[Company Information](index=2&type=section&id=Company%20Information) Victory Oil & Gas Pipeline Holdings Limited is a Cayman Islands-incorporated company listed on the Main Board of the Hong Kong Stock Exchange with stock code 1080, headquartered in Zibo, Shandong Province, China - Victory Oil & Gas Pipeline Holdings Limited is a company incorporated in the Cayman Islands and listed on the Main Board of the Hong Kong Stock Exchange with stock code **1080**, with its China headquarters in Zibo, Shandong Province[1](index=1&type=chunk)[3](index=3&type=chunk) [Financial Highlights](index=4&type=section&id=Financial%20Highlights) The Group's revenue increased by 3.5% to approximately RMB 333.6 million, with gross profit margin significantly improving to 11.0%, leading to a narrowed loss attributable to owners of the Company | Indicator | For the Six Months Ended June 30, 2024 | For the Six Months Ended June 30, 2023 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | Approximately RMB 333,604,000 | Approximately RMB 322,269,000 | Increased by 3.5% | | Gross Profit Margin | Approximately 11.0% | Approximately 4.2% | Increased by 6.8 percentage points | | Loss for the Period Attributable to Owners of the Company | Approximately RMB 23,716,000 | Approximately RMB 57,348,000 | Loss narrowed | | Total Comprehensive Loss for the Period Attributable to Owners of the Company | Approximately RMB 49,305,000 | Approximately RMB 57,348,000 | Loss narrowed | | Basic Loss Per Share | Approximately RMB 0.61 Cents | Approximately RMB 1.48 Cents | Loss narrowed | | Interim Dividend | Not recommended | None | No change | [CEO's Report](index=5&type=section&id=CEO%27s%20Report) The CEO's report outlines the company's strategic responses to market dynamics, focusing on client collaboration, operational efficiency, technological innovation, and future growth prospects [Market Environment and Operating Strategy](index=5&type=section&id=CEO%27s%20Report-Market%20Environment%20and%20Operating%20Strategy) Despite a complex external environment, the national economy continues its recovery, with the oil and gas sector showing resilience, enabling the company to pursue its annual operating targets - In the first half of 2024, the external environment's complexity, severity, and uncertainty significantly increased, yet the national economy continued its recovery and positive trend[5](index=5&type=chunk) - The oil and gas industry faces geopolitical challenges and alternative energy development pressures, but the National Pipeline Network Group's strong operating performance supports industry growth[5](index=5&type=chunk) [Market Expansion and Client Collaboration](index=5&type=section&id=CEO%27s%20Report-Market%20Expansion%20and%20Client%20Collaboration) The Group strengthened partnerships with key clients like the National Pipeline Network Group and "Three Barrels of Oil" while successfully expanding into new social markets and increasing processing orders to optimize structure and profitability - The Group deepened strategic cooperation with key clients such as the National Pipeline Network Group and the "Three Barrels of Oil," achieving **first and second place** in bids from PetroChina and Sinopec, respectively[6](index=6&type=chunk) - **Five new clients** were successfully developed, particularly a leading insulation industry enterprise within the province, laying a foundation for stable future cooperation[7](index=7&type=chunk) - Increased development of processing orders effectively reduced procurement capital occupation costs and improved processing profit margins[7](index=7&type=chunk) [Production Operations and Management Efficiency](index=6&type=section&id=CEO%27s%20Report-Production%20Operations%20and%20Management%20Efficiency) The Group successfully completed major national pipeline projects, enhanced production efficiency through process optimization, and reduced labor costs via flexible employment, while strengthening safety management - Successfully completed supply guarantee tasks for several large pipeline projects, including the National Pipeline Network Group's Hulin-Changchun Natural Gas Pipeline and the Second West-East Gas Pipeline[8](index=8&type=chunk) - Adopted a "stable key positions, flexible auxiliary positions" employment principle, gradually reducing fixed employment to effectively lower labor costs[9](index=9&type=chunk) - Implemented safety "grid management," establishing a reporting platform with rewards and penalties to achieve comprehensive safety production management[10](index=10&type=chunk) [Quality Management and Technological Innovation](index=7&type=section&id=CEO%27s%20Report-Quality%20Management%20and%20Technological%20Innovation) The company achieved significant quality management milestones, including successful API audits and carbon footprint certifications, while advancing technological innovation through equipment upgrades and patent acquisitions - Successfully passed the **API 5L monogram and API Spec Q1 annual surveillance audits**, and obtained carbon footprint and Type III environmental declaration certifications for spiral submerged arc welded pipes and anti-corrosion steel pipes[11](index=11&type=chunk) - Solidly advanced the upgrade and transformation of **eight key equipment technologies** to enhance production efficiency and quality[12](index=12&type=chunk) - During the reporting period, **15 scientific papers** were published, **one invention patent** and **one utility model patent** were granted, with **two additional utility model patents** pending application[12](index=12&type=chunk) [Future Outlook](index=8&type=section&id=CEO%27s%20Report-Future%20Outlook) Despite a projected slowdown in global oil demand, China's economy is expected to meet its GDP growth target, with the Group leveraging its capacity and technology as a key supplier to secure more orders and enhance competitiveness - China is expected to achieve its annual GDP growth target of around **5%** in 2024, with domestic crude oil and natural gas production maintaining growth[13](index=13&type=chunk) - The Group will leverage its production capacity and technological advantages as a main supplier to the National Pipeline Network Group to secure more project orders and actively plan for the second-half framework agreement bidding[14](index=14&type=chunk) - The company will continue to deepen strategic adjustments, optimize its business structure, and promote product and technology upgrades to enhance core competitiveness[14](index=14&type=chunk) [Management Discussion and Analysis](index=10&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth review of the Group's market performance, operational achievements, and financial results for the period, including detailed insights into revenue, profitability, assets, liabilities, and liquidity [Market Overview](index=10&type=section&id=Market%20Overview) In the first half of 2024, China's economy continued its recovery with a 5.0% GDP growth, while the oil and gas sector saw increased production despite softening demand for refined oil products due to rising new energy adoption - In the first half of 2024, China's GDP was approximately **RMB 61.7 trillion**, growing by **5.0%** year-on-year[15](index=15&type=chunk) - National crude oil output from industrial enterprises above designated size increased by **1.9%** year-on-year, and natural gas output grew by **6.0%** year-on-year, reaching a historical high for the same period[15](index=15&type=chunk) - The increasing penetration of new and alternative energies led to weak demand in the domestic refined oil market, with the share of clean energy consumption increasing by **2.2 percentage points** year-on-year[15](index=15&type=chunk) [Business Review](index=11&type=section&id=Business%20Review) The Group, a leading SAWH pipe manufacturer in China, primarily serves the National Pipeline Network Group and major state-owned oil companies, with an annual production capacity of approximately 0.8 million tonnes of SAWH pipes - The Group is a major SAWH pipe manufacturer in China, with key clients including the National Pipeline Network Group and large state-owned enterprises such as Sinopec, PetroChina, and CNOOC[17](index=17&type=chunk) Production Capacity | Capacity | Value | | :--- | :--- | | Annual SAWH Pipe Production Capacity | Approximately 0.8 million tonnes | | Annual Anti-Corrosion Production Line Capacity | Approximately 4.8 million sqm | | Annual Insulation Pipe Production Line Capacity | 110 km | - During the reporting period, the Group participated in several large-scale projects, including the National Pipeline Network Group's Hulin-Changchun Natural Gas Pipeline Project and the Second West-East Gas Pipeline Project[18](index=18&type=chunk) [Financial Review](index=12&type=section&id=Financial%20Review) The Group's total revenue increased by 3.5% to RMB 334 million, driven by growth in anti-corrosion treatment and new trading business, resulting in a significant 169.0% increase in gross profit and a narrowed comprehensive loss [Revenue](index=12&type=section&id=Revenue) Total revenue for the reporting period was approximately RMB 334 million, a 3.5% year-on-year increase, primarily driven by a substantial 70.5% growth in anti-corrosion treatment income and new trading business, despite a 3.7% decrease in SAWH pipe sales | Revenue Item | 2024 H1 (RMB) | 2023 H1 (RMB) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | **333,604,000** | **322,269,000** | **+3.5%** | | SAWH