(a joint stock limited company incorporated in the People's Republic of China with limited liability) (Stock Code: 01818)

2020

IN TERIM REPORT

*For identification purposes only

CONTENTS

2

4

13

25

Corporate Information

Management Discussion and Analysis

Other Information

Report on Review of Interim Financial Information

26

Interim Condensed Consolidated Statement of

Profit or Loss

27

Interim Condensed Consolidated Statement of

Comprehensive Income

28

Interim Condensed Consolidated Statement of

Financial Position

30

Interim Condensed Consolidated Statement of

Changes in Equity

32

Interim Condensed Consolidated Statement of

Cash Flows

35

Notes to the Interim Condensed Consolidated

Financial Statements

CORPORATE INFORMATION

NAME OF THE COMPANY

招金礦業股份有限公司

ENGLISH NAME OF THE COMPANY

Zhaojin Mining Industry Company Limited*

LEGAL REPRESENTATIVE

Mr. Weng Zhanbin

EXECUTIVE DIRECTORS

Mr. Weng Zhanbin (Chairman)

Mr. Dong Xin (President)

Mr. Wang Ligang (Vice-President and Board Secretary)

NON-EXECUTIVE DIRECTORS

Mr. Xu Xiaoliang (Vice Chairman)

(Resigned on 24 April 2020)

Mr. Zhang Banglong (Vice Chairman)

(Appointed on 24 April 2020)

Mr. Liu Yongsheng

Mr. Gao Min

Mr. Huang Zhen

INDEPENDENT NON-EXECUTIVE DIRECTORS

Ms. Chen Jinrong

Mr. Choy Sze Chung Jojo

Mr. Wei Junhao

Mr. Shen Shifu

SUPERVISORY COMMITTEE MEMBERS

Mr. Wang Xiaojie (Chairman of the

Supervisory Committee)

Mr. Zou Chao

Ms. Zhao Hua

SECRETARY TO THE BOARD

Mr. Wang Ligang

  • For identification purpose only

COMPANY SECRETARY

Ms. Ng Ka Man

QUALIFIED ACCOUNTANT

Mr. Ma Ving Lung Nelson

AUTHORIZED REPRESENTATIVES

Mr. Weng Zhanbin (Chairman)

Mr. Dong Xin (President)

BOARD COMMITTEES

AUDIT COMMITTEE MEMBERS

Ms. Chen Jinrong (Chairman of the

Audit Committee)

Mr. Choy Sze Chung Jojo

Mr. Huang Zhen

STRATEGIC COMMITTEE MEMBERS

Mr. Weng Zhanbin (Chairman of the

Strategic Committee)

Mr. Xu Xiaoliang (Resigned on 24 April 2020)

Mr. Zhang Banglong (Appointed on 24 April 2020) Mr. Liu Yongsheng

NOMINATION AND REMUNERATION COMMITTEE MEMBERS

Mr. Choy Sze Chung Jojo (Chairman of the Nomination and Remuneration Committee)

Mr. Wang Ligang

Mr. Gao Min

Ms. Chen Jinrong

Mr. Wei Junhao

GEOLOGICAL AND RESOURCES MANAGEMENT COMMITTEE MEMBERS

Mr. Wei Junhao (Chairman of the Geological and

Resources Management Committee)

Mr. Liu Yongsheng

Mr. Shen Shifu

  • ZHAOJIN MINING INDUSTRY COMPANY LIMITED

SAFETY AND ENVIRONMENT PROTECTION COMMITTEE MEMBERS

Mr. Dong Xin (Chairman of the Safety and

Environment Protection Committee)

Mr. Wang Ligang

Mr. Shen Shifu

AUDITORS

INTERNATIONAL AUDITOR

Ernst & Young

22nd Floor

CITIC Tower

1 Tim Mei Avenue

Central

Hong Kong

PRC AUDITOR

Ernst & Young Hua Ming LLP

(Special General Partnership)

16th Floor, Ernst & Young Building Dongfang Square

No. 1 East Changan Road

Dongcheng District

Beijing

PRC

LEGAL ADVISERS

PRC LEGAL ADVISER

King & Wood Mallesons LLP

17th Floor, One ICC

Shanghai International Commercial Center 999 Middle Huai Hai Road

Shanghai

PRC

Postal code: 200031

HONG KONG LEGAL ADVISER

Eversheds Sutherland

37/F, One Taikoo Place

Taikoo Place

979 King's Road

Quarry Bay

Hong Kong

CORPORATE INFORMATION

REGISTERED OFFICE

No. 299 Jinhui Road

Zhaoyuan City

Shandong Province

PRC

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

31st Floor

Tower Two

Times Square

1 Matheson Street

Causeway Bay

Hong Kong

HONG KONG H SHARE REGISTRAR AND TRANSFER OFFICE

Computershare Hong Kong Investor

Services Limited

Shops 1712-16, 17th Floor

Hopewell Centre

183 Queen's Road East

Wanchai

Hong Kong

PRINCIPAL BANKERS

Bank of China

78 Fuqian Road

Zhaoyuan City

Shandong Province

PRC

Agricultural Bank of China

298 Wenquan Road

Zhaoyuan City

Shandong Province

PRC

CORPORATE WEBSITE

www.zhaojin.com.cn

STOCK CODE

01818

INTERIM REPORT 2020

3

MANAGEMENT DISCUSSION AND ANALYSIS

I. PRINCIPAL ACTIVITIES

For the six months ended 30 June 2020 (the "Period"), Zhaojin Mining Industry Company Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") are mainly engaged in the exploration, mining, ore processing, smelting and sale of gold products and other metallic products in the People's Republic of China (the "PRC"). The principal products include "Au9999" and "Au9995" standard gold bullions and other gold products under the brand name of "Zhaojin".

II. INTERIM RESULTS

REVENUE

During the Period, the Group generated revenue of approximately RMB3,131,980,000 in total (corresponding period of 2019: approximately RMB2,817,982,000), representing an increase of approximately 11.14% as compared to the corresponding period of last year.

NET PROFIT

During the Period, the net profit of the Group was approximately RMB456,168,000 (corresponding period of 2019: approximately RMB255,923,000), representing an increase of approximately 78.24% as compared to the corresponding period of last year.

PRODUCT PRODUCTION

During the Period, the Group attained an aggregate gold production of approximately 15,228.84 kg (approximately 489,618.20 ozs), representing a decrease of approximately 4.13% as compared to the corresponding period of last year. In particular, the gold output from the Group's mines amounted to 7,920.75 kg (approximately 254,657.83 ozs), representing a decrease of approximately 21.85% as compared to the corresponding period of last year, and the gold output from the smelting and tolling arrangement amounted to approximately 7,308.09 kg (approximately 234,960.37 ozs), representing an increase of approximately 27.09% as compared to the corresponding period of last year. During the Period, the Group attained an aggregate copper production of approximately 4,762 tons (of which copper output from mines amounted to 2,599 tons, and copper output from smelting amounted to 2,163 tons), representing a decrease of approximately 51.31% as compared to the corresponding period of last year.

PROFIT ATTRIBUTABLE TO OWNERS OF THE PARENT

During the Period, the profit attributable to owners of the parent was approximately RMB412,392,000 (corresponding period of 2019: approximately RMB238,855,000), representing an increase of approximately 72.65% as compared to the corresponding period of last year.

EARNINGS PER SHARE

During the Period, the basic and diluted earnings per share attributable to the ordinary equity holders of the parent amounted to approximately RMB0.13 (corresponding period of 2019: approximately RMB0.07), representing an increase of approximately 85.71% as compared to the corresponding period of last year.

NET ASSETS PER SHARE

As at 30 June 2020, the consolidated net assets per share was approximately RMB5.25 (30 June 2019: approximately RMB5.25), and the yield to net assets during the Period was approximately 2.66% (corresponding period of 2019: approximately 1.51%).

  • ZHAOJIN MINING INDUSTRY COMPANY LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

III. INTERIM DIVIDEND

The board of directors of the Company (the "Board") does not recommend the payment of interim dividend for the six months ended 30 June 2020 (corresponding period of 2019: Nil).

IV. BUSINESS REVIEW

In the first half of 2020, under the impact of the spread of COVID-19 epidemic, the geopolitical crisis, the plunge in commodity prices and the monetary easing policies of various countries, the gold price showed an overall upward trend. The international gold price opened at US$1,517.18/oz at the beginning of the year and continued to rise after closing at US$1,780.72/oz at the end of June, recording an average of US$1,645.42/oz for the first half of the year, representing a year-on-year increase of 25.94%.

According to statistics from the China Gold Association, the output of raw gold in China amounted to 170.07 tons in the first half of 2020, representing a reduction in production of 10.61 tons compared to the corresponding period in 2019 and a year-on-year decrease of 5.87%, in which 141.82 tons were produced from gold mines and 28.25 tons were produced from non-ferrous raw materials. At the beginning of 2020, the entire industry was affected by the COVID-19 epidemic, and the cumulative gold production nationwide fell sharply as compared with last year. However, since the second quarter, as the domestic epidemic eased, and the international gold price rose rapidly, the rate of resumption of work and production for domestic gold production has increased rapidly.

Since the beginning of 2020, the sudden outbreak of the epidemic has brought huge challenges to production and operation. Affected by the epidemic, overall resumption time of the Company was later than last year. However, benefiting from the soaring prices of gold and copper and effective epidemic prevention and control measures, the mines of the Company resumed work at a relatively rapid rate, especially since entering the second quarter. Adhering to the main direction of "campaign, test and opportunity", the Company solidly proceeded with the "five- optimal competition", "tackling problems" and "partner assistance", quickly resumed normal business activities of all subsidiaries and achieved hard-won development achievements.

IMPROVEMENT IN PRODUCTION AND OPERATION DUE TO THE OBVIOUS MOMENTUM OF KEY BUSINESSES

In the first half of the year, the Company adopted extraordinary measures with superior strength for the challenges arising from the epidemic, and fully resumed production and achieved target production, thus proactively reversed the passive situation brought by the epidemic. In addition, it leveraged on high prices to promote production vigorously, and all indicators generally showed a good momentum featured by rise after fall and general improvement. For the first half of the year, the Company's total output of gold amounted to 15,228.84 kg (approximately 489,618.20 ozs), among which 7,920.75 kg (approximately 254,657.83 ozs) of gold was mine-produced gold. Key businesses including Dayingezhuang Gold Mine and Zaozigou Gold Mine had obvious momentum. Benefited from the opportunity of a sharp rise in the gold price, and achieved a total profit before tax of RMB0.58 billion, representing a year-on-year substantial increase of 78.36%.

INTERIM REPORT 2020

5

MANAGEMENT DISCUSSION AND ANALYSIS

STEADY IMPLEMENTATION OF KEY TASKS WITH THE THEME OF "DOUBLE FOCUS"

Adhering to the theme of "double focus" in the overall work for the year, the Company cumulatively invested RMB239 million in the technical innovation of key infrastructure, while the construction of mining and ore processing facilities of Ruihai Mining and the reconstruction and expansion of Caogoutou mining area have fully commenced and advanced in an orderly manner; and the ore treatment plant expansion project of Fengningjinlong with a capacity of 2,000 tons/day was completed ahead of schedule and achieved target production and met standards. The financial sharing center was developed with full functions and was launched with a coverage rate of 97%. The H share full circulation involving the field of capital operation was successfully approved by the China Securities Regulatory Commission (the "CSRC"). In the first half of the year, the Company accumulated investments of RMB17.6912 million in science and technology, and implemented a total of 14 key scientific research projects; the Company applied for 27 patents in total, and has been granted 4 new invention patents and 30 utility novelty patents; the construction of Shandong Mine Solid Waste Resources Recycling And Manufacturing Innovation Center* (山東省礦山固廢資源循環利用製造業創新中心) (the "Shandong Manufacturing Innovation Center") and Dayingezhuang Intelligent Mine passed the examination and acceptance at all levels of the province and city; the fine tailings filling experience at Hedong Gold Mine was successfully promoted and applied in Canzhuang Gold Mine, setting a model for the construction of green tailings-free mines in the entire industry.

