experience adjustments and changes
in actuarial assumptions are charged or credited in other
comprehensive income in the period in which they arise.
These obligations are valued annually by independent qualified
actuaries.
(d) Termination benefits (d)
Termination benefits are payable when employment is
terminated by the Group before the normal retirement date,
or whenever an employee accepts voluntary redundancy in
exchange for these benefits. The Group recognises termination (a)
benefits at the earlier of the following dates: (a) when the Group (b)
can no longer withdraw the offer of those benefits; and (b) when 37
the entity recognises costs for a restructuring that is within
the scope of IAS 37 and involves the payment of termination
benefits. In the case of an offer made to encourage voluntary
redundancy, the termination benefits are measured based on 12
the number of employees expected to accept the offer. Benefits
falling due more than 12 months after the end of the reporting
period are discounted to their present value.
(e) Profit-sharing and bonus plans (e)
The Group recognises a liability and an expense for bonuses and
profit-sharing based on a formula that takes into consideration
the profit attributable to the Company’s shareholders after
certain adjustments. The Group recognises a provision where
contractually obliged or where there is a past practice that has
created a constructive obligation.
2022 159
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Employee benefits (Continued)
(f) Employee leave entitlements (f)
Employee entitlements to annual leave are recognised when
they accrue to employees. A provision is made for the estimated
liability for annual leave as a result of services rendered by
employees up to the statement of financial position date.
Employee entitlements to sick leave and maternity leave are not
recognised until the time of leave.
(g) Share-based payments – expense recognition and grant date (g)
Share-based payment expenses should be recognised over
the period during which the employees provide the relevant
services. This period may commence prior to the grant date. In
this situation, the entity estimates the grant date fair value of the
equity instruments for the purposes of recognising the services
received during the period between service commencement
date and grant date. Once the grant date has been established,
the entity revises the earlier estimate so that the amounts
recognised for services received is ultimately based on the grant
date fair value of the equity instruments.
Share-based payments
Share-based compensation benefits are provided to employees via A
the A share Option Incentive Scheme (the “Employee Option Plan”),
the executive short-term incentive scheme and share appreciation.
Information relating to these schemes is set out in Notes 37 and 38. 37 38
160 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Share-based payments (Continued)
Employee options
The fair value of options granted under the Employee Option Plan is
recognised as an employee benefits expense with a corresponding
increase in equity. The total amount to be expensed is determined by
reference to the fair value of the options granted:
– including any market performance conditions (eg the entity’s
share price)
– excluding the impact of any service and non-market
performance vesting conditions (eg profitability, sales growth
targets and remaining an employee of the entity over a specified
time period), and
– including the impact of any non-vesting conditions (eg the
requirement for employees to save or hold shares for a specific
period of time).
The total expense is recognised over the vesting period, which is the
period over which all of the specified vesting conditions are to be
satisfied. At the end of each period, the entity revises its estimates
of the number of options that are expected to vest based on the
non-market vesting and service conditions. It recognises the impact
of the revision to original estimates, if any, in profit or loss, with a
corresponding adjustment to equity.
2022 161
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Restricted share incentive scheme
Under the restricted share incentive scheme, shares are issued by
the Company to the selected employees on the grant date.
The total amount to be expensed which is determined by reference
to the fair value of the granted restricted shares as of the grant date
less the proceeds received from the grant, is amortised to profit or
loss over the relevant service period being the vesting period of the
shares, and recorded under other reserves attributable to equity
holders of the Company. The proceeds received from the grant are
treated as capital contribution wholly belonging to the participants.
The proceeds received from the grant are firstly recorded under
treasury shares and other payables until each unlocking date when
the relevant vesting conditions are satisfied.
The number of shares expected to vest is estimated based on the
non-market vesting conditions. The estimates are revised at the end
of each reporting period and adjustments are recognised in profit or
loss and other reserves.
Provision
Provisions are recognised when: the Group has a present legal or
constructive obligation as a result of past events; it is probable that
an outflow of resources will be required to settle the obligation;
and the amount has been reliably estimated. Provisions are not
recognised for future operating losses.
The Group recognises provisions in respect of the estimated liability
to repair or replace for assurance type – warranty. This provision is
calculated based on historical experience of the level of repairs and
replacements.
Where there are a number of similar obligations, the likelihood that
an outflow will be required in settlement is determined by considering
the class of obligations as a whole. A provision is recognised even if
the likelihood of an outflow with respect to any one item included in
the same class of obligations may be small.
If an entity has an onerous contract (the unavoidable costs of meeting
the obligations under the contract exceed the economic benefits
expected to be received under it), the present obligation under the
contract is recognised as a provision.
162 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Provision (Continued)
A restructuring provision is recognised only when the general
recognition criteria for provision are met. The obligation for a
restructuring is often constructive. A constructive restructuring (a)
obligation arises only when there is: (a) a detailed formal plan (b)
identifying the main features of the restructuring; and (b) a valid
expectation in those affected that the entity will carry out the
restructuring by starting to implement the plan or announcing its
main features to those affected.
A restructuring plan does not create a present obligation at the
statement of financial position date if it is announced after that date,
even if it is announced before the financial statements are approved.
A sale or termination of a business might fall under the definition of
a restructuring. No obligation arises in respect of restructuring costs
associated with the sale of an operation until the entity is committed
to the sale (that is, there is a binding sale agreement).
Restructuring provision includes only the direct expenditures
arising from the restructuring, which are necessarily entailed
by the restructuring and not those associated with the entity’s
ongoing activities. Any expected gains on the sale of assets are not
considered in measuring a restructuring provision.
Revenue recognition
Sales comprise the fair value of the consideration received or
receivable from the sale of coal mining machinery, spare parts, auto
parts and rendering of services in the ordinary course of the Group’s
activities. Sales are presented, net of value-added tax, rebates and
discounts, and after eliminating sales within the Group.
The Group also assesses its role as an agent or principal for each
transaction and in an agency arrangement the amounts collected
on behalf of the principal are excluded from revenue. The Group
recognises revenue when the specific criteria have been met for each
of the activities, as described below.
2022 163
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Revenue recognition (Continued)
Sales of products
The Group manufactures and sells a range of coal mining machineries
and auto parts to its customers. Sales are recognised when control of
the products has transferred, being when the products are delivered
to the customer, and there is no unfulfilled obligation that could affect
the customer’s acceptance of the products. Delivery occurs when
the products have been shipped to the specific location, the risks of
obsolescence and loss have been transferred to the customer, and
either the customer has accepted the products in accordance with
the sales contract, the acceptance provisions have lapsed, or the
Group has objective evidence that all criteria for acceptance have
been satisfied. The retention receivables which will be settled by
customers after warranty period, is included in trade receivables.
The Group does not recognise the warranty service as a separate
performance obligation in a single contract as the warranty service is
assurance type, and the Group’s obligation to repair or replace faulty
products under the warranty terms is recognised as a provision, see 33
Note 33.
Transportation and handling cost
As the transportation and handling activities occur before the
customer obtains control of related products, they are not separate
performance obligation, therefore, related costs are fulfilment costs
which are recognised as assets. The assets are amortised on a
systematic basis that is consistent with the transfer to the customer
of the goods or service to which the assets relate. Due to the short
period of transportation, related assets are not material at the date of
the statement of financial position.
Significant financing component
Where the contract contains a financing component which provides
a significant financing benefit to the customer for more than 12 12
months, revenue is measured at the present value of the amount
receivable, discounted using the discount rate that would be reflected
in a separate financing transaction with the customer, and interest 3 5
income is accrued separately under the effective interest method.
Normally, the collection period would be from 3 to 5 years.
Rendering of services
Revenue from providing services is recognised in the accounting
period in which the services are rendered. The service provided by
the Group is mainly related to the service for repairing service.
164 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Revenue recognition (Continued)
Presentation of assets and liabilities related to contracts with
customers
IFRS 15 Revenue from Contracts with Customers requires the 15
presentation of any unconditional rights to consideration as a
receivable separately from contract assets. The Group has therefore
reclassified its contract assets and contact liabilities in accordance 15
with IFRS 15.
Contract liabilities are recognised as follows:
Contract liabilities recognised in relation to advance received
from customers for non-cancellable contracts.
Contract liabilities recognised in relation to Research and
Development (“R&D”) reimbursements – The Group recognises
the related reimbursement payment from customer as contract
liabilities and recognises the amount as revenue over the
expected production to customer in future period. The related
R&D costs are capitalised as contract fulfilment cost and
amortised to profit or loss on a systematic basis consistent with
the pattern of the transfer of the products under production to
the customer as part of cost of sales. Any R&D cost which is not
recoverable or when related production is not proceeded by the
customer is written off to profit or loss directly.
The Group also has the contract related assets, recognised in
relation to nomination fee. Nomination fee represents the fee
paid by the Group to the customers to participate in the tendering
process, and the fee is not refundable once the customer’s contract
is secured. Such payment to customer is capitalised as an asset
and subsequently amortised to deduct against the revenue over the
contract life.
2022 165
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Interest income
Interest income is calculated by applying the effective interest rate
to the gross carrying amount of a financial asset except for financial
assets that subsequently become credit-impaired. For credit-
impaired financial assets the effective interest rate is applied to the
net carrying amount of the financial asset (after deduction of the loss
allowance).
Interest income is presented as other income where it is earned from
financial assets that are held for cash management purposes.
Government grants
Grants from the government are recognised where there is a
reasonable assurance that the grant will be received and the Group
will comply with all attached conditions. If the grant is in the form
of monetary assets, it is measured by the amount received or
receivable.
Government grants of the Group are obtained free from the
government in the form of monetary assets, including tax refunds
and/or financial subsidies.
Government grants related to assets are government grants which
are obtained by the enterprise for the construction or formation
of other long-term assets. Government grants related to income
refer to the grants other than those related to assets. Government
grants related to assets are recognised as deferred income, equally
recorded in profit or loss of corresponding period over the life of the
relevant assets.
Government grants related to income used as compensation for
business expenses or losses in subsequent periods, are recognised
as deferred income, and recorded in profit or loss when the expenses
are recognised; those obtained as compensation for business
expenses or losses that have occurred are recorded directly in current
profit or loss.
166 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Leases
Leases are recognised as a right-of-use asset and a corresponding
liability at the date at which the leased asset is available for use by
the Group.
Contracts may contain both lease and non-lease components. The
Group allocates the consideration in the contract to the lease and
non-lease components based on their relative stand-alone prices.
However, for leases of real estate for which the Group is a lessee,
it has elected not to separate lease and non-lease components and
instead accounts for these as a single lease component.
Lease terms are negotiated on an individual basis and contain a wide
range of different terms and conditions. The lease agreements do not
impose any covenants other than the security interests in the leased
assets that are held by the lessor. Leased assets may not be used as
security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of
the following lease payments:
fixed payments (including in-substance fixed payments), less
any lease incentives receivable
variable lease payments that are based on an index or a
rate, initially measured using the index or rate as at the
commencement date
amounts expected to be payable by the Group under residual
value guarantees
the exercise price of a purchase option if the Group is
reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
2022 167
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Leases (Continued)
The lease payments are discounted using the interest rate implicit in
the lease. If that rate cannot be readily determined, which is generally
the case for leases in the Group, the lessee’s incremental borrowing
rate is used, being the rate that the individual lessee would have to
pay to borrow the funds necessary to obtain an asset of similar value
to the right-of-use asset in a similar economic environment with
similar terms, security and conditions.
To determine the incremental borrowing rate, the Group:
where possible, uses recent third-party financing received by
the individual lessee as a starting point, adjusted to reflect
changes in financing conditions since third party financing was
received
uses a build-up approach that starts with a risk-free interest
rate adjusted for credit risk for leases held by the Group, which
does not have recent third party financing, and
makes adjustments specific to the lease, eg term, country,
currency and security.
If a readily observable amortising loan rate is available to the
individual lessee (through recent financing or market data) which has
a similar payment profile to the lease, then the group entities use that
rate as a starting point to determine the incremental borrowing rate.
The Group is exposed to potential future increases in variable lease
payments based on an index or rate, which are not included in
the lease liability until they take effect. When adjustments to lease
payments based on an index or rate take effect, the lease liability is
reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period so
as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date
less any lease incentives received
any initial direct costs, and
restoration costs.
168 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2
(Continued)
2.2 The principal accounting policies (Continued) 2.2
Leases (Continues)
Right-of-use assets are generally depreciated over the shorter of the
asset’s useful life and the lease term on a straight-line basis. If the
Group is reasonably certain to exercise a purchase option, the right-
of-use asset is amortised over the underlying asset’s useful life.
Payments associated with short-term leases of equipment and
vehicles and all leases of low-value assets are recognised on a
straight-line basis as an expense in profit or loss. Short-term leases 12
are leases with a lease term of 12 months or less without a purchase
option. Low-value assets comprise IT equipment and small items of
office furniture.
Lease income from operating leases where the Group is a lessor is
recognised in income on a straight-line basis over the lease term.
Initial direct costs incurred in obtaining an operating lease are added
to the carrying amount of the underlying asset and recognised as
expense over the lease term on the same basis as lease income. The
respective leased assets are included in the statement of financial
position based on their nature. The Group did not need to make any
adjustments to the accounting for assets held as lessor as a result of
adopting the new leasing standard.
Earnings per share
Basic earnings per share is calculated by dividing: the profit
attributable to owners of the Company, excluding any costs of
servicing equity other than ordinary shares by the weighted average
number of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued during the
year and excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account:
the after-income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares, and
the weighted average number of additional ordinary shares that
would have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
Dividend distribution
Dividend distribution to the shareholders is recognised as a liability in
the Group’s consolidated financial statements in the period in which
the dividends are approved by the Company’s shareholders, where
appropriate.
2022 169
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors 3
The Group’s major financial assets and liabilities include loans receivable
from associates and joint ventures, financial assets at fair value through
profit or loss, financial assets at fair value through other comprehensive
income, finance lease receivables, long-term receivables, debt investment,
trade and other receivables, derivative instruments, bank deposits, cash
and cash equivalents, trade and other payables, borrowings, redemption
liabilities, transferred trade receivables and liabilities associated with
transferred trade receivables. Details of these financial instruments are
disclosed in respective notes. The risks associated with these financial
instruments and the policies on how to mitigate these risks are set out
below. The management manages and monitors these exposures to
ensure appropriate measures are implemented on a timely and effective
manner.
(a) Market risk (a)
The Group’s activities expose it primarily to currency risk, interest rate
risk, liquidity risk and price risk. There has been no change in the
Group’s exposure to these risks or the manner in which it manages
and measures the risks.
(i) Currency risk (i)
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,
receivables, borrowings and payables (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 carrying amounts of the Group’s Non-Functional Currency
Items at the end of each reporting period are as follows:
31 December 2022 31 December 2021
2022 12 31 2021 12 31
USD EUR HKD USD EUR HKD
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Assets 1,052,259 134,066 10,005 697,958 144,561 9,639
Liabilities (130,393) (280,415) – (77,875) (342,550) –
The Group is mainly exposed to the foreign currency risk
between United States dollars (“USD”)/RMB, Euro (“EUR”)/RMB
and Hong Kong dollars (“HKD”)/RMB.
170 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(a) Market risk (Continued) (a)
(i) Currency risk (Continued) (i)
Sensitivity analysis
The following table details the Group’s sensitivity to a 5%
appreciation and depreciation in the relevant foreign currencies 5% 5%
against RMB. The rate of 5% is the sensitivity rate used when
reporting foreign currency risk internally to key management
personnel and represents management’s assessment of the
reasonably possible change in foreign exchange rates. The
sensitivity analysis includes only outstanding foreign currency 5%
denominated monetary items and adjusts their translation at
the end of each reporting period for a 5% change in foreign 5%
currency rates but does not consider the effect of derivative
financial instruments. A positive number below indicates an
increase in post-tax profit for the year and a negative number
below indicates a decrease in profit for the year where the
relevant foreign currencies change 5% against RMB.
31 December 2022 31 December 2021
2022 12 31 2021 12 31
USD EUR HKD USD EUR HKD
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
If the currency strengthens
against RMB 39,066 (5,903) 375 25,613 (8,008) 361
If the currency weakens
against RMB (39,066) 5,903 (375) (25,613) 8,008 (361)
2022 171
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(a) Market risk (Continued) (a)
(ii) Interest risk (ii)
The Group is exposed to cash flow interest rate risk in relation 32
to variable-rate borrowings (see Note 32 for details). 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.
The sensitivity analysis below has been determined based on
the exposure to interest rates for variable-rate borrowings at
the end of each reporting period and the excepted changes in
interest rates taking place at the beginning of the financial year
and being held constant throughout the reporting period.
If the interest rates on variable-rate borrowings had been 50 50
basis points higher and all other variables were held constant,
post-tax profit for the year would have decreased by:
2022 2021
2022 2021
RMB’000 RMB’000
Decrease in post-tax profit for the year (28,406) (22,586)
The post-tax profit for the year would have increased by the 50
same amount as mentioned above if the interest rates on
variable-rate borrowings had been 50 basis points lower and all
other variables were held constant.
172 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(a) Market risk (Continued) (a)
(iii) Price risk (iii)
The Group’s exposure to equity securities price risk arises from
investments held by the Group and classified in the statement
of financial position either as at fair value through other
comprehensive income (FVOCI) (Note 23) or at fair value through 23
profit or loss (FVPL) (Note 23). To manage its price risk arising 23
from investments in equity securities, the Group diversifies its
portfolio. Diversification of the portfolio is done in accordance
with the limits set by the Group.
The Group’s equity investments include both publicly traded
investments and investments in unlisted companies.
With the 10% change of the price of those equity securities 10%
including both listed companies and unlisted companies, the
Group’s other comprehensive income and profit before tax
would increase or decrease by approximately RMB79.7 million 79.7 0.1
and RMB0.1 million (2021: RMB14.4 million and RMB0.1 2021 14.4
million respectively), respectively. 0.1
(b) Credit risk (b)
Credit risk arises from trade and other receivables, finance lease
receivables, long-term receivables, structured deposits, derivative
assets, loans 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.
2022 173
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(b) Credit risk (Continued) (b)
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 receivable or cash from 30%
customers (which approximate 30% of the contract price) before 180
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 year, the Group has endorsed and derecognised certain
notes receivable for the settlement of trade and other payables with
full recourse. In the opinion of the directors of the Company, the risk
of the default in payment of the endorsed notes receivable is low
because all endorsed notes receivable are issued and guaranteed by
reputable PRC banks.
The 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 1
the reporting date with the risk of default as at the date of initial 5
recognition. The expected credit loss rates are determined based on
historical credit losses experienced from the past 1 to 5 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. Especially the following indicators are
incorporated:
actual or expected significant adverse changes in business,
financial or economic conditions that are expected to cause
a significant change to the counterparties’ ability to meet its
obligations
actual or expected significant changes in the operating results
of counterparties
significant increases in credit risk on other financial instruments
of counterparties
significant changes in the expected performance and behaviour
of counterparties, including changes in the payment status of
counterparties in the Group and changes in the operating results
of the counterparties.
174 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(b) Credit risk (Continued) (b)
The Group has the receivables from different customers and debtors
operate in different industries. In the meantime, customer portfolio
basis are also different between China and other countries. Thus, the
Group classified the above assets into below categories:
Category 1: trade receivables – coal mining machinery group 1
Category 2: trade receivables – ASIMCO group 2
Category 3: trade receivables – SEG Automotive Germany 3 SEG Automotive
GmbH (“SEG”) and its subsidiaries (“SEG group”) Germany GmbH SEG
SEG
Category 4: notes receivables – commercial notes 4
Category 5: notes receivables – bank accepted notes 5
Category 6: finance lease receivables and long-term receivables 6
Category 7: other receivables 7
Category 8: transferred trade receivables 8
Category 9: financial assets at fair value through profit or loss 9
2022 175
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(b) Credit risk (Continued) (b)
(i) Trade receivables (i)
The Group applies the IFRS 9 simplified approach to measuring 9
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. To measure the expected
credit losses, trade receivables have been grouped based on
shared credit risk characteristics and the days past due.
