Sitemap 繁體 | 簡体
Corporate Profile
Chairman's Statement
Board of Directors
Vision and Mission
Corporate Governance
Corporate Environmental and Social Responsibility
 

Dear Shareholders,

On behalf of the Board of Directors of Shougang Fushan Resources Group Limited ("Shougang Resources" or the "Company"), I am hereby delighted to present the annual report of the Company and its subsidiaries (collectively referred to as the "Group") for the year ended 31 December 2017 (the "Review Year"), and report to shareholders on the Group's performance for the Review Year.

The global economy was under strong recovery during 2017, in particular, the recovery of the domestic demand in the United States ("U.S.") and China became an important engine of global economic growth.This year, the U.S. interest rate began an upward track, the U.S. stocks repeatedly struck new high and the biggest scale tax reform plan in 30 years was approved; Eurozone's PMI continued to pick up; Japan expected to end their over ten-year deflation period; and global enterprises achieved good profits in general.

After bottoming out in 2016, China's economy continued to recover beyond expectations in 2017, with real GDP growth rising to 6.9% from 6.7% in 2016, and its fixed assets investment (excluded peasants household) rising by 7.2% year-on-year ("YOY"). The development momentum was good. The country's Supply-side Structural Reform achieved remarkable effects, in turn benefiting the Group's coal businesses.By the end of 2017, China had cut its steel capacity by an approximate total of 110 million tonnes, and achieved closely to the "13th Five-Year Plan" steel sector capacity reduction target of 100-150 million tonnes. China has also cut accumulated coal capacity by approximately 440 million tonnes, likely to achieve its Five-Year Plan target of reducing coal capacity by 500 million tonnes in 2018. At the end of 2017, China had about 7,000 coal mines, down from 10,800 coal mines in 2015. In addition, the tightening of safety and environmental protection requirements and inspections will also benefit steel and coal sectors to drive prices upwards continuously.

With positive market sentiment and the continued efforts of the Group, Shougang Resources is pleased to report that profit for the Review year was HK$1.18 billion, and profit attributable to the Company's shareholders was HK$1.08 billion, significantly increased by HK$1.11 billion and HK$969 million YOY respectively. For the year ended 31 December 2017, the raw coking coal production volume of the Group was 3.98 million tonnes with a YOY increase of 3%. Due to the increase in the sales volume of raw coking coal by 0.45 million tonnes YOY to 0.93 million tonnes, the clean coking coal production volume of the Group was 2.03 million tonnes, decreased by 0.29 million tonnes YOY, and sales volume was 2.07 million tonnes, decreased by 2% YOY. The average realised selling prices (inclusive of VAT) of raw and clean coking coal were RMB684/tonne and RMB1,386/tonne, with a YOY significant increase of 72% and 80% respectively. During the Review Year, the Group's revenue was HK$3.47 billion with a YOY increase of 92%, and the gross profit margin increased to 54% from 34% in 2016. The Group's financial position continued to maintain a healthy level. The total of free cash and bill receivables of the Group was approximately HK$6 billion.

The above achievements were the results of economy recovery, macro policies changing opportunities, the support from our shareholders and the Board of Directors, together with the efforts of all of our staffs working through the hard time during the downturn of the industry in previous years. Even with a relatively positive market situation in 2017, we continue to strengthen our risk awareness, making efforts towards the safety production, cost control, efficiency improvement, flexible marketing strategies, introducing and implementing new technologies, maintained innovation and strengthened our competitiveness.

Looking towards 2018, the overall market of both global development and China economy is considered remaining optimistic in general. Many major financial institutions upgrade their forecasts of the economic growth in global and China. But the sanguine sentiments are relative fragile, with some unfavorable factors such as geopolitical instability in the Middle-East, Asia, Europe and Africa, the rise of protectionism and the expansion of Populism. All of these factors will directly or indirectly affect the development of the economies around the world, including China. China is still under the process of Supply-side Structural Reform, the 19th CPC National Congress has also emphasised that China economy is stepping into a new era, the main stream is on high-quality growth instead of high-speed growth. The country will be focusing on real economy development, speeding up the industries' upgrading, controlling the financial risks and directing economic development to be healthier and more disciplined.

As for the coal sector, the Supply-side Structural Reform will continue to deepen, while the environmental protection related policies will become more tightening and comprehensive. Shougang Resources, as a premium coking coal producer enterprise with advanced capacity, will benefit from these improvements.

In 2018, based on the national development strategy and the overall economic environment, the Group will continue to utilise our competitive edges, including safety working standards, fully implementation of the environmental protection measures to carry forward, and our key construction projects in progress to increase both production volume and efficiency. We will also continue to tap into our potentials, enhance management abilities and explore the opportunities to diversify our investment portfolio on the basis of our main business in order to enhance sustainable development to maximise returns for society, our shareholders and employees.

As a token of our appreciation for the continued support and kindness of our shareholders, the Board of Directors of Shougang Resources have proposed a final dividend of HK7.2 cents per ordinary share and declared a special dividend of HK6.3 cents per ordinary share. Once more, I would like to express my heartfelt gratitude again to our shareholders, management team, employees and business partners for their support for the Group through the years!


Ding Rucai
Chairman

 

Copyright © Shougang Fushan Resources Group Limited. All Rights Reserved.Disclaimer