Stock Code: SZ 300748
JL MAG Rare-Earth Co., Ltd.(Industrial Park of Economic and Technological Development Zone, Ganzhou City, Jiangxi Province, P.R. China)
Annual Report 2020 (Summary)
This Summary has been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, theChinese version shall prevail.
Part I Important NotesThis Summary is based on the full text of the Annual Report of JL MAG Rare-Earth Co., Ltd. (hereinafterreferred to as the “Company”). In order for a full understanding of the Company’s operating results, financialcondition and future development plans, investors should carefully read through the aforesaid full text, which hasbeen disclosed together with this Summary on the media designated by the China Securities RegulatoryCommission (the “CSRC”).
All the directors of the Company attended in person the board meeting for the approval of this Report exceptfor the following:
| Name | Office title | Reason for not attending the meeting in person | Proxy entrusted to attend the meeting |
| Xie Zhihong | Director | For reason of other work | Cai Baogui |
BDO China Shu Lun Pan Certified Public Accountants LLP issued an unmodified unqualified opinion on theCompany’s financial statements for the year under review.
Change of the independent auditor for the Reporting Period: BDO China Shu Lun Pan Certified PublicAccountants LLP is the independent auditor for the audit of the Company for the year under review.
Independent auditor’s modified opinion:
□ Applicable √ Not applicable
Board-approved final cash and/or stock dividend plan for ordinary shareholders:
√ Applicable □ Not applicable
The Board has approved a final dividend plan for ordinary shareholders as follows: based on the total sharecapital at the date of record, a cash dividend of RMB2 (tax inclusive) per 10 shares is planned to be distributed toall the shareholders, with no bonus issue from profit and a bonus issue of 6 additional shares for every 10 existingshares from capital reserves.
Board-approved final cash and/or stock dividend plan for preference shareholders:
□ Applicable √ Not applicable
Part II Key Corporate Information
1. Stock Profile
| Stock name | JL MAG | Stock code | 300748 | |
| Stock exchange | Shenzhen Stock Exchange | |||
| Contact information | Board Secretary | Securities Representative | ||
| Name | Lu Ming | Lai Xunlong | ||
| Office address | 81 West Jinling Road, Economic and Technological Development Zone, Ganzhou City, Jiangxi Province, P.R. China | 81 West Jinling Road, Economic and Technological Development Zone, Ganzhou City, Jiangxi Province, P.R. China | ||
| Fax | +86 797 8068 000 | +86 797 8068 000 | ||
| Tel. | +86 797 8068 059 | +86 797 8068 059 | ||
| E-mail address | jlmag_info@jlmag.com.cn | jlmag_info@jlmag.com.cn | ||
2. Principal Activities or Products in the Reporting Period
No significant changes occurred to the Company’s principal activities, the markets for its products, itsbusiness model or primary revenue drivers during the Reporting Period, with details as follows:
(I) Principal activities and markets for products
The Company is a high-tech enterprise engaged in research and development, production and sales of highperformance NdFeB permanent magnetic materials. It is a leading supplier of core materials used in new energyand energy conservation and environmental protection sectors in the world. The products are widely used inElectric Vehicles and auto parts, Energy-saving variable frequency air conditioner, Wind Power, 3C, Energysaving elevator, Robotics and intelligent manufacturing, as well as Rail transit. The Company has establishedlong-term stable partnerships with top-tier Chinese and foreign enterprises in various industries.
(II) Business model
The Company mainly adopts a Producing according to Sales model. It purchases rare earth and auxiliarymetal materials in advance based on orders, and designs and produces NdFeB magnetic steel. Currently, theCompany has the capability of manufacturing a whole series of products, covering product research anddevelopment, mold development and manufacturing, billet production, finished product processing and surfacetreatment, while exercising overall control and management of each process.
During its close cooperation with top-tier enterprises in various industries, the Company has developed amature business model. These large well-known enterprises have very strict product quality requirements and along product assessment and verification cycle. In order to satisfy their quality, technology and managementsystem requirements, the Company has been optimizing its research and development, manufacturing, supplychain management, customer service and corporate culture, forming a well-developed business model that meetsthe needs of customers.