The expected loss rates are based on the payment profiles of 2022 12 31
sales over a period of 12 to 36 month before 31 December 2021 12 31 12 36
2022 or 31 December 2021 respectively and the corresponding
historical credit losses experienced within this period. The
historical loss rates are adjusted to reflect current and forward-
looking information on macroeconomic factors affecting the
ability of the customers to settle the receivables. The Group has
identified the Producer Price Index (“PPI”) of coal mining and
washing industry and Gross Domestic Product (“GDP”) to be
the most relevant factors for coal mining machinery group, and
general PPI and GDP of the countries in which it sells its goods
and services to be the most relevant factors for auto parts
group, and accordingly adjusts the historical loss rates based on
expected changes in these factors.
Trade receivables and contract assets are written off when there
is no reasonable expectation of recovery. Indicators that there is
no reasonable expectation of recovery include, amongst others,
the failure of a debtor to engage in a repayment plan with the
Group.
Impairment losses on trade receivables and contract assets
are presented as net impairment losses within operating profit.
Subsequent recoveries of amounts previously written off are
credited against the same line item.
176 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(b) Credit risk (Continued) (b)
(i) Trade receivables (Continued) (i)
The closing loss allowances for trade receivables of different 2022 12 31
categories as at 31 December 2022 are listed as follows:
Category 1: Coal mining machinery group 1
Over Over Over Over
90 days 180 days 1 year 2 years
Within but within but within but within but within Over
90 days 180 days 1 year 2 years 3 years 3 years Total
90 180
90 180
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables
At 31 December 2022 2022 12 31
Expected loss rate 0% 2% 5% 20% 50% 100%
Gross carrying amount (excluding
receivables assessed individually) 1,066,494 1,025,989 1,124,118 736,386 58,544 64,051 4,075,582
Loss allowance provision – 20,520 56,206 147,277 29,272 64,051 317,326
Individually impaired receivables 700 1,212 26,409 108,229 86,030 101,925 324,505
Loss allowance provision 700 1,212 14,180 43,475 27,742 88,125 175,434
Total loss allowance provision 700 21,732 70,386 190,752 57,014 152,176 492,760
Trade receivables
At 31 December 2021 2021 12 31
Expected loss rate 0% 2% 5% 20% 50% 100%
Gross carrying amount (excluding
receivables assessed individually) 1,032,452 961,196 911,656 447,658 101,616 139,422 3,594,000
Loss allowance provision – 19,224 45,583 89,532 50,808 139,422 344,569
Individually impaired receivables – – – – – 130,485 130,485
Loss allowance provision – – – – – 130,485 130,485
Total loss allowance provision – 19,224 45,583 89,532 50,808 269,907 475,054
2022 177
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(b) Credit risk (Continued) (b)
(i) Trade receivables (Continued) (i)
Category 2: ASIMCO group 2
Over Over Over
90 days 180 days 1 year
Within but within but within but within Over
90 days 180 days 1 year 2 years 2 years Total
90 180
90 180
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables
At 31 December 2022 2022 12 31
Expected loss rate 0% 1% 18% 83% 100%
Gross carrying amount (excluding
receivables assessed individually) 573,970 239,141 54,937 7,481 6,335 881,864
Loss allowance provision – 1,196 10,107 6,172 6,335 23,810
Individually impaired receivables – 914 – 701 4,216 5,831
Loss allowance provision – 914 – 701 4,216 5,831
Total loss allowance provision – 2,110 10,107 6,873 10,551 29,641
Trade receivables
At 31 December 2021 2021 12 31
Expected loss rate 0% 2% 30% 80% 100%
Gross carrying amount (excluding
receivables assessed individually) 492,590 296,842 59,842 7,874 6,524 863,672
Loss allowance provision – 5,937 17,953 6,299 6,524 36,713
Individually impaired receivables – 176 1,296 4,001 3,057 8,530
Loss allowance provision – 176 1,296 4,001 3,057 8,530
Total loss allowance provision – 6,113 19,249 10,300 9,581 45,243
Category 3: SEG group and contract related assets 3 SEG
The trade receivable balance of SEG group and contract related SEG
assets are mainly related with SEG group’s customers, who are SEG
the global OEMs in auto industry. The Group assessed the credit
losses of trade receivable balance of SEG group individually using SEG
simplified approach. As at 31 December 2022, RMB47 million 2022 12 31
(2021: RMB25 million) has been provided as life time loss
allowance for trade receivables. 47 2021
25
178 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(b) Credit risk (Continued) (b)
(ii) Notes receivables (ii)
Category 4: notes receivables – commercial notes 4
The Group assesses the credit losses of notes receivables –
commercial notes individually using three-stage approach. 2022 12
As at 31 December 2022, RMB7.2 million (2021: RMB1.0 31 12
million) were provided as 12 months loss allowance for notes 7.2 2021
receivables – commercial notes. 1.0
Category 5: notes receivables – bank accepted notes 5
The Group assesses the credit losses of notes receivables –
bank accepted notes individually using three-stage approach. 2022
As at 31 December 2022, RMB0.1 million (2021: RMB0.1 12 31
million) were provided as 12 months loss allowance for notes 12 0.1
receivables-bank accepted notes. 2021 0.1
(iii) Finance lease receivables and long-term receivables (iii)
Category 6: finance lease receivables and long-term receivables 6
Finance lease receivables and long-term receivables are mainly
due from the customers of coal mining machinery group. The
Group has provided financial leasing or long term payment plan
to certain customers because these customers are mainly state
owned companies or guaranteed by third parties with special
credit profile. The Group has granted a relatively long repayment
plan to the customers based on the credit assessment. The
Group assesses the credit losses of finance lease receivables
and long-term receivables individually using simplified 2022 12 31
approach. As at 31 December 2022, RMB93 million (2021:
RMB89 million) were provided as life time loss allowance for 93 2021 89
finance lease receivables and long-term receivables.
(iv) Other receivables (iv)
Category 7: Other receivables 7
The Group applies the IFRS 9 three-stage approach to measure 9
expected credit loss (“ECL”). Other receivables comprise:
advances to staff, deposit and others. Since the credit risk
of other receivables are considered not significantly increase
since initial recognition, therefore the impairment provision
is determined as 12 months ECL. As at 31 December 2022, 12
RMB106 million (2021: RMB39 million) were provided as loss 2022 12 31
allowance for other receivables. 106 2021
39
2022 179
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(b) Credit risk (Continued) (b)
(v) Transferred trade receivables (v)
Category 8: Transferred trade receivables 8
Please refer to Note 34 for the detailed description of
transferred trade receivables. The Group assesses the credit 34
loss of transferred trade receivables individually using simplified 2022
approach. As at 31 December 2022 and 2021, the related loss 2021 12 31
allowance was immaterial.
(vi) Financial assets at fair value through profit or loss (vi)
Category 9: Financial assets at fair value through profit or loss 9
The Group is also exposed to credit risk in relation to debt
investments that are measured at fair value through profit
or loss. The maximum exposure at the end of the reporting
period is the carrying amount of these investments of 5,228,176,000 2021
RMB5,228,176,000 (2021: RMB3,236,286,000). As at 31 3,236,286,000 2022 2021 12
December 2022 and 2021, the Group assesses the credit 31
loss of financial assets at fair value through profit or loss and
no allowance needed as most of the investments are high
rating bond investments in open market managed by reputable
financial institutions. And management believe that except
for the loss from fair value changes, there will be almost no
significant losses from non-performance by these financial
institutions.
(c) Liquidity risk (c)
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 utilisation 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.
180 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(c) Liquidity risk (Continued) (c)
Weighted On demand Total
average or less than 3 months 1 year 2 years undiscounted Carrying
The Group interest rate 3 months to 1 year to 2 years to 5 years cashflows amount
3 3 1 1 2 2 5
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2022 2022 12 31
Non-derivative financial liabilities
Trade and other payables
(excluding non-financial liabilities) 8,476,537 1,801,580 – – 10,278,117 10,278,117
Liabilities associated with transferred
trade receivables 21,616 247,795 – – 269,411 269,411
Borrowings 2.40 1,498,438 1,866,920 543,475 3,974,968 7,883,801 7,549,970
Lease liabilities 2.90 59,353 109,592 146,353 1,207,144 1,522,442 1,397,002
Derivative financial liabilities
Designated as hedging instruments – – – – – –
Not designated as hedging instruments 17,395 – – – 17,395 17,395
10,073,339 4,025,887 689,828 5,182,112 19,971,166 19,511,895
As at 31 December 2021 2021 12 31
Non-derivative financial liabilities
Trade and other payables
(excluding non-financial liabilities) 6,830,176 1,629,641 – – 8,459,817 8,459,817
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
7,100,958 3,600,427 4,015,877 2,024,726 16,741,988 16,241,293
The amounts included above for variable interest rate instruments for
non-derivative financial liabilities are subject to change if changes
in variable interest rates differ to those estimates of interest rates
determined at the end of the reporting period.
In addition to the above, the Group is also exposed to liquidity risk
in the next one year from each reporting date in relation to the
maximum loss and cash outflows that may result from the Group’s
endorsed notes receivable with full recourse should the issuing banks
of these notes fail to honour their obligations, please refer to Note 42 42
for details.
2022 181
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(d) Fair value measurements of financial instruments (d)
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.
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).
182 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(d) Fair value measurements of financial instruments (d)
(Continued)
Financial instruments Fair value as at 31 December 2022 Fair value hierarchy Valuation technique and key input
2022 12 31
Financial assets at fair value Listed equity securities in A-share Level 1 Quoted bid prices in an active market
through OCI, non-current – RMB392,987,000 (2021: Nil) 1
A
392,987,000 2021
Financial assets at fair value Listed equity securities in Hong Kong Level 1 Quoted bid prices in an active market
through OCI, non-current – Nil (2021: RMB31,752,000) 1
2021 31,752,000
Derivative financial instruments Forward foreign exchange contract not Level 2 Valuation model similar to forward pricing and swap models,
designated as hedging instruments 2 using present value calculations. The models incorporate
– RMB4,890,000 various market observable inputs including the foreign
(2021: RMB15,372,000) exchange spot and forward rates, interest rate curves and
metals hedging price. The carrying amounts of forward
4,890,000 currency contracts, metals hedging contracts and interest
2021 15,372,000 rate swaps are the same as their fair values.
Derivative financial instruments Forward foreign exchange contract Level 2 Valuation model similar to forward pricing and swap models,
designated as hedging instruments 2 using present value calculations. The models incorporate
– Nil (2021: RMB16,324,000) various market observable inputs including the foreign
exchange spot and forward rates, interest rate curves and
2021 16,324,000 metals hedging price. The carrying amounts of forward
currency contracts, metals hedging contracts and interest
rate swaps are the same as their fair values.
Derivative financial instruments Forward foreign exchange contract not Level 2 Valuation model similar to forward pricing and swap models,
designated as hedging instruments 2 using present value calculations. The models incorporate
– RMB17,395,000 various market observable inputs including the foreign
(2021: RMB32,998,000) exchange spot and forward rates, interest rate curves and
metals hedging price. The carrying amounts of forward
17,395,000 currency contracts, metals hedging contracts and interest
2021 32,998,000 rate swaps are the same as their fair values.
2022 183
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(d) Fair value measurements of financial instruments (d)
(Continued)
Financial instruments Fair value as at 31 December 2022 Fair value hierarchy Valuation technique and key input
2022 12 31
Financial assets at fair value Other financial assets Level 2 Fair values of collective investment schemes, debt securities,
through profit or loss – assets management products 2 base, ferrous and precious metals futures and options
– RMB4,077,805,000 contracts have been determined based on quotes from
(2021: RMB1,286,026,000) market makers, funds administrators or alternative
pricing sources supported by observable inputs. The most
4,077,805,000 significant inputs are market interest rates, market prices
2021 1,286,026,000 of metals, net asset values and latest redemption prices or
transaction prices of the respective collective investment
schemes. The expected return rates ranged from 1.01% to
7.00%. The higher the expected return rate, the higher the
fair value.
1.01%
7.00%
Financial assets at fair value Certificate of deposits Level 2 Discounted cash flow. The estimated future cash flow is based
through profit or loss – RMB578,258,000 (2021: Nil) 2 on the contractual amount, discounted at a rate that reflects
the expected return rates ranged from 3.10% to 4.18%.
578,258,000 2021 The higher the expected return rate, the higher the fair
value.
3.10%
4.18%
Financial assets at fair value Structured deposit Level 2 Discounted cash flow. The estimated future cash flow is based
through profit or loss – Nil (2021: RMB918,000,000) 2 on the contractual amount, discounted at a rate that reflects
the expected return. The higher the expected return rate,
2021 918,000,000 the higher the fair value.
Financial assets at fair value Other financial assets – principal guaranteed Level 2 Discounted cash flow. The estimated future cash flow is based
through profit or loss financial products and principal non- 2 on the contractual amount, discounted at a rate that reflects
guaranteed financial products the expected return rates ranged from 0.00% to 5.50%.
– RMB570,817,000 The higher the expected return rate, the higher the fair
(2021: RMB1,030,964,000) value.
0.00%
570,817,000 5.50%
2021 1,030,964,000
184 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
3 Financial risk factors (Continued) 3
(d) Fair value measurements of financial instruments (d)
(Continued)
Financial instruments Fair value as at 31 December 2022 Fair value hierarchy Valuation technique and key input
2022 12 31
Financial assets at fair value Notes receivables Level 3 Discounted cash flow. The estimated future cash flow is based
through OCI, current – RMB4,494,325,000 3 on the contractual amount, discounted at a rate that reflects
(2021: RMB4,111,050,000) the expected discounted rate ranged from 0.90% to 3.95%.
The higher the discount rate, the lower the fair value.
4,494,325,000
2021 4,000,050,000 0.90% 3.95%
Financial assets at fair value Equity interest in unlisted company with no Level 3 Valuation multiples. The fair value is based on EV/EBIT
through OCI, non-current open market price quote 3 multiple and discount for lack of marketability (“DLOM”), the
– RMB403,889,000 EV/EBIT multiple at a range from 35 to 59 and the DLOM
(2021: RMB112,000,000) at 23%. The higher the EV/EBIT multiple, the higher the fair
value. The higher the DLOM, the lower the fair value.
EV/EBIT
403,889,000 EV/EBIT
2021 112,000,000 35 59 23% EV/EBIT
Financial assets at fair value Equity interest in unlisted company with no Level 3 Discounted cash flow. The estimated future cash flow is based
through profit or loss open market price quote 3 on expected volatility, discount for lack of marketability
– RMB1,296,000 (2021: RMB1,296,000) (“DLOM”), and discount rate. The higher the expected
volatility, the lower the fair value. The higher the DLOM, the
lower the fair value. The higher the discount rate, the lower
1,296,000 the fair value.
2021 1,296,000
There were no transfers between Level 1 and 2 during the year. 1 2
In 2022, the Group transferred an equity interest investment 2022 3
from Level 3 to Level 1 due to the investment listed in an active 1
market (Note 23(a)). 23(a)
The directors consider that the carrying amounts of current financial
assets and financial liabilities recorded at amortised cost in the
consolidated financial statements approximate their fair values.
2022 185
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY 4
SOURCES OF ESTIMATION UNCERTAINTY
The preparation of financial statements requires the use of accounting
estimates which, by definition, will seldom equal the actual results.
Management also needs to exercise judgement in applying the Group’s
accounting policies.
Estimates and judgements are continually evaluated. They are based on
historical experience and other factors, including expectations of future
events that may have a financial impact on the entity and that are believed
to be reasonable under the circumstances.
The following are the critical judgements, apart from those involving
estimations (see below), that the directors have made in the process of
applying the entity’s accounting policies and that have the most significant
effect on the amounts recognised in financial statements.
Estimated impairment of trade receivables
The Group makes provision for impairment of receivables based on 3
assumptions about risk of default and expected loss rates (Note 3). The
Group uses judgement in making these assumptions and selecting the
inputs to the impairment calculation, based on the Group’s past history,
existing market conditions as well as forward-looking estimates at the
date of the statement of financial position. In making the judgement,
management considers available reasonable and supportive forwarding-
looking information such as actual or expected significant changes in the
operating results of customers, actual or expected significant adverse
changes in business and customers’ financial position. At every reporting
date the historical observed default rates are updated and changes in the
forward-looking estimates are analysed by the Group’s management.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the
value-in-use of the cash-generating units (“CGUs”) to which goodwill
has been allocated. The value-in-use calculation requires the Group to
estimate the future cash flows expected to arise from the cash-generating
units and also to choose a suitable discount rate in order to calculate the
present value. Where the actual future cash flows are less than expected, 2022 12 31
a material impairment loss may arise. The carrying amount of goodwill at 131,905,000 2021 412,850,000
31 December 2022 was RMB131,905,000 (2021: RMB412,850,000). 19
Further details are set out in Note 19.
186 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY 4
SOURCES OF ESTIMATION UNCERTAINTY (Continued)
Impairment of intangible assets
The management considers the potential impairment based on the
recoverable amount. The intangible assets with finite useful lives are
reviewed for impairment when events or circumstances indicate the
carrying value may not be recoverable. Factors that would indicate
potential impairment may include, but are not limited to, the significant
change in technology associated with the intangible assets. Determining
whether intangible assets is impaired requires an estimation of the
recoverable amount of the CGUs to which intangible assets belong. The
recoverable amount of CGUs at the end of the reporting period is based on
the value in use calculation which requires the management of the Group
to estimate the future cash flows expected to arise from the CGUs and a
suitable discount rate in order to calculate the present value. Where the
actual future cash flows are less than expected, a material impairment loss
may arise.
Residual values of property and plant and equipment
The Group estimates the residual values and related depreciation charges
for its items of property, plant and equipment. This estimate is based on
the management’s experience of the actual useful lives and residual values
of items of property, plant and equipment of similar nature and functions. It
could change significantly as a result of technical innovations and actions
of its competitors. The management will increase the depreciation charge
where useful lives and residual values are less than previously estimated.
Estimation of defined benefit pension obligation
The present value of the pension obligations depends on a number of
factors that are determined on an actuarial basis using a number of
assumptions. Any changes in these assumptions will impact the carrying
amount of pension obligations. Details of key assumptions and impact of 35
possible changes in key assumptions are disclosed in Note 35.
2022 187
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY 4
SOURCES OF ESTIMATION UNCERTAINTY (Continued)
Estimation of provision
The Group makes provisions for product warranty (only assurance type),
onerous contracts and restructuring cost. Management estimates the
related provisions based on contract terms, available knowledge and past
experience. The Group recognises provisions to the extent that it has a
present legal or constructive obligation as a result of a past event; it is
more likely than not that an outflow of resources will be required to settle
the obligation; and that the amount can be reliably estimated.
As for onerous contracts, the Group assessed at the date of the statement
of financial position on whether unavoidable costs of meeting contractual
obligations have exceeded the economic benefits expected to be received,
and made provision for these onerous contracts based on the estimated
least net cost of exiting from the contracts.
Impairment of property, plant and equipment, right-of-
use assets and investment properties
The Group reviews the carrying amounts of its property, plant and
equipment, right-of-use assets and investment properties to determine
whether there is any indication that those assets have suffered an
impairment loss. Determining whether property, plant and equipment,
right-of-use assets and investment properties are impaired requires an
estimation of the recoverable amount, which is the higher of value-in-use
of the assets and the fair value less costs of disposal. The value-in-use
calculation requires the entity to estimate the future cash flows expected to
arise from the continuing use of the assets and from its ultimate disposal
and a suitable discount rate in order to calculate the present value. Where
the actual future cash flows are less than expected, a material impairment
loss may arise.