Pipe Sales | 293,963,000 | 305,226,000 | -3.7% | | Anti-Corrosion Treatment | 28,947,000 | 16,973,000 | +70.5% | | Insulation Treatment | 0 | 70,000 | -100% | | Trading Business | 10,694,000 | 0 | N/A | [Gross Profit](index=13&type=section&id=Gross%20Profit) Gross profit for the reporting period was approximately RMB 36.79 million, a substantial 169.0% year-on-year increase, with the gross profit margin rising from 4.2% to 11.0%, mainly due to a higher proportion of national pipeline and anti-corrosion treatment businesses which have higher margins | Indicator | 2024 H1 | 2023 H1 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Gross Profit | Approximately RMB 36,794,000 | Approximately RMB 13,677,000 | +169.0% | | Gross Profit Margin | Approximately 11.0% | Approximately 4.2% | +6.8 percentage points | [Operating Expenses](index=13&type=section&id=Operating%20Expenses) During the reporting period, sales and service costs decreased due to cost compression, and administrative expenses also declined, while selling and distribution costs increased primarily due to higher transportation fees - Sales and service costs decreased by approximately **3.8%** year-on-year to **RMB 297 million**, mainly due to the Group's efforts to compress various cost expenditures[20](index=20&type=chunk) - Selling and distribution costs increased to **RMB 18.91 million**, primarily due to increased transportation expenses borne by subsidiaries[23](index=23&type=chunk) - Administrative expenses decreased to **RMB 39.76 million**, as the Group rationally planned and compressed various expenditures[24](index=24&type=chunk) [Total Comprehensive Loss for the Period](index=14&type=section&id=Total%20Comprehensive%20Loss%20for%20the%20Period) The Group's total comprehensive loss for the period narrowed from RMB 57.94 million in the prior year to RMB 49.70 million in the current reporting period | Indicator | 2024 H1 (RMB) | 2023 H1 (RMB) | | :--- | :--- | :--- | | Total Comprehensive Loss for the Period | Approximately 49,695,000 | Approximately 57,944,000 | [Assets, Liabilities and Capital Expenditure](index=15&type=section&id=Assets%2C%20Liabilities%20and%20Capital%20Expenditure) As of June 30, 2024, the Group's total assets, total liabilities, and net assets all decreased compared to the end of 2023, with net current assets also declining, while capital expenditure was primarily for property, plant, and equipment purchases | Balance Sheet Item | June 30, 2024 (RMB) | December 31, 2023 (RMB) | | :--- | :--- | :--- | | Total Assets | 959,318,000 | 1,083,579,000 | | Total Liabilities | 505,581,000 | 580,147,000 | | Net Assets | 453,737,000 | 503,432,000 | | Net Current Assets | 6,032,000 | 18,868,000 | - Capital expenditure for the six months ended June 30, 2024, was **RMB 13.622 million**, primarily for the acquisition of property, plant, and equipment[33](index=33&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=16&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Capital%20Structure) As of June 30, 2024, the Group's cash and cash equivalents significantly decreased to RMB 47.37 million, mainly due to increased inventories and reduced contract liabilities, while total borrowings were approximately RMB 325 million, leading to an increased gearing ratio - Cash and cash equivalents significantly decreased from **RMB 137 million** at the end of 2023 to **RMB 47.37 million**, primarily due to increased inventories and decreased contract liabilities[36](index=36&type=chunk) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Borrowings | Approximately RMB 325,017,000 | Approximately RMB 329,567,000 | | Gearing Ratio | Approximately 50.1% | Approximately 46.0% | [Interim Dividend](index=17&type=section&id=Interim%20Dividend) The Board of Directors does not recommend the declaration of any interim dividend for the six months ended June 30, 2024 - The Board of Directors does not recommend the payment of an interim dividend for 2024, consistent with the same period last year[38](index=38&type=chunk) [Directors' Report](index=18&type=section&id=Directors%27%20Report) The Directors' Report details the interests of directors and major shareholders in the company's shares, outlines the share option scheme, and confirms compliance with various regulatory requirements [Directors' and Chief Executives' Interests](index=18&type=section&id=Directors%27%20and%20Chief%20Executives%27%20Interests) The report discloses the interests of directors and major shareholders in the company's shares, with Chairman Mr. Wei Jun holding approximately 16.003% through a controlled corporation, and Mefun Group Limited and LM Global Asset LP being major shareholders - Mr. Wei Jun, Chairman and Non-executive Director, is deemed to be interested in **620,000,000 shares** of the Company, representing approximately **16.003%** of the issued share capital, through Mefun Group Limited, in which he holds a **65.97%** interest[40](index=40&type=chunk)[41](index=41&type=chunk) - Major shareholders Mefun Group Limited and LM Global Asset LP hold approximately **16.003%** and **15.486%** of the Company's shares, respectively[54](index=54&type=chunk)[56](index=56&type=chunk) [Share Option Scheme](index=21&type=section&id=Share%20Option%20Scheme) The company's share option scheme, adopted in 2016 and valid until 2026, had 73.95 million unexercised options as of June 30, 2024, representing 1.9087% of issued share capital, with no new grants, exercises, or lapses during the period - The share option scheme became effective on **May 20, 2016**, for a period of **10 years**[50](index=50&type=chunk) - As of June 30, 2024, there were **73,950,000 unexercised share options** with an exercise price of **HKD 0.10**, representing **1.9087%** of the issued share capital[53](index=53&type=chunk) - The total number of shares available for issue under the share option scheme is **139,443,060 shares**, representing approximately **3.5991%** of the issued shares as of the report date[52](index=52&type=chunk) [Other Compliance Matters](index=20&type=section&id=Other%20Compliance%20Matters) During the reporting period, the Group had no significant capital commitments, contingent liabilities, or major investments/disposals, maintained its public float, and confirmed no material interests of directors in significant contracts or post-balance sheet events - As of June 30, 2024, the Group's capital commitments for the acquisition of property, plant, and equipment were approximately **RMB 17,000**[44](index=44&type=chunk) - The Group had no contingent liabilities and did not use any financial instruments to hedge its minimal foreign exchange risk[46](index=46&type=chunk)[47](index=47&type=chunk) - The company has maintained a public float of not less than **25%** as required by the Listing Rules[59](index=59&type=chunk) [Corporate Governance](index=29&type=section&id=Corporate%20Governance) This section details the company's adherence to corporate governance standards, including compliance with the Listing Rules and the functions of the Audit Committee [Compliance Status](index=29&type=section&id=Corporate%20Governance-Compliance%20Status) During the reporting period, the company adopted and complied with all code provisions of the HKEX Corporate Governance Code, and all directors confirmed adherence to the Model Code for securities transactions - The company has adopted and complied with all principles and code provisions of the Corporate Governance Code in Appendix C1 of the HKEX Listing Rules[65](index=65&type=chunk) - All directors have confirmed their compliance with the standards set out in the Model Code throughout the review period[66](index=66&type=chunk) [Audit Committee](index=29&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, is responsible for reviewing and overseeing financial reporting, risk management, and internal control systems, and has reviewed the unaudited financial statements and interim report for the period - The Audit Committee is composed of **three independent non-executive directors**, with Mr. Chen Junzhu serving as Chairman[67](index=67&type=chunk) - The Audit Committee has reviewed the Group's unaudited financial statements and interim report for the review period, and also reviewed the risk management and internal control systems[67](index=67&type=chunk)[68](index=68&type=chunk) [Unaudited Condensed Consolidated Interim Financial Statements](index=30&type=section&id=Unaudited%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the interim period, including the statement of profit or loss, financial position, changes in equity, and cash flows [Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=30&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2024, the Group recorded revenue of RMB 333.6 million and gross profit of RMB 36.79 million, resulting in a pre-tax loss of RMB 24.09 million and a total comprehensive loss of RMB 49.70 million after accounting for fair value changes in financial assets | Item | For the Six Months Ended June 30, 2024 (RMB Thousand) | | :--- | :--- | | Revenue | 333,604 | | Gross Profit | 36,794 | | Loss Before Tax | (24,086) | | Loss for the Period | (24,106) | | Total Comprehensive Loss for the Period | (49,695) | [Unaudited Condensed Consolidated Statement of Financial Position](index=32&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, the Group's total assets amounted to RMB 959.32 million, total liabilities to RMB 