Always being customer-oriented, the Company never stops its efforts in technological upgrade anddifferentiated product design. The Company has moved technological services forward to the customer end. Itleverages its own professional technological advantages in NdFeB permanent magnetic materials to participate inthe design of customers’ new products, assist customers in optimizing product performance and reducing productcosts, and provide comprehensive technological solutions. The Company implements a strict quality managementsystem and has industry-leading lean production capabilities. The Company’s product delivery capabilities andproduction efficiency are at the leading level in the industry.
(III) Revenue drivers and position in the industry
During the Reporting Period, the Company continuously concentrated its efforts on new energy and energyconservation and environmental protection sectors, with special attention paid to such core applications as ElectricVehicles and auto parts, Energy-saving variable frequency air conditioner, Wind Power, 3C, Energy savingelevator, Robotics and intelligent manufacturing, as well as Rail transit. The Company’s operating revenue andnet profit kept growing. For the Reporting Period, the Company recorded operating revenue of RMB2,419.3067million, up 42.58% YoY, of which the domestic sales revenue stood at RMB2,078.5022 million, up 46.83% YoY,and the overseas sales revenue amounted to RMB340.8045 million, up 21.17% YoY. The net profit attributable tothe listed company’s shareholders was RMB244.4837 million, up 55.84% YoY. And the net profit attributable to
the listed company’s shareholders before exceptional gains and losses stood at RMB227.1318 million, up 54.68%YoY.Thanks to the rapid rise of market demand in new energy and energy conservation and environmentalprotection sectors, the Company has maintained fast sales revenue growth in Electric Vehicles, Energy-savingvariable frequency air conditioner and Wind Power. It has become a world-leading supplier of magnetic steel forthese sectors, maintaining stronger competitiveness.
In terms of Electric Vehicles and auto parts, the Company supplies magnetic steel to Tesla, BYD and UAES,etc. for producing drive motors for electric vehicles. SAIC Motor, NIO and Leading Ideal are all end users of theCompany. The Company has also been a magnetic steel supplier of Bosch Group for its auto parts for years. TheCompany is also the rare earth permanent magnetic material supplier for the modular electric drive matrix(“MEB”) platform project of Volkswagen Group, and the designated supplier of rare earth permanent magneticmaterials for the BEV3 flexible global all-electric vehicle platform of General Motors. In 2020, the Companyachieved revenue of RMB326 million from the Electric Vehicles and auto parts sectors, representing an increaseof 48.07% over last year. The Company’s shipment of magnetic steel for drive motors of electric vehicles in 2020can be assembled into approximately 450 thousand electric passenger vehicles.
With respect to Energy-saving variable frequency air conditioner, the Company is an important magneticsteel supplier for famous variable frequency air conditioner brands such as Midea, GREE, Shanghai Highly andMitsubishi. In 2020, the Company achieved revenue of RMB878 million from the Energy-saving variablefrequency air conditioner sector, representing an increase of 107.99% over last year. The Company’s shipment ofmagnetic steel in 2020 can be assembled into approximately 41 million compressors of Energy-saving variablefrequency air conditioner.
As for Wind Power, the Company’s end-users are mainly Goldwind and Siemens Gamesa. It achievedrevenue of RMB879 million from the Wind Power sector, representing an increase of 2.78% over last year. Theinstalled capacity of Wind Power that can be equipped with the magnetic steel in the Company’s shipment in 2020is approximately 10GW.
During the Reporting Period, the Company began mass production of its products for the 3C sector, whichhas become a new growth point for the Company’s earnings. In addition, the Company actively participates innew energy and energy conservation and environmental protection sectors such as Energy saving elevator,Robotics and intelligent manufacturing, as well as Rail transit, and has become a first-class supplier of highperformance magnetic steel in these sectors, possessing strong market competitiveness.
