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HK Bourse: Results Announcement From Xingye Copper International Group Ltd. -11-

22 Sep 2017 8:47 am
 
 
 
                                                                                               Interim Report 2017 
Management Discussion and Analysis 
 
 
Liquidity financial resources and capital structure 
 
As at 30 June 2017, the Group recorded net current liabilities of RMB76.6 million, which was primarily due to capital 
expenditure made in current period under review being largely financed by short-term bank borrowings. Capital expenditures 
are used to purchase manufacturing equipment, land and buildings according to the development plan of the Group. 
 
As a percentage of total interest-bearing borrowings, the short-term interest-bearing borrowings represented 88.4% as at 30 
June 2017. As at the date of this interim report, the Group had not experienced any difficulty in raising funds by securing 
and rolling over the short-term loans borrowed from various banks in the PRC, which were renewed on an annual basis in 
accordance with local market practice. 
 
Despite the net current liabilities as at 30 June 2017, owing to the Group's ability to generate cash from operating activities, 
good credit standing and relationships with principal lending banks and available unutilised banking facilities of RMB737.7 
million that will not expire within 12 months from 30 June 2017 (including long term loan facilities amounted to RMB369.6 
million effective until 2020) and cash at banks of RMB323.2 million (comprised pledged deposits of RMB109.8 million and 
cash and cash equivalents of RMB213.4 million) respectively. Based on the previous experience and the Group's relationships 
with its principal lending banks, the Board believes that the Group can roll over the existing short-term bank borrowings 
upon maturity in the coming year. The Board is confident that the Group has adequate financial resources to sustain its 
working capital requirement and meet its foreseeable debt repayment requirements. 
 
As at 30 June 2017, the Group had outstanding bank loans of approximately RMB861.4 million, of which RMB761.4 million 
shall be repaid within 1 year. As at 30 June 2017, 86.1% of the Group's debts was on secured basis. 
 
The gearing ratio as at 30 June 2017 was 40.6% (31 December 2016: 38.3%), which is calculated as net debt divided by 
total capital. Net debt is calculated as total debt (including all interest-bearing borrowings as shown in the consolidated 
statement of financial position) less cash and cash equivalents. Total capital is calculated as equity attributable to shareholders 
of the Company as shown in the consolidated statement of financial position plus net debt. 
 
 
Charge on assets 
 
As at 30 June 2017, the Group pledged assets with an aggregate carrying value of approximately RMB1,070.6 million (31 
December 2016: RMB1,167.1 million) to secure bank loans and facilities of the Group. 
 
 
Capital expenditure 
 
For the six months ended 30 June 2017, the Group has invested approximately RMB23.4 million for purchase of property, 
plant and equipment. These capital expenditures were financed by bank borrowings. 
 
 
Capital commitments 
 
As at 30 June 2017, the Group had contracted but not provided for future capital expenditures amounting to RMB9.6 million. 
 
 
Contingent liabilities 
 
As at 30 June 2017, the Group did not have any significant contingent liabilities. 
 
 
 
 
34     Huan Yue Interactive Holdings Limited 
                                     Management Discussion and Analysis 
 
 
MARKET RISK 
The Group is exposed to various types of market risks, including price risk, interest rate risk and foreign exchange risk. 
 
 
Price risk 
 
The Group is exposed to raw material price fluctuations. Cathode copper, alloy trimmings, zinc, tin, nickel and other metals 
are the principal raw materials used in the production of the Group's products. The Group had made such purchases at 
market prices. In addition, sales of all products of the Group were according to market price, which might fluctuate and 
were beyond our control. Therefore, fluctuations in the prices of raw materials may have an adverse effect on the results 
of the Group's operations. 
 
The Group uses its Shanghai Futures Exchange and London Metal Exchange copper futures contracts to hedge against 
fluctuations in copper price. The Group recorded a gain on futures contracts of approximately RMB1.5 million for the six 
months ended 30 June 2017, which was approximately RMB7.5 million in the corresponding period of last year. 
 