REMARKABLE RESULTS IN COST REDUCTION AND EFFICIENCY ENHANCEMENT WITH A CONTINUOUSLY STABLE ENVIRONMENT FOR DEVELOPMENT

In the first half of the year, the Company strengthened policy research and judgment to seize the opportunities behind the epidemic, and obtained a low-interest loan of RMB500 million from China Development Bank, with an average financing cost significantly lower than the market rate. By striving for preferential policies such as social security reductions and exemptions, subsidies for employment stabilization, electricity charge reductions and exemptions, and adopting effective measures including locking-in oil price, direct supply from manufacturers, and direct purchase of electricity to reduce costs. Focusing on the top ten pro-people projects, employees' work, life quality and happiness indices constantly improved in terms of wage growth, care for children of employees working in other places, health check-up, assistance to the poor, and the "4411 project" construction. The Company strengthened the building of cadre-mass relations, community relations, and government-enterprise relations, and attached great importance to Party conduct and integrity, compliance governance, etc. and thus maintained a harmonious and stable internal and external environment.

CONSCIENTIOUSLY UNDERTAKING RESPONSIBILITIES TO BUILD GREEN AND ECOLOGICAL MINES

In the first half of the year, the Company thoroughly implemented national laws and regulations and related policies, conscientiously undertook its responsibilities in the three key aspects of production safety, environmental protection, and epidemic prevention and control. The work in relation to safety, environmental protection, and epidemic prevention and control was steadily advanced through scientific and rigorous epidemic prevention deployment, safety culture construction, "partitioned management +" system integration, special rectification for key systems, restoration and governance of ecological environment, etc. In the first half of the year, a total of RMB87 million was invested in safety and environmental protection, and 38.55 hectares of green areas were added, accomplishing the annual greening target ahead of schedule, which guaranteed the healthy development of enterprise ecology. Zhaoyuan Zhaojin Jinhe Technology Co., Ltd.* (招遠市招金金合科技有限公司) successfully obtained the business license for utilising an additional capacity of 200,000 tons/year of hazardous waste of cyanidation tailings, laying a solid foundation for the sound development of the Company and its upstream enterprises.

  • ZHAOJIN MINING INDUSTRY COMPANY LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

V. FINANCIAL AND RESULTS ANALYSIS

REVENUE

During the Period, the Group's revenue amounted to approximately RMB3,131,980,000 (corresponding period of 2019: approximately RMB2,817,982,000), representing an increase of approximately 11.14% as compared to the corresponding period of last year. During the Period, the increase in revenue was primarily due to the substantial increase of gold price and effective organization of production during the Period.

NET PROFIT

During the Period, net profit of the Group amounted to approximately RMB456,168,000 (corresponding period of 2019: approximately RMB255,923,000), representing an increase of approximately 78.24% as compared to the corresponding period of last year. The increase in net profit was due to the substantial increase of gold price and the strengthening of operation management during the Period.

INTEGRATED COST OF GOLD PER GRAM

During the Period, the Group's integrated cost of gold was approximately RMB167.39 per gram (corresponding period of 2019: approximately RMB160.17 per gram), representing an increase of approximately 4.51% as compared to the corresponding period of last year and a decrease of approximately 2.24% as compared to the end of last year. Although the integrated cost of gold per gram was affected by the decline in gold production during the Period which led to an increase in unit mining costs, through a series of cost-reduction measures, the cost has decreased compared with the end of last year.

COST OF SALES

During the Period, the Group's cost of sales amounted to approximately RMB1,775,280,000 (corresponding period of 2019: approximately RMB1,746,346,000), representing an increase of approximately 1.66% as compared to the corresponding period of last year. The increase was primarily attributable to the increase in cost of outsourcing gold concentrate during the Period.

GROSS PROFIT AND GROSS PROFIT MARGIN

During the Period, the Group's gross profit was approximately RMB1,356,700,000, representing an increase of approximately 26.60% as compared to RMB1,071,636,000 of the corresponding period of last year. The Group's gross profit margin has increased from approximately 38.03% for the corresponding period of last year to approximately 43.32% for the Period. The increase in gross profit was mainly due to the substantial increase of gold price during the Period.

OTHER INCOME AND GAINS

During the Period, the Group's other income and gains were approximately RMB323,771,000 (corresponding period of 2019: approximately RMB157,917,000), representing an increase of approximately 105.03% as compared to the corresponding period of last year. The increase was mainly due to the increase in investment income during the Period as compared to the corresponding period last year.

INTERIM REPORT 2020

7

MANAGEMENT DISCUSSION AND ANALYSIS

SELLING AND DISTRIBUTION COSTS

During the Period, the Group's selling and distribution costs were approximately RMB18,650,000 (corresponding period of 2019: approximately RMB33,466,000), representing a decrease of approximately 44.27% as compared to the corresponding period of last year. The decrease was mainly due to the decrease in expenditure on overseas marketing activities during the Period.

ADMINISTRATIVE AND OTHER OPERATING EXPENSES

During the Period, the Group's administrative and other operating expenses were approximately RMB787,186,000 (corresponding period of 2019: approximately RMB621,071,000), representing an increase of approximately 26.75% as compared to the corresponding period last year. The increase was mainly due to the impairment losses on assets of the Group during the Period.

FINANCE COSTS

During the Period, the Group's finance costs amounted to approximately RMB354,244,000 (corresponding period of 2019: approximately RMB316,108,000), representing an increase of approximately 12.06% as compared to the corresponding period of last year. Such increase was mainly attributable to the increase in interestbearing debt that was included in the profit and loss statement by the Company.

LIQUIDITY AND CAPITAL RESOURCES

The working capital and funding required by the Group were mainly generated from its cash flows from operations and borrowings, while the Group's capital was primarily used to fund its capital expenditures, operating activities and repayment of borrowings.

As at 30 June 2020, the Group had cash and cash equivalents of approximately RMB3,221,230,000, representing a decrease of approximately 8.18% as compared to approximately RMB3,508,307,000 as at 31 December 2019. The decrease was mainly because the cash inflow from operating and financing activities was less than the net cash outflow of investing activities during the Period.

As at 30 June 2020, the balance of cash and cash equivalents of the Group denominated in Hong Kong dollars amounted to RMB128,926,000 (31 December 2019: RMB141,544,000), and those denominated in United States dollars amounted to RMB1,066,330,000 (31 December 2019: RMB2,015,572,000). Those denominated in Kazakhstani Tenge amounted to approximately RMB3,000 (31 December 2019: RMB3,000). All other cash and cash equivalents held by the Group are denominated in RMB.

The Renminbi is not freely convertible into other currencies, however, pursuant to the Regulation of the People's Republic of China on Foreign Exchange Administration and the Administration Regulations on Foreign Exchange Settlement, Sales and Payment, the Group is permitted to exchange Renminbi for other currencies through those banks which are authorized to conduct foreign exchange business.

  • ZHAOJIN MINING INDUSTRY COMPANY LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

BORROWINGS

As at 30 June 2020, the Group had outstanding bank borrowings, other borrowings and gold from gold leasing business (the Group financed through leases of gold from bank and subsequently sold through Shanghai Gold Exchange ("SGE")) of RMB11,463,595,000 (31 December 2019: RMB8,775,174,000), of which RMB11,327,455,000 (31 December 2019: RMB8,386,684,000) was repayable within one year, and RMB136,140,000 (31 December 2019: RMB388,490,000) was repayable within two to five years. As at 30 June 2020, the Group had outstanding corporate bonds of RMB2,255,491,000 (31 December 2019: RMB508,629,000), which shall be repaid within one year, and approximately RMB7,456,554,000 (31 December 2019: RMB9,170,130,000), which shall be repaid within two to five years.

As at 30 June 2020, except for bank loans of RMB7,080,000 (31 December 2019: RMB0) and corporate bonds of

RMB2,112,000,000 (31 December 2019: RMB2,078,217,000) denominated in United States dollars, all borrowings are denominated in Renminbi. As at 30 June 2020, except for secured and guaranteed bank loans and other borrowings of RMB169,850,000 (31 December 2019: RMB397,800,000), all borrowings are unsecured. As at 30 June 2020, 89.13% of the interest-bearing bank loans and other borrowings held by the Group were at fixed rates.

INCOME TAX

The effective income tax rate (i.e. the total income tax divided by profit before tax) of the Group during the Period was approximately 21.29% (corresponding period of 2019: approximately 21.23%).

TOTAL ASSETS

As at 30 June 2020, the total assets of the Group were approximately RMB43,829,543,000, representing an increase of approximately 8.89% as compared to approximately RMB40,251,780,000 as at 31 December 2019. Among which, total non-current assets amounted to approximately RMB28,577,652,000, accounting for approximately 65.20% of the total assets, and representing an increase of approximately 1.14% as compared to approximately RMB28,254,363,000 as at 31 December 2019. As at 30 June 2020, total current assets were approximately RMB15,251,891,000, accounting for approximately 34.80% of the total assets, and representing an increase of approximately 27.13% as compared to approximately RMB11,997,417,000 as at 31 December 2019.

NET ASSETS

As at 30 June 2020, the net assets of the Group were approximately RMB17,160,666,000, representing a decrease of approximately 1.16% as compared to approximately RMB17,362,858,000 as at 31 December 2019.

TOTAL LIABILITIES

As at 30 June 2020, the total liabilities of the Group were approximately RMB26,668,877,000, representing an increase of approximately 16.51% as compared to approximately RMB22,888,922,000 as at 31 December 2019. As at 30 June 2020, the gearing ratio (i.e. the net debt divided by the total equity plus net debt. Net debt includes interest-bearing bank and other borrowings, corporate bonds less the balance of cash and cash equivalents) was approximately 51.13% (31 December 2019: 46.26%).

CONTINGENT LIABILITIES

As at 30 June 2020, the contingent liabilities of the Group did not have any change as compared to 31 December 2019.

INTERIM REPORT 2020

9

MANAGEMENT DISCUSSION AND ANALYSIS

MARKET RISKS

The Group is exposed to various types of market risks, including fluctuations in gold price and other commodities prices, changes in interest rates and foreign exchange rates.

INTEREST RATE RISK

The Group's exposure to interest rate risk relates primarily to the Group's cash and bank deposits, interest-bearing bank and other borrowings and corporate bonds. The Group controls its interest rate risk from the holding of certain cash, bank deposits, interest-bearing bank and other borrowings and corporate bonds mainly through placing short-term deposits at fixed or floating rates and at the same time having bank borrowings at fixed or floating rates.

During the Period, the Group had not used any interest rate swaps to hedge its exposure to interest rate risk.

FOREIGN EXCHANGE RISK

The majority of the Group's transactions are carried out in Renminbi. The fluctuations in the RMB/USD exchange rate may affect the international and local gold price, which may therefore affect the Group's operating results. Fluctuation of foreign exchange rate may have an adverse effect on net assets, earnings and any dividend declared by the Group, which shall be converted or translated into Hong Kong dollars.

During the Period, the Group had not entered into any foreign exchange swaps to hedge against foreign exchange risks.

