Financial Performance - Revenue increased by 48.02% to RMB 2,591,773,000 compared to the previous year[16] - Gross profit surged by 1,441.01% to RMB 655,390,000[16] - Net profit attributable to owners for the year ended December 31, 2023, was RMB 254,989,000, recovering from a loss of RMB 208,234,000 in the previous year[11] - Basic earnings per share for the year was RMB 12.87, compared to a loss of RMB 11.80 per share in the previous year[18] - Operating profit for the year was RMB 405,972,000, a significant recovery from an operating loss of RMB 169,199,000 in the previous year[18] - The company's profit for 2023 was RMB 254,989,000, compared to a loss of RMB 208,234,000 in 2022, indicating a significant turnaround[76] - The net profit before tax for the year was RMB 385,576,000, compared to a loss of RMB 197,844,000 in the previous year[66] - The company reported a total comprehensive income of RMB 260,986,000 for the year, compared to a loss of RMB 180,784,000 in the previous year[128] Revenue and Growth - The company's total revenue for 2023 reached RMB 2,591,773 thousand, a significant increase from RMB 1,750,927 thousand in 2022, representing a growth of approximately 48.1%[56] - The construction contract revenue for 2023 was RMB 2,375,682 thousand, compared to RMB 1,544,552 thousand in 2022, indicating a growth of about 53.7%[56] - The total revenue for 2023 reached RMB 2,591,773 thousand, an increase from RMB 1,750,927 thousand in 2022, representing a growth of approximately 48.0%[68] - Revenue from the oil and gas equipment engineering and integrated services business increased by approximately 51.44% or about RMB 807,596,000, while revenue from the new energy and refining equipment engineering and integrated services business increased by approximately 21.40% or about RMB 35,774,000[166] Assets and Liabilities - Total assets increased to RMB 2,721,644,000 from RMB 1,621,558,000[20] - The total liabilities increased to RMB 2,073,260 thousand in 2023 from RMB 1,432,215 thousand in 2022, reflecting a rise of approximately 45.0%[66] - The total non-current liabilities decreased from RMB 342,261 thousand in 2022 to RMB 292,021 thousand in 2023, a reduction of about 14.7%[31] - The total non-current assets as of December 31, 2023, were RMB 1,354,281 thousand, compared to RMB 1,495,304 thousand in 2022, showing a decrease of about 9.4%[68] - The company reported a net asset value of RMB 2,011,739 thousand in 2023, up from RMB 1,747,247 thousand in 2022, reflecting an increase of approximately 15.2%[31] Cash Flow and Expenses - The group reported a net cash inflow from operating activities of approximately RMB 287,139,000 for the year[157] - Financial expenses for 2023 amounted to RMB 20,396 thousand, down from RMB 28,645 thousand in 2022, representing a decrease of approximately 28.7%[51] - The total financial expenses for 2023 amounted to approximately RMB 20,396,000, primarily consisting of bank interest expenses of about RMB 18,601,000[169] - The total administrative and other operating expenses decreased by approximately 0.91% or about RMB 2,479,000 to approximately RMB 270,744,000 compared to 2022[183] Dividends and Equity - The company did not recommend a final dividend for the year ended December 31, 2023[16] - Total equity increased to RMB 2,011,739 thousand in 2023, up from RMB 1,747,247 thousand in 2022, reflecting a growth of about 15.1%[193] - The board of directors does not recommend the payment of a final dividend for the year ended December 31, 2023[194] Operational Highlights - The company completed 15 projects in 2023, achieving new modular construction delivery records despite challenges such as design modifications and adverse winter conditions[145] - The company has established a solid foundation for securing future project orders through excellent project management and construction organization capabilities[145] - The group has initiated the renovation of the Penglai West plant to address the severe shortage of assembly space, aiming to enhance construction capacity[150] - The establishment of a detailed design department in the second half of 2023 aims to enhance the group's capabilities in module business and high value-added strategic transformation[150] Research and Development - The company's research and development expenses rose to RMB 99,557,000 in 2023 from RMB 78,469,000 in 2022, reflecting increased investment in innovation[89] - The group is focusing on technological innovation and process research, emphasizing domestic material and equipment substitution, patent product development, and digital system upgrades[151] Compliance and Governance - The company confirmed compliance with the Corporate Governance Code, with no deviations reported for the year ended December 31, 2023[196] - The audit committee, composed of four independent non-executive directors, reviewed the consolidated performance for the year ended December 31, 2023[195] Market Outlook - The company plans to expand its market presence in the underwater maintenance and technical support services sectors, particularly in the oil and gas and new energy industries[45] - The company faced significant geopolitical and economic uncertainties impacting global trade and energy markets, which may influence future performance[145]

智通财经APP讯，巨涛海洋石油服务(03303)发布公告，预期截至2023年12月31日止年度或取得公司拥有人应占溢利约人民币1.6亿元至人民币2.6亿元之间，而截至2022年12月31日止年度公司拥有人应占亏损为人民币2.08亿元。于2023年，集团的收入相较2022年或有较大幅度提升。根据公司当前掌握的资料，董事会认为溢利增加主要是因为集团采取严格的管理措施，实施减员增效，降低成本费用，若干项目的工作效率明显改善，实现了提前交付，从而提升了公司效益。 ...