3. Key Financial Information
(1) Key Financial Information of the Past Three Years
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
Unit: RMB
| 2020 | 2019 | 2020-over-2019 change (%) | 2018 |
| Operating revenue | 2,419,306,740.55 | 1,696,838,476.01 | 42.58% | 1,289,339,875.43 |
| Net profit attributable to the listed company’s shareholders | 244,483,670.62 | 156,880,220.48 | 55.84% | 147,195,841.72 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 227,131,823.51 | 146,838,409.80 | 54.68% | 105,795,891.33 |
| Net cash generated from/used in operating activities | 101,832,815.26 | 42,838,401.92 | 137.71% | 58,093,008.47 |
| Basic earnings per share (RMB/share) | 0.59 | 0.38 | 55.26% | 0.39 |
| Diluted earnings per share (RMB/share) | 0.59 | 0.38 | 55.26% | 0.39 |
| Weighted average return on equity (%) | 17.13% | 13.41% | Up by 3.72 percentage points | 16.20% |
| 31 December 2020 | 31 December 2019 | Change of 31 December 2020 over 31 December 2019 (%) | 31 December 2018 | |
| Total assets | 3,538,320,671.24 | 2,826,237,122.05 | 25.20% | 2,070,299,722.99 |
| Equity attributable to the listed company’s shareholders | 1,567,455,593.17 | 1,330,352,853.02 | 17.82% | 1,111,491,991.61 |
(2) Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 413,131,944.95 | 550,278,967.10 | 652,846,383.31 | 803,049,445.19 |
| Net profit attributable to the listed company’s shareholders | 35,762,924.63 | 55,736,932.33 | 61,164,708.24 | 91,819,105.42 |
| Net profit attributable to the listed company’s shareholders before exceptional items | 35,914,641.93 | 50,220,464.67 | 55,986,025.26 | 85,010,691.65 |
| Net cash generated from/used in operating activities | -133,184,959.90 | 77,379,752.12 | -97,424,136.39 | 255,062,159.43 |
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from whathave been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
4. Share Capital and Shareholder Information at the Period-End
(1) Numbers of Ordinary Shareholders and Preference Shareholders with Resumed Voting Rights as wellas Holdings of Top 10 Shareholders
Unit: share
| Number of ordinary shareholders at the period-end | 51,619 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 50,398 | Number of preference shareholders with resumed voting rights at the period-end | 0 | Number of preference shareholders with resumed voting rights at the month-end prior to the disclosure of this Report | 0 |
| Top 10 shareholders | ||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Number of shares held | Number of restricted shares held | Shares in pledge or frozen | |
| Status | Shares | |||||
| Jiangxi Ruide Venture Capital Co., Ltd. | Domestic non-state-owned corporation | 36.35% | 151,211,000 | 151,211,000 | Pledged | 3,000,000 |
| Goldwind Investment Holdings Co., Ltd. | Domestic non-state-owned corporation | 11.38% | 47,329,557 | 0 | ||
| Ganzhou Qianchang Business Consulting Management Center (Limited Partnership) | Domestic non-state-owned corporation | 6.72% | 27,950,000 | 0 | ||
| Ganzhou Rare Earth Group Co., Ltd. | State-owned corporation | 6.49% | 27,000,000 | 0 | ||
| Shenzhen Capital Fortune No. 9 Investment Enterprise (Limited Partnership) | Domestic non-state-owned corporation | 1.80% | 7,499,294 | 0 | ||
| Guotai Junan Securities Co., Ltd. | State-owned corporation | 0.43% | 1,773,100 | 0 | ||
| Mao Huayun | Domestic individual | 0.34% | 1,430,000 | 1,430,000 | ||
| Hong Kong Securities Clearing Company Limited | Overseas corporation | 0.30% | 1,227,904 | 0 | ||
| Lv Feng | Domestic individual | 0.22% | 905,000 | 905,000 | ||
| Industrial and Commercial Bank of China Limited—Southern China Securities Shenwan Nonferrous Metals Trading Open-Ended Index Securities Investment Fund | Other | 0.21% | 877,200 | 0 | ||
| Related or acting-in-concert parties among the shareholders above | (1) Jiangxi Ruide Venture Capital Co., Ltd. (“Ruide Venture Capital”) is the controlling shareholder of the Company. Actual controllers of the Company, namely Cai Baogui, Hu Zhibin and Li Xinnong, hold their respective interests of 40%, 30% and 30% in Ruide Venture Capital, and they are acting-in-concert parties. Meanwhile, Cai Baogui, Hu Zhibin and Li Xinnong hold their respective interests of 27.31%, 31.43% and 17.96% in Ganzhou Qianchang; (2) Mao Huayun, Deputy General Manager of the Company, directly holds 1,430,000 shares in the Company, as well as a 3.11% interest in Ganzhou Qianchang; (3) Lv Feng, Director and Deputy General Manager of the Company, directly holds 905,000 shares in the Company, as well as a 2.90% interest in Ganzhou Qianchang; (4) save as disclosed above, the Company is not aware of any related or acting-in-concert parties among the other shareholders above. | |||||
(2) Number of Preference Shareholders and Shareholdings of Top 10 of Them
□ Applicable √ Not applicable
No preference shareholders in the Reporting Period.