505.58 million, and net assets to RMB 453.74 million, with net current assets of RMB 6.03 million | Item | June 30, 2024 (RMB Thousand) | December 31, 2023 (RMB Thousand) | | :--- | :--- | :--- | | Non-current Assets | 555,698 | 579,355 | | Current Assets | 403,620 | 504,224 | | **Total Assets** | **959,318** | **1,083,579** | | Current Liabilities | 397,588 | 485,356 | | Non-current Liabilities | 107,993 | 94,791 | | **Total Liabilities** | **505,581** | **580,147** | | **Net Assets** | **453,737** | **503,432** | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=34&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2024, total equity decreased from RMB 503.43 million at the beginning of the year to RMB 453.74 million, primarily due to a total comprehensive loss of RMB 49.70 million for the period - Total equity decreased from **RMB 503,432 thousand** as of January 1, 2024, to **RMB 453,737 thousand** as of June 30, 2024[128](index=128&type=chunk) - The change in equity primarily resulted from a total comprehensive loss for the period of **RMB 49,695 thousand**, which included a loss for the period of **RMB 24,106 thousand** and other comprehensive loss of **RMB 25,589 thousand**[128](index=128&type=chunk)[129](index=129&type=chunk) [Unaudited Condensed Consolidated Statement of Cash Flows](index=36&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) During the reporting period, net cash used in operating activities was RMB 88.82 million, net cash from investing activities was RMB 9.22 million, and net cash used in financing activities was RMB 10.35 million, resulting in a net decrease in cash and cash equivalents of RMB 89.95 million | Cash Flow Item | For the Six Months Ended June 30, 2024 (RMB Thousand) | | :--- | :--- | | Net Cash Used in Operating Activities | (88,819) | | Net Cash From Investing Activities | 9,219 | | Net Cash Used in Financing Activities | (10,352) | | **Net Decrease in Cash and Cash Equivalents** | **(89,952)** | | Cash and Cash Equivalents at Beginning of Period | 137,318 | | **Cash and Cash Equivalents at End of Period** | **47,366** | [Notes to the Unaudited Condensed Consolidated Interim Financial Statements](index=38&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated interim financial statements, covering segment information, borrowings, and related party transactions [Segment Information (Note 3)](index=39&type=section&id=Segment%20Information) The Group's operations are divided into "Welded Pipe Business" and "Trading Business" segments, with the welded pipe business generating RMB 322.91 million in revenue and a loss of RMB 10.70 million, and the new trading business generating RMB 10.69 million in revenue with a loss of RMB 1.65 million, with most revenue derived from China 2024 H1 Segment Performance (Unaudited) | 2024 H1 Segment Performance (Unaudited) | Welded Pipe Business (RMB Thousand) | Trading Business (RMB Thousand) | Total (RMB Thousand) | | :--- | :--- | :--- | :--- | | Segment Revenue | 322,910 | 10,694 | 333,604 | | Segment Result | (10,699) | (1,652) | (12,351) | - Revenue from major customer A accounted for the majority of total revenue, at **RMB 250 million**[147](index=147&type=chunk) [Borrowings (Note 16)](index=54&type=section&id=Borrowings) As of June 30, 2024, the Group's total borrowings were approximately RMB 325 million, slightly lower than the end of 2023, comprising secured bank loans and unsecured other loans, with approximately RMB 219 million due within one year | Borrowing Type | June 30, 2024 (RMB Thousand) | December 31, 2023 (RMB Thousand) | | :--- | :--- | :--- | | Bank Loans – Secured | 276,250 | 280,800 | | Other Loans – Unsecured | 48,767 | 48,767 | | **Total** | **325,017** | **329,567** | - Bank loans are secured by the Group's property, plant, and equipment with a carrying value of approximately **RMB 119 million** and right-of-use assets of approximately **RMB 69.08 million**[171](index=171&type=chunk) - Other loans primarily consist of advances from directors, senior management, and employees, bearing a fixed annual interest rate of **5%**[172](index=172&type=chunk) [Related Party Transactions (Note 19)](index=56&type=section&id=Related%20Party%20Transactions) During the reporting period, significant related party transactions primarily involved interest payments on other loans to the company's directors, with outstanding loan balances from directors and key management personnel totaling RMB 1.065 million at period-end - Interest paid on other loans to the Company's directors amounted to **RMB 26,000**[177](index=177&type=chunk) - As of June 30, 2024, the loan balance from directors, chief executive, and other key management personnel was **RMB 1,065,000**[178](index=178&type=chunk)

[Financial Highlights and Interim Results Announcement](index=1&type=section&id=Financial%20Highlights%20and%20Interim%20Results%20Announcement) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) As of June 30, 2024, the company's revenue increased by 3.5% year-on-year, and gross profit margin significantly improved by 6.8 percentage points to 11.0%. Loss attributable to owners of the company narrowed substantially to RMB 23.716 million, but the Board did not recommend an interim dividend 2024 Interim Performance Key Financial Indicators | Indicator | 2024 Interim | 2023 Interim | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | approx. RMB 333,604,000 | approx. RMB 322,269,000 | +3.5% | | Gross Profit Margin | approx. 11.0% | approx. 4.2% | +6.8 percentage points | | Loss for the Period Attributable to Owners of the Company | approx. RMB 23,716,000 | approx. RMB 57,348,000 | Loss narrowed by 58.6% | | Basic Loss Per Share | approx. 0.61 cents | approx. 1.48 cents | Loss narrowed | | Interim Dividend | Not recommended | None | - | [Unaudited Condensed Consolidated Financial Statements](index=2&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Financial statements show gross profit increased by 169.0% year-on-year due to controlled sales costs, and pre-tax loss significantly narrowed from RMB 57.924 million to RMB 24.086 million. However, other comprehensive loss of RMB 25.589 million was recorded due to fair value adjustment of a financial asset. Total assets and net assets decreased, and cash and cash equivalents significantly reduced [Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) During the review period, revenue was RMB 334 million, up 3.5% year-on-year. Gross profit significantly increased to RMB 36.794 million from RMB 13.677 million in the prior period. Administrative expenses decreased, but total comprehensive loss for the period was RMB 49.70 million due to a fair value loss of RMB 25.589 million on a financial asset designated at fair value through other comprehensive income Condensed Consolidated Statement of Profit or Loss Key Items (RMB thousands) | Item | 2024 H1 (Unaudited) | 2023 H1 (Unaudited) | | :--- | :--- | :--- | | Revenue | 333,604 | 322,269 | | Sales and Services Costs | (296,810) | (308,592) | | **Gross Profit** | **36,794** | **13,677** | | Administrative Expenses | (39,763) | (48,913) | | Finance Costs | (6,601) | (6,821) | | **Loss Before Tax** | **(24,086)** | **(57,924)** | | Loss for the Period | (24,106) | (57,944) | | Other Comprehensive Loss | (25,589) | – | | **Total Comprehensive Loss for the Period** | **(49,695)** | **(57,944)** | | **Loss Attributable to Owners of the Company** | **(23,716)** | **(57,348)** | [Statement of Financial Position](index=4&type=section&id=Statement%20of%20Financial%20Position) As of June 30, 2024, the Group's total assets were RMB 959 million, a decrease from RMB 1.084 billion at the end of 2023. Total liabilities decreased to RMB 506 million, and net assets were RMB 454 million. Cash and cash equivalents significantly dropped from RMB 137 million to RMB 47.37 million Condensed Consolidated Statement of Financial Position Key Items (RMB thousands) | Item | 2024 June 30 (Unaudited) | 2023 December 31 (Audited) | | :--- | :--- | :--- | | **Non-current Assets** | 555,698 | 579,355 | | **Current Assets** | 403,620 | 504,224 | | *Of which: Cash and Cash Equivalents* | *47,366* | *137,318* | | **Total Assets** | **959,318** | **1,083,579** | | **Current Liabilities** | 397,588 | 485,356 | | **Non-current Liabilities** | 107,993 | 94,791 | | **Total Liabilities** | **505,581** | **580,147** | | **Net Assets** | **453,737** | **503,432** | [Management Discussion and Analysis](index=24&type=section&id=Management%20Discussion%20and%20Analysis) [CEO's Report](index=24&type=section&id=CEO%27s%20Report) The CEO's report highlights the company's stable operations despite a challenging external environment, achieved through strengthened cooperation with key clients like China Oil & Gas Piping Network Corporation, active market expansion, optimized production layout, and enhanced management efficiency. The company achieved significant results in quality management and technological innovation, maintaining confidence in the future development of the domestic oil and gas industry, and will continue to focus on its core business and explore new ventures to create shareholder value [Operational Review](index=24&type=section&id=Operational%20Review) During the review period, the company made progress in market, production, management, quality, and technology. Market efforts solidified cooperation with key clients and expanded to new social customers. Production efficiently completed national pipeline supply