GOLD PRICE AND OTHER COMMODITIES PRICE RISKS

The Group's exposure to price risk relates principally to the fluctuations in the market price of gold and copper, which may affect the Group's operation results. Under certain circumstances, the Group entered into AU (T+D) arrangements, which are substantially forward commodity contracts, in SGE during the Period to hedge against potential price fluctuations of gold. Under those contractual framework, the Group can forward buy or sell gold at the current day's price by depositing 10% of the total transaction amount as guarantee. Subsequently, it can close the deal by either physically delivering or entering into an offsetting arrangement. There are no special restrictions imposed on the settlement period by the contract. During the Period, the Group had not entered into any long-term AU (T+D) contractual framework.

The Group also entered into copper cathode and gold forward contracts in Shanghai Futures Exchange to hedge the price fluctuation caused by the sale of copper and gold.

The transaction price of the forward commodity contracts is closely monitored by the management of the Group. Accordingly, a reasonable possible fluctuation of 10% in commodity prices would have no significant impact on the Group's profit and equity for the Period.

PLEDGE

As at 30 June 2020, except for the following assets pledged or charged for environmental improvement funds, margin of commodity contracts, margin of AU (T+D) arrangements, and for obtaining bank borrowings and notes payable, the Group had not pledged or charged any other assets: (1) pledged deposits of RMB350,996,000

(31 December 2019: RMB278,303,000); (2) treasury bonds of RMB300,000,000 (31 December 2019: RMB400,000,000) and (3) financial assets at fair value through profit or loss of RMB100,000,000 (31 December 2019: RMB0).

10 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

MATERIAL CHANGES SINCE THE PUBLICATION OF THE ANNUAL REPORT

Save as disclosed above, there were no material changes in the business operations of the Group since the publication of the 2019 annual report dated 20 April 2020 to the date of this report.

VI. BUSINESS PROSPECTS

In the second half of 2020, the Company will adhere to its annual targets and missions and insist on being problem- oriented and performance-oriented. The two major campaigns, i.e. "five-optimal competition" and "tackling difficulties for achieving production and operation targets" will be further carried out throughout the Company to seize opportunities and race against time, in order to achieve progress and efficiency. All employees will gather strength for catch-up development.

SEIZING OPPORTUNITIES AND TAKING ADVANTAGE OF THE SITUATION TO FURTHER RELEASE PRODUCTION CAPACITY, INCREASE PRODUCTION AND CREATE BENEFITS

In the second half of the year, the Company will seize the opportunity of a sharp rise in the gold price to further promote the expansion of production capacity of key businesses, with a view to stablising and expanding production and increasing efficiency. Projects in terms of key technical innovation of infrastruction, scientific research and innovation, and safety and environmental protection, will be sped up, striving to reach target production as soon as possible. The focus will be placed on speeding up the construction of infrastructure-related technical innovation projects in respect of production and capacity expansion and efficiency optimization, including the construction of the mining and ore processing system of Ruihai Mining and Wucailong Company, the development projects of the deep parts of the Dayingezhuang Gold Mine and Zaozigou Gold Mine, in order to further release production capacity, and increase production and efficiency. It is planned to invest RMB98 million in scientific research to give full play to the role of design institutes, technical centers, academician workstations, etc. as platforms, strengthen the research on ten major scientific research topics for the year, and accelerate the construction of the Shandong Manufacturing Innovation Center, improving the development and utilisation rate of tailing resources.

STRENGTHENING EXTERNAL DEVELOPMENT AND GEOLOGICAL PROSPECTING AND BUILDING A LIFELINE FOR SUSTAINABLE DEVELOPMENT

Resources are the lifeline of mining enterprises. In the second half of the year, the Company will focus on two aspects. On the one hand, it will speed up external development, broaden information channels, take the initiative and strive to achieve new breakthroughs. On the other hand, it will stress geological scientific research and prospecting, continue to implement the "hope project, life-saving project, and results project", and steadily proceed with the exploration engineering of key mines to ensure prospecting results. It is planned to invest RMB61 million in geological prospecting, including 17,600 meters of tunneling engineering and 66,000 meters of drilling engineering, and it is expected to obtain 12 tons of gold metal and 900 tons of copper metal.

INTERIM REPORT 2020

11

MANAGEMENT DISCUSSION AND ANALYSIS

OPTIMIZING "FOUR KEY AREAS OF MANAGEMENT" TO COMPREHENSIVELY IMPROVE OPERATION QUALITY

In the second half of the year, the Company will proceed with in-depth implementation of the excellent performance management model to meet the overall requirements of "systematic management, standard work, refined process, and digital results". First, strategic management should be strengthened. A good structural planning will form a new pattern of strategic leadership and scientific development. Second, cost management should be intensified. Adhering to increasing revenue and reducing expenditure, the Company will reduce costs through technical and management means. Third, information-based management should be reinforced. Through vigorously promoting the integration of the "four new technologies" of mines and the construction of industrial Internet, the Company will gradually realize mechanization, automation, digitization, and mine intelligence, and build intelligent mines; internal databases will be established for each line to realize big data management. Fourth, benchmarking management should be enhanced. The Company will establish a scientific and efficient benchmarking management system, and achieve strategic goals by seeking for, setting, reaching and creating standards.

12 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

OTHER INFORMATION

  1. CHANGES IN SHAREHOLDING OF SHAREHOLDERS AND SHARE CAPITAL STRUCTURE

1. NUMBER OF SHAREHOLDERS

The details of the number of shareholders of the Company (the "Shareholders") recorded in the register of members as at 30 June 2020 are as follows:

Number of

Class

Shareholders

Domestic share

7

Overseas-listed foreign share - H share

1,490

Total number of Shareholders

1,497

2. SUBSTANTIAL SHAREHOLDERS

To the best knowledge of the directors, supervisors and chief executives of the Company, as at 30 June 2020, the interests and short positions of substantial Shareholders in the issued share capital of the Company which were required, pursuant to Section 336 of the Securities and Futures Ordinance (the "SFO") (Chapter 571 of the Laws of Hong Kong), to be entered into the register referred to therein, or holding 5% or above in the issued share capital of the Company which were required to be notified to the Company were as follows:

Approximate

percentage

Approximate

Approximate

of

percentage

percentage

shareholding

of

of

in the total

shareholding

shareholding

number

in the total

in the

of issued

number

registered

domestic

of issued

Long position/

Name of

Class of

Number of

capital of

shares of

H shares of

Short position/

Shareholders

shares

Capacity

shares held

the Company

the Company

the Company

Lending pool

%

%

%

1 Shandong Zhaojin

Domestic

Beneficial

1,136,211,009

34.74

51.15

-

Long position

Group Company

shares

owner

(Note 1)

Limited

Domestic

Interest of

50,967,195

1.56

2.29

-

Long position

shares

controlled

(Note 3)

corporation

H shares

Interest of

26,756,000

0.82

-

2.55

Long position

controlled

(Notes 1 and 3)

corporation

INTERIM REPORT 2020

13

OTHER INFORMATION

Approximate

percentage

Approximate

Approximate

of

percentage

percentage

shareholding

of

of

in the total

shareholding

shareholding

number

in the total

in the

of issued

number

registered

domestic

of issued

Long position/

Name of

Class of

Number of

capital of

shares of

H shares of

Short position/

Shareholders

shares

Capacity

shares held

the Company

the Company

the Company

Lending pool

%

%

%

2

Shanghai Yuyuan

Domestic

Beneficial owner

742,000,000

22.69

33.41

-

Long position

Tourist Mart (Group)

shares

Co., Ltd.

Domestic

Interest of

21,200,000

0.65

0.95

-

Long position

shares

controlled

(Notes 1 and 2)

corporation

3

Guo Guangchang

Domestic

Interest of

869,200,000

26.58

39.13

-

Long position

shares

controlled

(Note 4)

corporation

4

Fosun International

Domestic

Interest of

869,200,000

26.58

39.13

-

Long position

Limited

shares

controlled

(Note 4)

corporation

5

Fosun International

Domestic

Interest of

869,200,000

26.58

39.13

-

Long position

Holdings Ltd.

shares

controlled

(Note 4)

corporation

6

VanEck Vectors ETF

H shares

Beneficial owner

62,730,500

1.92

-

5.98

Long position

- VanEck Vectors Gold

(Note 5)

Miners ETF

7

Van Eck Associates

H shares

Investment

94,551,300

2.89

-

9.01

Long position

Corporation

manager

(Note 5)

8

Schroders Plc

H shares

Investment

71,263,940

2.18

-

6.79

Long position

manager

(Note 6)

14 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

OTHER INFORMATION

Approximate

percentage

Approximate

Approximate

of

percentage

percentage

shareholding

of

of

in the total

shareholding

shareholding

number

in the total

in the

of issued

number

registered

domestic

of issued

Long position/

Name of

Class of

Number of

capital of

shares of

H shares of

Short position/

Shareholders

shares

Capacity

shares held

the Company

the Company

the Company

Lending pool

%

%

%

9

Deutsche Bank

H shares

Beneficial owner

47,804,200

1.46

-

4.56

Long position

Aktiengesellschaft

H shares

Beneficial owner

60,470,400

1.85

-

5.76

Short position

10

BlackRock, Inc.

H shares

Interest of

84,022,426

2.57

-

8.01

Long position

controlled

(Note 7)

corporation

H shares

Interest of

521,500

0.02

-

0.05

Short position

controlled

(Note 7)

corporation

11

JPMorgan

H shares

Interest of

14,377,987

0.44

-

1.37

Long position

Chase & Co.

controlled

(Note 8)

corporation

H shares

Interest of

13,158,512

0.40

-

1.25

Short position

controlled

(Note 8)

corporation

H shares

Investment

68,500

0.002

-

0.006

Long position

manager

(Note 8)

H shares

Approved

44,208,051

1.35

-

4.21

Lending pool

lending agent

(Note 8)

H shares

Person having a

3,000

0.00009

-

0.0003

Long position

security interest

(Note 8)

in shares

12 State Street Bank & Trust

H shares

Approved lending

105,347,990

3.22

-

10.04

Lending pool

Company

agent

(Note 9)

INTERIM REPORT 2020

15

OTHER INFORMATION

Notes:

  1. Pursuant to Section 336 of the SFO, the Shareholders are required to file disclosure of interests forms when certain criteria are fulfilled and the full details of the requirements are available on SFO's official website. When a Shareholder's shareholding in the Company changes, it is not necessary for the Shareholder to notify the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") unless certain criteria are fulfilled, therefore substantial Shareholders' latest shareholding in the Company may be different from the shareholding filed with the Company and the Stock Exchange.
  2. Shanghai Yuyuan Tourist Mart (Group) Co., Ltd. ("Shanghai Yuyuan") holds 100% equity interests in Shanghai Laomiao Gold Co., Ltd. ("Laomiao Gold"), therefore the 21,200,000 domestic shares held by Laomiao Gold in the Company is shown as long position of Shanghai Yuyuan.
  3. Shandong Zhaojin Group Company Limited ("Zhaojin Group") holds 100% equity interests in Zhaojin Non-Ferrous Mining Company Limited ("Zhaojin Non-Ferrous"), therefore the 50,967,195 domestic shares held by Zhaojin Non- Ferrous in the Company is shown as long position of Zhaojin Group. Luyin Trading Pte Ltd. ("Luyin") is a wholly-owned subsidiary of Zhaojin Group and therefore the 28,645,000 H shares held by Luyin is shown as long position of Zhaojin Group.
  4. Guo Guangchang is interested in the shares of the Company through his directly or indirectly controlled companies (including Fosun International Limited and Fosun International Holdings Ltd.).
  5. Van Eck Associates Corporation is the investment manager of the VanEck Vectors ETF - VanEck Vectors Gold Miners ETF.
  6. Schroders Plc is interested in the shares of the Company through its directly or indirectly controlled companies.
  7. BlackRock, Inc. is interested in the shares of the Company through its directly or indirectly controlled companies.
  8. JPMorgan Chase & Co. is interested in the shares of the Company through its directly or indirectly controlled companies.
  9. State Street Bank & Trust Company is interested in the shares of the Company through its directly or indirectly controlled companies.