Financial Performance - The company reported a revenue decrease of 29.40% to RMB 823,527,000 for the six months ended June 30, 2023[5]. - Gross profit increased significantly by 1139.95% to RMB 194,337,000 compared to the same period last year[5]. - The profit attributable to the owners of the company for the six months ended June 30, 2023, was RMB 68,844,000, a turnaround from a loss of RMB 140,750,000 in the previous year[5]. - Basic earnings per share for the period were RMB 3.474, compared to a loss of RMB 8.371 per share in the prior year[5]. - The total revenue for the six months ended June 30, 2023, was RMB 823,527,000, a decrease of 29.4% compared to RMB 1,166,518,000 for the same period in 2022[25]. - The oil and gas segment generated revenue of RMB 677,016,000, down 34.5% from RMB 1,033,918,000 in the previous year[30]. - The new energy and refining segment reported revenue of RMB 141,016,000, an increase of 14.1% from RMB 123,540,000 in the prior year[30]. - The total segment profit for the six months ended June 30, 2023, was RMB 194,337,000, significantly up from RMB 15,673,000 in the same period of 2022[27]. - The company reported a net profit before tax of RMB 93,515,000 for the first half of 2023, compared to a loss of RMB 118,567,000 in the same period last year[27]. - The company's profit for the six months ended June 30, 2023, was RMB 68,844,000, compared to a loss of RMB 140,750,000 for the same period in 2022[42]. Assets and Liabilities - Total assets as of June 30, 2023, were RMB 4,174,551,000, compared to RMB 4,179,462,000 as of December 31, 2022[9]. - Current liabilities decreased to RMB 1,011,292,000 from RMB 1,089,954,000 at the end of the previous year[9]. - The net asset value increased to RMB 1,829,378,000 as of June 30, 2023, from RMB 1,747,247,000 at the end of 2022[9]. - Trade receivables and notes amounted to RMB 305,978,000 as of June 30, 2023, an increase from RMB 267,304,000 at the end of 2022[31]. - Contract assets decreased to RMB 248,146,000 from RMB 365,608,000 at the end of 2022, while contract liabilities increased to RMB 164,082,000 from RMB 128,220,000[31]. - The company's trade payables as of June 30, 2023, were RMB 447,458,000, a slight decrease from RMB 467,727,000 as of December 31, 2022[48]. - The company reported a decrease in the allowance for doubtful accounts to RMB 96,239,000 as of June 30, 2023, compared to RMB 94,951,000 as of December 31, 2022[45]. Cash Flow and Investments - Net cash generated from operating activities for the six months ended June 30, 2023, was RMB 177,996 thousand, compared to a net cash used of RMB (166,976) thousand in the same period of 2022[11]. - The company reported a net cash used in investing activities of RMB (28,788) thousand, compared to RMB (9,690) thousand in the previous year[11]. - The total cash inflow from the sale of property, plant, and equipment was RMB 141 thousand, an increase from RMB 84 thousand in the same period last year[11]. - The company received government grants totaling RMB 982 thousand, compared to RMB 156 thousand in the previous year[11]. - The net cash used in financing activities was RMB (41,402) thousand, a significant decrease from RMB 202,748 thousand in the same period of 2022[11]. - The company raised bank loans amounting to RMB 30,500 thousand during the period, while repaying RMB 67,450 thousand in bank loans[11]. Shareholder Information - Major shareholder Sanju Environmental Protection (Hong Kong) Co., Ltd. holds 641,566,556 shares, representing 32.38% of the issued share capital[92]. - Director Wang Lishan holds 396,911,278 shares (20.03%) and 2,300,000 share options (0.12%) as of June 30, 2023[90]. - Director Cao Yunsheng has 8,000,000 share options (0.40%) and 20,360,000 shares (1.03%) as of June 30, 2023[90]. - The total number of issued shares is 1,981,598,389 ordinary shares[103]. Corporate Governance and Compliance - The company has adopted the Corporate Governance Code to enhance transparency and protect shareholder rights[98]. - The Audit Committee reviewed the unaudited interim financial information for the six months ended June 30, 2023, and found it compliant with applicable accounting standards[101]. Future Plans and Strategies - The company plans to upgrade and update its construction site and facilities to improve efficiency and capacity for large module assembly and offshore wind equipment[76]. - The company will reorganize its market development team to focus on international markets and enhance its competitive capabilities[75]. - The capital management strategy aims to optimize the debt-to-equity ratio to maximize shareholder returns[70].

Financial Performance - Revenue decreased by 29.40% to RMB 823,527,000 compared to RMB 1,166,518,000 in the same period last year[13] - Gross profit increased significantly by 1139.95% to RMB 194,337,000 from RMB 15,673,000 year-on-year[13] - The profit attributable to owners of the company was RMB 68,844,000, a turnaround from a loss of RMB 140,750,000 in the previous year[13] - Basic earnings per share for the six months ended June 30, 2023, was RMB 3.474, compared to a loss of RMB 8.371 per share in the same period last year[13] - The company reported a total comprehensive income attributable to owners of the company of RMB 82,131,000 for the period, a significant recovery from a loss of RMB 127,771,000 in the previous period[39] - The company reported a net foreign exchange gain of RMB 3,526,000 for the six months ended June 30, 2023, down from RMB 4,966,000 in the same period of 2022[51] - The company incurred a loss of RMB 29,773,000 from the fair value of derivative financial instruments, compared to a loss of RMB 16,162,000 in the previous year[51] Assets and Liabilities - Total equity as of June 30, 2023, was RMB 1,829,378,000, up from RMB 1,747,247,000[6] - The total assets as of June 30, 2023, were RMB 2,168,918,000, while total liabilities were RMB 810,595,000[46] - The total assets less current liabilities as of June 30, 2023, were RMB 2,163,259,000, an increase from RMB 2,089,508,000 as of December 31, 2022, representing a growth of approximately 3.5%[40] - The net current assets as of June 30, 2023, were RMB 678,262,000, compared to RMB 531,604,000 as of December 31, 2022, reflecting an increase of about 27.6%[40] - The company’s total liabilities decreased, contributing to a lower capital-to-debt ratio due to profits generated in the first half of 2023[80] - The group's capital debt ratio decreased to 24.84% as of June 30, 2023, down from 28.37% as of December 31, 2022, indicating improved financial stability[115] Cash Flow and Investments - The company’s cash and cash equivalents as of June 30, 2023, were RMB 725,737,000, compared to RMB 610,477,000 as of December 31, 2022, reflecting an increase of approximately 18.9%[40] - Cash and bank deposits as of June 30, 2023, amounted to approximately RMB 729,701,000, an increase from RMB 610,477,000 as of December 31, 2022[74] - The company invested approximately RMB 3,817,000 in property, plant, and equipment during the first half of 2023, down from RMB 23,185,000 in the same period last year[92] - The group has no significant investments for the half-year period ending June 30, 2023, indicating a focus on internal development[100] Operational Efficiency - Operating profit for the period was RMB 104,510,000, compared to an operating loss of RMB 102,240,000 in the previous year[15] - The overall gross margin improved from 1.34% in the previous year to 23.60% in the current period, attributed to better project management and cost control[70] - Administrative and other operating expenses decreased by approximately 22.64% or RMB 30,621,000, totaling about RMB 104,602,000[72] - The company has implemented various management measures to optimize personnel and management structures, enhancing operational efficiency and reducing production costs[64] Market and Business Strategy - The international marine engineering market shows potential opportunities, although geopolitical factors introduce significant uncertainties[65] - The company secured new contracts worth approximately RMB 3 billion, expected to be completed over the next two years[92] - The group plans to restructure its market development team and establish specialized teams for different international markets to enhance market exploration and customer demand understanding[118] - The group aims to actively seek new business opportunities and explore business restructuring through acquisitions and collaborations[119] - The group is transitioning from traditional manufacturing to modular EPC, focusing on new energy businesses, including offshore wind power, to create new growth points[104] Workforce and Human Resources - The total number of employees as of June 30, 2023, was 2,318, a decrease from 2,739 as of December 31, 2022, reflecting a reduction in workforce[116] Dividends - The company announced no interim dividend for the six months ended June 30, 2023[13] - The board does not recommend the distribution of an interim dividend for the six months ending June 30, 2023[106]