Deferred income tax assets
Deferred income tax assets are recognised for all unused tax losses to
the extent that it is probable that taxable profit will be available against
which the losses can be utilised. Significant management judgement is
required to determine the amount of deferred income tax assets that can
be recognised, based upon the likely timing, the applicable tax rates, and
level of future taxable profits together with future tax planning strategies. 24
Further details are set out in Note 24.
Estimation of the fair value of certain financial assets
The fair value of financial instruments that are not traded in an active
market is determined using valuation techniques. The Group uses its
judgement to select a variety of methods and make assumptions that are
mainly based on market conditions existing at the end of each reporting
period
188 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
5 Revenue 5
Year ended 31 December 2022
2022 12 31
Manufacture of
coal mining Manufacture of
machinery auto parts Total
RMB’000 RMB’000 RMB’000
Sales of auto parts – 15,170,886 15,170,886
Sales of hydraulic roof supports 9,239,798 – 9,239,798
Revenue from steel and other
materials trading 4,330,804 74,774 4,405,578
Sales of spare parts for coal
mining machinery 2,399,574 – 2,399,574
Sales of other coal mining equipment 636,784 – 636,784
Other revenue 150,348 40,338 190,686
16,757,308 15,285,998 32,043,306
Year ended 31 December 2021
2021 12 31
Manufacture of
coal mining Manufacture of
machinery auto parts Total
RMB’000 RMB’000 RMB’000
Sales of auto parts – 16,080,408 16,080,408
Sales of hydraulic roof supports 6,873,987 – 6,873,987
Revenue from steel and other
materials trading 3,730,774 75,694 3,806,468
Sales of spare parts for coal
mining machinery 2,202,975 – 2,202,975
Sales of other coal mining equipment 155,516 – 155,516
Other revenue 119,834 54,339 174,173
13,083,086 16,210,441 29,293,527
2022 189
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
6 Segment information 6
Information reported to the chief executive of the Company, being the
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 segments under IFRS 8 are (i) 8 (i)
manufacture of coal mining machinery; and (ii) manufacture of auto parts. (ii)
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 prepares the segment a
reporting for net profit excluding the impact of a) impairment of goodwill b
b) interest expense of redemption liabilities, which are both related to the
manufacture of auto parts segment.
Manufacture of
coal mining Manufacture of
machinery auto parts Total
RMB’000 RMB’000 RMB’000
Year ended 31 December 2022 2022 12 31
Segment revenue 16,757,308 15,285,998 32,043,306
Segment net profit excluding
impairment of goodwill 2,553,138 351,518 2,904,656
Year ended 31 December 2021 2021 12 31
Segment revenue 13,083,086 16,210,441 29,293,527
Segment net profit excluding
impairment of goodwill, interest
expense of redemption liabilities 2,085,965 83,868 2,169,833
190 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
6 Segment information (Continued) 6
For the year ended December 31
12 31
2022 2021
2022 2021
RMB’000 RMB’000
Segment revenue and consolidated revenue 32,043,306 29,293,527
Segment net profit excluding impairment of goodwill,
interest expense of redemption liabilities 2,904,656 2,169,833
Impairment of goodwill (276,651) (78,935)
Interest expense on redemption liabilities – (21,030)
Consolidated profit for the year 2,628,005 2,069,868
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 goodwill
related to the manufacture of auto parts segment.
As at 31 December
12 31
2022 2021
2022 2021
RMB’000 RMB’000
SEGMENT ASSETS
Manufacture of coal mining machinery 29,924,697 22,763,293
Manufacture of auto parts 14,412,987 14,154,171
Total segment assets 44,337,684 36,917,464
Goodwill 131,905 412,850
Consolidated assets 44,469,589 37,330,314
SEGMENT LIABILITIES
Manufacture of coal mining machinery 16,453,699 12,885,253
Manufacture of auto parts 9,377,609 8,794,084
Consolidated liabilities 25,831,308 21,679,337
2022 191
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
6 Segment information (Continued) 6
Geographical information
The analysis of revenue by geographical location of customers is as
follows:
2022 2021
2022 2021
RMB’000 RMB’000
The PRC 21,716,648 19,929,645
Germany 4,337,463 4,488,468
Other countries 5,989,195 4,875,414
32,043,306 29,293,527
Segment assets are measured in the same way as in the consolidated
financial statements. These assets are allocated based on the operations
of the segment and the physical location of the assets.
2022
2022
Investment in Additions to
Segment associates and non-current
assets joint ventures assets
RMB’000 RMB’000 RMB’000
Manufacture of coal mining machinery
The PRC 29,738,194 186,594 692,146
Germany 77 – –
Other countries 128,104 – 346
Manufacture of auto parts
The PRC 7,237,882 92,274 656,381
Germany 2,593,778 – 137,065
Other countries 4,696,207 – 241,388
Total segment assets 44,394,242 278,868 1,727,326
Elimination (56,558)
Unallocated:
Goodwill 131,905
Total assets as per consolidated
statement of financial position 44,469,589
192 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
6 Segment information (Continued) 6
Geographical information (Continued)
2021
2021
Investment in Additions to
Segment associates and non-current
assets joint ventures assets
RMB’000 RMB’000 RMB’000
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 consolidated
statement of financial position 37,330,314
Information about major customers
No customer contributed over 10% of the total revenue of the Group for 2022 2021 12 31
the years ended 31 December 2022 and 2021. 10%
7 Other income 7
2022 2021
2022 2021
RMB’000 RMB’000
Government grants (Note) 315,104 254,525
Interest income on bank deposits, long-term
receivables and finance lease receivables 161,326 130,724
476,430 385,249
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 193
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
8 Other losses, net 8
2022 2021
2022 2021
RMB’000 RMB’000
Gain on disposal of a subsidiary (Note 43) 43 195,494 –
Net fair value gains on financial assets at fair
value through profit or loss 94,989 109,557
Net foreign exchange gain/(loss) 37,760 (31,086)
Net gains on disposal of property, plant and
equipment, and intangible assets 4,800 11,598
Net gains on disposal of associates – 56,596
Gains on disposal of loans receivable from
associates and a joint venture – 22,550
Dividend from financial assets at fair value
through other comprehensive income – 3,719
Dividend from financial assets at fair value
through profit or loss – 240
Impairment of property, plant and equipment (Note 16) 16 (1,491) (1,732)
Net fair value (loss)/gain on derivative financial
instruments (73,221) 5,069
Impairment of intangible assets (Note 20) 20 (99,116) (83,739)
Impairment of goodwill (Note 19) 19 (276,651) (78,935)
Others (2,598) (17,412)
(120,034) (3,575)
9 Finance costs 9
2022 2021
2022 2021
RMB’000 RMB’000
Interests on bank borrowings 226,682 200,103
Interests on lease liabilities 38,728 38,847
Interests on redemption liabilities – 24,741
265,410 263,691
194 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
10 Income tax expense 10
2022 2021
2022 2021
RMB’000 RMB’000
Current income tax 486,735 514,833
Under provision in the prior year – enterprise
income tax 9,744 9,130
Deferred income tax (34,406) 29,485
462,073 553,448
(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 2022 2021
new/high-tech technology enterprises status and enjoyed preferential 15%
income tax rate of 15% during 2022 and 2021. In addition, pursuant
to the Announcement on Increasing the Pre-tax Deductions in
Support of Technological Innovation (Announcement [2022] No. 28) [2022] 28 2022 10 1 2022 12
issued by the Ministry of Finance, the State Taxation Administration 31
and the Ministry of Science and Technology, during the period from 2022
1 October 2022 to 31 December 2022, the cost of newly purchased 100%
equipment can be fully deducted against taxable profit in 2022, and
entitled to additional pre-tax deduction at 100% for these certain
qualified new/high-tech technology enterprises.
According to the Notice on Improving the Pre tax Deduction Ratio
of Research and Development Expenses (CS [2018] No. 99)
and relevant regulations issued by the Ministry of Finance, the [2018] 99
State Administration of Taxation, and the Ministry of Science and
Technology, as well as the Announcement of the Ministry of Finance [2021] 13
and the State Administration of Taxation on Further Improving the 2022 2021 100%
Pre tax Deduction Policy of Research and Development Expenses (CS
[2021] No. 13), the Company and certain subsidiaries are entitled to
additional pre-tax deduction of research and development expenses
at 100% during 2022 and 2021.
(b) Germany profits tax (b)
Applicable profit tax rate of Germany is 29% (2021: 29%). During the 29% 2021 29%
years ended 31 December 2022 and 2021, no profit tax has been 2022 2021 12 31
provided due to accumulated losses as there is no estimated taxable
profits for the current and the prior years.
2022 195
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
10 Income tax expense (Continued) 10
(c) Others (c)
Applicable profit tax rates of the Group’s other subsidiaries are 2022 2021 12 31
between 9% and 34.01% for the years ended 31 December 2022 9%
and 2021. 34.01%
2022 2021
2022 2021
RMB’000 RMB’000
Profit before tax 3,090,078 2,623,316
Tax at applicable tax rate of respective entities 500,295 514,914
Tax effect of share of result of associates and
joint ventures (4,224) (6,712)
Tax effect of income not taxable for tax purpose (73,920) (92,207)
Tax effect of expenses that are not deductible for
tax purpose 143,833 184,248
Tax effect of tax losses and temporary
differences not recognised 97,039 57,424
Utilisation of tax losses and temporary differences
previously not recognised (342) (145)
Additional deduction for qualified research and
development expenses (125,119) (113,204)
Additional deduction for qualified equipment
expenditure (51,109) -
Impact of eligible preferencial tax rate (34,124) -
Under provision in prior years 9,744 9,130
462,073 553,448
Details of deferred taxation for the year are set out in Note 24. 24
196 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
11 Expense by nature (including cost of sales, 11
selling and distribution expenses, administration
expenses, restructuring costs and research and
development expenses)
2022 2021
2022 2021
RMB’000 RMB’000
Raw material costs 22,232,787 19,589,708
Employee benefits expenses
(including directors) (Note 13) 13 3,117,881 3,610,845
Depreciation for property, plant and equipment 582,889 671,359
Service fee 439,346 391,743
Freight charges 900,242 739,315
Amortization of intangible assets 190,402 239,999
Depreciation of right-of-use assets 152,526 155,729
Tax and surcharges 166,829 128,880
Short-term rental expenses 15,890 14,489
Auditors’ remuneration
– Audit service 6,120 6,120
– Audit of overseas subsidiaries 9,200 7,349
– Non-audit services 1,919 1,277
Depreciation for investment properties 18,815 11,682
Provision for inventories 42,423 6,851
Others 1,057,858 1,241,370
28,935,127 26,816,716
2022 197
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
12 Directors’, chief executive’s and supervisors’ 12
remuneration
Directors’ and supervisors’ remuneration for the year, disclosed pursuant
to the applicable Listing Rules and HKCO, is as follows:
For the year ended 31 December 2022
2022 12 31
Restricted
Salary, wages Performance Retirement share incentive
and other incentive benefit scheme scheme
benefits payments contributions Directors’ fee Share options (Note 5) Total
5
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors:
Mr. Jiao Chengyao (Notes 1, 2) 1 2 1,513 1,322 32 – – 6,342 9,209
Mr. Jia Hao 2,466 1,615 63 – 355 5,074 9,573
Mr. Xiang Jiayu 1,072 921 32 – – 4,228 6,253
Mr. Fu Zugang 1,072 1,038 32 – 304 4,228 6,674
Mr. Wang Xinying (Note 2) 2 – – – – – – –
Mr. Cui Kai (Note 2) 2 – – – – – – –
Mr. Fei Guangsheng (Note 2) 2 – – – – – – –
Sub-total 6,123 4,896 159 – 659 19,872 31,709
The executive directors’ remuneration shown above were paid for their
services in connection with the management of the affairs of the Company
and the Group.
For the year ended 31 December 2022
2022 12 31
Restricted
Salary, wages Performance Retirement share incentive
and other incentive benefit scheme scheme
benefits payments contributions Directors’ fee Share options (Note 5) Total
5
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Independent non-executive directors:
Mr. Cheng Jinglei – – – 140 – – 140
Mr. Ji Feng – – – 140 – – 140
Mr. Fang Yuan – – – 140 – – 140
Ms. Guo Wenqing – – – 82 – – 82
Sub-total – – – 502 – – 502
The independent non-executive directors’ remuneration shown above were
paid for their services as directors of the Company.
198 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
12 Directors’, chief executive’s and supervisors’ 12
remuneration (Continued)
For the year ended 31 December 2022
2022 12 31
Restricted
Salary, wages Performance Retirement share incentive
and other incentive benefit scheme scheme
benefits payments contributions Directors’ fee Share options (Note 5) Total
5
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Supervisors:
Mr. Liu Qiang 702 606 32 – – – 1,340
Mr. Wang Yue (Note 2) 2 – – – – – – –
Mr. Zhang Minglin 355 329 32 – – – 716
Mr. Bao Xueliang 214 160 32 – – – 406
Mr. Cui Zonglin 190 142 32 – – – 364
Mr. Cheng Xiangdong – – – – – – –
Mr. Zhang Yonglong – – – – – – –
Sub-total 1,461 1,237 128 – – – 2,826
Total 7,584 6,133 287 502 659 19,872 35,037
For the year ended 31 December 2021
2021 12 31
Restricted
Salary, wages Performance Retirement share incentive
and other incentive benefit scheme scheme
benefits payments contributions Directors’ fee Share options (Note 5) Total
5
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors:
Mr. Jiao Chengyao (Notes 1, 2) 1 2 1,268 1,274 30 – – 5,629 8,201
Mr. Jia Hao 2,458 1,782 57 – 406 4,503 9,206
Mr. Xiang Jiayu 938 942 30 – – 3,752 5,662
Mr. Fu Zugang 869 1,039 30 – 348 3,752 6,038
Mr. Wang Xinying (Note 2) 2 – – – – – – –
Mr. Wang Bin (Note 3) 3 227 341 – – – – 568
Mr. Cui Kai (Notes 2, 3) 2 3 – – – – – – –
Mr. Yang Dongsheng (Notes 2, 3) 2 3 – – – – – – –
Mr. Fei Guangsheng (Notes 3, 4) 3 4 – – – – – – –
Sub-total 5,760 5,378 147 – 754 17,636 29,675
2022 199
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
12 Directors’, chief executive’s and supervisors’ 12
remuneration (Continued)
The executive directors’ remuneration shown above were paid for their
services in connection with the management of the affairs of the Company
and the Group.
For the year ended 31 December 2021
2021 12 31
Restricted
Salary, wages Performance Retirement share incentive
and other incentive benefit scheme scheme
benefits payments contributions Directors’ fee Share options (Note 5) Total
5
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Independent non-executive directors:
Ms. Liu Yao (Note 3) 3 – – – – – – –
Mr. Jiang Hua (Note 3) 3 – – – – – – –
Mr. Li Xudong (Note 3) 3 – – – – – – –
Mr. Cheng Jinglei – – – 140 – – 140
Mr. Ji Feng (Note 4) 4 – – – 117 – – 117
Mr. Fang Yuan (Note 4) 4 – – – 117 – – 117
Ms.Guo Wenqing (Note 4) 4 – – – – – – –
Sub-total – – – 374 – – 374
The independent non-executive directors’ remuneration shown above were
paid for their services as directors of the Company.
200 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
12 Directors’, chief executive’s and supervisors’ 12
remuneration (Continued)
For the year ended 31 December 2021
2021 12 31
Restricted
Salary, wages Performance Retirement share incentive
and other incentive benefit scheme scheme
benefits payments contributions Directors’ fee Share options (Note 5) Total
5
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Supervisors:
Mr. Liu Qiang 624 611 30 – – – 1,265
Mr. Cui Leilei (Note 3) 3 56 53 7 – – 544 660
Mr. Ni Wei (Note 3) 3 170 225 13 – – 1,501 1,909
Mr. Zhou Rong (Note 3) 3 98 104 7 – – 1,689 1,898
Mr. Yuan Shaochong (Note 3) 3 67 69 7 – – 525 668
Mr. Wang Yue (Note 2) 2 – – – – – – –
Mr. Zhang Yichen (Note 3) 3 56 53 7 – – 544 660
Mr. Zhang Minglin (Note 4) 4 339 322 30 – – – 691
Mr. Bao Xueliang (Note 4) 4 190 159 30 – – – 379
Mr. Cui Zonglin (Note 4) 4 179 201 30 – – – 410
Mr. Cheng Xiangdong (Note 4) 4 – – – – – – –
Mr. Zhang Yonglong (Note 4) 4 – – – – – – –
Sub-total 1,779 1,797 161 – – 4,803 8,540
Total 7,539 7,175 308 374 754 22,439 38,589
2022 201
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
12 Directors’, chief executive’s and supervisors’ 12
remuneration (Continued)
The supervisors’ remuneration shown above were paid for their services
in connection with the management of the affairs of the Company and the
Group.
Note 1: Mr Jiao Chengyao is also the chief executive officer of the Company and 1
his emolument for the role as chief executive officer is also included above.
Note 2: All or partial of these directors’ remuneration for the years ended 31 2 2022 2021 12 31
December 2022 and 2021 were borne by investors, including Henan
Machinery Investment Group Co., Ltd, investor of Hong Yi Investment and
Henan Asset.
Note 3: All of these directors resigned during the year ended 31 December 2021 3 2021 12 31
and the amount shown above represents the remuneration paid for in
connection with their service as directors or supervisors.
Note 4: All of these directors and supervisors were newly appointed during the 4 2021 12 31
year ended 31 December 2021 and the amount shown above represents
the remuneration paid for in connection with their service as directors or
supervisors.
Note 5: The amount recorded in the restricted share incentive scheme were the 5
amount recorded in the financial statement.
The performance incentive payment is mainly determined on the basis
of the Group’s and individual performance for years ended 31 December 2022 2021 12 31
2022 and 2021, respectively.
No remuneration was paid by the Group to the directors or supervisors as 2022 2021 12 31
an inducement to join or upon joining the Group or as compensation for
loss of office during the years ended 31 December 2022 and 2021.
Except for Ms. Guo Wenqing, an independent non-executive director, 2022 2021 12 31
who has waived part or full of annual remuneration, no other directors
or supervisors has waived any remuneration during the years ended 31
December 2022 and 2021, respectively.
202 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
13 Employees’ remuneration 13
Employee benefits expenses include wages and salaries, performance
related incentive payments, share-based payment expenses, pension costs
– defined contribution plans and defined benefit plans.
Of the five individuals with the highest remuneration in the Group, 2021
four (2021: three) were directors or supervisor of the Company whose
remuneration is included in the disclosures in Note 12 above. The 12 2021
remuneration of the remaining one individual (2021: two) was as follows:
2022 2021
2022 2021
RMB’000 RMB’000
Salaries and other benefits 1,751 3,288
Performance related incentive payments 485 954
Retirement benefit scheme contributions 63 88
Share options 178 406
Restricted share incentive scheme 1,480 2,627
3,957 7,363
The number of five highest paid individuals whose remuneration fell within
the following bands is as follows:
2022 2021
2022 2021
No. of employees No. of employees
HK$1,000,001 to HK$1,500,000 1,000,001 1,500,000 – –
HK$1,500,001 to HK$3,000,000 1,500,001 3,000,000 – –
HK$3,000,001 to HK$5,000,000 3,000,001 5,000,000 1 2
HK$5,000,001 to HK$7,000,000 5,000,001 7,000,000 1 –
HK$7,000,001 to HK$9,000,000 7,000,001 9,000,000 1 1
HK$9,000,001 to HK$11,000,000 9,000,001 11,000,000 2 1
HK$11,000,001 to HK$13,000,000 11,000,001 13,000,000 – 1
5 5
2022 203
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
14 Dividends 14
2022 2021
2022 2021
RMB’000 RMB’000
Dividends recognised as distribution during the year
– 2021 Final (RMB0.435 per share) 2021
0.435 774,080 –
– 2020 Final (RMB0.2099 per share) 2020
0.2099 – 372,525
774,080 372,525
Subsequent to the end of the reporting period, a final dividend in respect 2022 12
of the year ended 31 December 2022 of RMB0.56 per share (2021: final 31 0.56 2021
dividend in respect of the year ended 31 December 2021 of RMB0.435 2021 12 31
per share) in an aggregated amount of RMB998,058,000 has been 0.435 998,058,000
proposed by the directors of the Company and is subject to approval by the
shareholders in the forthcoming annual general meeting.