(3) Ownership and Control Relations between the Actual Controllers and the Company
5. Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of thisReport’s approval or were due but could not be redeemed in full?Yes.
(1) Bond Profile
| Bond name | Abbr. | Bond code | Issue date | Maturity | Outstanding balance (RMB’0,000) | Coupon rate |
| Convertible Corporate Bonds of JL MAG Rare-Earth Co., Ltd. | JL Convertible Bonds | 123033 | 1 November 2019 | 31 October 2025 | 43,498.18 | 0.4% for the first year, 1.0% for the second year, 1.5% for the third year, 2.0% for the fourth year, 3.0% for the fifth year and 4.0% for the sixth year |
(2) Latest Rating and Rating Change
On 20 March 2019, CSCI Pengyuan Credit Rating Co., Ltd. issued the Credit Rating Report on ConvertibleCorporate Bonds Offered to the Public by JL MAG Rare-Earth Co., Ltd. in 2019 (CSCI Pengyuan Credit RatingReport [2019] No. Z.80.01), granting a long-term credit rating of AA- to the Company and a credit rating of AA-to the Company’s convertible bonds, with a “Stable” outlook.On 20 May 2020, CSCI Pengyuan Credit Rating Co., Ltd. issued the 2020 Follow-up Credit Rating Reporton Convertible Corporate Bonds Offered to the Public by JL MAG Rare-Earth Co., Ltd. in 2019 (CSCI PengyuanFollow-up Credit Rating Report [2020] No.34.01), maintaining the long-term credit rating of AA- for theCompany and the credit rating of AA- for the Company’s convertible bonds, with a “Stable” outlook.
(3) Selected Financial Information of the Company for the Past Two Years
Unit: RMB’0,000
| Item | 2020 | 2019 | Change |
| Debt/asset ratio | 55.70% | 52.93% | Up by 2.77 percentage points |
| EBITDA/Debt ratio | 20.39% | 17.62% | Up by 2.77 percentage points |
| Interest cover (times) | 5.75 | 5.71 | 0.70% |
Part III Management Discussion and Analysis
1. Business Review for the Reporting Period
On 22 September 2020, President Xi Jinping made a solemn declaration at the 75th session of the UnitedNations General Assembly to the effect that China will scale up its nationally determined contribution, adopt evenmore forceful policies and measures, and strive to peak carbon dioxide emissions before 2030 and achieve carbonneutrality before 2060. JL MAG focuses on the new energy and energy conservation and environmental protectionsectors. As an industry-leading supplier of high performance rare earth permanent magnetic materials in ElectricVehicles and auto parts, Energy-saving variable frequency air conditioner and Wind Power, JL MAG will supportChina in achieving the goal of carbon neutrality.
Since 2020, the coronavirus outbreak has had a huge impact on human society. Under the correct leadershipof higher-level organs, the Company has united all employees to overcome difficulties together following theguidance from the Board of Directors. With equal importance attached to pandemic control and production,substantial growth has been achieved in performance. All employees experienced an extraordinary year together.
Guided by the Company’s core values of “customer orientation, innovation and transcendence; unity ofknowledge and action, integrity and gratitude”, in 2020, the management led all the employees of the Company topool in efforts in accordance with the development strategy formulated by the Board of Directors. As a result, theCompany reported a three-year substantial growth in sales. What’s more, it further increased the share ofproduction and sales in the global rare earth permanent magnet industry, significantly optimized the marketstructure and the customer structure, witnessed a continuous growth in export sales, further improved technologies,quality and management capabilities, and performed stably in the capital market. The Company beefed upsolidarity and sharply boosted core competitiveness on a whole.