Financial Performance - Total revenue for 2022 was RMB 1,750,927 thousand, a decrease of 56.1% compared to RMB 3,981,612 thousand in 2021[144]. - Gross profit for 2022 was RMB 42,530 thousand, down 85.0% from RMB 283,616 thousand in 2021[144]. - Operating loss for 2022 was RMB 169,199 thousand, compared to an operating profit of RMB 49,397 thousand in 2021[144]. - Net loss attributable to owners for 2022 was RMB 208,234 thousand, compared to a profit of RMB 11,024 thousand in 2021[144]. - Basic loss per share for 2022 was RMB (11.80) cents, compared to earnings of RMB 0.66 cents in 2021[144]. - The company reported a net loss of RMB 180,784,000 for the year ended December 31, 2022, compared to a net loss of RMB 443,878,000 for the previous year[148]. - Total comprehensive income for the year was RMB (180,784) thousand, a decrease from RMB (2,324) thousand in the previous year[170]. - The company reported a significant reduction in trade receivables, which fell to RMB 264,023 thousand in 2022 from RMB 419,536 thousand in 2021[146]. - The company recorded a loss on impairment of property, plant, and equipment of RMB 55,962 thousand in 2022, compared to RMB 5,317 thousand in 2021, indicating increased asset impairment issues[198]. - The company experienced a pre-tax loss of RMB (197,844) thousand in 2022, a decrease from a profit of RMB 19,811 thousand in 2021, highlighting a substantial downturn in financial performance[198]. Shareholder Information - As of December 31, 2022, the company has approximately RMB 1,379,936,000 in share premium reserves, available for distribution to shareholders after deducting cumulative losses of about RMB 27,430,000[3]. - The company has a public float of at least 25% as of December 31, 2022, ensuring compliance with public shareholding requirements[29]. - The board considers various factors, including financial performance and cash flow, when recommending dividends[4]. - The company paid dividends totaling RMB 512,713,000 during the year[148]. - The company provides information to shareholders and investors primarily through financial reports and regulatory disclosures[107]. - The company has implemented a shareholder communication policy to ensure timely and effective information dissemination to shareholders and investors[120]. - The company actively engages with investors through performance briefings and individual meetings to communicate its status and developments[121]. - The company is committed to enhancing communication with shareholders and investors through various channels, including its website and investor relations department[119]. Corporate Governance - The company has adopted the Corporate Governance Code to enhance transparency and protect shareholder rights[43]. - The company aims to maintain high standards of corporate governance to improve operational efficiency[44]. - The company has established a comprehensive internal management system to monitor financial risks and ensure compliance[55]. - The company’s board of directors includes independent non-executive directors, ensuring compliance with listing rules[47]. - The audit committee oversees the financial reporting process and ensures that the management prepares the consolidated financial reports appropriately[66]. - The audit committee acknowledges that the issues leading to the qualified opinion have been resolved, and the financial impact has been reflected in the financial statements for the years ended December 31, 2021, and December 31, 2022[64]. - The audit committee held two meetings during the year to review financial data, including annual and semi-annual performance, and discussed risk management and internal control systems[87]. - The company has established a remuneration committee to review and recommend compensation policies for directors and senior management[89]. - The nomination committee held three meetings to discuss the nomination of new directors and ensure diversity in the board's composition[101]. - The company emphasizes a diversity policy for board members, considering various factors such as gender, age, and professional experience[102]. Risk Management - The company has a risk management framework in place to identify and assess potential risks affecting business objectives[55]. - The board is responsible for reviewing the effectiveness of risk management and internal control systems, which aim to manage risks rather than eliminate them[79]. - The company has established internal audit functions to regularly review financial management, production, and service processes[80]. - Directors are required to stay informed about the company's operational and financial conditions and report any significant events[81]. - The board conducted an annual review of the group's risk management and internal control systems, affirming their overall effectiveness[82]. Audit and Compliance - The independent auditor issued a qualified opinion on the consolidated financial statements for the year ended December 31, 2022, due to insufficient audit evidence[67]. - The independent auditor was unable to obtain sufficient appropriate audit evidence to support the carrying value of the default provision as of December 31, 2021[85]. - The independent auditor's report indicates that the consolidated financial statements reflect a true and fair view of the company's financial position as of December 31, 2022, except for matters described in the "Basis for Qualified Opinion" section[126]. - The audit fees for the year amounted to HKD 1,680,000, while other services cost HKD 250,000[62]. - The company’s independent auditor has been retained since its establishment in 2005, confirming independence and objectivity[41]. Capital Expenditures and Investments - Approximately HKD 500 million was allocated for the design, procurement, installation, and construction of oil and gas facilities, fully utilized as planned[8]. - About HKD 250 million was designated for capital expenditures related to the enhancement and expansion of production and office facilities in Zhuhai, with HKD 194 million already spent[8]. - The company has not utilized approximately HKD 100 million allocated for upgrading the Penglai site and related equipment, expected to be used in 2023 to 2024[10]. - Approximately HKD 38,866,500 was allocated for general operating funds, with HKD 6 million utilized during the reporting year[10]. - The company raised bank loans amounting to RMB 295,500 thousand during the year, while repaying RMB 312,900 thousand in bank and other loans[177]. Financial Position - Non-current assets totaled RMB 1,557,904 thousand in 2022, down from RMB 1,736,590 thousand in 2021[146]. - Current assets decreased to RMB 1,621,558 thousand in 2022 from RMB 2,137,380 thousand in 2021[146]. - Current liabilities decreased to RMB 1,089,954 thousand in 2022 from RMB 1,797,047 thousand in 2021[146]. - As of December 31, 2022, total equity amounted to RMB 1,747,247,000, a decrease from RMB 1,805,467,000 as of December 31, 2021[148]. - The company's net asset value decreased to RMB 1,747,247 thousand in 2022 from RMB 1,805,467 thousand in 2021, indicating a reduction in equity[173]. - The company’s total equity decreased from RMB 1,805,467 thousand in 2021 to RMB 1,747,247 thousand in 2022, reflecting a decline in shareholder value[173]. - The company’s cash and cash equivalents were RMB 610,477 thousand in 2022, down from RMB 662,765 thousand in 2021[146]. - Cash and cash equivalents as of December 31, 2022, were RMB 97,799,000, down from RMB 134,310,000 in 2021[150]. - The company recognized a significant goodwill of RMB 52,444,000 allocated to its oil and gas exploration equipment manufacturing business[157]. Default Compensation and Provisions - The company reported a provision for default compensation of approximately RMB 138,600,000 due to a contract delay, with an increase of RMB 73,600,000 recognized in the profit and loss account for the year ended December 31, 2022[61]. - The final amount for the default compensation reached RMB 138,600,000, and additional claims amounted to RMB 29,000,000, fully reflected in the financial statements for the years ended December 31, 2021, and December 31, 2022[63]. - Management is in negotiations with clients regarding the final amount of default compensation related to delivery delays, which exceeded the provisions made[84]. - The company recorded significant delays in the delivery of goods under a contract, which were attributed to various factors beyond its control[108]. - The company uses a provision matrix to estimate expected credit losses for trade receivables, which involves significant management judgment based on historical loss experience[116]. - The audit identified the estimation of expected credit losses for trade receivables as a key audit matter due to its importance to the consolidated financial statements[116].