15 Earnings per share 15
(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:
2022 2021
2022 2021
Earnings for the purpose of basic earnings
per share (profit for the year attributable to
owners of the Company) (RMB’000) 2,538,235 1,947,785
Weighted average number of ordinary shares
for the purpose of basic earnings per share 1,745,986,996 1,732,574,872
Earnings per share (RMB cents) 145.38 112.42
204 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
15 Earnings per share (Continued) 15
(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.
2022 2021
2022 2021
Earnings:
Profit attributable to owners of the Company used
in the diluted earnings per share calculation
(RMB’000) 2,538,235 1,947,785
Number of shares:
Weighted average number of ordinary shares in
issue during the year per share calculation 1,745,986,996 1,732,574,872
Add: share options 3,352,667 2,948,750
restricted share incentive (Note 38) 38 6,561,603 5,124,395
Weighted average number of ordinary shares in
issue and potential ordinary shares used
as the denominator in calculating diluted
earnings per share 1,755,901,266 1,740,648,017
Diluted earnings per share (RMB cents) 144.55 111.90
2022 205
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
16 Property, plant and equipment 16
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 1 January 2021 2021 1 1 1,586,516 3,987,357 52,163 983,908 665,032 7,274,976
Additions 24,197 127,474 8,010 74,149 798,954 1,032,784
Transfer 85,561 250,499 1,019 36,294 (373,373) –
Disposals (106) (116,716) (7,231) (33,278) (35,887) (193,218)
Transfer to investment properties (Note 18) 18 (8,243) – – – – (8,243)
Currency exchange differences (18,198) (244,224) – (195,761) (24,962) (483,145)
At 31 December 2021 2021 12 31 1,669,727 4,004,390 53,961 865,312 1,029,764 7,623,154
At 1 January 2022 2022 1 1 1,669,727 4,004,390 53,961 865,312 1,029,764 7,623,154
Additions 25,290 249,788 7,150 95,407 924,750 1,302,385
Transfer 384,855 623,892 3,761 149,853 (1,183,709) (21,348)
Transfer in from investment properties (Note 18) 18 21,607 – – – 24,029 45,636
Disposals (16,902) (265,974) (8,954) (135,790) (5,711) (433,331)
Disposal of a subsidiary (36,657) (123,869) (927) (2,338) (4,125) (167,916)
Transfer to investment properties (Note 18) 18 (43,386) – – – – (43,386)
Currency exchange differences 10,750 89,791 – 64,382 7,353 172,276
At 31 December 2022 2022 12 31 2,015,284 4,578,018 54,991 1,036,826 792,351 8,477,470
ACCUMULATED DEPRECIATION AND
IMPAIRMENT
At 1 January 2021 2021 1 1 377,241 1,616,256 27,509 582,330 29,803 2,633,139
Provided for the year 80,458 397,730 5,283 187,888 – 671,359
Impairment loss for the year – 595 – 1,137 – 1,732
Disposals (48) (76,828) (5,075) (29,684) (29,972) (141,607)
Transfer to investment properties (Note 18) 18 (6,194) – – – – (6,194)
Currency exchange differences (10,202) (196,711) – (169,567) (2,533) (379,013)
At 31 December 2021 2021 12 31 441,255 1,741,042 27,717 572,104 (2,702) 2,779,416
At 1 January 2022 2022 1 1 441,255 1,741,042 27,717 572,104 (2,702) 2,779,416
Provided for the year 72,077 389,474 6,763 114,575 – 582,889
Impairment loss for the year – 285 – – 1,206 1,491
Transfer in from investment properties (Note 18) 18 9,151 – – – – 9,151
Disposals (15,929) (244,942) (7,417) (130,583) – (398,871)
Disposal of a subsidiary (11,406) (39,613) (534) (591) – (52,144)
Transfer to investment properties (Note 18) 18 (899) – – – – (899)
Currency exchange differences 4,915 66,163 – 49,780 1,496 122,354
At 31 December 2022 2022 12 31 499,164 1,912,409 26,529 605,285 – 3,043,387
CARRYING VALUES
At 31 December 2021 2021 12 31 1,228,472 2,263,348 26,244 293,208 1,032,466 4,843,738
At 31 December 2022 2022 12 31 1,516,120 2,665,609 28,462 431,541 792,351 5,434,083
206 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
16 Property, plant and equipment (Continued) 16
The Group was in process of obtaining the relevant property ownership 2022 12 31
certificates for buildings with a net book value of approximately 405,352,000 2021 52,378,000
RMB405,352,000 as at 31 December 2022 (2021: RMB52,378,000).
In the opinion of the 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 2022 12 31
value of approximately RMB294,474,000 as at 31 December 2022 (2021: 294,474,000 2021 195,578,000
RMB195,578,000) to secure banking facilities granted to the Group.
17 Leases 17
(i) Amounts recognised in the statement of financial (i)
position
The statement of financial position shows the following amounts
relating to leases:
31 December 31 December
2022 2021
2022 2021
12 31 12 31
RMB’000 RMB’000
Right-of-use assets
Buildings 1,266,627 1,138,749
Land of use rights 512,850 471,142
Machines 8,364 4,924
Office and operating equipment 3,468 4,640
Others 44,132 49,000
1,835,441 1,668,455
Lease liabilities
Current 146,261 103,221
Non-current 1,250,741 1,142,850
1,397,002 1,246,071
The Group has land lease arrangement with mainland China
government.
Additions to the right-of-use assets during the 2022 financial year 2022
was RMB312,789,000 (2021: RMB639,898,000), RMB7,521,000 312,789,000 2021 7,521,000
of which (2021: nil) was transferred from investment properties. 2021
The Group has pledged right-of-use assets with a net book value 2022 12 31
of approximately RMB31,276,000 as at 31 December 2022 31,276,000 2021
(2021: RMB26,654,000) to secure banking facilities granted to the 26,654,000
Group.
2022 207
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
17 Leases (Continued) 17
(ii) Amounts recognised in the statement of profit or (ii)
loss and other comprehensive income
The profit or loss shows the following amounts relating to leases:
2022 2021
2022 2021
RMB’000 RMB’000
Depreciation charge of right-of-use assets:
Buildings 119,328 120,120
Land use rights 14,583 12,734
Machines 1,378 2,180
Office and operating equipment 2,028 1,854
Others 15,209 18,841
152,526 155,729
Interest expense (included in finance cost) 38,728 38,847
Expense relating to short-term leases (included in
cost of sales and administrative expenses) 5,566 4,592
Expense relating to leases of low-value assets
that are not shown above as short-term leases
(included in administrative expenses) 9,543 9,177
Expense relating to variable lease payments
not included in lease liabilities (included in
administrative expenses) 781 720
The total cash outflow for leases in 2022 was RMB207,202,000 2022
(2021: RMB167,987,000). 207,202,000 2021 167,987,000
208 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
18 Investment properties 18
Leasehold land
and land
Buildings use rights Total
RMB’000 RMB’000 RMB’000
COST
At 1 January 2021 2021 1 1 449,531 7,521 457,052
Transfer in from property, plant and
equipment (Note 16) 16 8,243 – 8,243
At 31 December 2021 2021 12 31 457,774 7,521 465,295
Transfer in from property, plant and
equipment (Note 16) 16 43,386 – 43,386
Transfer out to property, plant and
equipment (Note 16) 16 (54,018) – (54,018)
Transfer out to right-of-use assets – (7,521) (7,521)
Disposals (22,577) – (22,577)
At 31 December 2022 2022 12 31 424,565 – 424,565
DEPRECIATION
At 1 January 2021 2021 1 1 68,792 1,034 69,826
Transfer in from property, plant and
equipment (Note 16) 16 6,194 – 6,194
Provided for the year 11,532 150 11,682
At 31 December 2021 2021 12 31 86,518 1,184 87,702
Transfer in from property, plant and
equipment (Note 16) 16 899 – 899
Provided for the year 18,677 138 18,815
Transfer out to property, plant and
equipment (Note 16) 16 (17,533) – (17,533)
Transfer out to right-of-use assets – (1,322) (1,322)
At 31 December 2022 2022 12 31 88,561 – 88,561
CARRYING VALUES
At 31 December 2021 2021 12 31 371,256 6,337 377,593
At 31 December 2022 2022 12 31 336,004 – 336,004
2022 209
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
18 Investment properties (Continued) 18
As at 31 December 2022, the fair value of the Group’s investment 2022 12 31
properties was RMB777,089,000 (2021: RMB660,518,000). The 777,089,000 2021 660,518,000
fair value has been arrived at based on a valuation carried out by the
management of the Group. The fair value was determined based on the
direct comparison approach, which the directors of the Company are of
the view that it is the best estimate of the fair value of these investment
properties. The direct comparison approach reflects recent transaction
prices or current asking prices for similar properties. In estimating the fair
value of the properties, the highest and best use of the properties is their
current use.
Details of the Group’s investment properties and information about the fair 2022 12 31
value hierarchy as at 31 December 2022 are as follows:
Fair value as at
31 December
Level 3 2022
2022
12 31
3
RMB’000 RMB’000
Investment properties located in PRC 777,089 777,089
There were no transfers into or out of Level 3 during the year. 3
The above investment properties are depreciated on a straight-line basis,
taking into account their residual value, at the following rates per annum:
Buildings 3.17%-4.75% 3.17% 4.75%
Land use right 2% 2%
During the year ended 31 December 2022, the Group recognised rental 2022 12 31
income with the amount of RMB18,990,000 (2021: RMB21,234,000). 18,990,000 2021 21,234,000
All the buildings recorded as investment properties are located in the PRC.
The Group had not obtained the relevant property certificates for buildings 2022 12 31
with a net book value of RMB45,421,000 as at 31 December 2022 45,421,000 2021 29,332,000
(2021: RMB29,332,000). In the opinion of the directors of the Company,
the relevant property ownership certificates can be obtained in due time
without incurring significant costs.
210 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
19 Goodwill 19
The Group carries out its annual impairment test on goodwill by comparing
the recoverable amounts of cash generating unit (“CGU”) to the carrying
amounts. The recoverable amount of a CGU was determined based on
value-in-use calculations. These calculations used pre-tax cash flow
projections based on financial budgets approved by management covering
a five-year period with a terminal value related to the future cash flows
extrapolated using the estimated growth rates stated below beyond
the five-year period. The accuracy and reliability of the information is
reasonably assured by the appropriate budgeting, forecast and control
process established by the Group. The management leveraged their
extensive experiences in the industries and provided forecast based on
past performance and their expectation of future business plans and
market developments.
Goodwill is allocated to the Group’s cash-generating units (CGUs)
identified. The following is a summary of goodwill allocation for each CGUs:
Currency
translation
Opening Addition Impairment difference Closing
Year ended 31 December 2022 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
2022 12 31
ASIMCO International Casting Co., Ltd.
(Shanxi) (“ASIMCO Shanxi”) 104,516 – (60,894) – 43,622
ASIMCO Shuanghuan 88,283 – – – 88,283
SEG group SEG 220,051 – (215,757) (4,294) –
412,850 – (276,651) (4,294) 131,905
Currency
translation
Opening Addition Impairment difference Closing
Year ended 31 December 2021 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
2021 12 31
ASIMCO Shanxi 104,516 – – – 104,516
ASIMCO Shuanghuan 88,283 – – – 88,283
SEG group SEG 327,632 – (78,935) (28,646) 220,051
520,431 – (78,935) (28,646) 412,850
2022 211
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
19 Goodwill (Continued) 19
Impairment review on the goodwill of the Group has been conducted 2021 2022 12 31
by management as at 31 December 2021 and 2022, according to IAS 36
36 “Impairment of assets”. For the purposes of impairment review, the
recoverable amount of goodwill is determined based on value-in-use
calculations. The value-in-use calculations use cash flow projections based
on business plan for the purpose of impairment reviews covering a 5 or SEG
6-year period. After taking into consideration the competition in the market
of the products of SEG group and ASIMCO Shanxi, the Group has adjusted 2022 12 31
down the forecast and its cash flow projection. Accordingly, an impairment 276,651,000 2021 78,935,000
of RMB276,651,000 (2021: RMB78,935,000) has been provided
for the goodwill for the year ended 31 December 2022.
The key assumptions and discount rate used in the significant CGU value-
in-use calculations are as follows:
As at 31 December 2022 2022 12 31
Revenue Gross
growth rate profit rate Pre-tax
(%) (%) discount rate
(%) (%)
ASIMCO Shanxi 0%-10% 18%-21% 14.91%
ASIMCO Shuanghuan 0%-4% 34%-36% 14.91%
SEG group SEG (11%)-3% 16%-18% 16.25%
As at 31 December 2021 2021 12 31
Revenue Gross
growth rate profit rate Pre-tax
(%) (%) discount rate
(%) (%)
ASIMCO Shanxi (17%)-25% 16%-21% 15.00%
ASIMCO Shuanghuan (3%)-2% 35%-39% 15.00%
SEG group SEG (6%)-10% 17%-19% 15.79%
The budgeted gross margins used in the goodwill impairment testing,
were determined by management based on past performance and its
expectation for market development. The expected revenue growth rate
and gross profit rates are following the business plan approved by the
Company. Discount rates reflect market assessments of the time value and
the specific risks relating to the industry.
212 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
20 Intangible assets 20
21 Development Customer
Trademark Software costs Patent right relationship Total
COST
At 1 January 2021 2021 1 1 77,860 163,302 1,014,066 625,068 585,506 2,465,802
Additions – 20,861 70,792 339 – 91,992
Disposals – (1,761) (226,515) – – (228,276)
Currency exchange differences – (16,442) (93,343) (36,653) (32,133) (178,571)
At 31 December 2021 2021 12 31 77,860 165,960 765,000 588,754 553,373 2,150,947
Additions – 32,832 79,063 257 – 112,152
Disposals – (2,267) (17,162) (958) – (20,387)
Disposal of a subsidiary – – – (55,590) (145,920) (201,510)
Currency exchange differences – 4,729 25,174 9,239 8,108 47,250
At 31 December 2022 2022 12 31 77,860 201,254 852,075 541,702 415,561 2,088,452
AMORTISATION
At 1 January 2021 2021 1 1 53,203 113,261 62,362 246,639 189,789 665,254
Charge for the year 15,672 45,627 59,248 65,140 54,312 239,999
Disposals – (1,760) – – – (1,760)
Currency exchange differences – (12,968) (9,410) (18,530) (11,272) (52,180)
At 31 December 2021 2021 12 31 68,875 144,160 112,200 293,249 232,829 851,313
Charge for the year 7,414 23,945 60,723 57,146 41,174 190,402
Disposals – (2,252) – (822) – (3,074)
Disposal of a subsidiary – – – (41,930) (74,176) (116,106)
Currency exchange differences – 4,445 6,340 6,812 4,616 22,213
At 31 December 2022 2022 12 31 76,289 170,298 179,263 314,455 204,443 944,748
IMPAIRMENT
At 1 January 2021 2021 1 1 – 340 285,815 432 – 286,587
Additions (Note 8) 8 – 511 83,228 – – 83,739
Disposals – – (226,515) – – (226,515)
Currency exchange differences – (61) (20,998) (42) – (21,101)
At 31 December 2021 2021 12 31 – 790 121,530 390 – 122,710
Additions (Note 8) 8 – – 99,116 – – 99,116
Disposals – – (16,736) – – (16,736)
Disposal of a subsidiary – – – – – –
Currency exchange differences – 22 11,566 11 – 11,599
At 31 December 2022 2022 12 31 – 812 215,476 401 – 216,689
CARRYING VALUES
At 31 December 2021 2021 12 31 8,985 21,010 531,270 295,115 320,544 1,176,924
At 31 December 2022 2022 12 31 1,571 30,144 457,336 226,846 211,118 927,015
2022 213
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
20 Intangible assets (Continued) 20
Total research and development expense incurred during 2022 was 2022 1,465,025,000
approximately RMB1,465,025,000 (2021: RMB1,342,528,000), among 2021 1,342,528,000
which, RMB79,063,000 (2021: RMB70,792,000) related to auto parts 70,792,000 2021
technology project have been capitalised as development costs. In 70,792,000
2022, the Group assessed the BRM technology impairment considering 2022
the future market outlook of the technology, and made an impairment BRM
of approximately RMB77,291,000, and the Group made an additional 77,291,000
impairment of approximately RMB21,825,000 on certain development
projects in progress according to the impairment testing result, which 21,825,000 2021
belong to the manufacture of auto parts segment. During 2021, the Group
provided for an impairment of approximately RMB83.2 million related to 83.2
certain obsolete technologies, which belong to the manufacture of auto
parts segment.
21 Investments in associates 21
2022 2021
2022 2021
RMB’000 RMB’000
Cost of investments in unlisted associates 92,278 92,278
Share of post-acquisition profits and
other comprehensive income,
net of dividends received 94,562 79,683
186,840 171,961
214 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
21 Investments in associates (Continued) 21
As at 31 December 2022 and 2021, the Group had interests in the 2022 2021 12 31
following associates:
Proportion of
Place of nominal value of Proportion of
Name of entity registration registered capital voting power held Principal activities
2022 2021 2022 2021
2022 2021 2022 2021
Zhengzhou Suda Industrial Machinery Service Co., Ltd. The PRC 19.82% 19.82% 19.82% 19.82% Aftermarket services
Heilongjiang Zhenglong Coal Mining Machinery Co., Ltd. The PRC 47.50% 47.50% 47.50% 47.50% Manufacture of mining
machinery
Yizheng Nahuan Technology Co., Ltd. The PRC 49.00% 49.00% 49.00% 49.00% Providing services for auto
spare parts
ZMJ Jiangxi Zongji Equipment Co., Ltd. The PRC 38.00% 38.00% 38.00% 38.00% Manufacture of mining
machinery
Xinjiang Kerui ZMJ Heavy Machine Co., Ltd. The PRC 35.00% 35.00% 35.00% 35.00% Manufacture of mining
machinery
ZMJ Tezhong Duanya Manufacturing Co., Ltd. The PRC 49.00% 49.00% 49.00% 49.00% Manufacture of mining
machinery
Pingdingshan Zhengzhou Coal Mining Machinery Hydraulic The PRC 20.00% 20.00% 20.00% 20.00% Sales of hydraulic products
Electrical Control Co., Ltd.
2022 215
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
21 Investments in associates (Continued) 21
2022 2021
2022 2021
RMB’000 RMB’000
Aggregate amount of the Group’s share of profit
from continuing operations 23,147 39,416
Aggregate amount of the Group’s share of other
comprehensive income – –
Aggregate amount of the Group’s share of total
comprehensive income 23,147 39,416
Aggregate carrying amount of the Group’s interests in
these associates 186,840 171,961
There was no commitments or contingent liabilities in respect of associates 2022 2021 12 31
as at 31 December 2022 and 2021.