tasks. Management optimized labor and incentive systems. Quality and technology achieved API certifications, carbon footprint verification, and advanced equipment upgrades with new patents - Strengthened cooperation with China Oil & Gas Piping Network Corporation and "Three Barrels of Oil" (Sinopec, PetroChina, CNOOC) key clients, achieving excellent results in PetroChina and Sinopec tenders[56](index=56&type=chunk) - Actively expanded into the social market, successfully developed **5 new customers**, and increased processing orders, optimizing order structure and profitability[57](index=57&type=chunk) - Successfully completed steel pipe production and anti-corrosion tasks for multiple large-scale projects, including the China Oil & Gas Piping Network Corporation's Hulin-Changchun natural gas pipeline[58](index=58&type=chunk) - Passed API 5L and API Spec Q1 annual audits, and obtained carbon footprint and Type III environmental declaration certifications for spiral submerged arc welded pipes and anti-corrosion steel pipes[61](index=61&type=chunk) - Steadily advanced **8 key equipment technology upgrades** and obtained **1 invention patent** and **1 utility model patent** authorization[63](index=63&type=chunk) [Future Outlook](index=27&type=section&id=Future%20Outlook) Looking ahead, with global economic resilience and China's economy expected to meet growth targets, the company sees opportunities in the domestic oil and gas industry. Despite challenges from new energy alternatives, national support policies for oil and gas exploration provide positive signals. The company will leverage its advantage as a key supplier to China Oil & Gas Piping Network Corporation, deepening strategic adjustments, technological innovation, and market expansion for stable and sustainable growth - Global oil demand growth is expected to slow, but domestic crude oil and natural gas production will grow steadily, supporting industry development[64](index=64&type=chunk) - The company will continue to leverage its capacity and technological advantages as a key supplier to China Oil & Gas Piping Network Corporation, striving for more project orders and actively planning for the second half's framework agreement tenders[65](index=65&type=chunk) - The company's strategy will focus on deepening cooperation with core clients, promoting technological upgrades, and pursuing long-term development by expanding into new businesses to create shareholder value[65](index=65&type=chunk) [Financial Review](index=31&type=section&id=Financial%20Review) During the review period, the Group's total revenue increased by 3.5% to RMB 334 million, primarily driven by strong growth in anti-corrosion treatment and new trading business revenue, offsetting a slight decline in welded pipe sales. Gross profit and gross profit margin both increased significantly, mainly due to a higher proportion of high-margin national pipeline and anti-corrosion businesses. Administrative expenses were effectively controlled, but sales costs increased due to higher transportation fees. Ultimately, total comprehensive loss for the period narrowed to RMB 49.70 million Revenue Composition Analysis (RMB thousands) | Business Segment | 2024 H1 | 2023 H1 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | SAWH Welded Pipe Sales | 293,963 | 305,226 | -3.7% | | Anti-corrosion Treatment | 28,947 | 16,973 | +70.5% | | Trading Business | 10,694 | 0 | - | | **Total Revenue** | **333,604** | **322,269** | **+3.5%** | - Gross profit increased by **169.0%** to **RMB 36.794 million**, and gross profit margin improved from **4.2%** to **11.0%**, mainly due to a significant increase in the proportion of high-margin national pipeline and anti-corrosion treatment businesses[74](index=74&type=chunk) - Sales and distribution costs increased due to higher transportation fees, while administrative expenses decreased due to cost control[76](index=76&type=chunk)[77](index=77&type=chunk) - Due to the reclassification of the investment in Xinfeng Energy as a financial asset designated at fair value through other comprehensive income, a fair value change loss of **RMB 25.589 million** was recognized[82](index=82&type=chunk) [Capital & Risk Management](index=35&type=section&id=Capital%20%26%20Risk%20Management) As of June 30, 2024, the Group's total borrowings were approximately RMB 325 million, slightly lower than the end of 2023. The gearing ratio increased from 46.0% to 50.1%, mainly due to a decrease in equity. The Group's business is primarily denominated in RMB, with limited foreign exchange risk and no hedging activities. Some bank loans are secured by property, plant, equipment, and right-of-use assets Borrowing Situation (RMB thousands) | Borrowing Type | 2024 June 30 | 2023 December 31 | | :--- | :--- | :--- | | Bank Loans - Secured | 276,250 | 280,800 | | Other Loans - Unsecured | 48,767 | 48,767 | | **Total** | **325,017** | **329,567** | - The gearing ratio increased from **46.0%** at the end of 2023 to **50.1%** as of June 30, 2024[93](index=93&type=chunk) - The Group pledged property, plant and equipment of approximately **RMB 119 million** and right-of-use assets of approximately **RMB 69.08 million** as collateral for bank loans of **RMB 276 million**[96](index=96&type=chunk) - The Group's business is primarily transacted and settled in RMB, with minimal foreign exchange risk, and no hedging instruments are used[98](index=98&type=chunk) [Notes to the Financial Statements](index=6&type=section&id=Notes%20to%20the%20Financial%20Statements) [Segment and Customer Information](index=7&type=section&id=Segment%20and%20Customer%20Information) The Group's business is divided into two reportable segments: welded pipe business and trading business. The welded pipe business is the absolute dominant segment in terms of revenue and assets, contributing the vast majority of revenue. During the review period, trading business revenue was RMB 10.694 million, compared to zero in the prior period. The Group's revenue is almost entirely from the Chinese market, and there is a significant concentration risk with major customers, where customer A's revenue accounts for over 75% of total revenue Segment Revenue and Results (RMB thousands) | For the six months ended June 30, 2024 | Welded Pipe Business | Trading Business | Total | | :--- | :--- | :--- | :--- | | **Segment Revenue** | 322,910 | 10,694 | 333,604 | | **Segment Results** | (10,699) | (1,652) | (12,351) | - Revenue from major customer A was **RMB 250,151,000**, accounting for **75%** of the Group's total revenue[20](index=20&type=chunk) [Key Balance Sheet Items Analysis](index=17&type=section&id=Key%20Balance%20Sheet%20Items%20Analysis) Among key balance sheet items, financial assets designated at fair value through other comprehensive income (investment in Xinfeng Energy) recorded a fair value decrease of RMB 25.589 million. Total trade receivables remained stable, with the aging structure showing most due within one year. Total borrowings slightly decreased to RMB 325 million, with secured bank loans accounting for the majority - The fair value of financial assets designated at fair value through other comprehensive income (unlisted equity investment in Xinfeng Energy) decreased from **RMB 97.264 million** to **RMB 71.675 million**, resulting in a fair value change loss of **RMB 25.589 million**[34](index=34&type=chunk)[35](index=35&type=chunk) Trade Receivables Aging Analysis (Net, RMB thousands) | Aging | 2024 June 30 | 2023 December 31 | | :--- | :--- | :--- | | Within 3 months | 45,534 | 39,894 | | 3 to 6 months | 44 | 5,152 | | 6 months to 1 year | 11,003 | 10,673 | | 1 to 2 years | 1,459 | 381 | | **Total** | **58,040** | **56,100** | - As of June 30, 2024, the Group's total borrowings were **RMB 325 million**, of which **RMB 276 million** were secured bank loans and **RMB 48.77 million** were unsecured other loans. Approximately **RMB 219 million** of borrowings are repayable within one year[47](index=47&type=chunk) [Other Corporate Information](index=37&type=section&id=Other%20Corporate%20Information) [Dividends and Corporate Governance](index=37&type=section&id=Dividends%20and%20Corporate%20Governance) The Board did not recommend any interim dividend for the review period. The company complied with the Corporate Governance Code under the Listing Rules and maintained sufficient public float. The Audit Committee reviewed the unaudited financial statements for the period - The Board did not recommend the declaration of any interim dividend for the six months ended June 30, 2024[100](index=100&type=chunk) - The company complied with all code provisions of the Corporate Governance Code during the review period[102](index=102&type=chunk) - The Audit Committee, comprising three independent non-executive directors, reviewed the Group's unaudited financial statements, risk management, and internal control systems[107](index=107&type=chunk)