Financial Performance - Revenue for the year ended December 31, 2022, decreased by 56.02% to RMB 1,750,927,000 compared to RMB 3,981,612,000 in 2021[24] - Gross profit for the same period fell by 85% to RMB 42,530,000 from RMB 283,616,000 in the previous year[24] - The company reported a loss attributable to shareholders of RMB 208,234,000 for the year ended December 31, 2022, compared to a profit of RMB 11,024,000 in 2021[24] - The basic loss per share for the year was RMB 11.80, with no final dividend recommended for the year ended December 31, 2022[24] - The company reported a pre-tax loss of RMB 197,844,000 for the year, compared to a pre-tax profit of RMB 19,811,000 in 2021[13] - The total reported segment profit for 2022 was RMB 42,530,000, a significant decrease from RMB 283,616,000 in 2021, reflecting a decline of approximately 85%[42] - The company reported a net loss of RMB 105,196,000 for the year 2022, compared to a net profit of RMB 28,733,000 in 2021[69] - The company reported a net loss of RMB 208,234,000 in 2022, compared to a profit of RMB 11,024,000 in 2021[103] Operational Highlights - The group operated 15 projects at the Penglai site in 2022, with 8 projects completed and delivered successfully, achieving zero incident rate for 8 consecutive years[5] - The group achieved a total of 1.16 billion safe working hours without incidents, meeting all health, safety, and environmental targets for the year[5] - The company experienced significant project delays and cost increases, leading to substantial losses in the Zhuhai facility, impacting overall operational performance in 2022[120] - The company achieved 25 million safe working hours on the Arctic LNG2 project, marking a significant milestone in safety and quality[147] Employee and Management Changes - The total number of employees as of December 31, 2022, was 2,739, a decrease from 3,512 in 2021, with a reduction in both management and technical staff[9] - The company adjusted its management team in the second half of 2021 to address specific issues in project execution at the Zhuhai facility[121] - The group emphasizes the importance of creating a fair and open competitive environment for employees, with compensation and rewards based on industry standards and performance[189] Financial Position - Non-current assets decreased from RMB 1,736,590 thousand in 2021 to RMB 1,557,904 thousand in 2022, a decline of approximately 10.3%[28] - Current liabilities reduced significantly from RMB 2,137,380 thousand in 2021 to RMB 1,621,558 thousand in 2022, representing a decrease of about 24.1%[28] - The company's total equity decreased from RMB 1,805,467 thousand in 2021 to RMB 1,747,247 thousand in 2022, a decline of approximately 3.2%[29] - The company’s cash and cash equivalents decreased from RMB 662,765 thousand in 2021 to RMB 610,477 thousand in 2022, a decline of approximately 7.9%[28] - The total assets reported for 2022 were RMB 3,179,462,000, down from RMB 3,873,970,000 in 2021, indicating a reduction of about 18%[42] - The total liabilities decreased to RMB 1,432,215,000 in 2022 from RMB 2,068,503,000 in 2021, representing a decline of approximately 31%[42] Revenue and Cost Analysis - Total revenue from construction contracts and new energy products for 2022 was RMB 1,750,927 thousand, down from RMB 3,981,612 thousand in 2021, indicating a decline of approximately 56.1%[35] - Revenue from construction contracts for 2022 was RMB 1,544,552,000, down from RMB 3,801,550,000 in 2021, a decrease of about 59%[56] - The cost of sales and services for 2022 was about RMB 1,708,397,000, down 53.80% from RMB 3,697,996,000 in 2021[153] - Direct costs accounted for 83.02% of total sales and service costs, amounting to RMB 1,418,338,000, a reduction of 57.84% from RMB 3,364,114,000 in the previous year[153] - Administrative and other operating expenses decreased by 17.30% to approximately RMB 273,223,000 compared to RMB 330,375,000 in 2021[156] Strategic Initiatives - The group plans to actively explore business restructuring and transformation opportunities through acquisitions and collaborations[6] - The company plans to continue investing in upgrading existing facilities to enhance construction capacity and timely delivery capabilities[124] - The company aims to develop multi-system and multi-field integrated energy service capabilities, focusing on core markets and advantageous products[150] - The group plans to focus on market development, particularly in the energy sector, and will enhance bidding capabilities and personnel to track upcoming projects over the next two years[194] - The company has plans for market expansion and new product development, although specific details were not disclosed in the conference call[43] Challenges and Risks - The global energy crisis, exacerbated by geopolitical conflicts, poses significant challenges for the company and the industry as a whole[146] - The group is actively managing foreign exchange risks associated with fluctuations in the RMB against USD and EUR, aiming to minimize exposure to foreign currency-denominated assets[188] - The group is in discussions with clients regarding the final amount of penalties due to significant delays in the delivery of goods, which exceeded the prepared provisions[192] Miscellaneous - The company recognized government subsidies of approximately RMB 3,936,000 for 2022, compared to RMB 6,737,000 in 2021, reflecting a decline of about 42%[60] - The company has been recognized as a high-tech enterprise, allowing for a reduced tax rate of 15% for certain subsidiaries until November 17, 2025[47][48] - The company reached an agreement with clients regarding compensation for delayed defaults amounting to RMB 138,600,000 and additional claims of RMB 29,000,000, which have been reflected in the financial statements[184]

Financial Performance - Revenue decreased by 42.88% year-on-year to RMB 1,166,518,000[4] - Gross profit decreased by 94.05% year-on-year to RMB 15,673,000[4] - The loss attributable to owners for the six months ended June 30, 2022, was RMB 140,750,000, compared to a profit of RMB 98,301,000 for the same period in 2021[4] - Basic loss per share for the six months ended June 30, 2022, was RMB 8.371[4] - The company reported a total comprehensive loss of RMB 127,771,000 for the period[7] - Total comprehensive income for the six months ended June 30, 2022, was RMB (140,750) thousand, compared to RMB (127,771) thousand for the same period in 2021[16] - The company reported a total comprehensive loss before tax of RMB 118,567 thousand for the six months ended June 30, 2022, compared to a profit of RMB 124,649 thousand for the same period in 2021[35] - The company reported a loss attributable to owners of approximately RMB 140,750,000, a decrease of about 243% compared to the profit in the same period last year[88] Assets and Liabilities - Total assets less current liabilities as of June 30, 2022, amounted to RMB 2,185,730,000[10] - Net current assets as of June 30, 2022, were RMB 552,945,000[10] - Non-current assets as of June 30, 2022, totaled RMB 1,632,785,000[8] - Total equity as of June 30, 2022, was RMB 1,676,326,000[10] - The company reported a total equity of RMB 1,676,326 thousand as of June 30, 2022, compared to RMB 1,896,255 thousand as of December 31, 2021[16] - The company’s total liabilities as of June 30, 2022, were RMB 634,351 thousand, compared to RMB 1,896,255 thousand as of December 31, 2021[16] Cash Flow - Cash used in operating activities for the six months ended June 30, 2022, was RMB (166,976) thousand, a decrease from RMB 363,012 thousand in the same period of 2021[16] - Net cash generated from financing activities for the six months ended June 30, 2022, was RMB 202,748 thousand, compared to RMB (204,210) thousand in the same period of 2021[16] - The cash and cash equivalents at the end of the period were RMB 705,024 thousand, down from RMB 1,344,933 thousand at the end of June 30, 2021[16] - The company reported a net cash outflow from operating activities of approximately RMB 166,976,000 for the period[89] Segment Performance - Revenue from external customers for the Oil and Gas segment was RMB 1,033,918 thousand, while the New Energy and Refining segment generated RMB 123,540 thousand, totaling RMB 1,166,518 thousand for the six months ended June 30, 2022[33] - The Oil and Gas segment reported a profit of RMB 139,919 thousand, whereas the New Energy and Refining segment incurred a loss of RMB 124,212 thousand, resulting in a total segment profit of RMB 15,673 thousand[33] Operational Challenges - The company faced significant losses from the Zhuhai site due to project delays and cost overruns, impacting performance in 2021 and the first half of 2022[75] - The company reported a substantial decrease in workload in the first half of 2022 compared to the same period last year, with insufficient new orders impacting future operations[76] - The company is actively negotiating with clients to push forward project progress affected by external uncertainties, including geopolitical tensions[72] Corporate Governance - The audit committee has reviewed the unaudited interim financial information for the six months ending June 30, 2022, and found it compliant with applicable accounting standards[164] - The company has adopted the Corporate Governance Code to enhance transparency and protect shareholder rights[160] - The company has established an audit committee consisting of three independent non-executive directors and one non-executive director[164] - The company is committed to maintaining high standards of corporate governance and compliance with listing rules[160] Shareholder Information - As of June 30, 2022, the major shareholder Wang Lishan holds 396,911,278 shares, representing 23.61% of the total shares[145] - The beneficial owner of the company, Sanju Environmental Protection (Hong Kong) Limited, holds 641,566,556 shares, accounting for 38.16% of the total shares[147] - Major shareholders include Beijing Sanju Environmental Protection New Materials Co., Ltd. with 641,566,556 shares (38.16%) and Xiangxing Investment Co., Ltd. with 396,911,278 shares (23.61%) [151] Future Outlook - The company plans to focus on market development, particularly in North America and Europe, due to strong investment momentum in oil and gas development projects[105] - The company aims to actively expand its offshore wind power construction strategy[106] - Future guidance indicates a projected revenue growth of approximately 10% year-over-year for the next fiscal period[138]

Financial Performance - The company's turnover for 2021 was RMB 3,981,612,000, a significant increase compared to RMB 3,647,183,000 in 2020, representing a growth of approximately 9.1%[8] - Gross profit for 2021 was RMB 447,749,000, while net profit was RMB 11,024,000, indicating a net profit margin of approximately 0.28%[8] - Basic and diluted earnings per share for 2021 were RMB 0.0066 and RMB 0.0065, respectively[9] - In 2021, the company's net profit attributable to owners was approximately RMB 11,024,000, a decrease of 92.49% compared to RMB 146,712,000 in 2020[31] - The company's gross profit for 2021 was approximately RMB 283,616,000, a decrease of 36.66% or RMB 164,133,000 from 2020, resulting in a gross margin drop from 12.28% to 7.12%[28] - The company recorded revenue of approximately RMB 3,981,612,000 in 2021, an increase of 9.17% or RMB 334,429,000 compared to 2020[22] - Revenue from the oil and gas equipment engineering and integrated services increased by 2.72% or RMB 77,378,000, while revenue from the new energy and refining equipment engineering and integrated services surged by 33.34% or RMB 259,765,000, mainly due to contributions from offshore wind power equipment projects[22] Dividends and Share Capital - The company did not recommend a final dividend for the year ended December 31, 2021[9] - The company has no predetermined dividend payout ratio, and the declaration of dividends is at the discretion of the board[70] - The board of directors has approved a dividend payout of $0.50 per share, representing a 25% increase from the last dividend[48] - The company issued 47,290,000 ordinary shares in 2021, raising a total of HKD 30,819,000[72] - The company's total share capital as of December 31, 2021, consisted of 1,681,306,389 ordinary shares, an increase from 1,634,016,389 shares in 2020[73] Operational Achievements - The completion of the GCGV natural gas chemical plant core module construction project in March 2021 marked a significant achievement, with a total of 2,230 million safe working hours recorded[11] - The Arctic LNG 2 liquefied natural gas production line core module construction project delivered its first three modules by the end of 2021, contributing to a total of over 20 million safe working hours[12] - The company has received multiple awards for project excellence, including "Best Site" and "Best Team" for the GCGV project[11] Management and Strategy - The company is actively optimizing its management structure and enhancing management controls to improve project delivery efficiency[11] - The company is actively seeking new business opportunities through acquisitions and collaborations to promote business transformation[18] - The company plans to enhance its construction efficiency and reduce costs by investing in facility upgrades and improving manufacturing capabilities[17] - The company aims to improve market organization and marketing capabilities to secure major bidding opportunities and increase market orders[16] Employee and Safety Initiatives - The company is focusing on enhancing employee skills and safety through various training and engagement activities[16] - The company has