22 Investments in joint ventures 22
2021 2020
2021 2020
RMB’000 RMB’000
Cost of investments in unlisted joint venture 55,895 55,895
Share of post-acquisition profits and other
comprehensive income, net of dividends received 36,133 31,083
92,028 86,978
As at 31 December 2022, the Group had interest in the following joint
2022 12 31
ventures:
Place of Proportion of nominal Proportion of voting
Name of entity registration value of registered capital power held Principal activities
2022 2021 2022 2021
2022 2021 2022 2021
NPR ASIMCO Powdered Metals Manufacturing The PRC 50.00% 50.00% 50.00% 50.00% Manufacture of auto-parts
(Yizheng) Co., Ltd
Zhengzhou Mining Intelligent Working Face The PRC 28.00% 28.00% 28.00% 28.00% Manufacture of high-tech
technology Co., Ltd. coal and mining parts
216 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
22 Investments in joint ventures (Continued) 22
NPR ASIMCO Powdered Metals Manufacturing (Yizheng) Co., Ltd. is a
joint venture of ASIMCO Shuanghuan, which was acquired by the Group in 2017 3
March 2017.
Zhengzhou Mining Intelligent Working Face Technology Co., Ltd. is a joint
venture of Zhengzhou Coal Mining Machinery Group Co., Ltd. that was 2018
incorporated by the Group in December 2018. The Group had joint control 12
on Zhengzhou Mining Intelligent Working Face Technology Co., Ltd. due to
the board representation and voting right.
2022 2021
2022 2021
RMB’000 RMB’000
Aggregate amount of the Group’s share of profit from
continuing operations 5,050 5,639
Aggregate amount of the Group’s share of other
comprehensive income – –
Aggregate amount of the Group’s share of total
comprehensive income 5,050 5,639
Aggregate carrying amount of the Group’s interests in
these joint ventures 92,028 86,978
There was no commitments or contingent liabilities in respect of joint 2022 2021 12 31
ventures as at 31 December 2022 and 2021.
23 Financial asset at fair value through profit or 23
loss/Financial asset at fair value through other
comprehensive income/Derivative financial
instruments
Financial assets at fair value through other comprehensive
income
2022 2021
2022 2021
RMB’000 RMB’000
Non-current assets
Equity securities listed in A-shares (Note a) A a 392,987 –
Unlisted equity securities (Note b) b 403,889 112,000
Equity securities listed in Hong Kong – 31,752
796,876 143,752
Current assets
Notes receivable (Note c) c 4,494,325 4,111,050
2022 217
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
23 Financial asset at fair value through profit or 23
loss/Financial asset at fair value through other
comprehensive income/Derivative financial
instruments (Continued)
Financial assets at fair value through profit or loss
2022 2021
2022 2021
RMB’000 RMB’000
Current assets
Other financial assets (Note d) d 4,648,622 2,316,990
Certificate of deposits 578,258 –
Unlisted equity securities 1,296 1,296
Structured deposits – 918,000
5,228,176 3,236,286
Note:
(a) In August 2022, Nanjing Bestway Intelligent Control Technology Co., Ltd. was (a) 2022 8
listed on ChiNext Board of Shenzhen Stock Exchange, and the investment
was reclassified from unlisted equity securities to equity securities listed in A
A-shares.
(b) In August 2022, the Group acquired 16.67% shareholdings of Luoyang LYC (b) 2022 8 LYC
Bearing Co., Ltd. with a consideration of RMB389,323,000. And the Company 16.67% 389,323,000
designated the investment as a financial asset at fair value through other 2022
comprehensive income in 2022.
(c) The Group recorded the notes receivable as financial assets at other (c)
comprehensive income due to the Group’s intention to either holding note
receivables to maturity or endorsing or discounting.
(d) As at 31 December 2022, the other financial assets were as following: (d) 2022 12 31
2022 2021
2022 2021
RMB’000 RMB’000
Assets management products (i) (i) 4,077,805 1,286,026
Principal guaranteed financial products 100,000 580,000
Principal non-guaranteed financial products 470,817 450,964
4,648,622 2,316,990
218 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
23 Financial asset at fair value through profit or 23
loss/Financial asset at fair value through other
comprehensive income/Derivative financial
instruments (Continued)
Financial assets at fair value through profit or loss (Continued)
(i) As at 31 December 2022, the Group held some assets management products (i) 2022 12 31
amounting to RMB4,077,805,000. The assets management products are 4,077,805,000
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.
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 below. The
Group has the following derivative financial instruments:
Derivative financial assets
2022 2021
2022 2021
RMB’000 RMB’000
Not designated as hedging instruments 4,890 15,372
Derivative financial liabilities
2022 2021
2022 2021
RMB’000 RMB’000
Not designated as hedging instruments 17,395 32,998
Designated as hedging instruments – 16,324
17,395 49,322
2022 219
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
24 Deferred income tax assets/liabilities 24
The following is the analysis of the deferred income tax balances for
financial reporting purposes:
2022 2021
2022 2021
RMB’000 RMB’000
Deferred income tax assets to be recovered
– within 12 months 12 235,933 210,262
– after 12 months 12 247,393 216,028
483,326 426,290
Deferred income tax liabilities to be settled
– within 12 months 12 (40,696) (29,941)
– after 12 months 12 (308,437) (259,372)
(349,133) (289,313)
Deferred income tax assets, net 134,193 136,977
220 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
24 Deferred income tax assets/liabilities (Continued) 24
The following are the major deferred income 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 Revaluation
allowance of inventory provision profit difference difference payments assets equipment of FVOCI Others Total
RMB’000 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 1 January 2021 2021 1 1 114,671 13,636 199,859 16,909 12,543 21,120 (16,949) (182,683) (48,560) – 35,394 165,940
(Charge)/credit to profit or loss (17,557) 4,628 (11,447) 10,525 (43,322) (20,072) 653 29,424 6,135 – 11,548 (29,485)
Effect of change in tax rate (51) – (1,197) – – – – – – – (36) (1,284)
Currency exchange differences (418) (748) (5,344) – (3,955) (1,043) – 11,521 2,345 – (552) 1,806
At 31 December 2021 2021 12 31 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 16,884 3,529 8,366 18,540 (85,817) 94 603 47,141 6,122 – 18,944 34,406
Charge to other comprehensive
income – – – – – – – – – (45,789) – (45,789)
Disposal of a subsidiary (2,776) (2,307) (3,496) – (334) – 2,870 12,816 1,333 – – 8,106
Currency exchange differences 5,355 270 2,691 (524) (75) 4 (519) (295) (213) – (6,202) 492
At 31 December 2022 2022 12 31 116,108 19,008 189,432 45,450 (120,960) 103 (13,342) (82,076) (32,838) (45,789) 59,096 134,192
2022 221
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
24 Deferred income tax assets/liabilities (Continued) 24
The net balances of deferred income tax assets and liabilities after
offsetting are as follows:
2022 2021
2022 2021
Deferred income tax assets, net 313,657 383,830
Deferred income tax liabilities, net (179,464) (246,853)
134,193 136,977
At the end of the reporting period, the Group had the following
unrecognised unused tax losses:
2022 2021
2022 2021
RMB’000 RMB’000
Unused tax losses 5,515,887 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 follows:
2022 2021
2022 2021
RMB’000 RMB’000
31 December 2022 2022 12 31 – 1,377
31 December 2023 2023 12 31 – –
31 December 2024 2024 12 31 – –
31 December 2025 2025 12 31 2,024 2,113
31 December 2026 2026 12 31 3,562 5,961
31 December 2027 2027 12 31 86,924 –
No expiry date 5,423,377 4,165,469
5,515,887 4,174,920
222 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
25 Finance lease receivables 25
2022 2021
2022 2021
RMB’000 RMB’000
Finance lease receivables due from customers 100,957 65,271
Less: Finance lease receivables due within 1 year 1
(50,963) (42,122)
Non-current finance lease receivables 49,994 23,149
Certain of the Group’s equipment is leased out under finance leases. All
the leases are denominated in RMB. The terms of finance leases entered 1.5 10
into ranged from 1.5 to 10 years.
Minimum lease receivables
2022 2021
2022 2021
RMB’000 RMB’000
Within 1 year 1 54,945 42,571
Over 1 year but less than 2 years 1 2 11,888 3,885
Over 2 years but less than 5 years 2 5 20,640 10,884
Over 5 years 5 27,260 14,624
Less: unearned finance income (13,776) (6,693)
Present value of minimum lease payments receivable 100,957 65,271
Present value of minimum
lease receivables
2022 2021
2022 2021
RMB’000 RMB’000
Within 1 year 1 50,963 42,122
Over 1 year but less than 2 years 1 2 9,699 3,433
Over 2 years but less than 5 years 2 5 15,845 8,750
Over 5 years 5 24,450 10,966
Present value of minimum lease payments receivable 100,957 65,271
2022 223
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
25 Finance lease receivables (Continued) 25
The interest rates inherent in the leases are fixed at the contract date for
the entire lease terms. The weighted average effective interest rate is 2.84% 2021
approximately 2.84% (2021: 4.66%) per annum. 4.66%
The Group is not permitted to sell or pledge the collateral in the absence
of default by the lessee. As at 31 December 2022, none of the finance 2022 12 31
lease receivable balances is secured by the leased equipment (2021: 2021
RMB5,890,000). 5,890,000
Please refer to Note 3 for the loss allowance of finance lease receivables. 3
26 Long-term receivables 26
2022 2021
2022 2021
RMB’000 RMB’000
Long term receivable due from customers 295,133 190,506
Less: loss allowance (40,633) (43,333)
254,500 147,173
Less: Long-term receivable due within 1 year 1 (88,032) (30,324)
Long-term receivable due after 1 year 1 166,468 116,849
The amount is expected to be received as follows:
Within 1 year 1 91,334 31,512
Over 1 year but less than 2 years 1 2 163,513 105,202
Over 2 years but less than 5 years 2 5 7,093 12,323
Less: unearned finance income (7,440) (1,864)
254,500 147,173
Note: The balance represents long-term receivables from customers arising from
sales of goods. As at 31 December 2022, the amount of RMB149,126,000 2022 12 31 149,126,000
is secured by letters of credit (2021: Nil). The rest amount is interest free, 2021
unsecured and repayable in 2 to 5 years. Deemed interest income of 2 5
RMB5,884,000 calculated based on effective interest method was recognised 5,884,000 2021
during current year (2021: RMB3,786,388). 3,786,388
As at 31 December 2022, the Group provided loss allowance with the 2022 12 31
amount of RMB40,693,000 (2021: RMB43,333,000) for the long-term 40,693,000 2021
receivables. 43,333,000
224 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
27 Contract liabilities 27
2022 2021
2022 2021
RMB’000 RMB’000
Contract liabilities
Contract liabilities, current
– advances from customers (Note) 3,663,770 2,258,436
Contract liabilities, current
– R&D reimbursements from customers 84,579 13,930
3,748,349 2,272,366
Contract liabilities, non-current – R&D reimbursements
from customers 21,510 26,528
Note: Advances from customers are mainly from coal mining machinery group for
non-cancelable contracts, and normally would be recognized as revenue in 12 2022
next 12 months. RMB1,768,154,000 (2021: RMB1,426,025,000) of contract 1,768,154,000 2021
liabilities that was included in the beginning of the period were recognised as 1,426,025,000
revenue during 2022.
28 Inventories 28
2022 2021
2022 2021
RMB’000 RMB’000
Raw materials and consumables 1,889,694 1,577,020
Work in progress 1,117,820 931,631
Finished goods 5,118,946 3,922,152
8,126,460 6,430,803
Inventory provision (216,637) (188,396)
7,909,823 6,242,407
Movement in inventory provision during the year ended 31 December 2022 2021 12 31
2022 and 2021 are as below:
2022 2021
2022 2021
RMB’000 RMB’000
Opening balance 188,396 189,339
Additional provision in the year 44,879 24,775
Utilised (2,456) (17,924)
Write-off (4,185) –
Disposal of a subsidiary (15,380) –
Currency exchange differences 5,383 (7,794)
Closing balance 216,637 188,396
2022 225
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
29 Trade and other receivables 29
2022 2021
2022 2021
RMB’000 RMB’000
Financial assets
Trade receivables 7,100,804 6,268,846
Less: loss allowance (569,818) (545,649)
6,530,986 5,723,197
Financial asset receivables (Note) 320,344 –
Deposits 179,397 111,567
Receivable from disposal of investment 65,526 81,908
Staff advances 31,068 10,305
Others 709,124 215,255
Less: loss allowance (106,348) (38,692)
1,199,111 380,343
7,730,097 6,103,540
Non-financial assets
Prepayments to suppliers 942,844 727,630
Other tax recoverable 445,686 542,903
1,388,530 1,270,533
Total trade and other receivables 9,118,627 7,374,073
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:
2022 2021
2022 2021
RMB’000 RMB’000
Within 180 days 180 4,600,006 4,356,449
Over 180 days but within 1 year 180 1 1,169,412 935,779
Over 1 year but within 2 years 1 2 660,208 378,746
Over 2 years within 3 years 2 3 87,560 52,223
Over 3 years 3 13,800 –
6,530,986 5,723,197
Note:
In December 2022, the Group purchased financial asset receivables amounting to 2022 12
RMB320 million from third party securities companies. The estimated annual yield 320 2023 6
rate is 3.8% or 5.0% and the financial asset receivables will be due in June 2023. 3.8% 5.0%
226 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
29 Trade and other receivables (Continued) 29
The trade and other receivables denominated in foreign currencies as at 2022 2021
31 December 2022 and 2021, are expressed in RMB as follows: 12 31
2022 2021
2022 2021
RMB’000 RMB’000
EUR 623,241 499,862
USD 504,204 323,054
Indian Rupee (“INR”) 233,894 161,750
Brazilian Real (“BRL”) 51,420 43,451
South African Rand (“ZAF”) 14,310 8,731
Mexican Peso (“MXI”) 19,686 2,430
Japanese Yen (“JPY”) 12,631 9,658
Russian Rubble (“RUB”) 7,780 –
Hungarian Forint (“HUF”) 271 –
1,467,437 1,048,936
Movement of loss allowance on trade and other receivables
2022 2021
2022 2021
RMB’000 RMB’000
Opening balance 584,341 673,803
Provided during the year 126,837 33,763
Write off (15,667) (119,809)
Disposal of a subsidiary (18,505) –
Currency exchange differences (840) (3,416)
Closing balance 676,166 584,341
As at 31 December 2022, the Group had litigations against customers 2022 12 31
with overdue trade receivable balances amounting to RMB249,218,000. 249,218,000
Among those litigations, the Group reached settlement for trade receivable
balance of RMB155,226,000, adjudicated for trade receivable balance of 155,226,000
RMB752,000, and remaining litigations for receivable of RMB93,240,000 752,000 2022 12 31
were still on-going as of 31 December 2022. 93,240,000
2022 227
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
30 Cash and cash equivalents/bank deposits 30
2022 2021
2022 2021
RMB’000 RMB’000
Cash and cash equivalents Cash
Cash 448 411
Bank deposits with original maturity within
three months or less 3,612,995 3,195,263
Cash and cash equivalents 3,613,443 3,195,674
Bank deposits
Pledged bank deposits 665,609 374,274
Bank deposits with original maturity over
three months 2,736,734 2,249,706
Restricted cash 92 320,122
3,402,435 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 2022 12 31
which ranged from 0.0001% to 2.75% per annum as at 31 December 0.0001% 2.75% 2021 0.001%
2022 (2021: 0.001% to 2.25% per annum). 2.25%
228 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
31 Trade and other payables 31
2022 2021
2022 2021
RMB’000 RMB’000
Notes payable (Note a) a 3,290,909 2,470,233
Trade payable (Note a) a 6,053,833 4,989,188
9,344,742 7,459,421
Salary and bonus payables (Note b) b 474,244 1,006,865
Deposits (Note c) c 74,842 86,937
Interest payable 27,366 21,688
Other taxes payable 728,248 511,726
Restrictive shares payable (Note 38) 38 118,198 248,724
Factoring payable (Note d) d 49,586 29,735
Dividends payable 36,686 –
Accruals and other payables (Note e) e 626,697 613,312
11,480,609 9,978,408
Notes:
(a) The following is an ageing analysis of notes payable and trade payables (a) 2022 2021 12 31
presented based on issuance date/invoice date as at 31 December 2022 and
2021:
2022 2021
2022 2021
RMB’000 RMB’000
Within 1 year 1 8,966,683 7,179,570
Over 1 year 1 378,059 279,851
9,344,742 7,459,421
(b) Pursuant to the board resolution of “Distribution plan of 2019-2021 super (b) 2022 3 28
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.
2022 229
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
31 Trade and other payables (Continued) 31
Notes: (Continued)
(d) From 2020, a subsidiary of the Group entered into an agreement to arrange (d) 2020
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.
32 Borrowings 32
2022 2021
2022 2021
RMB’000 RMB’000
Non-current:
– Bank borrowings – secured or guaranteed
(Notes c, d and e) c d e 2,286,588 1,650,018
– Bank borrowings – unsecured 4,552,092 3,258,769
Less: current portion of non-current borrowings (2,525,936) (278,129)
4,312,744 4,630,658
Current:
– Bank borrowings –secured or guaranteed
(Notes a, b, d and e) a b d e 291,293 572,177
– Bank borrowings – unsecured 419,997 317,646
Add: current portion of non-current borrowings 2,525,936 278,129
3,237,226 1,167,952
Total borrowings 7,549,970 5,798,610
Secured 2,577,881 2,222,195
Unsecured 4,972,089 3,576,415
7,549,970 5,798,610
Fixed-rate borrowings 468,998 150,646
Variable-rate borrowings 7,080,972 5,647,964
7,549,970 5,798,610
230 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
32 Borrowings (Continued) 32
Notes:
(a) The balance of bank borrowings totally amounting to RMB19,606,000 (2021: (a) 2022 12 31
Nil) were secured by the trade and other receivables as at 31 December 19,606,000 2021
2022.
(b) The balance of bank borrowings totally amounting to RMB49,000,000 (2021: (b) 2022 12 31
RMB38,000,000) were secured by the pledge of the land use rights and 49,000,000 2020 38,000,000
property, plant and equipment as at 31 December 2022.