Financial Performance - For the year ended December 31, 2023, the company's revenue was approximately RMB 591,885,000, a decrease of about RMB 455,006,000 compared to 2022[7]. - The gross profit margin for the year was approximately 5.7%, a decrease of about 4.0 percentage points from the previous year[7]. - The net loss attributable to shareholders for the year was approximately RMB 98,414,000, an increase of about RMB 65,410,000 compared to 2022[7]. - Basic and diluted loss per share attributable to shareholders was approximately RMB 2.54, an increase of about RMB 1.69 compared to the previous year[7]. - The group's sales revenue decreased by approximately 43.5% to about RMB 591,885,000 for the year ended December 31, 2023, down from approximately RMB 1,046,891,000 in the previous year[48]. - The group's gross profit decreased from approximately RMB 101,981,000 to about RMB 33,463,000, resulting in a gross margin decline from approximately 9.7% to about 5.7%[53]. - The total comprehensive loss for the year ended December 31, 2023, was approximately RMB 99,233,000, compared to RMB 29,395,000 for the year ended December 31, 2022[71]. Dividends and Shareholder Returns - The board of directors did not recommend the payment of any final or interim dividends for the year ended December 31, 2023[7]. - The board does not recommend the distribution of a final dividend for the year ended December 31, 2023[116]. Operational Efficiency and Production - The company aims to secure more orders and enhance its performance by leveraging its strong operational capabilities and advanced technology[11]. - The production efficiency was maximized, ensuring timely and quality completion of various pipeline production tasks, with a historical high first-pass yield achieved during the production of key national pipeline specifications[18]. - The company implemented multiple equipment upgrades, including a new hydraulic system and modifications to pressure testing machinery, to enhance production quality and efficiency[19]. - The company adopted a comprehensive contracting model for its five major grassroots units, significantly improving production efficiency and product quality[21]. - The group has strengthened internal management and steadily advanced technological projects and equipment renovations to improve production automation levels[38]. Market and Customer Relations - The company maintained strong relationships with key clients such as Sinopec and China National Petroleum Corporation while expanding its market presence[14]. - The company expanded its social market by acquiring 8 new customers, particularly in the insulation industry, despite a significant reduction in order volume due to delays in the national pipeline framework bidding[14]. - The company anticipates a peak in pipeline construction market demand due to national energy strategies and infrastructure development plans[31]. - The company aims to optimize order structure and focus on large-diameter thermal pipeline markets to ensure stable growth in orders[33]. Financial Management and Investments - The group recognized an impairment loss of approximately RMB 39,044,000 related to its investment in a joint venture, New Feng Energy Group[60]. - The group recognized a tax rebate of approximately RMB 15,122,000 for the year ended December 31, 2023, compared to a tax expense of approximately RMB 186,000 in 2022[70]. - The group currently has limited foreign exchange risk and does not have any hedging arrangements in place to manage this risk[80]. - The effective annual interest rate for bank loans ranged from 3.97% to 4.38% in 2023, compared to 4.00% to 4.44% in 2022[78]. Sustainability and Environmental Initiatives - The photovoltaic power generation project generated approximately 3.265 million kWh, equivalent to a CO2 reduction of 3,200 tons, contributing to national carbon neutrality goals[25]. - The management team emphasized a commitment to sustainability, aiming for a 30% reduction in carbon emissions by 2025[94]. - The group has obtained ISO 14001 environmental management system certification, indicating good environmental performance[114]. Corporate Governance - The board of directors consists of five executive directors, one non-executive director, and three independent non-executive directors, ensuring a balanced structure with diverse industry knowledge and experience[184]. - The audit committee consists of three independent non-executive directors, including Mr. Chan, Mr. Ng, and Mr. Chiu, with Mr. Chan serving as the chairman[200]. - The company has adopted the corporate governance principles and code provisions set out in Appendix C1 of the Listing Rules from January 1, 2023, to December 31, 2023[182]. Employee and Management Information - The total employee compensation and related costs were approximately RMB 68,522,000 as of December 31, 2023, a decrease from RMB 76,004,000 in 2022[166]. - The group employed 513 staff members as of December 31, 2023, down from 539 in 2022[166]. - Each director has entered into a service contract or appointment letter with the company for a term of three years, with provisions for termination with prior written notice[192].

Financial Performance - For the year ended December 31, 2023, revenue was approximately RMB 591,885,000, a decrease of about RMB 455,006,000 compared to 2022[3]. - Gross profit margin for the year was approximately 5.7%, a decrease of about 4.0 percentage points from 2022[3]. - The loss attributable to owners of the company for the year was approximately RMB 98,414,000, an increase of about RMB 65,410,000 compared to 2022[3]. - Basic and diluted loss per share attributable to owners of the company was approximately RMB 2.54, an increase of about RMB 1.69 compared to 2022[3]. - The total loss for the fiscal year 2023 was RMB 99,233,000, compared to a loss of RMB 29,258,000 for the fiscal year 2022, indicating a significant increase in losses[20][18]. - The company reported a pre-tax loss of RMB 114,355,000 compared to a pre-tax loss of RMB 29,072,000 in 2022[4]. - The company reported a pre-tax loss of RMB 98,414,000 for 2023, compared to a loss of RMB 33,004,000 in 2022, reflecting an increase in losses[44]. - The group's total audited comprehensive loss for the year ended December 31, 2023, was approximately RMB 99,233,000, compared to RMB 29,395,000 for the year ended December 31, 2022[138]. Revenue Breakdown - For the fiscal year ending December 31, 2023, the total revenue from the welded pipe business was RMB 547,827,000, while the trading business generated RMB 44,058,000, resulting in a total revenue of RMB 591,885,000[18]. - Revenue from the welding pipe business decreased to RMB 510,914 thousand in 2023 from RMB 952,702 thousand in 2022, a decline of approximately 46.4%[29]. - Revenue from trading business increased to RMB 44,058 thousand in 2023 from RMB 8,935 thousand in 2022, a growth of approximately 392.5%[29]. - The revenue from SAWH welded pipes decreased by approximately 35.6% to about RMB 510,914,000, while the SAWL welded pipe segment reported zero revenue compared to RMB 159,386,000 in 2022[118]. - The company's sales revenue decreased by approximately 43.5% to about RMB 591,885,000 from approximately RMB 1,046,891,000 in the previous year[118]. Assets and Liabilities - Total assets decreased to RMB 598,223,000 from RMB 606,168,000 in 2022[8]. - Net assets attributable to owners of the company decreased to RMB 495,199,000 from RMB 593,538,000 in 2022[8]. - Current liabilities decreased to RMB 485,356,000 from RMB 550,230,000 in 2022[7]. - Total assets decreased from RMB 1,288,105,000 in 2022 to RMB 981,949,000 in 2023, reflecting a decline of about 24%[59]. - The total liabilities increased significantly, with current liabilities rising to RMB 716,663,000 in 2023 from RMB 128,460,000 in 2022[59]. Impairment and Provisions - The company recorded a loss from impairment provisions of RMB 39,044,000 for investments in associates, compared to RMB 8,570,000 in 2022[4]. - The company recognized a provision for impairment losses on investments in an associate amounting to RMB 39,044,000 in 2023, compared to RMB 8,570,000 in 2022, highlighting increased financial strain[18][20]. - The net asset value of investments in associates decreased from RMB 235,634,000 in 2022 to RMB 92,778,000 in 2023, a decline of approximately 60.7%[46]. - Impairment losses recognized amounted to approximately RMB 39,044,000 for the year ended December 31, 2023, primarily due to the impairment of investments in New Feng Energy[128]. Dividends and Shareholder Returns - The board of directors did not recommend the declaration of any final or interim dividend for the year ended December 31, 2023[3]. - The company did not declare any final or interim dividends for the years ended December 31, 2023, and December 31, 2022[43]. - The board does not recommend the payment of a final dividend for the year ended December 31, 2023[151]. Operational Efficiency and Future Outlook - The company aims to enhance its operational efficiency with a centralized control rate of 98% for the natural gas pipeline network[86]. - Future economic growth is projected at 4% for 2023 and 4.2% for 2024, despite ongoing global uncertainties[85]. - The company plans to leverage its advanced equipment and technology to secure more orders and improve performance[86]. - The company aims to optimize order structure and focus on both social pipeline orders and national pipeline orders in 2024[105]. - The company plans to enhance core profitability and business sustainability through refined operations and a focus on main business units[105]. Compliance and Governance - The company has adhered to all corporate governance principles and rules as of December 31, 2023[155]. - All directors confirmed compliance with the standard code for securities trading as of December 31, 2023[156]. - The audit committee reviewed the audited consolidated financial statements for the fiscal year ending December 31, 2023[161].