implemented a health, safety, and environmental management system certified by OHSAS18001:2007, focusing on creating a safe production environment[63] - The company conducts annual health checks for employees to ensure they meet health standards[64] Financial Position and Liabilities - As of December 31, 2021, the group's cash and cash equivalents amounted to approximately RMB 666,970,000, down from RMB 1,191,173,000 in 2020[31] - The capital debt ratio increased to 29.58% in 2021 from 25.55% in 2020, primarily due to a reduction in total equity after dividend payments totaling RMB 512,713,000[38] - The group had approximately RMB 397,830,000 in available bank credit as of December 31, 2021, compared to RMB 332,940,000 in 2020[31] - The group reported a provision for default compensation of approximately RMB 65 million due to contract delivery delays as of December 31, 2021[179] - The expected credit loss for trade receivables is estimated using a matrix that involves significant management judgment based on historical credit loss experience[191] Corporate Governance - The company has adopted the Corporate Governance Code to maintain high standards of corporate governance, enhancing transparency and protecting shareholder rights[132] - The board held a total of 12 meetings in 2021, with attendance rates for individual directors ranging from 11 to 12 out of 12 meetings[141] - The company has confirmed that all independent non-executive directors have submitted annual confirmations regarding their independence as per listing rules[140] - The company is committed to reviewing and monitoring compliance with legal and regulatory requirements as part of its corporate governance responsibilities[140] Audit and Compliance - The independent auditor expressed a qualified opinion regarding the adequacy of audit evidence for the provision recognized in the financial statements[155] - The audit committee held two meetings during the year to review and discuss the company's financial information, including annual and semi-annual performance[163] - The audit committee recommended the reappointment of the independent auditor for the 2022 financial year[165] - The auditor's report aims to provide transparency while balancing legal and public interest considerations[200] Future Outlook - The company provided guidance for the next quarter, expecting revenue to be between $1.6 billion and $1.7 billion, indicating a growth rate of 7% to 13%[48] - New product launches are anticipated to contribute an additional $200 million in revenue over the next fiscal year[48] - Market expansion plans include entering two new international markets by the end of the fiscal year, projected to increase market share by 5%[48]

[Financial Highlights](index=3&type=section&id=Financial%20Highlights) The company reported significant growth in turnover and profit attributable to owners for the first half of 2021, with no interim dividend declared Financial Highlights for H1 2021 | Indicator | H1 2021 (RMB '000) | Prior Period (RMB '000) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Turnover | 2,042,142 | 1,296,344 | 57.53% | | Gross Profit | 263,505 | 177,496 | 48.46% | | Profit attributable to owners of the Company | 98,301 | 25,363 | 288% | | Basic earnings per share | 5.966 cents | 1.552 cents | - | | Diluted earnings per share | 5.901 cents | 1.552 cents | - | - The Board announced no interim dividend would be paid for the six months ended June 30, 2021[4](index=4&type=chunk) [Independent Review Report](index=4&type=section&id=Independent%20Review%20Report) RSM Hong Kong conducted a review of the condensed consolidated interim financial information, finding no material non-compliance with HKAS 34 - RSM Hong Kong, the auditor, reviewed the condensed consolidated interim financial information in accordance with Hong Kong Standard on Review Engagements 2410[4](index=4&type=chunk)[5](index=5&type=chunk) - The auditor found no matters suggesting the interim financial information was not prepared in all material respects in accordance with HongAS 34[8](index=8&type=chunk) [Condensed Consolidated Statement of Profit or Loss](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) The company's profit for the period significantly increased in 2021, driven by higher revenue and improved operating efficiency Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Indicator | 2021 (RMB '000) | 2020 (RMB '000) | | :--- | :--- | :--- | | Revenue | 2,042,142 | 1,296,344 | | Cost of sales and services | (1,778,637) | (1,118,848) | | Gross Profit | 263,505 | 177,496 | | Other income | 25,862 | 16,281 | | Administrative expenses | (173,325) | (96,708) | | Operating profit | 139,282 | 56,715 | | Finance costs | (14,633) | (19,432) | | Profit before tax | 124,649 | 37,283 | | Income tax expense | (26,348) | (11,920) | | Profit for the period attributable to owners of the Company | 98,301 | 25,363 | | Basic earnings per share | 5.966 cents | 1.552 cents | | Diluted earnings per share | 5.901 cents | 1.552 cents | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Total comprehensive income attributable to owners of the company increased significantly in 2021, despite a negative foreign currency translation difference Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2021 (RMB '000) | 2020 (RMB '000) | | :--- | :--- | :--- | | Profit for the period | 98,301 | 25,363 | | Other comprehensive income: Exchange differences on translation of foreign operations | (7,919) | 18,096 | | Other comprehensive income for the period, net of tax | (7,919) | 18,096 | | Total comprehensive income for the period attributable to owners of the Company | 90,382 | 43,459 | [Condensed Consolidated Statement of Financial Position](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) The company's net assets decreased as of June 30, 2021, primarily due to a reduction in current assets and an increase in current liabilities Condensed Consolidated Statement of Financial Position (As at June 30, 2021) | Indicator | June 30, 2021 (RMB '000) | December 31, 2020 (RMB '000) | | :--- | :--- | :--- | | **Non-current assets** | | | | Property, plant and equipment | 1,215,304 | 1,246,905 | | Right-of-use assets | 433,168 | 444,561 | | Goodwill | 52,444 | 52,444 | | Intangible assets | 10,785 | 12,226 | | Trade receivables, non-current | 6,002 | 1,592 | | Deferred tax assets | 30,240 | 29,452 | | **Total non-current assets** | **1,747,943** | **1,787,180** | | **Current assets** | | | | Inventories | 195,061 | 127,343 | | Trade and bills receivables | 573,259 | 721,246 | | Contract cost assets | 6,047 | 6,150 | | Contract assets | 230,958 | 455,282 | | Prepayments, deposits and other receivables | 253,265 | 181,474 | | Derivative financial instruments | 8,591 | 2,182 | | Tax recoverable | 18 | - | | Pledged deposits | 112,291 | 136,073 | | Bank balances and cash | 