(c) The balance of bank borrowing amounting to EUR15,000,000 (equivalent (c) 2022 12 31 15,000,000
to RMB111,344,000) was guaranteed by the Company as at 31 December 111,344,000 2021
2022 (2021: EUR22,000,000, equivalent to RMB158,833,000). 22,000,000 158,833,000
(d) The balance of RMB2,397,931,000 as at 31 December 2022 mainly (d) 2022 2,397,931
represented:
i) SEG entered into a revolving facility agreement of EUR100 million with (i) SEG 2022 100
the lenders in 2022, of which Deutsche Bank AG, Singapore Branch
and Standard Chartered Bank (Hong Kong) Limited acted as mandated
lead arrangers and bookrunners. The Group has drawn down a loan of
EUR30,000,000 (equivalent to RMB222,687,000), with the effective 30,000,000 222,687,000
interest rate of 3-month Euribor+1.80% per annum, and it is a revolving Euribor+1.80%
loan on a three-month basis and is repayable finally in July 2025. This 2025 7
borrowing is guaranteed by SEG Automotive Germany GMBH, SEG
Automotive North America LLC and SEG Automotive Products (China)
Co., Ltd..
ii) SEG entered into a term loan facility agreement of EUR300 million with (ii) SEG 2022 300
the lenders in 2022, of which Deutsche Bank AG, Singapore Branch
and Standard Chartered Bank (Hong Kong) Limited acted as mandated
lead arrangers and bookrunners. The Group has drawn down a loan of
EUR293,045,000 (equivalent to RMB2,175,244,000), with the effective 293,045,000
interest rate of 3-month Euribor+1.40% per annum, and is repayable in 2,175,244,000
July 2025. This borrowing is guaranteed by the Company. Euribor+1.40%
2025 7
In addition, the revolving facility agreement is secured by the pledged shares New Neckar Holdings and Operations
of New Neckar Holdings and Operations GmbH & Co. KG and are secured, GmbH & Co. KG
inter alia, by one or more of the following assets in SEG group worth of SEG 588
EUR588 million (equivalent to RMB4,364 million): 4,364
(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 any bank accounts for the collection of trade receivables
that are the subject of arrangements constituting Permitted Factoring, SEG
security transfer in respect of all moveable assets of SEG;
(b) Shares of certain subsidiaries (SEG Automotive Components Brazil (b)
Ltda., 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);
2022 231
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
32 Borrowings (Continued) 32
Notes (Continued)
(d) (Continued) (d)
(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 31 December 2022, the secured assets in SEG group were as 2022 12 31 SEG
follows:
2022
2022
RMB’000
Cash and cash equivalents 287,921
Trade and other receivables 1,498,525
Property, plant and equipment 167,716
Investment in subsidiaries of SEG SEG 1,638,015
Others 772,058
4,364,235
(e) The balance of RMB2,025,362,000 as at 31 December 2021 mainly (e) 2021 12 31 2,025,362,000
represented:
SEG entered into a facility agreement of EUR300 million with the lenders in SEG 2019 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) EUR131,544,000 (equivalent to RMB949,707,000), with the effective (i) 131,544,000 949,707,000
interest rate of Euribor+2.40% per annum, and is repayable from July Euribor+2.40% 2019 7
2019 to January 2023. 2023 1
(ii) EUR75,789,000 (equivalent to RMB547,173,000), with the effective (ii) 75,789,000 547,173,000
interest rate of Euribor+2.40% per annum is an annually revolving loan Euribor+2.40%
and is repayable finally in January 2023. 2023 1
In 2020, SEG entered into an amendment to the above mentioned 2020 SEG 91,500,000
facilitate agreement to have an Incremental Facility in an amount of EUR 2021 12 31
91,500,000. As at 31 December 2021, the Group has drawn down the 73,200,000
loan of EUR73,200,000, equivalent to RMB528,482,040, with the effective 528,482,040 2020 50,000,000
interest rate of Euribor+2.40% per annum is an annually revolving loan and is 401,205,000
repayable finally in October 2022. Euribor+2.40% 2022
10
232 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
32 Borrowings (Continued) 32
Notes (Continued)
(e) (Continued) (e)
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 EUR616 million (equivalent to RMB4,451 million): 616 4,451
(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) Shares of certain subsidiaries (SEG Automotive Components Brazil (b)
Ltda., 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 31 December 2021, the secured assets in SEG group were as 2021 12 31 SEG
follows:
2021
2021
RMB’000
Cash and cash equivalents 206,021
Trade and other receivables 1,279,885
Property, plant and equipment 68,555
Investment in subsidiaries 1,593,175
Others 1,303,096
4,450,732
2022 233
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
32 Borrowings (Continued) 32
At 31 December At 31 December
2022 2021
2022 2021
12 31 12 31
RMB’000 RMB’000
Carrying amount repayable:
Within one year 3,237,226 1,167,952
More than one year, but not exceeding two years 450,000 3,750,658
More than two years, but not exceeding five years 3,862,744 880,000
7,549,970 5,798,610
Less: Amounts shown under current liabilities (3,237,226) (1,167,952)
Amounts shown under non-current liabilities 4,312,744 4,630,658
The carrying amounts of the Group’s borrowings are denominated in the
following currencies:
At 31 December At 31 December
2022 2021
2022 2021
12 31 12 31
RMB’000 RMB’000
RMB 4,945,906 3,549,646
EUR 2,604,064 2,248,964
7,549,970 5,798,610
The ranges of effective interest rates (which are also equal to contracted
interest rates) on the Group’s borrowings are as follows:
At 31 December At 31 December
2022 2021
2022 2021
12 31 12 31
Effective interest rate per annum
Fixed-rate borrowings 0.95%~3.95% 1.00%~3.95%
Variable-rate borrowings 1.748%~3.965% 0.80%~3.80%
234 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
33 Provisions 33
Onerous Restructuring
Warranty contracts provision Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021 2021 1 1 200,817 351,258 676,866 – 1,228,941
Additional provision in the year 138,575 65,368 117,560 8,245 329,748
Reversal/utilisation of provision (107,813) (193,125) (413,982) (8,245) (723,165)
Currency exchange differences (9,567) (24,702) (51,754) – (86,023)
At 31 December 2021 2021 12 31 222,012 198,799 328,690 – 749,501
Current portion 222,012 136,642 328,690 – 687,344
Non-current portion – 62,157 – – 62,157
222,012 198,799 328,690 – 749,501
At 1 January 2022 2022 1 1 222,012 198,799 328,690 – 749,501
Additional provision in the year 133,302 73,909 – – 207,211
Reversal/utilisation of provision (152,265) (135,907) (72,533) – (360,705)
Disposal of a subsidiary (13,000) – – – (13,000)
Currency exchange differences 1,270 1,052 5,574 – 7,896
At 31 December 2022 2022 12 31 191,319 137,853 261,731 – 590,903
Current portion 186,865 122,679 261,731 – 571,275
Non-current portion 4,454 15,174 – – 19,628
191,319 137,853 261,731 – 590,903
The warranty provision which represents management’s best estimate
of the Group’s liability under warranty periods granted to customers
(who purchased coal mining machinery and auto parts), based on prior
experience relating to defective products claims.
Onerous contracts provision represents management’s best estimate of
the expected contract loss, based on the forecast performance relating to
the contracts.
Restructuring provision represents the costs relating to the spin-off of SEG
SEG group and restructuring plant plan from the former group and the 2021 2022 SEG
restructuring plan relating to SEG group in 2021 and 2022.
2022 235
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
34 Transfers of financial assets 34
The Group entered into agreements with certain equipment leasing
companies and end-user customers, pursuant to which:
i) the Group sold hydraulic roof supports (which were designated to be i)
used by end-user customers) to the equipment leasing companies
and received the payments from leasing companies;
ii) the equipment leasing companies lease the hydraulic roof supports to ii)
the end-user customers;
iii) the Group are obliged to settle the unsettled leased amounts due iii)
by the end-user customers to the leasing companies if the end
user customers defaulted on repayments to the equipment leasing
companies in the manner as specified in the agreement.
Given the substance of the transaction, the Group continues to recognise
receivables to the extent of outstanding lease obligation of the ultimate
end-users of the equipment in its consolidated statement of financial
position until full settlement of such lease obligation by the ultimate end-
users of the equipment and proceeds received from the equipment leasing
companies are recorded as financing arrangements.
The transferred trade receivables and associated liabilities were offset to
the extent of the settlement by the ultimate end-users of the equipment.
35 Employee benefit obligations 35
2022 2021
2022 2021
RMB’000 RMB’000
Defined benefit pension plan (a) (a) 116,988 165,092
Other employee benefit provisions 105,336 138,169
222,324 303,261
236 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
35 Employee benefit obligations (Continued) 35
(a) Defined benefit pension plan (a)
The Group’s post-employment benefits include defined contribution
plans and defined benefit plans. The defined benefit plans are funded
or unfunded pension systems or systems financed by insurance
premiums.
The major pension and post-retirement medical care plans are
described below. These plans are subject to actuarial risks, such as
longevity risks, interest fluctuation risks and capital market risks.
Germany
The pension scheme SEG VORSORGE plan (former Bosch VORSORGE SEG VORSORGE Bosch
Plan), which was introduced on January 1, 2006, is a defined VORSORGE 2006 1 1
benefit including interest with salary-based contributions. The SEG SEG
VORSORGE Plan is partly funded via an external pension fund. The VORSORGE
value of the assets of the external pension fund is offset against the
pension obligation calculated using the projected unit credit method.
During the vesting period, employer and employee contributions are
added to the assets of pension fund up to the tax-allowed ceiling.
Contributions that exceed the tax-allowed ceiling are allocated to
the unfunded obligation. The benefit amount rises in line with the
performance of the pension fund. Grandfather provisions were Bosch VORSORGE
transferred to the former Bosch VORSORGE Plan. For a constantly
decreasing number of members of the workforce in the vesting
period, a transitional arrangement guarantees a fixed rate of return
on the defined benefit obligation. On reaching retirement, or in the
event of occupational disability or death, the earned benefits are paid
out in the form of a lump-sum payment, pension payments, or a
lifelong annuity.
India
The Gratuity Plan in India provides a lump sum benefit to employees
upon leaving for any reason. The benefit is 15 days of the final
base salary for each year of service upon retirement or termination 5
provided the employee has worked for the company for at least 5 15
years. In the case of death or disability during active employment,
there is no minimum service requirement to receive the benefit, and
the lump sum amount is 30 days of the final base salary for each 30
year of service plus 21 days of the final base salary for each expected
future year of service had the death or disability not occurred. There is 21
a benefit ceiling of one million Indian rupees except for management 1998 5 7
employees hired before 7 May 1998 who have no benefit ceiling.
2022 237
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
35 Employee benefit obligations (Continued) 35
(a) Defined benefit pension plan (Continued) (a)
The development of the net liability of the defined benefit obligation is
presented in the following table:
Impact of
minimum
Present value Present value funding
Fair value of of funded of unfunded requirement/
plan assets obligations obligations asset ceiling Net value
At 1 January 2021 2021 1 1 681,503 (887,997) (1,235) – (207,729)
Current Period: 6,321 (58,408) (155) – (52,242)
Current service cost – – – – –
Interest expense/(income) – (49,951) (146) – (50,097)
Past service cost and gains and
losses on settlements 6,321 (8,457) (9) – (2,145)
Remeasurements: 57,333 15,377 488 – 73,198
Return on plan assets, excluding
amounts included in interest income 57,333 – – – 57,333
Loss from change in demographic
assumptions – 95 – – 95
Loss from change in financial
assumptions – 35,927 64 – 35,991
Experience gains – (20,645) 424 – (20,221)
Change in asset ceiling, excluding
amounts included in interest expense – – – – –
Currency translation differences (67,597) 85,964 140 – 18,489
Contributions: (24,247) – – – (24,247)
Employers (24,247) – – – (24,247)
Plan participants – – – – –
Payments from plans: (16,098) 44,162 – – 28,064
Benefit payments (16,098) 44,162 – – 28,064
Settlements – – – – –
Others – – (625) – (625)
At 31 December 2021 2021 12 31 637,215 (800,920) (1,387) – (165,092)
238 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
35 Employee benefit obligations (Continued) 35
(a) Defined benefit pension plan (Continued) (a)
The development of the net liability of the defined benefit obligation is
presented in the following table:
Impact of
minimum
Present value Present value funding
Fair value of of funded of unfunded requirement/
plan assets obligations obligations asset ceiling Net value
At 1 January 2022 2022 1 1 637,215 (800,920) (1,387) – (165,092)
Current Period: 8,608 (36,627) (117) – (28,136)
Current service cost – (25,460) (107) – (25,567)
Interest expense/(income) 8,608 (11,167) (10) – (2,569)
Past service cost and gains and
losses on settlements – – – – –
Remeasurements: (46,818) 93,270 291 – 46,743
Return on plan assets, excluding
amounts included in interest income (46,818) – – – (46,818)
Loss from change in demographic
assumptions – 1,770 – – 1,770
Loss from change in financial
assumptions – 55,977 387 – 56,364
Experience gains – 35,524 (96) – 35,428
Change in asset ceiling, excluding
amounts included in interest expense – – – – –
Currency translation differences 757 (3,692) (37) – (2,972)
Contributions: (162,315) – – – (162,315)
Employers (162,315) – – – (162,315)
Plan participants – – – – –
Payments from plans: (61,269) 62,966 93 – 1,790
Benefit payments (61,269) 62,966 93 – 1,790
Settlements – – – – –
Others – 63 (208) – (145)
Transferred to third party (60,666) 253,805 – – 193,139
At 31 December 2022 2022 12 31 315,512 (431,136) (1,364) – (116,988)
2022 239
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
35 Employee benefit obligations (Continued) 35
(a) Defined benefit pension plan (Continued) (a)
For the key regions, the present value of the defined benefit obligation
can be reconciled to the provision as follows:
At 31 December 2022
2022 12 31
Present
value of the Plan Other Unrecognized
RMB’000 obligation assets assets asset Provision
Germany 378,956 – (280,959) – 97,997
India 36,606 – (33,651) – 2,955
415,562 – (314,610) – 100,952
At 31 December 2021
2021 12 31
Present
value of the Plan Other Unrecognized
RMB’000 obligation assets assets asset Provision
Germany 754,442 – (602,916) – 151,526
India 33,190 – (33,554) – (364)
787,632 – (636,470) – 151,162
240 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
35 Employee benefit obligations (Continued) 35
(a) Defined benefit pension plan (Continued) (a)
The Plan assets comprised the following components:
As at 31 December 2022
2022 12 31
Germany India
Percentage Percentage
figures figures
Equity instruments 43% –
Debt instruments 46% –
Cash and cash equivalents 1% –
Others 10% 100%
100% 100%
As at 31 December 2021
2021 12 31
Germany India
Percentage Percentage
figures figures
Equity instruments 49% –
Debt instruments 36% –
Cash and cash equivalents 2% –
Others 13% 100%
100% 100%
2022 241
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
35 Employee benefit obligations (Continued) 35
(a) Defined benefit pension plan (Continued) (a)
The significant actuarial assumptions were as follows:
As at 31 December 2022
2022 12 31
Germany India
Percentage Percentage
figures figures
Discount factor 3.70% 7.35%
Projected salaries growth rate 3.00% 8.00%
Projected pension growth rate 2.00% N/A
The significant actuarial assumptions were as follows:
As at 31 December 2021
2021 12 31
Germany India
Percentage Percentage
figures figures
Discount factor 1.10% 6.35%
Projected salaries growth rate 3.00% 8.00%
Projected pension growth rate 1.75% N/A
242 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
35 Employee benefit obligations (Continued) 35
(a) Defined benefit pension plan (Continued) (a)
To determine the discount factor in the Euro zone, reference was
made to bonds rated AA by at least one rating agency. This was AA
reviewed as of the reporting date. In all regions the discount factor
was determined in accordance with IAS 19 Employee Benefits. 19
Projected salaries are future salary increases estimated on the basis
of the economic situation and inflation, among other things.
The significant actuarial assumptions were as follows:
Germany
As at 31 December 2022
2022 12 31
Change in Increase in Decrease in
assumption assumption assumption
Percentage Percentage
Figures Figures
Discount factor 0.5 percentage points Decrease by 2.1 Increase by 2.4
0.5 2.1 2.4
Projected salaries growth rate 0.25 percentage points Increase by 0.1 Decrease by 0.1
0.25 0.1 0.1
Projected pension growth rate 0.25 percentage points Increase by 0.3 Decrease by 0.3
0.25 0.3 0.3
Life expectancy One year Increase by 0.6 N/A
0.6
2022 243
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
35 Employee benefit obligations (Continued) 35
(a) Defined benefit pension plan (Continued) (a)
India
As at 31 December 2022
2022 12 31
Change in Increase in Decrease in
assumption assumption assumption
Percentage Percentage
Figures Figures
Discount factor 0.5 percentage points Decrease by 3.0 Increase by 3.2
0.5 3.0 3.2
Projected salaries growth rate 0.25 percentage points Increase by 1.0 Decrease by 1.0
0.25 1.0 1.0
Projected pension growth rate 0.25 percentage points – –
0.25 – –
Life expectancy One year Increase by 0.2 N/A
0.2
The significant actuarial assumptions were as follows:
Germany
As at 31 December 2021
2021 12 31
Change in Increase in Decrease in
assumption assumption assumption
Percentage Percentage
Figures Figures
Discount factor 0.5 percentage points Decrease by 4.3 Increase by 5.0
0.5 4.3 5.0
Projected salaries growth rate 0.25 percentage points Increase by 0.1 Decrease by 0.1
0.25 0.1 0.1
Projected pension growth rate 0.25 percentage points Increase by 1.1 Decrease by 1.0
0.25 1.1 1.0
Life expectancy One year Increase by 1.7 N/A
1.7
244 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
35 Employee benefit obligations (Continued) 35
(a) Defined benefit pension plan (Continued) (a)
India
As at 31 December 2021
2021 12 31
Change in Increase in Decrease in
assumption assumption assumption
Percentage Percentage
Figures Figures
Discount factor 0.5 percentage points Decrease by 3.5 Increase by 3.7
0.5 3.5 3.7
Projected salaries growth rate 0.25 percentage points Increase by 1.3 Decrease by 1.3
0.25 1.3 1.3
Projected pension growth rate 0.25 percentage points – –
0.25 – –
Life expectancy One year Increase by 0.2 N/A
0.2
36 Share capital 36
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 2021 12 31 1,536,259 1,536,259 243,234 243,234 1,779,493 1,779,493
At 31 December 2022 2022 12 31 1,535,411 1,539,011 243,234 243,234 1,778,645 1,782,245
(i) Movements in ordinary shares (i)
Number of shares Total
Note (thousands) RMB’000
Details
Opening balance 1 January 2021 2021 1 1 1,732,471 1,732,471
Exercise of share options – proceeds received
37 4,722 4,722
Restricted share incentive scheme issues 38 42,300 42,300
Balance 31 December 2021 2021 12 31 1,779,493 1,779,493
Forfeited restricted shares during the year 38 (848) (848)
Exercise of share options – proceeds received
37 – 3,600
Balance 31 December 2022 2022 12 31 1,778,645 1,782,245
2022 245
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
37 Share option 37
Employee Option Plan
The establishment of The A Share Option Incentive Scheme was approved 2019 10 21 2019
by shareholders at The Second Extraordinary General Meeting of 2019, The 2019 A 2019
First A Shareholders Class Meeting of 2019 and The First H Shareholders H A
Class Meeting of 2019 held on 21 October 2019. In accordance with the
Share Option Incentive Scheme, the Company would grant a number of A
options to the qualified participants to purchase A Shares of the Company.
Under the plan, participants are granted options which only vest if certain
performance standards are met. Participation in the plan is at the board’s
discretion and no individual has a contractual right to participate in the
plan or to receive any guaranteed benefits.
The amount of options that will vest depends on the performance of the
Company and the individual participant. Once vested, the options remain 12
exercisable for a period of 12 months.
The Company has provided RMB7,116,000 (2021: RMB8,578,000) in 2022
respect of these options as share-based payment expenses in 2022. 7,116,000 2021 8,578,000
The source of the underlying shares of the scheme shall be ordinary A
Shares in RMB to be directly issued by the Company to the participants. A
2022 2021
2022 2021
Average Average
exercise price exercise price
per share Number of per share Number of
option options option options
As at 1 January 1 1 5.5851 10,063,400 5.795 16,030,000
Granted during the year – – – –
Exercised during the year (Note) 5.1501 (3,600,300) 5.5851 (4,722,300)
Forfeited during the year 5.1501 (662,500) 5.5851 (1,244,300)
As at 31 December 12 31 5.1501 5,800,600 5.5851 10,063,400
Vested and exercisable 12 31
at 31 December 5.1501 891,000 5.5851 –
Note: The consideration of the share options exercised was already received in 2022 12
December 2022, but the new shares registration procedures were completed 2023 1
in January 2023.