Financial Performance - For the six months ended June 30, 2023, the company's revenue was approximately RMB 322,269,000, a decrease of about 27.3% compared to the same period in 2022[6]. - The gross profit margin for the same period was approximately 4.2%, down by about 4.3 percentage points year-on-year[6]. - The loss attributable to the company's owners was approximately RMB 57,348,000, compared to a profit of RMB 38,410,000 in the same period of 2022[6]. - Basic loss per share for the period was approximately RMB 1.48, compared to basic earnings per share of RMB 0.99 in the same period of 2022[6]. - The group recorded unaudited revenue of approximately RMB 322,269,000, a decrease of about 27.3% compared to RMB 443,281,000 in the same period last year[38]. - Gross profit for the review period was approximately RMB 13,677,000, a decrease of about 63.7% from RMB 37,626,000 in the same period last year, with a gross margin decline from 8.5% to 4.2%[41]. - The group's comprehensive loss for the review period amounted to approximately RMB 57,944,000, a decline from a profit of approximately RMB 34,736,000 for the six months ended June 30, 2022[50]. - The company reported a loss before tax of RMB 57,924 thousand, compared to a profit of RMB 34,972 thousand in the previous year[110]. - The company incurred financial expenses of RMB 6,821 thousand, down from RMB 9,909 thousand in the previous year[122]. - The company reported a significant increase in impairment losses on investments in associates, amounting to RMB 28,722 thousand for the current period[122]. Operational Highlights - The company is focusing on key clients such as the National Pipeline Network Group and Sinopec, while also actively expanding into the social market, resulting in a significant increase in local market orders[10]. - Strategic collaborations with domestic insulation companies and coating processing plants are being formed to optimize the overall order structure and maximize processing profits[10]. - The company aims to achieve high-quality development by leveraging its advantages in production, technology, economy, and management[8]. - Shandong Shengli Steel Pipe successfully completed multiple large pipeline projects, ensuring timely and quality production and delivery[11]. - The company has established a dedicated after-sales service team, enhancing customer satisfaction and project coordination[12]. - The company achieved a 15.32% reduction in electricity consumption per ton in the pipe manufacturing division, saving 883,200 kWh of electricity[16]. - Five technology projects and eleven equipment renovation projects are currently being implemented to enhance production automation[19]. - The company is involved in several major pipeline projects, including the National Pipeline Group's East Gas Transmission Project and various regional gas supply projects[34]. Market and Industry Trends - The domestic energy production enterprises are implementing energy supply and price stability policies, with industrial crude oil production increasing by 2.1% year-on-year to 105 million tons[7]. - The National Energy Administration aims to increase oil and gas exploration and production, indicating a sustained demand for pipeline construction in the coming years[20]. - The crude oil production in China increased from 189 million tons to 205 million tons over the past five years, highlighting the growth in energy resource development[20]. - In the first half of 2023, China's GDP grew by 5.5% year-on-year, indicating a recovery in market demand and economic stability[27]. - The oil and gas industry saw an increase in production, with crude oil output reaching 105 million tons, a year-on-year growth of 2.1%, and natural gas production at 115.5 billion cubic meters, up 5.4% year-on-year[28]. Financial Position - As of June 30, 2023, total assets were approximately RMB 1,090,815,000, down from RMB 1,156,398,000 as of December 31, 2022; net assets decreased to approximately RMB 544,721,000 from RMB 602,590,000[52]. - The group's net current assets improved to approximately RMB 30,661,000 as of June 30, 2023, compared to net current liabilities of approximately RMB 22,920,000 as of December 31, 2022, primarily due to the conversion of some bank borrowings from short-term to medium- and long-term[53]. - The capital debt ratio increased to approximately 47.2% as of June 30, 2023, compared to 37.0% as of December 31, 2022[62]. - Cash and cash equivalents significantly decreased to approximately RMB 38,159,000 as of June 30, 2023, from RMB 158,776,000 as of December 31, 2022, due to increased inventory and prepaid expenses[61]. - The group’s total liabilities as of June 30, 2023, were RMB 546,094,000, compared to RMB 553,808,000 as of December 31, 2022, indicating a slight decrease[142]. Shareholder Information - Mefun Group Limited holds 620,000,000 shares, accounting for approximately 16.003% of the company's issued shares, making it the largest single shareholder[18]. - Goldmics Investments Limited owns 153,130,224 shares, representing about 3.952% of the issued shares[18]. - The company must seek shareholder approval if the total number of options granted to any individual exceeds 1% of the company's issued share capital within any 12-month period[82]. - The maximum number of shares that may be issued upon the exercise of all options granted under the new plan and any other plans cannot exceed 30% of the company's issued share capital[84]. - The company has the right to terminate the new plan at any time through a resolution at a shareholders' meeting[79]. Corporate Governance - The company has adopted good corporate governance practices and complies with all relevant rules and guidelines[103]. - No significant contracts were entered into with the controlling shareholder during the review period[91]. - The company did not have any major investments or acquisitions during the six months ending June 30, 2023[98]. - No major events related to the company's business or financial performance have occurred after the review period[101].

B_table indent_4.5 mm N_table indent_4 mm 香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容 概不負責，對其準確性或完整性亦不發表任何聲明，並明確表示概不就因 本公告全部或任何部分內容而產生或因依賴該等內容而引致的任何損失 承擔任何責任。 SHENGLI OIL & GAS PIPE HOLDINGS LIMITED 勝 利 油 氣 管 道 控 股 有 限 公 司 （於開曼群島註冊成立的有限公司） （股份代號：1080） 截至二零二三年六月三十日止六個月之中期業績公告 財務摘要 • 截至二零二三年六月三十日止六個月（「回顧期內」）收入約為人民幣 322,269,000元，較二零二二年同期減少約27.3%。 • 回顧期內毛利率約為4.2%，較二零二二年同期減少約4.3個百分點。 ...

