Kemao Industries : Half Yearly Report

KEMAO INDUSTRITIES LIMITED

ACN 625 928 216 | NSX Code: KEM

FINANCIAL REPORT

FOR THE HALF YEAR ENDED

30 JUNE 2021

This Financial Report for the Half Year ended 30 June 2021 is to be read in conjunction with the Financial Report for the Year ended 31 December 2020 and any announcements made to the market during the half year ended 30 June 2021.

KEMAO INDUSTRTIES LIMITED	Corporate Directory
Corporate Directory
Board of Directors
Mr Long Huy Lam	Non-executive Chairman
Mr Dong Chen	Managing Director
Ms Fang Chen	Executive Director
Mr Jianping Zhou	Non-executive Director
Ms Xuekun Li	Non-executive Director

Company Secretary

Ms Xuekun Li

Registered Office in Australia

Office 20

217 Hay St

Subiaco WA6008

Tel:	[phone]
Email:	[e-mail]
Website:	www.kemao-tinplate.com

Principle Business Address in China

No 5 Songwentou Road

Yunting Town, Jiangyin City

Jiangsu Province 214422 China

Tel:	[phone]
Fax:	[phone]

Auditors

MGI Perth Audit Services Pty Ltd

322 Hay St

Subiaco WA 6008

Share Registry

Advanced Share Registry

110 Stirling Highway

Nedlands WA6009

Tel:	[phone]
Fax:	[phone]

Securities Exchange Listing

Fully Paid Shares in Kemao Industries Limited are quoted on National Stock Exchange of Australia (code: KEM).

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KEMAO INDUSTRTIES LIMTIED	Contents

Financial Report

for the Half Year ended 30 June 2021

	Page
Directors' Report	1
Auditor's Independence Declaration	3
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income	4
Condensed Consolidated Statement of Financial Position	5
Condensed Consolidated Statement of Changes in Equity	6
Condensed Consolidated Statement of Cash Flows	7
Notes to the Condensed Financial Statements	8
Directors' Declaration	15
Auditor's Independent Review Report	16

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KEMAO INDUSTRIES LIMITED	Directors' Report

Directors' Report

The directors of Kemao Industries Limited (Kemao) herewith submit the financial report of Kemao Industries and its subsidiaries ("KEM" or "the Group") for the half-year ended 30 June 2021. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

The names of the directors of the Company during or since the end of the half year are:

• Mr Long Huy Lam (appointed Non-executive Chairman 29 March 2021)
• Mr Dong Chen (Executive Director)
• Ms Fang Chen (Executive Director)
• Mr Jianping Zhou (Non-executive Director)
• Ms Xuekun Li (appointed Non-executive Director 3 March 2021)
• Ms Chong Peng Leong (resigned from Non-executive Director 3 March 2021) The above named directors held office during and since the end of the half-year.

Review of Operations

KEM is a professional metal packaging solution provider. The Group specialises in the production and supply of tinplate and cold-rolled steel coils to the global market. KEM's production base and manufacture centre is located in the Jiangsu Province of China.

The Group reported a consolidated loss of $2,784,000 for the half-year ended 30 June 2021 (2019: a consolidated loss of $424,000).

Revenue for the half year ended 30 June 2021 grew by 25.9% to $77.4 million, compared with $61.5 million of last period. Due to strict COVID-19 containment measures, social and economic environment became normalised in China in 2021. Over the course of the pandemic lock- down, the Company saw a lot of small and medium manufactures closed down and the concentration within the industry became higher and higher. As one of the top tin-plate manufacturers with long history in China, KEM took the opportunity to increase its market share. Domestic sales increased by 37.7% to $65.8 million. While overseas sales were down 15% to $11.6 million, the total sales returned to almost the pre-COVID level.

Raw material prices and shipping costs continued to rise significantly during the period. The Group recorded a gross loss of $810,000 for the first six months of 2021. In order to cope with the unexpected price movement and the ongoing uncertainties arising from Covid-19, KEM continued to strengthen its inventory control.

The Group remained focus on improving production management, minimising unnecessary expenditure and reducing waste. Apart from the non-cash impairment provision, all other operating expenditure decreased during the period.

KEM has adopted prudent capital management. The Group managed not to increase its borrowings during the challenging period. As at 30 June 2021 KEM had around $9.3 million cash and generated $1.2 million from its operating activities during the period. While it had negative $5.2 million working capital as at 30 June 2021, KEM assessed its cashflow remained stable.

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KEMAO INDUSTRIES LIMITED	Directors' Report

Auditor's Independence Declaration

The Auditor's Independence Declaration is included on page 3 and forms part of the Directors' Report for the half year ended 30 June 2021.

Signed in accordance with a resolution of directors made pursuant to section 306(3) of the Corporations Act 2001.

On behalf of the Board

Long Huy Lam

Director

Sydney, 9 September 2021

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