During the Reporting Period, the Company continuously concentrated its efforts on new energy and energyconservation and environmental protection sectors, with special attention paid to such core applications as ElectricVehicles and auto parts, Energy-saving variable frequency air conditioner, Wind Power, 3C, Energy savingelevator, Robotics and intelligent manufacturing, as well as Rail transit. The Company’s operating revenue andnet profit kept growing. For the Reporting Period, the Company recorded operating revenue of RMB2,419.3067million, up 42.58% YoY, of which the domestic sales revenue stood at RMB2,078.5022 million, up 46.83% YoY,and the overseas sales revenue amounted to RMB340.8045 million, up 21.17% YoY. The net profit attributable tothe listed company’s shareholders was RMB244.4837 million, up 55.84% YoY. And the net profit attributable tothe listed company’s shareholders before exceptional gains and losses stood at RMB227.1318 million, up 54.68%YoY.
In 2020, the Company achieved revenue of RMB326 million from the Electric Vehicles and auto parts
sectors, representing an increase of 48.07% over last year. The Company has entered the supply chains of multipletop-tier companies in the global automotive industry, and has been designated by a number of international anddomestic automotive customers as a project supplier. What’s particularly notable is that the Company is involvedin the supply chain of Tesla, a global leader in new energy vehicles, with a three-year supply agreement from2021 to 2023 concluded; the Company has been in partnership with Bosch Group for years; the Company won the2020 “Excellent Quality Award” from BYD-Fuddy Power. In 2020, the Company’s revenue from theenergy-saving variable frequency air conditioner sector grew to RMB878 million, representing an increase of
107.99% over last year. The Company continued to consolidate its leading status in the global variable frequencyair conditioner sector. It won the title of “Transition to Lean and Excellent Supplier” from Midea Group and thetitle of “Efficiency Improvement and Excellent Supplier” from the Midea electromechanical business group, inaddition to the 2020 “VE Proposal Award” from Mitsubishi Electric (Guangzhou) Compressor Co., Ltd. TheCompany continued to consolidate its global leading position in Wind Power. Its revenue from Wind Powerreached RMB879 million in 2020. The Company won the honor of “5A Supplier with Good Quality and Credit”from Goldwind for the sixth consecutive year and won the “Technical Support Award” from Goldwind. In 2020,the Company continued to develop high-end markets for Robotics and intelligent manufacturing, as well asEnergy saving elevator, and began mass production and sale of products for the 3C sector.During the Reporting Period, the Company further improved its technology, quality and management ability.In terms of technological R&D, the Company made progress in material engineering, process optimization,surface treatment, recyclable technology and other areas, and actively cooperated with customers in R&D of newproducts and product iteration and upgrade. Products at the ultra-high grades, heavy rare earth free magnet gradesand heavy rare earth lean magnet grades were developed. Particularly, its grain boundary diffusion products werewell received by several strategic customers. The Company established a system of patent application andmanagement. With the support from the Chinese Society of Rare Earths and the guidance of the Science andTechnology Department of the Province as well as the Municipal Science and Technology Bureau, the Companyevaluated a scientific achievement titled "Study and Industrialization of Key Technology to ProduceHigh-temperature Resistant, Low HRE and High Performance Rare Earth Permanent Magnets." The evaluationconclusion was "an international advanced level achieved." In 2020, the Company independently developed,produced and delivered over 100 pieces (sets) of new automatic equipment, which improved the quality andconsistency of products. The Company advocated lean production, integrated business procedures and created theenterprise value chain. The Company’s product delivery capabilities and production efficiency topped the industryand were well recognized by its customers. The Company carried out comprehensive energy managementactivities. It optimized the process, reduced energy consumption, adopted energy-efficient equipment and reducedthe power cost. An excellent supply chain would be built. The Company signed and performed long-term supplyagreements with China Southern Rare Earth Group Co., Ltd. and China Northern Rare Earth (Group) High-techCo., Ltd. At the same time, it gave play to the excellent tradition of returning every particle to the warehouses, andstrictly managed production materials and auxiliary materials.During the Reporting Period, the Company actively expanded its capacity to satisfy the increasing marketdemand. Currently, the Company has the capacity to produce 15,000 tons of billets a year. Its production base is
developing from single factory to a group of multiple factories. In 2020, the Company's IPO projects, includingthe "Establishment of a High Performance Magnet Project with an Annual Capacity of 1,300 Tons" and the"Upgrade and Transformation of Automatic Production Lines", were completed and put into operationsuccessively. Benefits from such projects have been gradually obtained. The Company's convertible bondfund-raising project in 2019 titled "Upgrade and Transformation into Smart Manufacturing Factories" and theprivate placement fund-raising project in 2020 titled "High-end Magnet Project with an Annual Capacity of 3,000Tons for Electric Vehicles and 3C" have been smoothly commenced and are under steady progress. At the sametime, the Company invested RMB575 million in building the "Base of High Performance Rare Earth PermanentMagnetic Materials" in Baotou. The project has been commenced. Upon commissioning, the base will have anannual capacity of 8,000 tons of high performance rare earth permanent magnetic materials and be equipped withsupporting electroplating production lines. The Company established a subsidiary in Ningbo in January 2020 inpreparation for the processing base of 3C magnetic materials. Through the construction and implementation of theaforementioned projects, the Company will effectively expand and upgrade its capacity to produce highperformance magnetic steel, improve the automation of production lines and the competitiveness of its products,and enhance its overall competitiveness and profitability.