246 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
37 Share option (Continued) 37
Employee Option Plan (Continued)
Share options outstanding at the end of the year have the following expiry
dates and exercise prices:
Share options Share options
outstanding at outstanding at
Exercise 31 December 31 December
Grant Date Expiry date price 2022 2021
2022 2021
12 31 12 31
04 November 2019 19 December 2022 5.1501 – –
2019 11 4 2022 12 19
04 November 2019 19 December 2023 5.1501 891,000 4,956,600
2019 11 4 2023 12 19
04 November 2019 19 December 2024 5.1501 4,909,600 5,106,800
2019 11 4 2024 12 19
Total 5,800,600 10,063,400
Weighted average remaining contractual life of options outstanding at end of period 0.66 years 1.49 years
(i) Fair value of options granted (i)
The assessed fair value at grant date of options granted during the 2022 12 31
year ended 31 December 2022 was RMB0.49 per share. The fair 0.49
value at grant date is independently determined using an adjusted
form of the Black Scholes Model which includes a Monte Carlo (Black Scholes)
simulation model that takes into account the exercise price, the term (Monte Carlo)
of the option, the impact of dilution (where material), the share price
at grant date and expected price volatility of the underlying share,
the expected dividend yield, the risk free interest rate for the term
of the option and the correlations and volatilities of the peer group
companies.
2022 247
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
37 Share option (Continued) 37
Employee Option Plan (Continued)
(i) Fair value of options granted (Continued) (i)
The model inputs for options granted during the year ended 31 2022 12 31
December 2022 included:
(a) options are granted for no consideration and vest based (a)
on Company’s ranking within a peer group of 20 selected 20
companies over a three year period. Vested options are
exercisable for a period of two years after vesting
(b) exercise price: RMB5.795 (the exercise price changed to (b) 5.795 20222
RMB5.1501 per share in 2022) 5.1501
(c) grant date: 4 November 2019 (c) 2019 11 4
(d) expiry date: 19 December 2022, 19 December 2023 and 19 (d) 2022 12 19 2023 12 19
December 2024 2024 12 19
(e) share price at grant date: RMB6.05 per share (e) 6.05
(f) expected price volatility of the Company’s shares: (f)
30.38% First phase 29.93% Second phase 40.83% Third phase
30.38% 29.93% 40.83%
(g) expected dividend yield: Nil (g)
(h) risk-free interest rate: (h)
2.8219% Two years 2.9280% Three years 3.0197% Four years
2.8219% 2.9280% 3.0197%
The expected price volatility is based on the historic volatility (based
on the remaining life of the options), adjusted for any expected
changes to future volatility due to publicly available information.
248 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
38 Restricted share incentive scheme 38
On 4 June 2021, the Annual General Meeting of the Group adopted a 2021 6 4
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.
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.
On 7 June 2021, 42,300,000 A shares were issued at the price 2021 6 7 A
of RMB5.88 per A share under the Scheme, and the amount of 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 31). In 2022, upon the first unlocking period 31 2022
due, except for some forfeited shares which were repurchased, the related
repurchase liabilities for these unlocked shares were derecognized. As 2022 12
at 31 December 2022, the remaining balance of repurchase liability is 31
RMB118,198,000 (2021: RMB248,724,000) recorded in trade and other 118,198,000 2021 248,724,000
payables (Note 31). 31
I n 2022, t h e C o m p a n y h a s p r o v i d e d R M B84,743,000 (2021: 2022
RMB79,364,000) as share-based payment expenses in respect of these 84,743,000 2021 79,364,000
restricted shares.
2022 249
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
38 Restricted share incentive scheme (Continued) 38
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:
Unlocking
Arrangement of Unlocking Period Unlocking duration percentage
First Unlocking Period Commencing from the first trading day upon the expiry of 12 months from the Date 40%
of Grant to the last trading day upon the expiry of 24 months from the Date of
Grant
12 24
Second Unlocking Period Commencing from the first trading day upon the expiry of 24 months from the Date 30%
of Grant to the last trading day upon the expiry of 36 months from the Date of
Grant
24 36
Third Unlocking Period Commencing from the first trading day upon the expiry of 36 months from the Date 30%
of Grant to the last trading day upon the expiry of 48 months from the Date of
Grant
36 48
The evaluation period for unlocking the restricted shares under the 2021
Scheme shall be from 2021-2023 and the evaluation shall be conducted 2023
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:
2022 2021
2022 2021
Number of Number of
restricted restricted
Issued price shares Issued price shares
Opening balance 1 January 1 1 5.88 42,300,000 5.88 –
Issued during the year 5.88 – 5.88 42,300,000
Forfeited during the year 5.88 (848,000) 5.88 –
Unlocked during the year 5.88 (16,804,000) 5.88 –
Balance 31 December 12 31 5.88 24,648,000 5.88 42,300,000
250 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
39 Non-controlling interests 39
The table below shows details of non-wholly owned subsidiaries of the
Group that have significant non-controlling interests:
Place of Proportion of
establishment equity interest held by Profit/(loss) allocated to Accumulated
and principal non-controlling interest non-controlling interests non-controlling interests
Name of subsidiary place of business as at December 31 Year ended December 31 as at December 31
12 31 12 31
12 31
2022 2021 2022 2021 2022 2021
2022 2021 2022 2021 2022 2021
ASIMCO Shuanghuan PRC 36.46% 36.46% 51,224 51,116 410,094 388,419
Zhengzhou Hengda Intelligent Control Technology
Co., Ltd. (“Hengda Intelligent”)(Note) PRC 14.98% N/A 24,092 N/A 241,510 N/A
Hubei Super Electric Auto Motor Co., Ltd.
(“Super Electric”) (Note 43) PRC N/A 49.00% (1,172) 7,500 N/A 295,605
43
ASIMCO Camshaft (Yizheng) Co., Ltd.
(“ASIMCO Camshaft”) PRC 37.00% 37.00% 2,841 15,029 121,158 125,454
Individual immaterial subsidiaries with
non-controlling interests PRC N/A N/A 12,785 48,438 58,252 46,008
89,770 122,083 831,014 855,486
Note: On 9 September 2022, Hengda Intelligent entered into the capital increase 2022 9 9
agreement with the Company, the business partners and investors of
the Group, the core shareholder of Hengda Intelligent and the strategic
investors. Prior to the entering into and implementation of the capital increase 100%
agreement, the Company held 100% equity interest in Hengda Intelligent,
and Hengda Intelligent was a wholly-owned subsidiary of the Company. The
business partners and investors of the Group, the core shareholder of Hengda 871,650,000 14.98%
Intelligent and the strategic investors contributed RMB871,650,000 and held 216,708,000
14.98% equity interest in Hengda Intelligent in total, which resulted in the 85.02%
increase of non-controlling interests by RMB216,708,000. After the capital
increase transaction, the Company held 85.02% equity interest in Hengda
Intelligent.
2022 251
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
39 Non-controlling interests (Continued) 39
The key financial information for the non-wholly owned subsidiaries of the
Group listed below
ASIMCO Shuanghuan
2022 2021
2022 2021
RMB’000 RMB’000
Current assets 995,805 838,263
Non-current assets 702,691 565,600
Current liabilities 504,847 268,282
Non-current liabilities 68,872 70,252
Equity attributable to owners of the Company 714,683 676,910
Non-controlling interests 410,094 388,419
Revenue 811,079 803,890
Expenses (670,586) (663,652)
Profit and total comprehensive income 140,493 140,238
Profit and total comprehensive income
attributable to owners of the Company 89,269 89,122
Profit and total comprehensive income
attributable to the non-controlling interests 51,224 51,116
Profit and total comprehensive income 140,493 140,238
Net cash inflow from operating activities 63,794 128,124
Net cash (outflow)/inflow from investing activities (120,617) 60,543
Net cash inflow/(outflow) from financing activities 10,262 (127,416)
Net cash (outflow)/inflow (46,561) 61,251
252 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
39 Non-controlling interests (Continued) 39
Other than ASIMCO Shuanghuan, the key financial information for the
remaining non-controlling interests by segment is as follows:
Manufacture of coal mining machinery
Manufacture of coal mining machinery segment, including mainly Hengda
Intelligent, Zhengzhou Coal Mining Longwall Face Machinery Co., Ltd. and
Zhengzhou Coal Mining Zhu Duan Co., Ltd.
2022 2021
2022 2021
RMB’000 RMB’000
Current assets 3,442,268 452,478
Non-current assets 527,089 386,439
Current liabilities 2,141,121 695,437
Non-current liabilities 31,208 6,600
Equity attributable to owners of the Company 1,497,267 90,872
Non-controlling interests 299,762 46,008
Revenue 3,267,354 1,640,696
Expenses 2,574,922 1,496,137
Profit and total comprehensive income 692,432 144,559
Profit and total comprehensive income
attributable to owners of the Company 655,555 96,122
Profit and total comprehensive income
attributable to the non-controlling interests 36,878 48,438
Profit and total comprehensive income 692,432 144,559
Net cash inflow from operating activities 882,340 62,202
Net cash outflow from investing activities (930,872) (7,187)
Net cash inflow/(outflow) from financing activities 140,094 (54,794)
Net cash inflow 91,562 221
2022 253
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
39 Non-controlling interests (Continued) 39
Manufacture of auto parts
Manufacture of auto parts segment, including mainly ASIMCO Camshaft and
Super Electric.
2022 2021
2022 2021
RMB’000 RMB’000
Current assets 175,719 819,904
Non-current assets 277,232 529,629
Current liabilities 98,873 352,454
Non-current liabilities 125,498 54,851
Equity attributable to owners of the Company 107,422 521,169
Non-controlling interests 121,158 421,059
Revenue 320,095 986,234
Expense 314,810 930,308
Profit and total comprehensive income 5,285 5,285
Profit and total comprehensive income
attributable to owners of the Company 3,617 33,397
Profit and total comprehensive income
attributable to the non-controlling interests 1,668 22,529
Profit and total comprehensive income 5,285 5,285
Net cash inflow from operating activities 133,456 137,485
Net cash outflow from investing activities (25,119) (61,960)
Net cash outflow from financing activities (172,766) (35,694)
Net cash (outflow)/inflow (64,429) 79,906
40 Capital commitments 40
2022 2021
2022 2021
RMB’000 RMB’000
Capital expenditure in respect of
acquisition of property, plant and
equipment contracted for but not provided
in the consolidated financial statements 999,163 857,979
254 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
41 Related party transactions 41
Before 26 February 2021, in the opinion of the directors of the Company, 2021 2 26
the ultimate controlling party of the Company was Henan SASAC of the
PRC government and that the Group is subject to the control of the PRC 24
government. In accordance with IAS 24, entities that are controlled,
jointly controlled or significantly influenced by the PRC government (“PRC
government related entities”) are regarded as related parties of the Group.
Due to the complex ownership structure, the PRC government may hold
indirect interests in many companies. Some of these interests may, in
themselves or when combined with other indirect interests, be controlling
interests which may not be known to the Group.
From 1 January 2021 to 26 February 2021, apart from the significant 2021 1 1 2021 2 26
transactions with Henan SASAC related entities, the Group’s transactions
with other PRC government related entities are collectively significant
as a large portion of its sales of goods, purchases of materials, most 2021 2 26
of bank deposits, and other general banking facilities and the relevant
interest income earned and expenses incurred during the period ended
26 February 2021 are transacted with entities owned/controlled by the
PRC government. In the opinion of the directors of the Company, the
transactions with PRC government related entities are activities in the
ordinary course of the Group’s business and entered into under normal
commercial terms and conditions, and that the dealings of the Group have
not been significantly or unduly affected by the fact that the Group and
those entities are government related. The Group has also established its
approval process for sales of goods and purchases of materials and its
financing policy for borrowings, such approval process and financing policy
do not depend on whether the counterparties are government related
entities or not.
After the group structure changed from 26 February 2021, the Company 2021 2 26
has no de facto controller (Note 1), in the opinion of the directors of the 1 5%
Company, the investors held more than 5% and their related parties
treated as the related parties of the Company.
During the year ended 31 December 2022 and 2021, the Group entered 2022 2021 12 31
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)
2022 2021
2022 2021
RMB’000 RMB’000
Sales of goods and service 3,131 4,644
2022 2021
2022 2021
RMB’000 RMB’000
Purchase of goods and services 2,604,606 44,226
2022 255
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
41 Related party transactions (Continued) 41
(a) The Group and its investors (Continued) (a)
The details of outstanding balances with investors and their related
parties are set as follows:
2022 2021
2022 2021
RMB’000 RMB’000
Trade and other receivables from investors 25,491 55
2022 2021
2022 2021
RMB’000 RMB’000
Trade and other payables to investors 2,044 2,740
2022 2021
2022 2021
RMB’000 RMB’000
Amount prepaid to investors 78,134 –
The Group’s investors include the investors and their subsidiaries.
The amount due to investors related entities was unsecured, interest-
free and repayable on demand.
(b) The Group and other PRC government related entities (b)
The Group ceased to be controlled by Henan SASAC since 26 2021 2 26
February 2021, and other PRC government related entities were not
considered as related parties since then.
256 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
41 Related party transactions (Continued) 41
(c) The Group and its associates and joint ventures (c)
The Group had the following significant transactions with its associates
and joint ventures.
2022 2021
2022 2021
RMB’000 RMB’000
Sales of goods and services
Associates 164,238 48,599
Joint ventures 10,673 2,465
174,911 51,064
2022 2021
2022 2021
RMB’000 RMB’000
Purchase of goods and services
Associates 278,176 243,428
Joint ventures 51,461 50,833
329,637 294,261
2022 257
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
41 Related party transactions (Continued) 41
(c) The group and its associates and joint ventures (Continued) (c)
The Group had the following outstanding balances with its associates 2022 2021 12 31
and joint ventures as at 31 December 2022 and 2021:
2022 2021
2022 2021
RMB’000 RMB’000
Trade and other receivables from:
Associates 1,454 34,668
Joint ventures 69,996 72,962
71,450 107,630
2022 2021
2022 2021
RMB’000 RMB’000
Trade and other payables to:
Associates 64,712 143,865
Joint ventures 20,803 6,141
85,515 150,006
2022 2021
2022 2021
RMB’000 RMB’000
Amounts prepaid to:
Associates 4,625 –
Joint ventures 22,510 –
27,135 –
All amounts due from or due to associates and joint ventures are from
trade in nature. The amount due to associates and joint ventures are
unsecured, interest-free and repayable on demand.
258 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
41 Related party transactions (Continued) 41
(d) Remuneration of key management personnel (d)
The remuneration of executive directors and other members of key
management were as follows:
2022 2021
2022 2021
RMB’000 RMB’000
Short-term benefits 21,079 21,830
Restricted share incentive scheme 25,791 27,693
Share options 1,369 1,566
Post-employment benefits 452 452
48,691 51,541
Key management represents the executive directors and other
senior management personnel disclosed in the annual report. The
remuneration of key management personnel is determined with
reference of the performance to individuals and market trends.
42 Contingent liabilities 42
(a) Notes receivable (a)
During the year, the Group has endorsed and derecognised certain
notes receivable for the settlement of trade and other payables with
full recourse. In the opinion of the directors of the Company, the risk
of the default in payment of the endorsed notes receivable is low
because all endorsed notes receivable are issued and guaranteed by
reputable PRC banks. The maximum exposure to the Group that may
result from the default of these endorsed and derecognised notes
receivable at the end of each reporting period is as follows:
2022 2021
2022 2021
RMB’000 RMB’000
Outstanding endorsed notes receivable
with recourse 1,922,511 2,133,197
These endorsed and derecognised notes receivable have a maximum
maturity of 1 year, and the total undiscounted cash flows of these 2022 12 31
endorsed and derecognised notes receivable, representing the
Group’s maximum loss if the issuing banks fail to honor their 1,922,511,000 2021 2,133,197,000
notes and guarantees, amounted to RMB1,922,511,000 as at 31
December 2022 (2021: RMB2,133,197,000).
2022 259
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
42 Contingent liabilities (Continued) 42
(b) Trade receivable transferred (b)
During the year, the Group has derecognized certain trade receivables
without recourse which were transferred to banks with amounting to 283,140,000
RMB283,140,000.
43 Disposal of a subsidiary 43
In March 2022, the Group signed an equity transfer agreement to sell 2022 3
all of its 51% equity interests in Super Electric to a third party, Hubei 51%
Jingchuan Intelligent Equipment Co., Ltd. with total consideration
o f R M B331,328,000, a m o n g w h i c h , c a s h c o n s i d e r a t i o n w a s 331,328,000 310,673,000
RMB310,673,000. The cash consideration has been fully received and the 2022 3
transaction was completed in March 2022. After the transaction, Super
Electric ceased to be a subsidiary of the Group.
The financial performance and cash flow information of Super Electric 2022
presented are for the three months ended 31 March 2022. 3 31
Revenue 157,495
Expenses (160,309)
Loss before income tax (2,814)
Income tax credit 422
Loss after income tax (2,392)
Total loss after income tax for the period attributable to:
Owners of the Company (1,220)
Non-controlling interests (1,172)
Gain on sale of the subsidiary after income tax (Note a) a 174,839
Net cash inflow from operating activities 2,459
Net cash outflow from investing activities (165)
Net cash inflow from financing activities 2,653
Net increase in cash generated by the subsidiary 4,947
260 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
43 Disposal of a subsidiary (Continued) 43
Note a: Details of the sale of the subsidiary a
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:
Cash and cash equivalents 36,060
Financial assets at fair value through
other comprehensive income 130,115
Trade and other receivables 186,526
Inventories 174,454
Property, plant and equipment 115,772
Right-of-use assets 22,982
Intangible assets 85,404
Deferred income tax assets 8,913
Total assets 760,226
Borrowings 30,000
Trade and other payables 388,578
Provision 13,000
Deferred income tax liability 17,019
Total liabilities 448,597
Net assets of Super Electric 311,629
2022 261
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
44 Reconciliation of liabilities arising from financing 44
activities
(a) Net debt reconciliation (a)
The table below details changes in the Group’s liabilities and equity
arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those for
which cash flows were, or future cash flows will be, classified in the
Group’s consolidated statement of cash flows as cash flows from
financing activities.
Liabilities
associated with
transferred
trade Redemption Interests
Borrowings Leases receivables liabilities payable
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021 2021 1 1 4,598,895 805,206 830,941 1,420,875 25,552
Financing cash flows – net 1,454,132 (153,498) – (1,425,868) (228,708)
Finance costs (Note 9) 9 – – – 24,741 200,103
New leases – 639,899 – – –
Currency exchange differences (254,417) (45,536) – (19,748) 24,741
Others (Note) – – (143,468) – –
At 31 December 2021 2021 12 31 5,798,610 1,246,071 687,473 – 21,688
At 1 January 2022 2022 1 1 5,798,610 1,246,071 687,473 – 21,688
Financing cash flows – net 1,777,475 (191,312) – – (221,602)
Finance costs (Note 9) 9 – – – – 226,682
New leases – 312,789 – – –
Currency exchange differences 3,885 29,454 – – 598
Disposal of a subsidiary (30,000) – – – –
Others (Note) – – (418,062) – –
At 31 December 2022 2022 12 31 7,549,970 1,397,002 269,411 – 27,366
Note: The amount of liabilities associated with transferred trade receivables
represented the offset of trade receivables against liabilities associated
with transferred trade receivables to the extent of the settlement by the
ultimate end-users of the equipment.
