On behalf of the Board of Directors, I am delighted to present the Annual Report for China Mining International Limited (the “Company”) and its subsidiaries (the “Group”) for the financial year ended 31 December 2023 (“FY2023”).

FINANCIAL REVIEW

FY2023 was a challenging year for the Group. The Group had recorded a net loss of RMB84.5 million for FY2023 as compared to net loss of RMB7.6 million for FY2022. While the significant losses are mainly due to the one-off non-recurring bearer plant written off of RMB63 million during FY2023, revenue from the sale of pomegranate produce have also decreased significantly as compared to FY2022 due to lower harvest in FY2023.

China, one of the leading producers of pomegranates globally, is facing significant challenges in pomegranate cultivation due to extreme weather events. Unpredictable climate patterns, including increased temperatures and extreme weather events such as storms and droughts, have adversely affected the production and quality of pomegranates in various regions of the country.

The Group is also not spared from the extreme weather events and had experienced the Henan torrential deluge during July 2021. The flood aftermath has adversely affected the growth and harvest of the agriculture produce. Hailstorm and rising temperatures have led to altered growing seasons, affecting the flowering and fruiting stages of pomegranate trees. The production of pomegranates had also significantly reduced during FY2023 as compared to FY2022.

OPERATION REVIEW

During FY2023, the Group had discontinued the mass-volume, low-margin products sold through the internet platform, as this trading business had not so attractive low yielding margin.

As part of the Group’s streamlining of operations and costs, the Group had also made applications to the Registrar of Companies to strike off the following subsidiaries:

1. Henan Xinyounong Supply Chain Management Co., Ltd. (河南鑫优农供应链管理有限公司);

2. Henan Liangai Supply Chain Management Co., Ltd. (河南良皑供应链管理有限公司); and

3. Henan Jiangui Supply Chain Management Co., Ltd. (河南坚贵供应链管理有限公司);

4. China Mining Singapore Pte. Ltd.

The Group will continue its appropriate cost containment measures to curtail business expenses without compromising efficiency;

The Chinese government has taken back part of the Group’s leased farmland for highway construction during FY2023. While compensation is given for the returning the leased farmland back to the state, it had caused considerable disruptions to the operations of the pomegranate cultivation and harvesting.

MOVING FORWARD

China’s post-Covid economic recovery did not take off as expected. Further, aggravated by the protracted trade tensions between China and USA and the Ukraine-Russia war. China also faces multiple challenges, including sluggish consumer spending, a crisis in the property market, weakening exports, record youth unemployment and high local government debts. Chinese consumers had prioritized essential needs over discretionary spending, leading to a shift in consumption patterns towards necessities and away from luxury or non-essential items. Chinese consumers sees pomegranates as a premium fruit as compared to staple fruits like apples and oranges, negatively impacting consumer demands in FY2023.

Notwithstanding the negative business sentiments, the Group seeks to continue to strengthen its resilience through the following strategies in FY2024 and beyond:

1. Through the adoption of an ‘asset-light’ business model to not take on any big-ticket capital expenditure or investment item;

2. Through the diversification in the sale of products and produce (not restricted to pomegranate fruits alone), be it processed or otherwise, to be sourced from within the Group and/or through third parties;

3. Through appropriate cost containment measures to curtail expenses without compromising efficiency; and

4. Through active reach out for new business growth points

ACKNOWLEDGEMENTS

I would like to extend my sincerest appreciation to our dedicated management and staff for their unwavering commitment, hard work, and valuable contributions. My heartfelt thanks go to our partners, suppliers, and customers for their steadfast support over the years. I am equally grateful to my fellow Directors for their invaluable guidance and contributions, aiding the Group in overcoming numerous challenges in recent years.

Finally, I would like to express my deep gratitude to our unwavering shareholders who steadfastly supported us in the preceding years. I look forward to your continued support in making our shared dream come true in FY2024 and beyond.

Zhai Kebin
Chief Executive Officer and Executive Chairman