1,342,360 | 1,188,255 | | **Total current assets** | **2,721,850** | **2,818,005** | | **Current liabilities** | | | | Trade and bills payables | 1,035,035 | 1,056,120 | | Contract liabilities | 171,481 | 430,267 | | Other accruals and payables | 211,957 | 133,667 | | Dividends payable | 307,783 | - | | Provisions | 208,195 | 68,541 | | Bank borrowings | 54,500 | 37,500 | | Deferred income | 10,873 | 8,398 | | Lease liabilities | 7,027 | 9,118 | | Tax payable | 34,788 | 17,174 | | **Total current liabilities** | **2,041,639** | **1,760,785** | | **Net current assets** | **680,211** | **1,057,220** | | **Total assets less current liabilities** | **2,428,154** | **2,844,400** | | **Non-current liabilities** | | | | Deferred income | 20,651 | 28,563 | | Lease liabilities | 42,727 | 45,868 | | Bank borrowings | 446,450 | 482,200 | | Deferred tax liabilities | 22,071 | 38,424 | | **Total non-current liabilities** | **531,899** | **595,055** | | **Net assets** | **1,896,255** | **2,249,345** | | **Capital and reserves** | | | | Share capital | 15,150 | 14,755 | | Reserves | 1,881,105 | 2,234,590 | | **Total equity** | **1,896,255** | **2,249,345** | [Condensed Consolidated Statement of Changes in Equity](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Total equity decreased in the first half of 2021, mainly due to dividend payments, despite profit for the period and share-based expenses Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Item | Share Capital (RMB '000) | Share Premium (RMB '000) | Special Reserve (RMB '000) | Convertible Bond Equity Reserve (RMB '000) | Exchange Reserve (RMB '000) | Share-based Payment Reserve (RMB '000) | Statutory Reserve (RMB '000) | Retained Profits (RMB '000) | Total Equity (RMB '000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | As at January 1, 2020 | 14,755 | 1,733,618 | (52,040) | 2,951 | (19,038) | 60,992 | 40,275 | 369,480 | 2,150,993 | | Total comprehensive income for the period | – | – | – | – | 18,096 | – | – | 25,363 | 43,459 | | Share-based payment expense | – | – | – | – | – | 1,935 | – | – | 1,935 | | Total changes in equity for the period | – | – | – | – | 18,096 | 1,935 | – | 25,363 | 45,394 | | As at June 30, 2020 | 14,755 | 1,733,618 | (52,040) | 2,951 | (942) | 62,927 | 40,275 | 394,843 | 2,196,387 | | As at January 1, 2021 | 14,755 | 1,733,618 | (52,040) | 2,951 | (72,422) | 46,813 | 40,275 | 535,395 | 2,249,345 | | Total comprehensive income for the period | – | – | – | – | (7,919) | – | – | 98,301 | 90,382 | | Share-based payment expense | – | – | – | – | – | 43,500 | – | – | 43,500 | | Forfeiture of share options | – | – | – | – | – | (655) | – | 655 | – | | Issue of shares upon exercise of share options | 395 | 39,034 | – | – | – | (13,688) | – | – | 25,741 | | Special dividend paid | – | (204,930) | – | – | – | – | – | – | (204,930) | | Final dividend for 2020 approved | – | (307,783) | – | – | – | – | – | – | (307,783) | | Total changes in equity for the period | 395 | (473,679) | – | – | (7,919) | 29,157 | – | 98,956 | (353,090) | | As at June 30, 2021 | 15,150 | 1,259,939 | (52,040) | 2,951 | (80,341) | 75,970 | 40,275 | 634,351 | 1,896,255 | [Condensed Consolidated Statement of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Net cash generated from operating activities decreased in 2021, while net cash from investing activities turned positive, and financing activities resulted in a net outflow Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Indicator | 2021 (RMB '000) | 2020 (RMB '000) | | :--- | :--- | :--- | | Net cash generated from operating activities | 363,012 | 511,025 | | Net cash generated from/(used in) investing activities | 2,887 | (130,930) | | Net cash used in financing activities | (204,210) | (199,402) | | Net increase in cash and cash equivalents | 161,689 | 180,693 | | Cash and cash equivalents at beginning of period | 1,191,173 | 808,766 | | Effect of exchange rate changes | (7,929) | 18,106 | | Cash and cash equivalents at end of period | 1,344,933 | 1,007,565 | [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering accounting policies, fair value measurements, segment information, and other financial items [1. Basis of Preparation](index=12&type=section&id=1.%20Basis%20of%20Preparation) The condensed consolidated financial statements are prepared in accordance with HKAS 34 and HKEX Listing Rules, consistent with the 2020 annual financial statements - The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' issued by the HKICPA and the applicable disclosure requirements of the HKEX Listing Rules[20](index=20&type=chunk) - The condensed consolidated financial statements should be read in conjunction with the 2020 annual financial statements, with consistent accounting policies and methods of computation applied[20](index=20&type=chunk) [2. Adoption of New and Revised Hong Kong Financial Reporting Standards](index=12&type=section&id=2.%20Adoption%20of%20New%20and%20Revised%20Hong%20Kong%20Financial%20Reporting%20Standards) The Group adopted all new and revised HKFRSs effective January 1, 2021, with no significant impact on the consolidated financial statements, and no early adoption of upcoming standards - The Group adopted all new and revised HKFRSs relevant to its operations and effective for the accounting year beginning January 1, 2021, which had no significant impact on the Group's consolidated financial statements[21](index=21&type=chunk) - The Group did not early adopt any new or revised standards in preparing these condensed consolidated interim financial statements[21](index=21&type=chunk) [3. Fair Value Measurement](index=13&type=section&id=3.%20Fair%20Value%20Measurement) The carrying amounts of the Group's financial assets and liabilities approximate their fair values, with fair value measurements categorized into three levels; derivative financial instruments significantly increased - The carrying amounts of the Group's financial assets and liabilities in the condensed consolidated statement of financial position approximate their respective fair values[23](index=23&type=chunk) - Fair value measurements are categorized into three levels based on valuation input data: Level 1 (quoted prices in active markets), Level 2 (observable input data), and Level 3 (unobservable input data)[23](index=23&type=chunk)[24](index=24&type=chunk) Fair Value of Derivative Instruments (Forward Exchange Contracts) | Item | June 30, 2021 (RMB '000) | December 31, 2020 (RMB '000) | | :--- | :--- | :--- | | Derivative instruments - Forward exchange contracts (assets) | 8,591 | 2,182 | [4. Segment Information](index=15&type=section&id=4.