262 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
44 Reconciliation of liabilities arising from financing 44
activities (Continued)
(b) Non-cash investing and financing activities (B)
2022 2021
2022 2021
RMB’000 RMB’000
Dividends declared to non-controlling
interests but not paid (Note) 141,764 –
Note: In March 2022, Super Electric declared a dividend of RMB141,764,000 2022 3
to non-controlling interests, which has not been paid upon disposed. 141,764,000
45 Capital risk management 45
The Group manages its capital to ensure that entities in the Group will
be able to continue as a going concern while maximising 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 equivalents)/ 2022 12 31
total equity) of the Group as at 31 December 2022 and were as follows:
2022 2021
2022 2021
Gearing ratio 119% 118%
2022 263
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
46 Financial instruments 46
Categories of financial instruments
2022 2021
2022 2021
RMB’000 RMB’000
Financial assets:
Financial assets at fair value:
Financial assets at fair value through
profit or loss 5,228,176 3,236,286
Financial assets at fair value through other
comprehensive income 5,291,201 4,254,802
Derivative financial instruments 4,890 15,372
Financial assets at amortised cost:
Trade and other receivables (excluding
prepayments and other tax recoverable) 7,730,097 6,103,540
Cash and cash equivalents 3,613,443 3,195,674
Bank deposits 3,402,435 2,944,102
Long-term receivables 254,500 147,173
Transferred trade receivables 269,411 687,473
Finance lease receivables 100,957 65,271
Total 25,895,110 20,649,693
Financial liabilities:
Financial liabilities at fair value:
Derivative financial instruments 17,395 49,322
Liabilities at amortised cost
Trade and other payables
(excluding non-financial liabilities) 10,278,117 8,459,817
Liabilities associated with transferred trade
receivables 269,411 687,473
Borrowings 7,549,970 5,798,610
Lease liabilities 1,397,002 1,246,071
Total 19,511,895 16,241,293
47 Events after the reporting period 47
The Board held a meeting on 21 December 2022 and passed a resolution, 2022 12 21
pursuant to which it agreed to handle the matters in relation to the 2019 A
exercise by 292 eligible participants during the second exercise period in 292
accordance with the relevant requirements of the 2019 A Share Option
Incentive Scheme of the Company, involving 4,491,300 exercisable 4,491,300
shares.
On 29 December 2022, the Company received capital contributions of 2022 12 29 286
RMB18,541,905.03 from 286 participants, involving 3,600,300 exercised 18,541,905.03
shares. 3,600,300
On 5 January 2023, the Company completed the registration procedures 2023 1 5 286
for the additional 3,600,300 A Shares underlying the exercise for such 3,600,300 A
286 participants. The number of issued A Shares of the Company was A 1,535,411,470
changed from 1,535,411,470 shares to 1,539,011,770 shares; and 1,539,011,770
the total number of issued shares of the Company was changed from 1,778,645,670 1,782,245,970
1,778,645,670 shares to 1,782,245,970 shares.
264 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
48 Particular of principal subsidiaries of the 48
company
Details of the Company’s subsidiaries as at 31 December 2022 and 2021 2022 2021 12 31
are as follows.
Nominal value
Place of of issued and
incorporation/ fully paid up Proportion of ownership
establishment/ share capital/ interest and voting power
Name of subsidiary Principal activity operation registered capital held by the Group
2022 2021
2022 2021
% %
Directly held:
Hengda Intelligent (former name: “Zhengzhou Manufacture of hydraulic The PRC RMB360,000,000 85.02 100.00
Coal Mining Machinery Hydraulic Electrical products 360,000,000
Control Co., Ltd.”)
Zhengzhou Coal Mining machinery Manufacture of mining The PRC RMB100,000,000 100.00 100.00
Comprehensive Equipment Co., Ltd. machinery 100,000,000
Zhengzhou Coal Mining Machinery Group Trading of raw materials The PRC RMB10,000,000 100.00 100.00
Material Trading Co., Ltd. and products 10,000,000
Zhengzhou Coal Mining Longwall Face Manufacture of mining The PRC RMB50,000,000 53.21 53.21
Machinery Co., Ltd. machinery 50,000,000
Zhengzhou Coal Mining Machinery Group Manufacture of mining The PRC RMB50,000,000 54.00 54.00
Lu An Xinjiang Co., Ltd. machinery 50,000,000
Zhengzhou Zhima Street Industrial Co., Ltd. Hotel Management and The PRC RMB100,000,000 100.00 100.00
construction service 100,000,000
Zhengzhou Coal Mine Machinery Co., Ltd. Manufacture of mining The PRC RMB1,000,000,000 100.00 100.00
machinery 1,000,000,000
2022 265
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
48 Particular of principal subsidiaries of the 48
company (Continued)
Nominal value
Place of of issued and
incorporation/ fully paid up Proportion of ownership
establishment/ share capital/ interest and voting power
Name of subsidiary Principal activity operation registered capital held by the Group
2022 2021
2022 2021
% %
Directly held (Continued):
Zhengzhou Coal Mining Machinery Aftermarket service of Russia USD100,000 100.00 100.00
Siberia Co., Ltd. mining machinery 100,000
ZMJ International Trading (Hong Kong) Sale and purchase of Hong Kong USD7,500,000 100.00 100.00
Co., Ltd. mining machinery 7,500,000
ZMJ Germany GmbH Sale and purchase of Germany EUR1,000,000 100.00 100.00
mining machinery 1,000,000
ZMJ America, Inc. Sale and purchase of Canada CAD100 100.00 100.00
mining machinery 100
ZMJ Australia Pty Ltd Sale and purchase of Australia USD200,000 100.00 100.00
mining machinery 200,000
ZMJ Commercial Factoring Co., Ltd. Commercial factoring The PRC RMB100,000,000.00 100.00 100.00
100,000,000.00
Zhengzhou Coal Mining Machinery Shuyun Providing technology The PRC RMB10,000,000 60.00 60.00
Intelligence Technology Co., Ltd. service 10,000,000
266 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
48 Particular of principal subsidiaries of the 48
company (Continued)
Nominal value
Place of of issued and
incorporation/ fully paid up Proportion of ownership
establishment/ share capital/ interest and voting power
Name of subsidiary Principal activity operation registered capital held by the Group
2022 2021
2022 2021
% %
Directly held (Continued):
ZMJ Emerging Industry Investment (Henan) Investing The PRC RMB389,516,702 100.00 N/A
Partnership (Limited Partnership) 389,516,702
SEG Automotive E-Drive System Co., Ltd. Sale of auto parts The PRC RMB100,000,000 100.00 N/A
100,000,000
ASIMCO (Beijing) Limited Sale and purchase of auto The PRC RMB1,200,000,000 100.00 100.00
parts and components 1,200,000,000
CACG LTD. I (“CACG I”) Sale of auto parts Cayman Islands RMB418,970 100.00 100.00
418,970
Zhengzhou Shengji Mechanical and Sale of auto parts The PRC RMB2,450,000,000 100.00 100.00
Electrical Equipment Company Limited 2,450,000,000
ZMJ Zhiding Hydraulic Company Limited Manufacture of mining The PRC RMB50,000,000 100.00 100.00
(“ZMJ Zhiding”) machinery 50,000,000
2022 267
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
48 Particular of principal subsidiaries of the 48
company (Continued)
Nominal value
Place of of issued and
incorporation/ fully paid up Proportion of ownership
establishment/ share capital/ interest and voting power
Name of subsidiary Principal activity operation registered capital held by the Group
2022 2021
2022 2021
% %
Indirectly held:
Zhengzhou Coal Mining Machinery Software and IT services The PRC RMB8,000,000 85.02 100.00
Intelligent Control Technology Innovation 8,000,000
Center Co, Ltd. (former name: “Intelligent
Control Software and Network Services
Technology (Zhengzhou) Co.,Ltd.”)
Intelligent Control Software and Network Software and IT services The PRC RMB8,000,000 85.02 100.00
Services Technology (Shenzhen) Co.,Ltd. 8,000,000
Zhengzhou Yingzhike Technology Co., Ltd. Software and IT services The PRC – 85.02 N/A
Zhengzhou Coal Mining Zhu Duan Co., Ltd. Sale of molding and The PRC RMB30,000,000 55.26 55.26
metal material 30,000,000
Zhengzhou Coal Mining Machinery Sale of molding and The PRC RMB50,000,000 55.26 55.26
Gelin Material Technology Co., Ltd. metal material 50,000,000
(“ZMJ Gelin Material”)
268 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
48 Particular of principal subsidiaries of the 48
company (Continued)
Nominal value
Place of of issued and
incorporation/ fully paid up Proportion of ownership
establishment/ share capital/ interest and voting power
Name of subsidiary Principal activity operation registered capital held by the Group
2022 2021
2022 2021
% %
Indirectly held (Continued):
ASIMCO Camshaft Sale of auto parts The PRC RMB118,043,007 63.00 63.00
118,043,007
ASIMCO Shuanghuan Sale of auto parts The PRC RMB229,703,231 63.54 63.54
229,703,231
ASIMCO Shanxi Sale of auto parts The PRC RMB420,362,000 100.00 100.00
420,362,000
ASIMCO NVH Technologies Co., Ltd Sale of auto parts The PRC RMB299,200,000 100.00 100.00
(Anhui) (“ASIMCO NVH”) 299,200,000
NVH
Hong Kong SMG International Co., Limited Sale of auto parts The PRC EUR310,000,000 100.00 100.00
310,000,000
ASIMCO International, Inc. Sale of auto parts The USA USD1 100.00 100.00
1
ASIMCO Alloy Materials (Yizheng) Co., Ltd Sale of auto parts The PRC RMB41,308,285 63.54 63.54
(former name: “ASM ALLOY MATERIALS 41,308,285
(YIZHENG) CO.,LTD”)
2022 269
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
48 Particular of principal subsidiaries of the 48
company (Continued)
Nominal value
Place of of issued and
incorporation/ fully paid up Proportion of ownership
establishment/ share capital/ interest and voting power
Name of subsidiary Principal activity operation registered capital held by the Group
2022 2021
2022 2021
% %
Indirectly held (Continued):
Yangzhou Yingwei AutoMotive Parts Co., Ltd. Sale of auto parts The PRC RMB2,000,000 63.54 63.54
2,000,000
Anhui ASIMCO Sealing Technology Co., Ltd. Sale of auto parts The PRC RMB50,000,000 100.00 100.00
50,000,000
Ningguo ASIMCO Wujinzhipin Co., Ltd. Sale of auto parts The PRC RMB20,000,000 100.00 100.00
20,000,000
ASIMCO Sealing Technologies (Thailand) Sale of auto parts Thailand THP22,500,000 100.00 100.00
Co., Ltd. 22,500,000
ASIMCO Technologies (Yuncheng) Co., Ltd. Sale of auto parts The PRC RMB200,000,000 100.00 100.00
200,000,000
Super Electric Sale of auto parts The PRC RMB206,000,000 – 51.00
206,000,000
SMG Acquisition Fund, L.P. Sale of auto parts Cayman Islands EUR499,999,905 100.00 100.00
SMG Acquisition Fund, L.P. 499,999,905
SMG Acquisition Luxembourg Sale of auto parts Luxembourg EUR12,000 100.00 100.00
Holdings S.à r.l. 12,000
SMG Acquisition Luxembourg Holdings S.à r.l.
270 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
48 Particular of principal subsidiaries of the 48
company (Continued)
Nominal value
Place of of issued and
incorporation/ fully paid up Proportion of ownership
establishment/ share capital/ interest and voting power
Name of subsidiary Principal activity operation registered capital held by the Group
2022 2021
2022 2021
% %
Indirectly held (Continued):
New Neckar Autoparts Holding GmbH Sale of auto parts Germany EUR25,000 100.00 100.00
New Neckar Autoparts Holding GmbH 25,000
New Neckar Autoparts Holdings and Sale of auto parts Germany EUR625,000,500 100.00 100.00
Operations GmbH & Co. KG 625,000,500
New Neckar Autoparts Holdings
and Operations GmbH & Co. KG
SEG Automotive Germany GmbH Sale of auto parts Germany EUR25,000 100.00 100.00
25,000
SEG Automotive Components Brazil Ltda. Sale of auto parts Brazil EUR50,300,715.57 99.99 99.99
50,300,715.57
Starters E-Components Generators Sale of auto parts Hungary EUR15,050,000 100.00 100.00
Automotive Hungary Kft. 15,050,000
Starters E-Components Generators
Automotive Hungary Kft.
SEG Automotive Products (China) Co., Ltd. Sale of auto parts The PRC RMB290,400,000.00 100.00 100.00
290,400,000.00
SEG New Energy Automobile R&D of auto parts The PRC RMB22,000,000.00 N/A 100.00
Technology Co., Ltd. 22,000,000.00
2022 271
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
48 Particular of principal subsidiaries of the 48
company (Continued)
Nominal value
Place of of issued and
incorporation/ fully paid up Proportion of ownership
establishment/ share capital/ interest and voting power
Name of subsidiary Principal activity operation registered capital held by the Group
2022 2021
2022 2021
% %
Indirectly held (Continued):
SEG Automotive India Private Limited Sale of auto parts India EUR134,395.95 99.99 99.99
134,395.95
SEG Automotive North America LLC Sale of auto parts North America EUR0 100.00 100.00
0
SEG Automotive France S.A.S. Sale of auto parts France EUR50,000 100.00 100.00
50,000
SEG Automotive Japan Corporation Sale of auto parts Japan EUR736,982.46 100.00 100.00
736,982.46
SEG Automotive Mexico Manufacturing, Sale of auto parts Mexico EUR486,633.91 99.99 99.99
S.A. de C.V. 486,633.91
SEG Automotive Mexico Service, Sale of auto parts Mexico EUR89,994.28 99.99 99.99
S. de R. L. de C.V. 89,994.28
SEG Automotive Mexico Sales, Sale of auto parts Mexico EUR95,008.49 99.99 99.99
S. de R.L. de C.V. 95,008.49
SEG Automotive Portugal, Unipessoal Lda. Sale of auto parts Portugal EUR25,000 100.00 100.00
25,000
272 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
48 Particular of principal subsidiaries of the 48
company (Continued)
Nominal value
Place of of issued and
incorporation/ fully paid up Proportion of ownership
establishment/ share capital/ interest and voting power
Name of subsidiary Principal activity operation registered capital held by the Group
2022 2021
2022 2021
% %
Indirectly held (Continued):
SEG Automotive South Africa Sale of auto parts South Africa EUR59,711.7 100.00 100.00
Proprietary Limited 59,711.7
SEG Automotive Korea Co. Ltd. Sale of auto parts Korea EUR36,834.26 100.00 100.00
36,834.26
SEG Automotive Spain, S.A.U. Sale of auto parts Spain EUR9,616,000 100.00 100.00
9,616,000
SEG Automotive Italy S.r.l. Sale of auto parts Italy EUR500,000 100.00 100.00
500,000
Note: Except for SEG Automotive Products (China) Co., Ltd., all other PRC
subsidiaries are invested by PRC enterprise.
2022 273
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
49 Information about the statement of financial 49
position of the Company
2022 2021
2022 2021
RMB’000 RMB’000
NON-CURRENT ASSETS
Property, plant and equipment 1,543,709 1,102,818
Right of use assets 26,005 30,242
Investment properties 214,262 223,528
Intangible assets 258,703 202,662
Investments in subsidiaries 8,472,516 7,944,431
Investments in associates 145,859 129,575
Investments in a joint venture 37,123 33,805
Financial assets at fair value through other
comprehensive income 392,987 112,000
Deferred tax assets 107,503 184,359
Finance lease receivables 4,442 –
Long term receivables 196,387 182,901
Total non-current assets 11,399,496 10,146,576
CURRENT ASSETS
Inventories 4,107,529 2,889,094
Loans receivable from subsidiaries 170,000 190,000
Trade and other receivables 4,949,933 3,195,159
Transferred trade receivables 269,411 687,473
Finance lease receivables, current portion 45,718 38,400
Long-term receivables, current portion 88,032 32,336
Financial assets at fair value through profit or loss
3,881,101 3,016,026
Financial assets at fair value through other
comprehensive income 3,376,123 2,675,277
Bank deposits 2,971,915 2,576,046
Cash and cash equivalents 2,239,639 2,053,992
Total current assets 22,099,401 17,353,803
Total assets 33,498,897 27,500,379
274 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
49 Information about the statement of financial 49
position of the Company (Continued)
2022 2021
2022 2021
RMB’000 RMB’000
NON-CURRENT LIABILITIES
Other non-current liabilities 166,888 186,834
Employee benefit obligations 16,811 –
Borrowings 2,137,500 3,247,769
Lease liabilities 23,740 27,821
Total non-current liabilities 2,344,939 3,462,424
CURRENT LIABILITIES
Trade and other payables 7,411,217 5,519,982
Contract liabilities 2,942,164 1,905,066
Borrowings 2,416,092 214,500
Liabilities associated with transferred
trade receivables 269,411 687,473
Lease liabilities 19,660 14,250
Total current liabilities 13,058,544 8,341,271
Total liabilities 15,403,483 11,803,695
CAPITAL AND RESERVES
Share capital 1,782,245 1,779,493
Share premium 4,538,675 4,426,102
Reserves (Note (a)) (a) 11,774,494 9,491,089
Total equity 18,095,414 15,696,684
Total equity and liabilities 33,498,897 27,500,379
2022 275
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022 2022 12 31
49 Information about the statement of financial 49
position of the Company (Continued)
Note (a) (a)
Statutory
Treasury Surplus Other Retained
share Reserve reserves earnings Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance at 1 January 2021 2021 1 1 – 1,023,520 117,681 7,233,700 8,374,901
Profit for the year – – – 1,748,273 1,748,273
Transfer – 174,827 – (174,827) –
Share options – – 8,578 – 8,578
Restricted share incentive scheme
(Note 38) 38 (248,724) – 79,364 – (169,360)
Return of contributions to State-owned
investors – – (95,000) – (95,000)
Disposal of associates – – (3,778) – (3,778)
Dividends (Note 14) 14 – – – (372,525) (372,525)
Balance at 31 December 2021 2021 12 31 (248,724) 1,198,347 106,845 8,434,621 9,491,089
Balance at 1 January 2022 2022 1 1 (248,724) 1,198,347 106,845 8,434,621 9,491,089
Profit for the year – – – 2,697,512 2,697,512
Other comprehensive income for year – – 238,839 – 238,839
Profit and total comprehensive income for
the year – – 238,839 2,697,512 2,936,351
Share options – – (10,242) – (10,242)
Restricted share incentive scheme
(Note 38) 38 130,526 – 303 547 131,376
Dividends (Note 14) 14 – – – (774,080) (774,080)
Balance at 31 December 2022 2022 12 31 (118,198) 1,198,347 335,745 10,358,600 11,774,494
276 Zhengzhou Coal Mining Machinery Group Co., Ltd. Annual Report 2022
Five Year Financial Highlights
Highlights of Consolidated Statement of Profit or Loss
Year ended 31 December
12 31
2022 2021 2020 2019 2018
2022 2021 2020 2019 2018
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Revenue 32,043,306 29,293,527 26,519,393 25,721,417 26,011,730
Cost of sales 25,644,599 23,221,695 20,218,738 20,923,902 21,159,849
Profit before tax 3,090,078 2,623,316 1,939,894 1,530,076 1,288,738
Profit for the year 2,628,005 2,069,868 1,378,781 1,139,910 938,908
Profit for the year attributable to:
Owners of the Company 2,538,235 1,947,785 1,239,149 1,040,253 832,344
Non-controlling interests 89,770 122,083 139,632 99,657 106,564
2,628,005 2,069,868 1,378,781 1,139,910 938,908
Highlights of Consolidated Statement of Financial
Position
As at 31 December
12 31
2022 2021 2020 2019 2018
2022 2021 2020 2019 2018
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets 10,270,311 9,407,764 9,352,372 9,470,921 9,336,011
Current assets 34,199,278 27,922,550 25,104,222 20,347,930 18,672,760
Total assets 44,469,589 37,330,314 34,456,594 29,818,851 28,008,771
Non-current liabilities 6,245,568 6,600,964 5,594,284 3,854,076 4,013,211
Current liabilities 19,585,740 15,078,373 14,828,479 12,822,529 11,704,716
Total liabilities 25,831,308 21,679,337 20,422,763 16,676,605 15,717,927
Equity attributable to owners of
the Company 17,807,267 14,795,491 13,063,795 12,239,731 11,457,210
Non-controlling interests 831,014 855,486 970,036 902,515 833,634
Total equity 18,638,281 15,650,977 14,033,831 13,142,246 12,290,844
Total equity and liabilities 44,469,589 37,330,314 34,456,594 29,818,851 28,008,771