Financial Performance - For the year ended December 31, 2022, the revenue was approximately RMB 1,046,891,000, a decrease of approximately RMB 479,793,000 compared to 2021[9] - The loss attributable to the owners of the company for the year was approximately RMB 33,004,000, a decrease of approximately RMB 227,715,000 compared to 2021[9] - The basic and diluted loss per share attributable to the owners of the company was approximately RMB 0.85, a decrease of approximately RMB 5.90 compared to 2021[9] - The company's revenue decreased by approximately 31.4% from RMB 1,526,684,000 in 2021 to RMB 1,046,891,000 in 2022[51] - SAWL welded pipe sales revenue dropped by approximately 72.4%, from RMB 577,820,000 in 2021 to RMB 159,386,000 in 2022[51] - The gross profit decreased by approximately 24.9%, from RMB 135,820,000 in 2021 to RMB 101,981,000 in 2022, while the gross margin increased from approximately 8.9% to 9.7%[54] - Other income and gains fell by approximately 78.7%, from RMB 67,424,000 in 2021 to RMB 14,384,000 in 2022[55] - The total comprehensive loss for the year ended December 31, 2022, was approximately RMB 29,395,000, a significant decrease from RMB 281,246,000 for the year ended December 31, 2021[68] Operational Efficiency - The gross profit margin for the year was approximately 9.7%, an increase of about 0.8 percentage points from 2021[9] - The company aims to enhance operational efficiency by reducing equipment failure rates and labor intensity through technical upgrades in 2023[32] - The group completed 14 equipment technology upgrades in 2022, enhancing operational efficiency and product quality[21] - The management team emphasizes quality control and production management as key areas for improving operational performance[86] - The company is focused on expanding its market presence and enhancing operational efficiency through strategic investments and partnerships[87] Strategic Initiatives - The company aims to secure more pipeline and related business orders by leveraging its strong performance and advanced technology[12] - The company is focused on technical innovation and market expansion to enhance its competitive position[14] - The group plans to accelerate the formation of a new oil and gas market structure, enhancing upstream resource supply and downstream market competition, which is expected to stimulate industry development[40] - The company is actively pursuing new product development and technological advancements to stay competitive in the market[87] - The company is exploring potential mergers and acquisitions to bolster its market position and expand its service offerings[87] Market Position and Customer Base - Shandong Shengli Steel Pipe Company was selected as a major supplier for SAWH pipes, securing over 15% of the total orders from the National Pipeline Group for 2022, with these orders accounting for 47.7% of Shandong Shengli's total orders[15] - The group ranked second in the annual direct procurement bidding for Sinopec and first in the annual framework bidding for PetroChina, while also expanding its customer base by adding 18 new clients[19] - The group secured approximately 47.7% of its total sales orders from the National Pipeline Network Group in 2022, becoming a key supplier of SAWH welded pipes[43] - The company's major customers accounted for approximately 52.9% of total sales, up from 42.3% in 2021[122] - The largest customer represented about 31.2% of total sales, compared to 11.6% in 2021[122] Financial Health and Liabilities - As of December 31, 2022, the group's borrowings amounted to approximately RMB 321,310,000, down from RMB 691,000,000 as of December 31, 2021[74] - The net current liabilities as of December 31, 2022, were approximately RMB 22,920,000, significantly reduced from RMB 279,039,000 as of December 31, 2021[70] - The group's financial expenses for the year ended December 31, 2022, were approximately RMB 17,579,000, a substantial reduction from RMB 34,669,000 in the previous year[66] - The capital debt ratio as of December 31, 2022, was 37.0%, a decrease from 56.0% in 2021[162] - The group had no significant contingent liabilities as of December 31, 2022[164] Employee and Management - The company has a strong management team with extensive experience in the steel and energy sectors, including multiple positions held at Victory Steel Pipe[86] - The total number of employees as of December 31, 2022, was 539, down from 915 in 2021, with total staff costs and related expenses amounting to approximately RMB 76,004,000, a decrease from RMB 103,819,000 in 2021[169] - The group has implemented a long-term incentive plan, including share option schemes, to motivate its employees[170] - The company is committed to continuous professional training for its employees[125] - The group regularly reviews its human resources and compensation policies, considering local regulations and market conditions[169] Future Outlook - The company anticipates a small peak in pipeline construction demand in 2023, focusing on expanding domestic demand and accelerating key project implementation[30] - The company provided a positive outlook for the next quarter, projecting revenue growth of 10% to 12%[96] - Future outlook includes a commitment to sustainable practices and compliance with regulatory standards in operations[87] - The company has outlined performance guidance that reflects a positive growth trajectory in the upcoming fiscal year[89] Compliance and Governance - The board of directors did not recommend the declaration of any final or interim dividends for the year ended December 31, 2022[9] - The board of directors includes executive directors and independent non-executive directors, with terms of three years[131] - The company has implemented policies to ensure competitive salaries and benefits for employees[125] - The group confirmed compliance with the disclosure requirements of the Listing Rules regarding related party transactions under the logistics service framework agreement[173] Share Options and Equity - The new share option plan was approved by shareholders on May 20, 2016, and will be effective for 10 years until May 19, 2026[139] - The maximum number of shares that can be issued under the new plan is capped at 327,436,560 shares, which represents 10% of the issued shares as of the adoption date[146] - The company granted 24,000,000 share options at an exercise price of HKD 0.80 per share to 81 directors and senior management on January 3, 2012[148] - As of December 31, 2022, the total number of share options granted under the plan was 91,170,000, with 74,400,000 options remaining unexercised, representing approximately 1.92% of the total issued shares[151] - The company has experienced lapses of share options due to employee departures, with specific amounts detailed for each year[148]

B_table indent_4.5 mm N_table indent_4 mm 香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容 概不負責，對其準確性或完整性亦不發表任何聲明，並明確表示概不就因 本公告全部或任何部分內容而產生或因依賴該等內容而引致的任何損失 承擔任何責任。 SHENGLI OIL & GAS PIPE HOLDINGS LIMITED 勝 利 油 氣 管 道 控 股 有 限 公 司 （於開曼群島註冊成立的有限公司） （股份代號：1080） 截至二零二二年十二月三十一日止年度 全年業績公告 財務摘要 • 截至二零二二年十二月三十一日止年度（「回顧年」）內收入約為人民 幣1,046,891,000元，較二零二一年的收入減少約人民幣479,793,000元。 • 回顧年內毛利率約為9.7%，較二零二一年的毛利率增加約0.8個百分點。 ...