As at 30 June 2020, save as disclosed above and to the best knowledge of the directors, supervisors and chief executives of the Company, no person had any interests and short positions in the shares or underlying shares of the Company which were required, pursuant to Section 336 of the SFO, to be entered into the register referred to therein, or held 5% or above in the issued share capital of the Company which was required to be notified to the Company.

16 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

OTHER INFORMATION

  1. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES OR DEBENTURES OF THE

COMPANY AND ITS ASSOCIATED CORPORATIONS

As at 30 June 2020, the interests or short position of the directors, supervisors and chief executives of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest or short positions which they were taken or deemed to have under such provisions of the SFO), or which would be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which would be required to be notified to the Company and the Stock Exchange pursuant to Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules"), were as follows:

Approximate

percentage of

shareholding

Approximate

in the total

percentage of

number of

shareholding in

issued

Long

the registered

domestic

position/

Number of

capital of the

shares of

Short

Name and position

Class of shares

Capacity

shares held

Company

the Company

position

1

Weng Zhanbin

Domestic shares

Beneficiary of a trust

1,200,000

0.04%

0.05%

Long position

(Chairman and

(other than a

Executive Director)

discretionary

interest)

2

Dong Xin

Domestic shares

Beneficiary of a trust

300,000

0.009%

0.01%

Long position

(Executive Director and

(other than a

President )

discretionary

interest)

3

Wang Ligang

Domestic shares

Beneficiary of a trust

1,000,000

0.03%

0.05%

Long position

(Executive Director and

(other than a

Vice-president)

discretionary

interest)

4

Zhao Hua

Domestic shares

Beneficiary of a trust

200,000

0.006%

0.009%

Long position

(Supervisor)

(other than a

discretionary

interest)

INTERIM REPORT 2020

17

OTHER INFORMATION

Note:

1. The interests set out above relate to the employee shares subscription plan portions ("ESSP Portions") under the employee shares subscription plan subscribed by the directors, supervisors and chief executives. One ESSP Portion corresponds to one domestic share.

Save as disclosed above, as at 30 June 2020, and to the knowledge of the directors, supervisors and chief executives of the Company, no person had any interests or short positions in the shares or underlying shares of the Company which were required, pursuant to Section 352 of the SFO, to be entered into the register referred to therein, or required pursuant to the Model Code to be notified to the Company and the Stock Exchange.

III. CHANGES IN THE INFORMATION OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVES

Save as disclosed in the section headed "IX. Important Events - 6. Changes in Composition of the Board and Member of the Strategic Committee under the Board" of this interim report, the Company is not aware of any change in the information of the directors, supervisors or chief executives of the Company, which is required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules, since the Company's last published annual report and up to the date of this interim report.

IV. RIGHTS TO PURCHASE SHARES OR DEBENTURES OF DIRECTORS AND SUPERVISORS

Save as disclosed in this report, none of the directors and supervisors had any interests in the share capital or debt securities of the Company or any of its associated corporations (as defined in the SFO). None of the directors, supervisors and their spouses and children below eighteen years old was granted rights to subscribe for the interests in the share capital or debt securities of the Company or any of its associated corporations and there was no exercise of any of such rights by any of such person.

At no time during the Period had the Company or any of its subsidiaries, holding companies or any fellow subsidiaries entered into any arrangements which enable the directors and supervisors to have the rights to acquire benefits by means of acquisition of shares or debentures in the Company or any other legal entities.

V. SUFFICIENT PUBLIC FLOAT

Based on the information available to the Company and so far as the directors were aware, the Company confirmed that during the Period and up to the date of this report, sufficient public float of the shares of the Company was maintained.

VI. PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

During the Period, neither the Company nor any of its subsidiaries purchased, sold or redeemed any listed securities

of the Company.

VII. CONVERTIBLE SECURITIES, SHARE OPTIONS, WARRANTS OR SIMILAR RIGHTS

During the Period, the Company did not issue any convertible securities, share options, warrants or similar rights. During the Period and up to the date of this report, the Group has no share option scheme.

18 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

OTHER INFORMATION

VIII. EMPLOYEES

As of 30 June 2020, the Company had a total of 6,670 employees. The Group remunerates its employees according to their performance, experience and prevailing industry practices and provide other benefits to employees (including retirement benefit plans, medical benefit plans and housing fund plans). The Group also provides opportunities for further education and training to its employees. The Group offers competitive remuneration packages to its employees and reviews employee remuneration annually with reference to the prevailing labor market and human resources market trends and laws.

IX. IMPORTANT EVENTS

1. ON 5 JUNE 2020, THE 2019 ANNUAL GENERAL MEETING CONSIDERED AND PASSED, AMONG OTHER THINGS, THE FOLLOWING RESOLUTIONS:

  1. the Company's profit distribution proposal for the year ended 31 December 2019 to distribute a cash dividend of RMB0.04 (before taxation) per share to all Shareholders;
  2. authorizing the Board to allot, issue or deal with H shares and domestic shares of up to a maximum of 20% of the respective total number of issued H shares and existing domestic shares of the Company as at the date of passing such resolution;
  3. authorizing the Board to repurchase H shares of up to a maximum of 10% of the total number of issued H shares of the Company as at the date of passing such resolution;
  4. the appointment of Mr. Huang Zhen and Mr. Zhang Banglong as non-executive directors;
  5. amending Article 8.5, Article 8.6, Article 8.7, Article 8.9, and Article 9.6 of the articles of association of the Company; and
  6. amending Article 18, Article 26, Article 27, Article 33, Article 34, and Section 2 of the rules of procedures for general meetings of the Company.

Relevant details were set out in the circular and notice of the Company both dated 21 April 2020, the supplemental circular and supplemental notice of the Company both dated 20 May 2020 and the voting results announcement of the Company dated 5 June 2020 respectively published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.zhaojin.com.cn.

INTERIM REPORT 2020

19

OTHER INFORMATION

2. ON 5 JUNE 2020, THE DOMESTIC SHARES CLASS MEETING AND H SHARES CLASS MEETING CONSIDERED AND APPROVED THE FOLLOWING PROPOSALS RESPECTIVELY:

  1. the Board was granted a general mandate to repurchase H shares of up to a maximum of 10% of the total number of issued H shares of the Company as at the date of passing such resolution;
  2. amending Article 8.5, Article 8.6, Article 8.7, Article 8.9, and Article 9.6 of the articles of association of the Company; and
  3. amending Article 18, Article 26, Article 27, Article 33, Article 34, and Section 2 of the rules of procedures for general meetings of the Company.

The proposals were approved at the domestic shares class meeting and H shares class meeting respectively.

Relevant details were set out in the circular and notices of the Company both dated 21 April 2020, the supplemental circular and supplemental notices of the Company both dated 20 May 2020 and the voting results announcement of the Company dated 5 June 2020 respectively published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.zhaojin.com.cn.

3. PROPOSED IMPLEMENTATION OF THE H SHARE FULL CIRCULATION

On 13 January 2020, the Company received an official letter from the CSRC, stating that the CSRC has accepted the Company's application in relation to the implementation of the H share full circulation. Under its application, the Company would apply for the conversion of up to 1,560,340,597 domestic shares into H shares of the Company and the listing thereof (the "Conversion and Listing"). On 18 June 2020, the Company received the formal approval (the "Approval") from the CSRC approving the Conversion and Listing. The Approval shall be valid for 12 months from 17 June 2020. During such 12-month period, the Company shall complete the Conversion and Listing. On 3 August 2020, the Company received the approval from the Stock Exchange for the listing of and the permission to deal in 1,560,340,597 H shares (the "Converted H Shares"). The conversion was completed on 7 August 2020. The listing of the Converted H Shares on the Stock Exchange commenced at 9:00 a.m. on 10 August 2020.

Relevant details were set out in the announcements of the Company dated 13 January 2020, 18 June 2020, 3 August 2020 and 10 August 2020 published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.zhaojin.com.cn.

20 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

OTHER INFORMATION

4. ENTERING INTO THE MANAGEMENT INCENTIVE AGREEMENT FOR ZHAOJIN MINING INDUSTRY COMPANY LIMITED

On 13 January 2020, the Company entered into the Management Incentive Agreement for Zhaojin Mining Industry Company Limited* (招金礦業股份有限公司管理層激勵協議書) (the "Agreement") with Shanghai Yuyuan and Shanghai Fosun Industrial Investment Co., Ltd. ("Fosun Industrial Investment"), respectively, aiming to provide incentives to the management of the Company to effectively facilitate the full conversion of domestic shares of the Company into listed H shares for full circulation, and the management of market capitalization of the Company. Pursuant to the Agreement, Shanghai Yuyuan and Fosun Industrial Investment shall respectively provide the incentives in cash to the management of the Company conditionally. The conditions of the incentives are the realization of conversion of domestic shares of the Company into listed H shares for full circulation, management of its market capitalization and gains from any disposal of shares.

Relevant details were set out in the announcement of the Company dated 13 January 2020 published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.zhaojin.com.cn.

5. REDEMPTION OF MEDIUM-TERM NOTES

On 19 March 2020, the Company redeemed the first tranche of medium-term notes for 2015 with a par value of RMB0.5 billion at an interest rate of 5.9% per annum.

Relevant details were set out in the announcement of the Company dated 10 March 2020 published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.zhaojin.com.cn.

6. CHANGES IN COMPOSITION OF THE BOARD AND MEMBER OF THE STRATEGIC COMMITTEE UNDER THE BOARD

The Company held the 11th meeting of the sixth session of the Board on 24 April 2020, at which Mr. Xu Xiaoliang tendered his resignation as a non-executive director, vice chairman and a member of the Strategic Committee of the Company due to the re-allocation of his work arrangement. His resignation was with effect from 24 April 2020. The Board appointed Mr. Zhang Banglong as a non-executive director, vice chairman and a member of the Strategic Committee of the Company. His appointment was with effect from 24 April 2020.

The details of changes in the composition of the Board were set out in the announcement dated 24 April 2020 published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.zhaojin.com.cn.

INTERIM REPORT 2020

21

OTHER INFORMATION

7. CHANGES IN SENIOR MANAGEMENT

The Company held the 11th meeting of the sixth session of the Board on 24 April 2020. As Mr. Sun Xiduan had reached the age of retirement and transfer, he applied for early retirement and transfer. The Board agreed to dismiss Mr. Sun Xiduan from the position of vice president of the Company, and the dismissal date was with effect from 24 April 2020.

8. ISSUE OF SUPER SHORT-TERM BONDS

On 25 March 2020, the Company issued the first tranche of super short-term bonds for 2020 with a par value of RMB1 billion for a term of 270 days and bearing interest rate of 2.28% per annum. The proceeds are to repay interest-bearing loans of the Company.

Relevant details were set out in the announcements of the Company dated 24 March 2020 and 27 March 2020 published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.zhaojin.com.cn.

On 15 April 2020, the Company issued the second tranche of super short-term bonds for 2020 with a par value of RMB1 billion for a term of 180 days and bearing interest rate of 1.60% per annum. The proceeds are to repay interest-bearing loans of the Company.

Relevant details were set out in the announcements of the Company dated 14 April 2020 and 16 April 2020 published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.zhaojin.com.cn.

On 20 April 2020, the Company issued the third tranche of super short-term bonds for 2020 with a par value of RMB1 billion for a term of 270 days and bearing interest rate of 1.80% per annum. The proceeds are to repay interest-bearing loans of the Company.