During the Reporting Period, the Company made active use of capital market platforms to carry out equityincentives and refinancing. The Company practiced the sharing concept of "Platform Co-creation andAchievement Sharing." In August 2020, the Board of Directors of the Company approved the 2020 RestrictedStock Incentive Plan. By now, a total of 8,034,000 shares have been granted to 226 incentive recipientsaccumulatively, accounting for 2% of the Company's total share capital. In January 2021, the Companysuccessfully issued shares to specific targets and raised a total of RMB521 million, which further enhanced itsstrength and facilitated its rapid development.During the Reporting Period, the Company continuously improved and optimized corporate governance, andwon a series of awards and honors from authoritative medias: The Company won the "Best Board of Directors onthe ChiNext Board" from the 11th Tianma Award for Investor Relations of Chinese Listed Companies organizedby Securities Times; the Company won the "Best Listed Company on the ChiNext Board" from the 15th Surveyof the Competitiveness and Public Credibility of Chinese Listed Companies organized by Chinese SecuritiesJournal; Mr. Cai Baogui, Chairman of the Company, was awarded the "Excellent Golden-Quality Entrepreneur"from the "2020 High-Quality Development Forum of Listed Companies and the Golden-Quality Award"organized by Shanghai Securities News, and was invited to the Entrepreneur Roundtable Forum; the Board ofDirectors of the Company was awarded the 16th Excellent Board of Directors of Chinese Listed Companies bythe Directors & Boards.Since its inception, the Company has been earnestly fulfilling its social responsibilities as a listed companyduring its constant development. Facing the precipitate COVID-19 outbreak at the beginning of 2020, apart fromensuring its own production safety, the Company played a role in the local combat against the pandemic. Itdonated RMB1 million to the First Affiliated Hospital of Gannan Medical University through Ganzhou Red CrossPhilanthropy Foundation, and donated imported medical masks worthy over RMB100,000 to Ganzhou Red CrossPhilanthropy Foundation. In 2020, the anti-pandemic and poverty alleviation funds and supplies donated by the
Company totaled RMB1,212,000; the scholarships or education funds established by it at schools totaledRMB420,000. In addition, the Company continued to increase investment in safe production and environmentprotection in 2020, and recorded expenses of environment protection and occupational safety of RMB11.83million throughout the year, an increase of 9.39% year-on-year.
2. Significant Change to Principal Activities in the Reporting Period
□ Yes √ No
3. Product Category Contributing over 10% of Principal Business Revenue or Profit
√ Applicable □ Not applicable
Unit: RMB
| Product category | Operating revenue | Operating profit | Gross profit margin | YoY change in operating revenue (%) | YoY change in operating profit (%) | YoY change in gross profit margin (%) |
| NdFeB magnetic steel | 2,288,664,323.16 | 554,703,239.07 | 24.24% | 40.40% | 57.29% | Up by 2.60 percentage points |
4. Business Seasonality that Calls for Special Attention
□ Yes √ No
5. Significant YoY Changes in Operating Revenue, Cost of Sales and Net Profit Attributable to the ListedCompany’s Ordinary Shareholders or Their Compositions
□ Applicable √ Not applicable
6. Possibility of Delisting
□ Applicable √ Not applicable
7. Matters Related to Financial Reporting
(1) YoY Changes to Accounting Policies, Accounting Estimates or Measurement Methods
√ Applicable □ Not applicable
(I) Reasons and time for the changes in accounting policies
1. The Ministry of Finance issued the Accounting Standards for Enterprises No. 22 - Recognition andMeasurement of Financial Instruments (2017 Revision) (C.K. [2017] No. 7), the Accounting Standards forEnterprises No. 23 - Transfer of Financial Assets (2017 Revision) (C.K. [2017] No. 8) and the AccountingStandards for Enterprises No. 24 - Hedging (2017 Revision) (C.K. [2017] No. 9) on 31 March 2017, and theAccounting Standards for Enterprises No. 37 - Presentation of Financial Instruments (2017 Revision) (C.K. [2017]No. 14) on 2 May 2017 (the aforementioned standards are collectively referred to as the "new standards onfinancial instruments"). Domestic listed companies were required to implement the standards from 1 January 2019.According to the above requirements, the Company has adopted the aforementioned new financial instrumentssince 1 January 2019, and amended its accounting policies in light of regulations in the new standards on financial
instruments. In accordance with the related transitional requirements in the new standards on financial instruments,the Company did not conduct retroactive adjustment to its comparative statements of the same period of last year.These changes in the accounting policies would not influence the financial status or operating results of theCompany in previous years.