Financial Performance - Revenue for the period was approximately RMB 443,281,000, a decrease of about 11.8% compared to the same period in 2021[8]. - Gross profit margin for the period was approximately 8.5%, a decrease of 2.7 percentage points compared to the same period in 2021[9]. - Profit attributable to owners of the company was approximately RMB 38,410,000, compared to a loss of RMB 8,960,000 in the same period of 2021[9]. - Basic earnings per share attributable to owners of the company was RMB 0.99, compared to a loss per share of RMB 0.23 in the same period of 2021[9]. - The group's unaudited revenue for the review period was approximately RMB 443,281,000, a decrease of about 11.8% compared to RMB 502,823,000 in the same period last year[43]. - The group's gross profit for the review period was approximately RMB 37,626,000, down from RMB 56,493,000 in the same period last year, resulting in a gross margin decrease from about 11.2% to approximately 8.5%[45]. - The total comprehensive income for the review period was approximately RMB 34,736,000, compared to a comprehensive loss of RMB 23,643,000 in the same period last year[53]. - The company reported a significant increase in other income and net gains, rising to RMB 85,658 thousand from RMB 55,339 thousand year-over-year[124]. - The pre-tax profit for the six months ended June 30, 2022, was RMB 38,410,000, compared to a loss of RMB 8,960,000 for the same period in 2021[182]. Operational Highlights - The company achieved good results in the 2022 annual framework bidding of the National Pipeline Network Group and Sinopec[17]. - The domestic oil and gas industry market is expected to maintain steady development, providing more opportunities for private enterprises[14]. - The company aims to leverage its rich experience and advanced equipment and technology to secure more pipeline orders[14]. - The central government has implemented a package of policies to stabilize the economy, which is expected to positively impact the company's operations[13]. - The company continues to focus on technological innovation and upgrading equipment to enhance its competitive strength[17]. - Shandong Shengli Steel Pipe was selected as a key supplier for SAWH pipes, securing over 15% of the total order volume from the National Pipeline Corporation for 2022[18]. - The company achieved second place in the bidding for SAWH pipes and anti-corrosion processing with Sinopec, ensuring at least 20% of the orders with no upper limit[19]. - Production efficiency improved significantly, with electricity consumption per ton of welded pipe down approximately 30% year-on-year, and anti-corrosion electricity consumption down about 20% year-on-year[20]. - The company successfully completed insulation processing for Ф1220 specification steel pipes with a 100% qualification rate, establishing a solid foundation for future production tasks[22]. - Six technology projects and six equipment modification projects were initiated to enhance automation levels, with several projects already completed and verified[23]. Market Outlook - The company anticipates increased demand for pipeline construction in the coming years, driven by the government's focus on natural gas supply and infrastructure development[27]. - The National Pipeline Corporation is accelerating project construction, with Shandong Shengli Steel Pipe positioned as a key supplier for major pipeline projects in the second half of 2022[28]. - The group aims to expand its insulated steel pipe business, which is expected to become another profit growth point due to significant market potential[30]. - The group has identified substantial development space in the insulated pipe industry, which is currently dominated by private enterprises, indicating a competitive market landscape[30]. - The group will continue to participate in large pipeline projects to create value for society while increasing its revenue[30]. Financial Position - As of June 30, 2022, the total assets of the group were approximately RMB 1,138,150,000, a significant decrease from RMB 1,919,687,000 as of December 31, 2021[54]. - The net assets of the group increased to approximately RMB 674,686,000 as of June 30, 2022, compared to RMB 627,465,000 as of December 31, 2021, reflecting an increase of about RMB 1[54]. - The group reported a net current asset of approximately RMB 12,442,000 as of June 30, 2022, a turnaround from net current liabilities of approximately RMB 279,039,000 as of December 31, 2021[55]. - The cash and cash equivalents of the group were approximately RMB 89,186,000 as of June 30, 2022, down from RMB 134,311,000 as of December 31, 2021[57]. - The group's borrowings decreased to approximately RMB 283,000,000 as of June 30, 2022, from RMB 691,000,000 as of December 31, 2021[57]. - The capital debt ratio improved to approximately 34.4% as of June 30, 2022, compared to 56.0% as of December 31, 2021[57]. - The total liabilities as of June 30, 2022, were RMB 463,464,000, down from RMB 1,292,222,000 as of December 31, 2021[175]. Shareholder Information - The board does not recommend the declaration of any interim dividend for the six months ended June 30, 2022[9]. - The company has issued 3,874,365,600 shares with a par value of HKD 0.1 per share, maintaining the same number of shares as of December 31, 2021[196]. - Mefun Group Limited holds 620,000,000 shares, representing 16.003% of the company's issued share capital[90]. - LM Global Asset LP owns 600,000,000 shares, accounting for 15.486% of the company's issued share capital[93]. - The company has maintained a public float of at least 25% as of June 30, 2022[97]. Governance and Compliance - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange listing rules and has complied with all relevant provisions[110]. - The audit committee has reviewed the unaudited financial statements for the review period and assessed the risk management and internal control systems[112]. - The independent review report concluded that there were no matters leading to a belief that the interim financial information was not prepared in accordance with International Accounting Standard 34[121].

Financial Performance - The company's revenue for the year was approximately RMB 1,526,684,000, an increase of about RMB 670,257,000 compared to 2020[11]. - The gross profit margin for the year was approximately 8.9%, an increase of about 3.7 percentage points from 2020[12]. - The loss attributable to shareholders for the year was approximately RMB 260,719,000, a decrease of about RMB 64,673,000 compared to 2020[12]. - The basic loss per share attributable to shareholders was approximately RMB 6.75, a decrease of about RMB 3.19 compared to 2020[12]. - The group's sales revenue increased by approximately 78.3% from about RMB 856.4 million in 2020 to approximately RMB 1,526.7 million in 2021, primarily driven by the core welding pipe business[53]. - The group's gross profit increased from approximately RMB 44.2 million in 2020 to about RMB 135.8 million in 2021, with a gross profit margin rising from approximately 5.2% to 8.9%[55]. - Other income and gains increased significantly from approximately RMB 24.1 million in 2020 to about RMB 67.4 million in 2021, mainly due to compensation received from the local government for land use rights[58]. - Administrative expenses rose from approximately RMB 152.3 million in 2020 to about RMB 173.4 million in 2021, primarily due to increased professional fees and the removal of labor insurance fee exemptions for small and micro enterprises[60]. - The total comprehensive loss for the year ended December 31, 2021, was approximately RMB 281,246,000, compared to RMB 385,829,000 for the year ended December 31, 2020[69]. Operational Developments - The production line for insulated pipes at Shandong Shengli Steel Pipe was officially launched, and a dedicated sales team was established to support pricing calculations and bidding preparations[23]. - Shandong Shengli Steel Pipe achieved a record production of Φ1620×20mm steel pipes for long-distance heating pipeline projects, optimizing welding processes to enhance production efficiency[25]. - Hunan Shengli Steel Pipe improved production efficiency by over 30% through the refurbishment of key machinery and achieved a welding pass rate of 99.48% for Φ813mm pipes[26]. - The company implemented cost control measures, adjusting material consumption indicators and promoting multi-skilled employees to enhance operational efficiency[27]. - The group signed a land storage agreement with the local government in Rizhao City, effectively increasing operational cash flow by disposing of idle assets[27]. - The group invested in technological upgrades to enhance automation and digitalization in steel pipe production, completing several key projects[30]. - The company successfully completed the production and delivery tasks for the key project of the national oil pipeline network, ensuring timely supply for the project[33]. Market and Industry Trends - The domestic economy grew by approximately 8.1% in 2021, contributing to stable production and social development[17]. - The ongoing market-oriented reforms in the oil and gas industry are expected to provide more opportunities for private enterprises[18]. - The company is positioned to benefit from the increased upstream energy production, which will drive demand for pipeline services[17]. - The national oil and gas pipeline network is expected to reach 240,000 kilometers by 2025, with over 25,000 kilometers of new pipelines planned in the next five years[34]. - The government’s policies for carbon peak and carbon neutrality are expected to accelerate the construction of high-quality oil and gas pipelines in the country[34]. - The company plans to actively pursue opportunities in pipeline construction, anticipating significant growth in demand due to national policies aimed at carbon neutrality[72]. Research and Development - The company obtained six new patents and published 17 technical papers in professional journals and industry conferences[31]. - The company is committed to maintaining compliance with listing regulations and corporate governance standards[116]. - The company will continue to invest in R&D and production to enhance competitiveness in the market[41]. Shareholder and Equity Information - The company issued 600,000,000 new shares at a subscription price of HKD 0.1 per share, raising approximately HKD 59.5 million for general operational funding[82]. - After the completion of the subscription, LM Global Asset LP became the major shareholder, holding approximately 15.486% of the company's shares[82]. - Mefun Group Limited holds 620,000,000 shares, representing 16.003% of the company's issued shares, making it the largest shareholder[144]. - LM Global Asset LP owns 600,000,000 shares, which is approximately 15.486% of the issued shares[146]. - The company has a structured stock option plan aimed at incentivizing key personnel and management[164]. Financial Position and Liabilities - The net current liabilities as of December 31, 2021, were approximately RMB 279,039,000, down from RMB 339,055,000 as of December 31, 2020, primarily due to reduced borrowings[72]. - The group's borrowings as of December 31, 2021, were approximately RMB 691,000,000, a decrease from RMB 780,600,000 in 2020[77]. - The group's financial expenses for the year ended December 31, 2021, were approximately RMB 34,669,000, a decrease from RMB 39,192,000 in 2020[67]. - The group did not have any significant contingent liabilities as of December 31, 2021[189]. - The group has not utilized any forward contracts or other methods to hedge foreign exchange risks, which are considered minimal[190]. Employee and Operational Metrics - The total employee count as of December 31, 2021, was 915, down from 928 in 2020, with total staff costs amounting to RMB 103,819,000, up from RMB 77,371,000 in 2020[192]. - The increase in total staff costs was primarily due to the removal of insurance fee exemptions for small and medium enterprises and increased overtime and variable pay due to higher production volumes[192]. - The group maintains good relationships with employees, customers, and suppliers, ensuring successful production and operations[133].