Relevant details were set out in the announcements of the Company dated 17 April 2020 and 21 April 2020 published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.zhaojin.com.cn.

On 18 May 2020, the Company issued the fourth tranche of super short-term bonds for 2020 with a par value of RMB1 billion for a term of 265 days and bearing interest rate of 1.50% per annum. The proceeds are to repay interest-bearing loans of the Company.

Relevant details were set out in the announcements of the Company dated 15 May 2020 and 20 May 2020 published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.zhaojin.com.cn.

22 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

OTHER INFORMATION

X. EVENTS AFTER THE REPORTING PERIOD

REDEMPTION OF CORPORATE BONDS

On 8 July 2020, the Company redeemed the second tranche of medium-term notes for 2015 with a par value of RMB1.6 billion at an interest rate of 5.2% per annum.

Relevant details were set out in the announcement of the Company dated 2 July 2020 published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.zhaojin.com.cn.

On 29 July 2020, the Company redeemed the corporate bonds for 2014 with a par value of RMB0.507 billion at an interest rate of 4.8% per annum.

Relevant details were set out in the announcement of the Company dated 20 July 2020 published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.zhaojin.com.cn.

XI. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

The Board is of the view that the Company has complied with all the code provisions in the Corporate Governance Code (the "Code") as set out in Appendix 14 to the Listing Rules during the period from 1 January 2020 to 30 June 2020. No director is aware of any information that reasonably reveals that there is any non-compliance with the code provisions in the Code by the Company during any time of the Period.

XII. COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED ISSUERS

The Company has adopted the Model Code as set out in Appendix 10 to the Listing Rules as its own code of conduct regarding directors' and supervisors' securities dealings.

After making specific enquiries with the directors and supervisors, all directors and supervisors of the Company have fully complied with the standards required according to the Model Code during the Period.

XIII.AUDIT COMMITTEE

The Audit Committee includes one non-executive director and two independent non-executive directors, namely Mr. Huang Zhen, Ms. Chen Jinrong and Mr. Choy Sze Chung Jojo, and its chairman is Ms. Chen Jinrong.

The Audit Committee has adopted a written terms of reference which is in compliance with the Code. It is mainly responsible for matters concerning the internal control and financial reporting, reviewing with the management of the accounting principles, accounting standards and methods adopted by the Company. The Audit Committee has discussed risk management and internal control affairs and reviewed the Company's unaudited interim report and the unaudited interim results announcement for the six months ended 30 June 2020, and the Audit Committee is of the view that the unaudited interim report and the unaudited interim results announcement for the six months ended 30 June 2020 have been prepared in accordance with applicable accounting standards, rules and regulations, and appropriate disclosures have been duly made.

INTERIM REPORT 2020

23

OTHER INFORMATION

XIV. INVESTOR RELATIONS

Investor relations is an important bridge between the Company and the capital market. The Company insists on putting investor relations management in an important position, eliminating doubts of investors by adhering to having a respectful and frank attitude. In the first half of 2020, the Company received more than 40 phone enquiries from investors, analysts and fund managers. In addition to maintaining good investor relations, the Company also maintained good relations with various mass media such as Wen Wei Po, Hong Kong Commercial Daily and Ta Kung Pao which have always proactively and positively reported about the Company, so as to build a healthy, sound and positive image to investors. We will make great efforts to change the Company into an enterprise with universal value and social responsibility to become China's Zhaojin and the world's Zhaojin.

In the first half of 2020, the Company conscientiously fulfilled its obligation of information disclosure set out in the "Administrative Measures on Information Disclosure of Listed Companies" to ensure truthfulness, accuracy, completeness, timeliness and fairness of information disclosure. It has published 55 announcements, circulars and/ or notices in total on the website of the Stock Exchange and simultaneously disclosed such information on the website of the Company.

By order of the Board

Zhaojin Mining Industry Company Limited*

Weng Zhanbin

Chairman

Zhaoyuan, the PRC, 25 August 2020

  • For identification purpose only

24 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

To the board of directors of Zhaojin Mining Industry Company Limited

(A joint stock limited company established in the People's Republic of China with limited liability)

INTRODUCTION

We have reviewed the interim financial information set out on pages 26 to 58, which comprises the condensed consolidated statement of financial position of Zhaojin Mining Industry Company Limited and its subsidiaries (the "Group") as at 30 June 2020 and the related interim condensed consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the six-month period then ended, and explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 "Interim Financial Reporting" ("HKAS 34") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA").

The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with HKAS 34. Our responsibility is to express a conclusion on this interim financial information based on our review. Our report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

SCOPE OF REVIEW

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the HKICPA. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is not prepared, in all material respects, in accordance with HKAS 34.

Ernst & Young

Certified Public Accountants

Hong Kong

25 August 2020

INTERIM REPORT 2020

25

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 June 2020

For the six months ended 30 June

2020

2019

RMB'000

RMB'000

Notes

(Unaudited)

(Unaudited)

REVENUE

5

3,131,980

2,817,982

Cost of sales

(1,775,280)

(1,746,346)

Gross profit

1,356,700

1,071,636

Other income and gains

5

323,771

157,917

Selling and distribution expenses

(18,650)

(33,466)

Administrative expenses

(491,338)

(443,056)

Impairment losses on financial assets

(79,290)

(9,604)

Gain on disposal of financial assets

46,688

52,040

Other expenses

6

(216,558)

(168,411)

Finance costs

(354,244)

(316,108)

Share of profits and losses of:

- Associates

6,590

1,598

- Joint ventures

5,856

12,373

PROFIT BEFORE TAX

7

579,525

324,919

Income tax expense

8

(123,357)

(68,996)

PROFIT FOR THE PERIOD

456,168

255,923

Attributable to:

Owners of the parent

412,392

238,855

Non-controlling interests

43,776

17,068

456,168

255,923

EARNINGS PER SHARE

ATTRIBUTABLE TO ORDINARY

EQUITY HOLDERS OF THE PARENT

Basic and diluted

Earnings per share for the period (RMB)

10

0.13

0.07

26 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2020

For the six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

PROFIT FOR THE PERIOD

456,168

255,923

OTHER COMPREHENSIVE INCOME

Other comprehensive income that may be reclassified to

profit or loss in subsequent periods:

Exchange differences on translation of foreign operations

19,430

17,602

Net other comprehensive income that may be reclassified to

profit or loss in subsequent periods

19,430

17,602

Net other comprehensive income that will not be

reclassified to profit or loss in subsequent periods

200

-

OTHER COMPREHENSIVE INCOME FOR THE PERIOD,

NET OF TAX

19,630

17,602

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

475,798

273,525

Attributable to:

Owners of the parent

432,014

256,209

Non-controlling interests

43,784

17,316

475,798

273,525

INTERIM REPORT 2020

27

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 June 2020

30 June

31 December

2020

2019

RMB'000

RMB'000

Notes

(Unaudited)

(Audited)

NON-CURRENT ASSETS

Property, plant and equipment

11

15,066,780

14,988,626

Right-of-use assets

754,087

768,088

Goodwill

609,525

666,179

Other intangible assets

11

9,576,716

9,603,768

Investments in joint ventures

182,544

173,954

Investments in associates

769,380

718,584

Deferred tax assets

150,209

163,052

Long-term deposits

29,734

22,312

Term deposit

200,000

-

Loans receivable

239,850

252,525

Financial assets measured at amortised cost

476,973

400,994

Other long-term assets

12

521,854

496,281

Total non-current assets

28,577,652

28,254,363

CURRENT ASSETS

Inventories

4,212,159

4,310,373

Trade and notes receivables

13

418,057

142,447

Prepayments, deposits and other receivables

683,156

591,874

Financial assets at fair value through profit or loss

3,679,383

554,642

Pledged deposits

350,996

278,303

Loans receivable

2,686,910

2,611,471

Cash and cash equivalents

3,221,230

3,508,307

Total current assets

15,251,891

11,997,417

CURRENT LIABILITIES

Trade and notes payables

14

423,221

368,166

Other payables and accruals

1,931,894

1,770,923

Interest-bearing bank and other borrowings

15

11,327,455

8,386,684

Tax payable

131,481

108,189

Provisions

4,287

9,616

Deposits from customers

2,086,764

1,223,619

Current portion of other long-term liabilities

130,000

159,368

Corporate bonds

16

2,255,491

508,629

Total current liabilities

18,290,593

12,535,194

28 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 June 2020

30 June

31 December

2020

2019

RMB'000

RMB'000

Notes

(Unaudited)

(Audited)

NET CURRENT LIABILITIES

(3,038,702)

(537,777)

TOTAL ASSETS LESS CURRENT LIABILITIES

25,538,950

27,716,586

NON-CURRENT LIABILITIES

Interest-bearing bank and other borrowings

15

136,140

388,490

Corporate bonds

16

7,456,554

9,170,130

Lease liabilities

36,452

41,085

Deferred tax liabilities

384,381

361,400

Deferred income

217,775

250,505

Provisions

50,506

50,506

Other long-term liabilities

96,476

91,612

Total non-current liabilities

8,378,284

10,353,728

NET ASSETS

17,160,666

17,362,858

EQUITY

Equity attributable to owners of the parent

Share capital

3,270,393

3,270,393

Perpetual capital instruments

2,169,276

2,664,600

Reserves

8,254,465

8,014,594

13,694,134

13,949,587

Non-controlling interests

3,466,532

3,413,271

TOTAL EQUITY

17,160,666

17,362,858

Weng Zhanbin

Don Xin

Director

Director

INTERIM REPORT 2020

29

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020

Attributable to owners of the parent

Perpetual

Statutory and

Exchange

Non-

Share

capital

Capital

Special

distributable

fluctuation

Retained

controlling

Total

capital

instruments

reserve

reserve

reserve

reserve

profits

Total

interests

equity

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

At 1 January 2020 (Unaudited)

3,270,393

2,664,600

2,618,648

36,373

1,102,469

26,955

4,230,149

13,949,587

3,413,271

17,362,858

Profit for the period

-

-

-

-

-

-

412,392

412,392

43,776

456,168

Changes in fair value of equity

investments through other

comprehensive income

-

-

200

-

-

-

-

200

-

200

Exchange differences on

translation of foreign operations

-

-

-

-

-

19,422

-

19,422

8

19,430

Total comprehensive income for

the period

-

-

200

-

-

19,422

412,392

432,014

43,784

475,798

Dividends paid to non-controlling

shareholders

-

-

-

-

-

-

-

-

(9,278)

(9,278)

Acquisition of a subsidiary

-

-

-

-

-

-

-

-

16,755

16,755

Safety production cost

-

-

-

3,616

-

-

(3,616)

-

-

-

Accrued distribution of

perpetual capital instruments

-

61,327

-

-

-

-

(61,327)

-

-

-

Transfer to retained earnings

-

-

21,546

-

-

-

(21,546)

-

-

-

Distribution of perpetual

capital instruments

-

(56,651)

-

-

-

-

-

(56,651)

-

(56,651)

Redemption of perpetual

capital instruments

-

(500,000)

-

-

-

-

-

(500,000)

-

(500,000)

Establishment of a subsidiary

-

-

-

-

-

-

-

-

2,000

2,000

2019 final dividend declared

-

-

-

-

-

-

(130,816)

(130,816)

-

(130,816)

At 30 June 2020 (Unaudited)

3,270,393

2,169,276

2,640,394*

39,989*

1,102,469*

46,377*

4,425,236*

13,694,134

3,466,532

17,160,666

  • These reserve accounts comprise the consolidated reserves of RMB8,254,465,000 (31 December 2019: RMB8,014,594,000) in the consolidated statement of financial position.