 
Interest rate risk 
In addition to short-term deposits, the Group has no significant interest-bearing assets. Therefore, the Group's income 
and operating cash flows are, to a large extent, independent of changes in market interest rates. The Group's exposure to 
market risk for changes in interest rates relates primarily to fluctuations in interest rates on bank borrowings. The Group's 
 
exposure to debt is used for general corporate purposes, including capital expenditures and working capital needs. The 
Group's bank borrowings bear interest rates that are subject to adjustment by lenders in accordance with changes of the 
relevant regulations of the People's Bank of China ("PBOC"). The Group's financing costs will increase when the PBOC 
raises interest rates. Fluctuations in interest rates will affect the cost of undertaking new debts. The Group had not entered 
any interest rate swap to hedge against exposure to interest rate risk. 
 
 
Foreign exchange risk 
 
The Group's export sales and certain part of the purchase of raw materials were denominated in foreign currencies, primarily 
U.S. dollars. Therefore, fluctuations in the exchange rate may have an impact on the Group's operating results. The Group 
has entered into foreign exchange forward contracts with local banks to hedge against foreign exchange rate risk. For the 
period under review, the Group had recorded a net foreign exchange gain of RMB3.0 million while recording a net loss of 
RMB7.4 million for the corresponding period in 2016. 
 
 
EMPLOYEES 
As at 30 June 2017, the total number of the Group's employees was 1,212 (31 December 2016: 1,282). Remuneration 
policies are reviewed periodically to ensure that the Group is offering competitive employment packages to our employees. 
The employees' benefits include salaries, pensions, medical insurance scheme and other applicable social insurance. During 
the reporting period, the total remuneration paid to employees was RMB56.4 million (for the year ended 2016: RMB 129.9 
million). Promotion and salary increments are assessed in accordance with performance. The Group's business growth 
depends on its employees' skills and contributions. The Group believes in the important position of human resources in a 
highly competitive industry and has devoted resources for training its employees. Besides, share options may be granted 
and shares may be awarded to eligible employees of the Group respectively in accordance with the terms of share option 
scheme adopted by the Company and share award scheme adopted by the Board. The Group has established an annual 
training program for our new employees so that the new employees can master the basic skills required to perform their 
duties, and existing employees can enhance or upgrade their skills. 
 
 
 
 
                                                                                                                             35 
                                                                                                Interim Report 2017 
Other Information 
 
 
DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS IN SHARES, UNDERLYING 
SHARES AND DEBENTURES 
As at 30 June 2017, the interests and short positions of the directors ("Directors") and chief executive of the Company in 
the shares, underlying shares and debentures of the Company and its associated corporations within the meaning of Part 
XV of the Securities and Futures Ordinance ("SFO"), which have been notified to the Company and The Stock Exchange of 
Hong Kong Limited (the "Stock Exchange") pursuant to Divisions 7 and 8 of Part XV of the SFO, including interests and 
short positions which the Directors and chief executive of the Company were taken or deemed to have under such provisions 
of the SFO, or which are required to be and are recorded in the register required to be kept pursuant to section 352 of 
the SFO or as otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for 
Securities Transactions by Directors of Listed Issuers (the "Model Code") contained in the Rules Governing the Listing of 
Securities on the Stock Exchange (the "Listing Rules"), were as follows: 
 
 
Interest in Long Position in Shares of HK$0.10 each of the Company 
                                                                                                     Number of         Approximate 
                                                                                Number of            Underlying       percentage of 
Name of Directors               Capacity/Nature of Interest                    Shares held          Shares held        shareholding 
                                                                                                                            (Note 1) 
 
 
HU Changyuan                    Founder of a discretionary trust/              265,200,000                       -            31.91% 
                                  other Interest                                   (Note 2) 
 
HU Minglie                      Beneficial owner/personal Interest                1,345,000                      -             0.16% 
 
REN Hao                         Interest of a controlled corporation/           19,996,667           57,781,111                9.36% 
 
 
 
 

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September 22, 2017 04:47 ET (08:47 GMT)
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