2. On 5 July 2017, the Ministry of Finance revised and issued the Accounting Standards for Enterprises No.14 - Revenues (C.K. [2017] No. 22). According to the requirements of the Ministry of Finance, those enterprisesthat are listed both at home and abroad and those enterprises that are listed overseas and adopt the InternationalFinancial Reporting Standards or the Accounting Standards for Enterprises for preparation of financial statementsshould implement the standards from 1 January 2018; the other domestic listed enterprises should implement thestandards from 1 January 2020; and those non-listed enterprises that adopt the Accounting Standards forEnterprises should implement the standards from 1 January 2021. In accordance with the aforementioned revisedaccounting standards for enterprises, the Company should adjust related accounting policies that it adoptedpreviously. According to the timeline stipulated by the Ministry of Finance, the Company has implemented thenew standards on revenues from 1 January 2020.
3. The Ministry of Finance issued the Notice on Revising and Issuing the Format of Financial Statements ofGeneral Enterprises for 2019 (C.K. (2019) No. 6) and the Notice on Revising and Issuing the Format ofConsolidated Financial Statements (Version 2019) (C.K. (2019) No. 16) on 30 April 2019 and 19 September 2019,respectively. The format of consolidated financial statements was revised. Enterprises were required to preparetheir consolidated financial statements of 2019 and the future periods according to the accounting standards forenterprises and requirements in the Notice on Revision. In accordance with the requirements in theaforementioned Notice on Revision, the Company should accordingly adjust the format of consolidated financialstatements that it adopted previously. According to the timeline stipulated by the Ministry of Finance, the formatof financial statements should be amended from the preparation of the 2019 consolidated financial statements.
(II) Accounting policies adopted before and after the changes
1. Accounting policies before the changes
Before the changes in accounting policies, the Company implemented the Accounting Standards forEnterprises - Basic Standards as well as specific accounting standards, guidelines on accounting standards forenterprises, announcements on interpreting the accounting standards for enterprises and other related regulations.
2. Accounting policies after the changes
After the changes in accounting policies, the Company has implemented the requirements in theaforementioned Notice on Revision. In addition to the above changes in accounting policies, regarding the otherunchanged parts, the Company implements the Accounting Standards for Enterprises - Basic Standards issued bythe Ministry of Finance previously as well as specific accounting standards, guidelines on accounting standardsfor enterprises, announcements on interpreting the accounting standards for enterprises and other relatedregulations.
These changes in accounting policies only affect the format of financial statements and the presentationstandards of some items. There is no retroactive adjustment or substantial influence on the Company's total assets,total liabilities, net assets, revenues and net profit. These changes in accounting policies satisfy requirements in
national laws and regulations, related rules and the Company's actualities. There is no damage to the interests ofthe Company and its shareholders.
(2) Retrospective Restatements due to Correction of Material Accounting Errors in the Reporting Period
□ Applicable √ Not applicable
No such cases.
(3) YoY Changes to the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
JL MAG (Ningbo) Rare-Earth Co., Ltd. and JL MAG (Baotou) Rare-Earth Co., Ltd., wholly-ownedsubsidiaries incorporated on 15 January 2020 and 18 August 2020 respectively, were included in the consolidatedfinancial statements for the year under review.