30 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020

Attributable to owners of the parent

Perpetual

Statutory and

Exchange

Non-

Share

capital

Capital

Special

distributable

fluctuation

Retained

controlling

Total

capital

instruments

reserve

reserve

reserve

reserve

profits

Total

interests

equity

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

At 31 December 2018 (Audited)

3,220,696

2,664,600

2,264,755

26,433

1,028,595

(9,096)

4,102,494

13,298,477

3,509,088

16,807,565

Effect of adoption of HKFRS 16

-

-

-

-

-

-

(3,082)

(3,082)

-

(3,082)

At 1 January 2019 (Unaudited)

3,220,696

2,664,600

2,264,755

26,433

1,028,595

(9,096)

4,099,412

13,295,395

3,509,088

16,804,483

Profit for the period

-

-

-

-

-

-

238,855

238,855

17,068

255,923

Exchange differences on translation

of foreign operations

-

-

-

-

-

17,354

-

17,354

248

17,602

Total comprehensive income for

the period

-

-

-

-

-

17,354

238,855

256,209

17,316

273,525

Dividends paid to non-controlling

shareholders

-

-

-

-

-

-

-

-

(15,875)

(15,875)

Acquisition of a subsidiary

-

-

-

-

-

-

-

-

39,200

39,200

Safety production cost

-

-

-

5,752

-

-

(5,752)

-

-

-

Accrued distribution of

perpetual capital instruments

-

69,350

-

-

-

-

(69,350)

-

-

-

Distribution of perpetual

capital instruments

-

(56,650)

-

-

-

-

-

(56,650)

-

(56,650)

2018 final dividend declared

-

-

-

-

-

-

(128,828)

(128,828)

-

(128,828)

At 30 June 2019 (Unaudited)

3,220,696

2,677,300

2,264,755*

32,185*

1,028,595*

8,258*

4,134,337*

13,366,126

3,549,729

16,915,855

  • These reserve accounts comprise the consolidated reserves of RMB7,468,130,000 (31 December 2018: RMB7,413,181,000) in the consolidated statement of financial position.

INTERIM REPORT 2020

31

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020

For the six months ended 30 June

2020

2019

RMB'000

RMB'000

Notes

(Unaudited)

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax

579,525

324,919

Adjustments for:

Finance costs

354,244

316,108

Share of profits and losses of associates

(6,590)

(1,598)

Share of profits and losses of joint ventures

(5,856)

(12,373)

Interest income from loans receivable

(13,619)

(49,958)

Loss on disposal or write-off of items of property,

plant and equipment, other intangible assets,

prepaid land lease payments and other long-term assets

6

1,429

1,529

Gain on disposal of subsidiaries

5

(4,232)

-

Fair value gain, net:

- Equity investments at fair value through profit or loss

5

(133,196)

-

Gain on disposal of financial assets at fair value through

profit or loss

(46,688)

(52,040)

Loss on settlement of commodity derivative contracts

6

9,035

64,156

Depreciation of property, plant and equipment

431,324

434,491

Depreciation of right-of-use assets

17,097

20,020

Amortisation of other intangible assets

50,186

56,374

Amortisation of long-term prepaid expenses

8,399

6,314

Provision for impairment of receivables

7

14,625

7,103

Impairment loss on loans receivable

7

64,665

2,501

Impairment loss/(reversal) of inventories

7

13,739

(4,956)

Impairment of property, plant and equipment

6

2,965

-

Impairment of intangible assets

6

66,714

-

Impairment of goodwill

6

56,654

-

Expense of other long-term assets

11,322

-

(Increase)/decrease in long-term deposits

(7,422)

4,585

Decrease/(increase) in inventories

84,476

(47,239)

Increase in trade and notes receivables

(280,418)

(112,770)

Increase in prepayments and other receivables

(70,698)

(294,972)

(Increase)/decrease in pledged deposits

(72,693)

73,873

Increase in loans receivable

(89,020)

(196,258)

Increase/(decrease) in trade and notes payables

55,055

(126,300)

Increase in other payables and accruals

47,714

42,237

Increase in deposits from customers

863,145

238,190

Decrease in deferred income

(36,321)

(30,659)

Decrease in provisions

(5,414)

(7,320)

32 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020

For the six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

CASH GENERATED FROM OPERATIONS

1,960,146

655,957

Income taxes paid

(64,244)

(88,548)

NET CASH FLOWS FROM OPERATING ACTIVITIES

1,895,902

567,409

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received

30,044

45,608

Purchases of items of property, plant and equipment

(476,203)

(639,990)

Increase in other intangible assets

(20,352)

(120,433)

Proceeds from disposal of items of property, plant and equipment

3,368

7,392

Acquisition of a joint venture

(1,000)

(52,000)

Acquisition of an associate

(30,580)

-

Acquisition of a subsidiary

(6,842)

-

Net payment of commodity derivative contracts

(9,035)

(64,156)

Deposits paid for commodity derivative contracts

(48,869)

(40,287)

Net proceeds (to)/from acquisition and disposal of

equity investments at fair value through profit or loss

(2,944,875)

117,204

Increase in right-of-use assets

(3,096)

(24,238)

Payment for investments in financial assets measured at amortised cost

(75,979)

(131,983)

Increase in loans receivable

(35,174)

(8,400)

Other cash inflows/(outflows) from investing activities

944

(4,250)

Increase in term deposits with original maturity of more than three months

(335,000)

-

NET CASH FLOWS USED IN INVESTING ACTIVITIES

(3,952,649)

(915,533)

INTERIM REPORT 2020

33

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020

For the six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

CASH FLOWS FROM FINANCING ACTIVITIES

New bank loans and other borrowings

11,819,760

8,610,348

Repayment of bank loans and other borrowings

(9,631,340)

(7,521,050)

Capital contribution from non-controlling shareholders

2,000

-

Dividends paid

(177,409)

(114,101)

Increase in corporate bonds

-

2,051,453

Interest paid

(345,803)

(272,304)

Principal portion of lease payments

(7,203)

(8,415)

NET CASH FLOWS FROM FINANCING ACTIVITIES

1,660,005

2,745,931

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

(396,742)

2,397,807

Cash and cash equivalents at beginning of period

3,508,307

1,143,299

Effects of foreign exchange rate changes, net

(25,335)

(2,202)

CASH AND CASH EQUIVALENTS AT END OF PERIOD

3,086,230

3,538,904

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS

Cash and bank balances

3,421,230

3,538,904

Less: Term deposits with original maturity of more than three months

335,000

-

Cash and cash equivalents as stated in the consolidated statement of

cash flows

3,086,230

3,538,904

34 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2020

1. CORPORATE INFORMATION

Zhaojin Mining Industry Company Limited (the "Company") was established as a joint stock limited liability company under the Company Law of the People's Republic of China (the "PRC") on 16 April 2004. The registered office of the Company is located at 299 Jinhui Road, Zhaoyuan, Shandong, China.

The Company and its subsidiaries (the "Group") were principally engaged in the exploration, mining, processing and smelting of gold, the sale of gold products, and the mining and processing of copper and the sale of copper products in Mainland China. In addition, the Group processed and sold silver in Mainland China.

As of 30 June 2020, the major shareholders of the Company were Shandong Zhaojin Group Company Limited ("Zhaojin Group") and Shanghai Yuyuan Tourist Mart Co., Ltd., who held 37.12% and 23.34% of the issued share capital of the Company, respectively, with their subsidiaries.

The H shares of the Company have been listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") since 8 December 2006.

2. BASIS OF PREPARATION AND CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

2.1 BASIS OF PREPARATION

The interim condensed consolidated financial information for the six months ended 30 June 2020 has been prepared in accordance with HKAS 34 Interim Financial Reporting. The interim condensed consolidated financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual consolidated financial statements for the year ended 31 December 2019.

As at 30 June 2020, the Group had net current liabilities of RMB3,038,702,000 (31 December 2019: RMB537,777,000). In view of this circumstance, the directors of the Company have given consideration to the future liquidity of the Group and its available sources of finance including banking facilities in assessing whether the Group will have sufficient financial resources to continue as a going concern. As at 30 June 2020, by taking into account the Group's cash flow projection, including the Group's unutilised banking facilities, ability to renew or refinance the banking facilities upon maturity and the Group's future capital expenditure in respect of its non-cancellable capital commitments, the directors of the Company consider that the Group has sufficient working capital to meet in full its financial obligations as they fall due for at least the next twelve months from the end of the reporting period and accordingly, these financial statements have been prepared on a going concern basis.

INTERIM REPORT 2020

35

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2020

2. BASIS OF PREPARATION AND CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019, except for the adoption of the following revised Hong Kong Financial Reporting Standards ("HKFRSs") for the first time for the current period's financial information.

Amendments to HKFRS 3

Definition of a Business

Amendments to HKFRS 9, HKAS 39 and

HKFRS 7

Interest Rate Benchmark Reform

Amendment to HKFRS 16

COVID-19-Related Rent Concessions (early adopted)

Amendments to HKAS 1 and HKAS 8

Definition of Material

The nature and impact of the revised HKFRSs are described below:

  1. Amendments to HKFRS 3 clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. A business can exist without including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group has applied the amendments prospectively to transactions or other events that occurred on or after 1 January 2020. The amendments did not have any impact on the financial position and performance of the Group.
  2. Amendments to HKFRS 9, HKAS 39 and HKFRS 7 address the effects of interbank offered rate reform on financial reporting. The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments did not have any impact on the financial position and performance of the Group as the Group does not have any interest rate hedge relationships.

36 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2020

  1. BASIS OF PREPARATION AND CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)
    2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)
    1. Amendment to HKFRS 16 provides a practical expedient for lessees to elect not to apply lease modification accounting for rent concessions arising as a direct consequence of the covid-19 pandemic. The practical expedient applies only to rent concessions occurring as a direct consequence of the covid-19 pandemic and only if (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before 30 June 2021; and (iii) there is no substantive change to other terms and conditions of the lease. The amendment is effective retrospectively for annual periods beginning on or after 1 June 2020 with earlier application permitted. The amendments did not have any impact on the financial position and performance of the Group.
    2. Amendments to HKAS 1 and HKAS 8 provide a new definition of material. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information. The amendments did not have any impact on the Group's interim condensed consolidated financial information.
  3. SEASONALITY OF OPERATIONS

The Group's operations are not subject to seasonality.

4. OPERATING SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and services and has three reportable operating segments as follows:

  1. The gold operations segment consists of gold mining and smelting operations;
  2. The copper operations segment consists of copper mining and smelting operations;
  3. the "others" segment comprises, principally, the Group's other investment activities, a finance company operation, a hotel and catering operation and engineering design and consulting operation.

Management monitors the results of the Group's operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on reportable segment profit or loss, which is a measure of adjusted profit or loss before tax. The adjusted profit or loss before tax is measured consistently with the Group's profit before tax except that interest income, finance costs, as well as corporate expenses are excluded from such measurement.

INTERIM REPORT 2020

37

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2020

4. OPERATING SEGMENT INFORMATION (continued)

Segment assets exclude cash and cash equivalents, deferred tax assets, pledged deposits and other unallocated corporate assets as these assets are managed on a group basis.

Segment liabilities exclude interest-bearing bank and other borrowings, corporate bonds, deferred tax liabilities and other unallocated corporate liabilities as these liabilities are managed on a group basis.

Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices.

The Group's operating segments are as follows:

For the six months ended 30 June 2020 (Unaudited)

Gold

Copper

operations

operations

Others

Total

RMB'000

RMB'000

RMB'000

RMB'000

Segment revenue

Revenue from external customers

2,872,583

121,480

137,917

3,131,980

Segment results

809,051

(57,883)

74,035

825,203

Reconciliation:

Interest income

108,566

Finance costs

(354,244)

Profit before tax

579,525

Segment assets

33,594,737

2,245,475

4,266,896

40,107,108

Reconciliation:

Corporate and other unallocated assets

3,722,435

Total assets

43,829,543

Segment liabilities

2,534,489

220,160

2,354,207

5,108,856

Reconciliation:

Corporate and other unallocated liabilities

21,560,021

Total liabilities

26,668,877

Other segment information

Capital expenditure*

591,053

27,365

6,677

625,095

Investments in associates

763,970

-

5,410

769,380

Investments in joint ventures

-

32,475

150,069

182,544

Impairment losses recognised/(reversed)

in the statement of profit or loss

218,446

3,721

(2,805)

219,362

Share of profits and losses of:

- Associates

6,975

-

(385)

6,590

- Joint ventures

-

(1,876)

7,732

5,856

Depreciation and amortisation

453,969

41,016

12,021

507,006

Gain on disposal of financial assets

10,184

-

36,504

46,688

Fair value gain on financial assets

at fair value through profit or loss

23,357

-

109,839

133,196

  • Capital expenditure consists of additions to property, plant and equipment, other intangible assets and right-of-use assets.

38 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2020

4. OPERATING SEGMENT INFORMATION (continued)

The Group's operating segments are as follows (continued):

For the six months ended 30 June 2019 (Unaudited)

Gold

Copper

operations

operations

Others

Total

RMB'000

RMB'000

RMB'000

RMB'000

Segment revenue

Revenue from external customers

2,505,031

238,301

74,650

2,817,982

Segment results

548,565

38,442

(21,561)

565,446

Reconciliation:

Interest income

75,581

Finance costs

(316,108)

Profit before tax

324,919

Segment assets

30,538,039

2,533,779

2,308,351

35,380,169

Reconciliation:

Corporate and other unallocated assets

3,963,727

Total assets

39,343,896

Segment liabilities

2,586,632

293,722

1,337,978

4,218,332

Reconciliation:

Corporate and other unallocated liabilities

18,209,709

Total liabilities

22,428,041

Other segment information

Capital expenditure*

819,375

34,982

10,693

865,050

Investments in associates

682,207

-

-

682,207

Investments in joint ventures

-

109,024

128,052

237,076

Impairment losses (reversed)/recognised

in the statement of profit or loss

(1,818)

4,338

2,128

4,648

Share of profits of:

- Associates

1,598

-

-

1,598

- Joint ventures

-

4,473

7,900

12,373

Depreciation and amortisation

444,708

59,343

6,834

510,885

Gain on disposal of equity investments

at fair value through profit or loss

5,098

-

46,942

52,040

  • Capital expenditure consists of additions to property, plant and equipment, other intangible assets and right-of-use assets.

INTERIM REPORT 2020

39

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2020

4. OPERATING SEGMENT INFORMATION (continued)

GEOGRAPHICAL INFORMATION

As over 92% of the assets of the Group are located in Mainland China and over 99% of the sales are made to customers in Mainland China, no further geographical segment information has been presented.

INFORMATION ABOUT A MAJOR CUSTOMER

For the six months ended 30 June 2020, revenue of approximately RMB2,524,627,000 (for the six months ended 30 June 2019: RMB2,249,823,000) was derived from sales by the gold operations segment to a single customer.

5. REVENUE, OTHER INCOME AND GAINS

An analysis of revenue is as follows:

For the six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Sale of goods

3,185,736

2,796,895

Rendering of services

70,391

102,936

3,256,127

2,899,831

Less: Government surcharges

(124,147)

(81,849)

3,131,980

2,817,982

Goods recognised at a point in time

3,232,714

2,896,784

Services recognised over time

23,413

3,047

3,256,127

2,899,831

Less: Government surcharges

(124,147)

(81,849)

Total revenue from contracts with customers

3,131,980

2,817,982

40 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2020

5. REVENUE, OTHER INCOME AND GAINS (continued)

OTHER INCOME AND GAINS

For the six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Fair value gain on financial assets

at fair value through profit or loss

133,196

-

Interest income

108,566

75,581

Government grants

36,321

30,659

Sales of auxiliary materials

24,983

38,637

Exchange gains

8,178

-

Others

12,527

13,040

323,771

157,917

6. OTHER EXPENSES

For the six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Loss on disposal or write-off of items of property, plant and equipment

1,429

1,529

Impairment of intangible assets

66,714

-

Impairment of property, plant and equipment

2,965

-

Impairment of goodwill

56,654

-

Cost of auxiliary materials and other business

60,572

49,979

Exchange losses

-

12,192

Loss on settlement of commodity derivative contracts

9,035

74,689

Others

19,189

30,022

216,558

168,411

INTERIM REPORT 2020

41

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2020

7. PROFIT BEFORE TAX

The Group's profit before tax from continuing operations is arrived at after charging/(crediting):

For the six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Cost of inventories sold

1,775,280

1,746,346

Impairment loss/(reversal) of inventories

13,739

(4,956)

Impairment loss on loans receivable

64,665

2,501

Provision for impairment of receivables

14,625

7,103

Impairment of intangible assets

66,714

-

Impairment of goodwill

56,654

-

Impairment of property, plant and equipment

2,965

-

Exchange differences, net

(8,178)

12,192

8. INCOME TAX EXPENSE

The Group is subject to income tax on an entity basis on profits arising in or derived from the jurisdictions in which members of the Group are domiciled and operate.

Provision for current income tax in Mainland China is based on the statutory rate of 25% (2019: 25%) of the assessable profits of the Group as determined in accordance with the PRC Corporate Income Tax Law, which was approved and became effective on 1 January 2008, except for certain high and new technology enterprises and western-region-development enterprises of the Group in Mainland China, which are taxed at a preferential rate of 15%. Hong Kong profits tax has been provided at the rate of 16.5% (2019: 16.5%) on the estimated assessable profits arising in Hong Kong during the year.

42 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2020

8. INCOME TAX EXPENSE (continued)

The major components of income tax expense in the interim condensed consolidated statement of profit or loss are as follows:

For the six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Current - Mainland China

- Charge for the period

87,533

61,097

Deferred tax

35,824

7,899

Total tax charge for the period

123,357

68,996

9. DIVIDENDS

For the six months ended 30 June

20202019

RMB'000 RMB'000

(Unaudited) (Unaudited)

Ordinary:

Proposed final - RMB0.04 per share (2019: RMB0.04 per share)

130,816

128,828

The proposed 2019 final dividend of RMB0.04 per share (tax included) in aggregate of RMB130,816,000 was approved by the shareholders on 5 June 2020. As at 30 June 2020, all the final dividend of 2019 has been paid. No interim dividend was proposed for the period (2019: Nil).

INTERIM REPORT 2020

43

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2020

10. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

Basic earnings per share is computed by dividing the profit attributable to ordinary equity holders of the parent for the period of RMB412,392,000 (for the six months ended 30 June 2019: RMB238,855,000) by the number of ordinary shares in issue during the period of 3,270,393,000 (for the six months ended 30 June 2019: 3,220,696,000).

The diluted earnings per share amounts were equal to the basic earnings per share amounts for the six months ended 30 June 2020 and 30 June 2019, as no diluting events existed during these periods.

11. PROPERTY, PLANT AND EQUIPMENT AND OTHER INTANGIBLE ASSETS

During the six months ended 30 June 2020, the Group acquired property, plant and equipment with a cost of RMB517,240,000 (30 June 2019: RMB637,782,000) and other intangible assets with a cost of RMB89,848,000 (30 June 2019: RMB146,633,000).

During the six months ended 30 June 2020, depreciation for property, plant and equipment was RMB431,324,000

(30 June 2019: RMB434,491,000) and amortisation for other intangible assets was RMB50,186,000 (30 June 2019: RMB56,374,000).

During the six months ended 30 June 2020, impairment losses on property, plant and equipment were amounted to RMB2,965,000 (30 June 2019: Nil), and impairment losses on other intangible assets were amounted to RMB66,714,000 (30 June 2019: Nil), which were stated in other expenses in the statement of profit or loss.

During the six months ended 30 June 2020, property, plant and equipment with a net book value of RMB4,797,000 (30 June 2019: RMB8,921,000) were disposed of by the Group, resulting in a net loss on disposal of RMB1,429,000 (30 June 2019: RMB1,529,000).

44 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

12. OTHER LONG-TERM ASSETS

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Advances and deposits paid for acquisitions of subsidiaries and

exploration rights

415,958

415,958

Advance payments for purchases of property, plant and equipment

95,322

67,225

Long-term prepaid expenses

10,574

13,098

521,854

496,281

The outstanding commitments in relation to the above acquisitions are disclosed in note 17.

13. TRADE AND NOTES RECEIVABLES

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Trade receivables

431,706

132,867

Notes receivable

8,717

27,138

Impairment

(22,366)

(17,558)

418,057

142,447

INTERIM REPORT 2020

45

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

13. TRADE AND NOTES RECEIVABLES (continued)

An ageing analysis of the trade receivables, based on the invoice date and net of loss allowance, is as follows:

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Outstanding balances due within one year

379,760

92,493

Outstanding balances due over one year but within two years

33,052

18,528

Outstanding balances due over two years but within three years

1,802

1,809

Outstanding balances due over three years

17,092

20,037

431,706

132,867

Less: impairment of trade receivables

(22,366)

(17,558)

409,340

115,309

Trade and notes receivables are non-interest-bearing. As 81% of the sales of the Group for the period ended 30 June 2020 (for the six months ended 30 June 2019: 80%) were made through the Shanghai Gold Exchange without specific credit terms, there were no significant receivables that were overdue or impaired.

14. TRADE AND NOTES PAYABLES

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Trade payables

389,202

324,109

Notes payable

34,019

44,057

423,221

368,166

At 30 June 2020, the balance of trade and notes payables mainly represented the amount regarding the unsettled procurement of gold concentrates. The trade payables are non-interest-bearing and are normally settled on 60 days' terms.

46 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

14. TRADE AND NOTES PAYABLES (continued)

An ageing analysis of the trade and notes payables, as at the end of the reporting period, based on the invoice date, is as follows:

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Outstanding balances are due as follows:

Within one year

383,546

289,344

Over one year but within two years

21,814

50,021

Over two years but within three years

10,599

17,742

Over three years

7,262

11,059

423,221

368,166

15. INTEREST-BEARING BANK AND OTHER BORROWINGS

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Current:

- Bank loans - unsecured

1,790,000

1,037,000

- Bank loans - guaranteed (b)

100,000

-

- Gold leasing business - unsecured

3,484,473

3,712,494

- Other borrowings - unsecured

562,993

439,390

- Other borrowings - secured (a)

291,000

397,800

- Short-term bonds - unsecured

5,098,989

2,800,000

11,327,455

8,386,684

Non-current:

- Bank loans - unsecured

-

288,000

- Other borrowings - unsecured

136,140

100,490

136,140

388,490

Total

11,463,595

8,775,174

INTERIM REPORT 2020

47

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

15. INTEREST-BEARING BANK AND OTHER BORROWINGS (continued)

As at 30 June 2020, most of the borrowings were denominated in RMB. The bank loans bear interest at effective interest rates of 2.50% to 4.35% (31 December 2019: 3.69% to 7.53%) per annum. The other borrowings bear interest at effective interest rates of 0.70% to 4.75% (31 December 2019: 2.55% to 4.75%) per annum.

  1. Certain of the Group's other borrowings are secured by certificates of deposits and pledges over the Group's treasury bonds, which had aggregate carrying values at the end of the reporting period of approximately RMB300,000,000 (31 December 2019: RMB400,000,000).
  2. As at 30 June 2020, bank loans of the Company with carrying amounts in aggregate of RMB100,000,000 were guaranteed by Zhaojin Group (31 December 2019: Nil).

16. CORPORATE BONDS

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Zhaojin bonds

6,600,927

6,601,837

Zhaojin medium term notes

999,118

998,806

USD guaranteed notes

2,112,000

2,078,116

Current

2,255,491

508,629

Non-current

7,456,554

9,170,130

Corporate bonds at the end of the period

9,712,045

9,678,759

17. COMMITMENTS

The Group had the following capital commitments at the end of the reporting period:

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Contracted, but not provided for:

- Property, plant and equipment

490,298

300,108

- Prepayment for potential acquisitions

1,538,797

1,538,797

2,029,095

1,838,905

48 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

18. RELATED PARTY TRANSACTIONS

During the period, the Group had the following material transactions with related parties:

For the six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

(A)

NATURE OF RELATIONSHIPS/TRANSACTIONS

(i)

Zhaojin Group

Expenses:

- Payment of rental of land use rights

4,710

4,710

- Payment of rental of equipment

10,025

-

- Brokerage service fees

3,772

2,255

Others:

- Increase in deposits from customers, net

832,544

210,292

- Interest expense on deposits from customers

5,213

9,192

(ii) Subsidiaries of Zhaojin Group

Sales:

- Sales of silver

34,338

-

- Sales of gold material

3,172

-

- Provision of exploration services

1,682

-

- Provision of digital mine construction technology services

6,510

-

Expenses:

- Fees for refining services

2,048

2,617

- Brokerage service fees

-

2

Capital transactions:

- Purchase of materials

-

58,364

- Purchase of exploration services

-

19,509

- Purchase of digital mine construction technology services

-

3,606

- Purchase of water treatment engineering services

5,070

10

- Purchase of relevant necessary super filter membrane and

equipment

-

3,704

Others:

- (Decrease)/increase in loans to related parties

(124,921)

381,500

- Interest income from loans

2,004

13,082

- Increase in deposits from customers, net

30,194

28,762

- Interest expense on deposits from customers

5,813

3,977

INTERIM REPORT 2020

49

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

18. RELATED PARTY TRANSACTIONS (continued)

For the six months ended 30 June

20202019

RMB'000 RMB'000

(Unaudited) (Unaudited)

(A) NATURE OF RELATIONSHIPS/TRANSACTIONS (continued)

  1. Associate - Aletai Zhengyuan International Mining Company Limited

- Purchase of gold concentrates

-

46,807

  1. Subsidiary of an associate - Shandong Wucailong Investment Company Limited

- Entrusted loans

15,000

2,000

- Interest income

3,563

2,710

  1. Joint venture - Ruoqiang Changyun Sanfengshan Mining Company Limited

- Purchase of copper concentrates

-

7,940

  1. Minority shareholder - No. 3 Exploration Institute

- Exploration services

2,735

-

(B) OUTSTANDING BALANCES WITH RELATED PARTIES

The Group had an outstanding trade in nature balance due from Zhaojin Group of RMB6,858,000 (31 December 2019: RMB8,816,000) and no amounts of trade in nature due to Zhaojin Group (31 December 2019: Nil) as at the end of the reporting period. This balance is unsecured, interest-free and has no fixed terms of repayment.

(C) COMPENSATION OF KEY MANAGEMENT PERSONNEL OF THE GROUP

For the six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Short term employee benefits

3,817

3,175

Post-employment benefits

202

322

Total compensation paid to key management personnel

4,019

3,497

50 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

19. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows:

FINANCIAL ASSETS

30 June 2020 (Unaudited)

Financial assets

Financial assets

at fair value

at fair value

through other

Financial

through

comprehensive

assets at

profit or loss

income

amortised cost

Total

RMB'000

RMB'000

RMB'000

RMB'000

Trade and notes receivables

-

8,717

409,340

418,057

Financial assets included in

other receivables

-

-

258,966

258,966

Financial assets at fair value

through profit or loss

3,679,383

-

-

3,679,383

Financial assets at amortised cost

-

-

476,973

476,973

Loans receivable

-

-

2,926,760

2,926,760

Term deposit

-

-

200,000

200,000

Pledged deposits

-

-

350,996

350,996

Total

3,679,383

8,717

4,623,035

8,311,135

FINANCIAL LIABILITIES

30 June 2020

Financial

liabilities at

amortised cost

RMB'000

(Unaudited)

Trade and notes payables

423,221

Financial liabilities included in other payables and accruals

1,588,104

Interest-bearing bank and other borrowings

11,463,595

Corporate bonds

9,712,045

Deposits from customers

2,086,764

Other long-term liabilities (including current portion)

226,476

Lease liabilities

36,452

Total

25,536,657

INTERIM REPORT 2020

51

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

19. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows (continued):

FINANCIAL ASSETS

31 December 2019 (Audited)

Financial assets

Financial assets

at fair value

at fair value

through other

Financial

through

comprehensive

assets at

profit or loss

income

amortised cost

Total

RMB'000

RMB'000

RMB'000

RMB'000

Trade and notes receivables

-

27,138

115,309

142,447

Financial assets included in other

receivables

-

-

242,286

242,286

Financial assets at fair value

through profit or loss

554,642

-

-

554,642

Financial assets at amortised cost

-

-

400,994

400,994

Loans receivable

-

-

2,863,996

2,863,996

Pledged deposits

-

-

278,303

278,303

Total

554,642

27,138

3,900,888

4,482,668

FINANCIAL LIABILITIES

31 December 2019

Financial liabilities

at amortised cost

RMB'000

(Audited)

Trade and notes payables

368,166

Financial liabilities included in other payables and accruals

1,449,164

Interest-bearing bank and other borrowings

8,775,174

Corporate bonds

9,678,759

Deposits from customers

1,223,619

Other long-term liabilities (including current portion)

250,980

Lease liabilities

41,085

Total

21,786,947

52 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

19. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

The carrying amounts and fair values of the Group's financial instruments, other than those with carrying amounts that reasonably approximate to fair values, are as follows:

Carrying amounts

Fair values

30 June

31 December

30 June

31 December

2020

2019

2020

2019

RMB'000

RMB'000

RMB'000

RMB'000

Financial assets

Term deposit

200,000

-

196,915

-

Loans receivable, non-current portion

239,850

252,525

259,295

270,122

Total

439,850

252,525

456,210

270,122

Financial liabilities

Interest-bearing bank and other

borrowings, non-current portion

136,140

388,490

136,140

375,592

Corporate bonds

9,712,045

9,678,759

9,843,527

9,830,720

Total

9,848,185

10,067,249

9,979,667

10,206,312

Management has assessed that the fair values of cash and cash equivalents, pledged deposits, trade and notes receivables, financial assets at fair value through profit or loss, trade and notes payables, financial assets included in prepayments, deposits and other receivables and financial liabilities included in other payables and accruals, deposits from customers, the current portion of loans receivable, the current portion of interest-bearing bank and other borrowings and the current portion of other long-term liabilities approximate to their carrying amounts largely due to the short-term maturities of these instruments.

The Group's finance department headed by the finance manager is responsible for determining the policies and procedures for the fair value measurement of financial instruments. At each reporting date, the finance department analyses the movements in the values of financial instruments and determines the major inputs applied in the valuation. The valuation is reviewed and approved by the chief financial officer.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values.

INTERIM REPORT 2020

53

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

19. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

The fair values of the non-current portion of loans receivable, interest-bearing bank and other borrowings and other long-term liabilities have been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities. The changes in fair value as a result of the Group's own non-performance risk for interest-bearing bank and other borrowings as at 30 June 2020 were assessed to be insignificant.

The fair values of listed equity investments are based on quoted market prices.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. All significant inputs required by fair value measurement are observable, hence these financial instruments are included in level 2.

For the fair value of the unlisted equity investments at fair value through other comprehensive income, management has estimated the potential effect of using reasonably possible alternatives as inputs to the valuation model.

FAIR VALUE HIERARCHY

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1

-

based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2

-

based on valuation techniques for which the lowest level input that is significant to the fair value

measurement is observable, either directly or indirectly in the open market

Level 3

-

based on valuation techniques for which the lowest level input that is significant to the fair value

measurement is unobservable

54 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

19. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

FAIR VALUE HIERARCHY (continued)

The following tables illustrate the fair value measurement hierarchy of the Group's financial instruments:

Assets measured at fair value

As at 30 June 2020

Fair value measurement using

Quoted

Significant

prices in

observable

active markets

inputs

(Level 1)

(Level 2)

Total

RMB'000

RMB'000

RMB'000

Financial assets at fair value through other

comprehensive income included in trade and

notes receivables

-

8,717

8,717

Financial assets at fair value through profit or loss

977,322

2,702,061

3,679,383

Total

977,322

2,710,778

3,688,100

As at 31 December 2019

Fair value measurement using

Quoted

Significant

prices in

observable

active markets

inputs

(Level 1)

(Level 2)

Total

RMB'000

RMB'000

RMB'000

Financial assets at fair value through other

comprehensive income included in trade and

notes receivables

-

27,138

27,138

Financial assets at fair value through profit or loss

486,040

68,602

554,642

Total

486,040

95,740

581,780

INTERIM REPORT 2020

55

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

19. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

FAIR VALUE HIERARCHY (continued)

Assets for which fair values are disclosed:

As at 30 June 2020

Fair value measurement using

Quoted

Significant

prices in

observable

active markets

inputs

(Level 1)

(Level 2)

Total

RMB'000

RMB'000

RMB'000

Term deposit

-

196,915

196,915

Loans receivable, non-current portion

-

259,295

259,295

Total

-

456,210

456,210

As at 31 December 2019

Fair value measurement using

Quoted

Significant

prices in

observable

active markets

inputs

(Level 1)

(Level 2)

Total

RMB'000

RMB'000

RMB'000

Loans receivable, non-current portion

-

270,122

270,122

56 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

19. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

FAIR VALUE HIERARCHY (continued)

Liabilities for which fair values are disclosed

As at 30 June 2020

Quoted

Significant

prices in

observable

active markets

inputs

(Level 1)

(Level 2)

Total

RMB'000

RMB'000

RMB'000

(Unaudited)

(Unaudited)

(Unaudited)

Interest-bearing bank and other borrowings,

non-current portion

-

136,140

136,140

Corporate bonds

6,720,479

3,123,048

9,843,527

Other long-term liabilities, non-current portion

-

96,476

96,476

Total

6,720,479

3,355,664

10,076,143

As at 31 December 2019

Quoted

Significant

prices in

observable

active markets

inputs

(Level 1)

(Level 2)

Total

RMB'000

RMB'000

RMB'000

(Audited)

(Audited)

(Audited)

Interest-bearing bank and other borrowings,

non-current portion

-

375,592

375,592

Corporate bonds

6,703,148

3,127,572

9,830,720

Other long-term liabilities, non-current portion

-

91,612

91,612

Total

6,703,148

3,594,776

10,297,924

INTERIM REPORT 2020

57

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 June 2020

20. EVENTS AFTER THE REPORTING PERIOD

On 3 August 2020, the Company received the approval from the Stock Exchange for the listing of and the permission to deal in 1,560,340,597 H shares (the "Converted H Shares"). The conversion was completed on 7 August 2020. The listing of the Converted H Shares on the Stock Exchange commenced at 9:00 a.m. on 10 August 2020.

21. APPROVAL OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The interim condensed consolidated financial statements were approved and authorised for issue by the board of directors on 25 August 2020.

58 ZHAOJIN MINING INDUSTRY COMPANY LIMITED

This is an excerpt of the original content. To continue reading it, access the original document here.

Attachments

  • Original document
  • Permalink

Disclaimer

Zhaojin Mining Industry Company Limited published this content on 17 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 September 2020 09:49:04 UTC