%20Segment%20Information) The Group operates in two main segments: oil and gas, and new energy and petrochemicals; the oil and gas segment contributed most of the revenue and profit, while the new energy segment saw significant revenue growth but incurred a loss - The Group comprises two main business segments: equipment engineering and integrated services for the oil and gas industry, and equipment engineering and integrated services for the new energy and petrochemical industry[28](index=28&type=chunk) Segment Revenue and Profit (For the six months ended June 30) | Segment | 2021 External Revenue (RMB '000) | 2021 Segment Profit/(Loss) (RMB '000) | 2020 External Revenue (RMB '000) | 2020 Segment Profit/(Loss) (RMB '000) | | :--- | :--- | :--- | :--- | :--- | | Oil and gas segment | 1,484,698 | 309,570 | 1,287,834 | 179,091 | | New energy and petrochemical segment | 546,147 | (46,185) | 516 | (216) | | Others | 11,297 | 120 | 7,994 | (1,379) | | **Consolidated Total** | **2,042,142** | **263,505** | **1,296,344** | **177,496** | Segment Profit Reconciliation (For the six months ended June 30) | Item | 2021 (RMB '000) | 2020 (RMB '000) | | :--- | :--- | :--- | | Total profit from reportable segments | 263,505 | 177,496 | | Unallocated amounts: Other income | 25,862 | 16,281 | | Unallocated amounts: Finance costs | (14,633) | (19,432) | | Unallocated amounts: Other operating expenses | (150,085) | (137,062) | | **Consolidated profit before tax for the period** | **124,649** | **37,283** | [5. Revenue](index=17&type=section&id=5.%20Revenue) The Group's revenue primarily derives from contracts with customers, categorized by business segment and timing of recognition; a significant portion of opening contract liabilities was recognized as revenue - The Group's revenue is generated from contracts with customers, primarily from equipment engineering and integrated services for the oil and gas industry and the new energy and petrochemical industry[33](index=33&type=chunk)[35](index=35&type=chunk) Revenue by Business Segment and Timing of Recognition (For the six months ended June 30) | Timing of Revenue Recognition | Oil and Gas (2021 RMB '000) | New Energy and Petrochemical (2021 RMB '000) | Others (2021 RMB '000) | Total (2021 RMB '000) | | :--- | :--- | :--- | :--- | :--- | | Goods and services transferred at a point in time | 14,121 | 2,528 | – | 16,649 | | Goods and services transferred over time | 1,470,577 | 543,619 | 11,297 | 2,025,493 | | **Total** | **1,484,698** | **546,147** | **11,297** | **2,042,142** | - An amount of approximately **RMB424,193,000** recognized in contract liabilities at the beginning of the period was recognized as revenue for the six months ended June 30, 2021[37](index=37&type=chunk) [6. Other Income](index=19&type=section&id=6.%20Other%20Income) Total other income for the first half of 2021 was RMB25,862 thousand, mainly from interest income, government grants, fair value gains on derivative financial instruments, and compensation income Composition of Other Income (For the six months ended June 30) | Item | 2021 (RMB '000) | 2020 (RMB '000) | | :--- | :--- | :--- | | Gain on disposal of property, plant and equipment | 324 | – | | Interest income | 4,567 | 5,388 | | Government grants recognized | 9,914 | 10,621 | | Fair value gain on derivative financial instruments | 1,526 | – | | Compensation income | 9,086 | – | | Miscellaneous income | 445 | 272 | | **Total** | **25,862** | **16,281** | - Of the recognized government grants, approximately **RMB4,477,000** was compensation for expenses or losses incurred, and approximately **RMB5,437,000** related to certain research and development activities[39](index=39&type=chunk) [7. Other Operating Expenses](index=20&type=section&id=7.%20Other%20Operating%20Expenses) Total other operating expenses for the first half of 2021 amounted to RMB11,739 thousand, primarily comprising net exchange losses, inventory provisions, and impairment losses on property, plant, and equipment Composition of Other Operating Expenses (For the six months ended June 30) | Item | 2021 (RMB '000) | 2020 (RMB '000) | | :--- | :--- | :--- | | Net exchange losses | 4,585 | 6,557 | | Fair value loss on derivative financial instruments | – | 3,368 | | Provision for inventories | 1,381 | 2,226 | | Impairment loss on property, plant and equipment | 5,522 | – | | Others | 251 | 1,366 | | **Total** | **11,739** | **13,517** | [8. Finance Costs](index=20&type=section&id=8.%20Finance%20Costs) Total finance costs for the first half of 2021 were RMB14,633 thousand, mainly consisting of interest expense on bank loans and other charges, showing a decrease from the prior period Composition of Finance Costs (For the six months ended June 30) | Item | 2021 (RMB '000) | 2020 (RMB '000) | | :--- | :--- | :--- | | Interest expense on bank borrowings | 11,437 | 16,119 | | Others | 3,196 | 3,313 | | **Total** | **14,633** | **19,432** | [9. Dividends](index=21&type=section&id=9.%20Dividends) The Group paid a 2020 interim special dividend of RMB204,930 thousand in the first half of 2021, and no interim dividends were proposed for the periods ended June 30, 2021, and 2020 Dividends Paid (For the six months ended June 30) | Item | 2021 (RMB '000) | 2020 (RMB '000) | | :--- | :--- | :--- | | 2020 interim special dividend — HKD0.15 per share | 204,930 | – | - No interim dividends were proposed for the six months ended June 30, 2021, and June 30, 2020[44](index=44&type=chunk) - The final dividend for the year ended December 31, 2020, of **HKD0.22** per share, was approved by shareholders and paid on July 23, 2021[43](index=43&type=chunk) [10. Income Tax Expense](index=21&type=section&id=10.%20Income%20Tax%20Expense) Income tax expense for the first half of 2021 was RMB26,348 thousand, primarily for China corporate income tax provision, showing an increase from the prior period, with no Hong Kong profits tax provision Income Tax Expense (For the six months ended June 30) | Item | 2021 (RMB '000) | 2020 (RMB '000) | | :--- | :--- | :--- | | Current tax — Provision for China corporate income tax for the period | 44,317 | 22,262 | | Current tax — Over-provision in prior periods | (827) | (5) | | Deferred tax | (17,142) | (10,337) | | **Total** | **26,348** | **11,920** | - The Group generated no assessable profits in Hong Kong, thus no provision for Hong Kong profits tax was made for the six months ended June 30, 2020, and 2021[48](index=48&type=chunk) [11. Profit for the Period](index=22&type=section&id=11.%20Profit%20for%20the%20Period) The Group's profit for the period is accounted for after deducting or including various items, such as inventory provisions, impairment reversals on trade receivables, impairment losses on property, plant, and equipment, and directors' and management's emoluments Profit for the Period Adjustment Items (For the six months ended June 30) | Item | 2021 (RMB '000) | 2020 (RMB '000) | | :--- | :--- | :--- | | Provision for inventories | 1,381 | 2,226 | | Impairment (reversal)/loss on trade and other receivables | (34,475) | 26,673 | | Gain on disposal of property, plant and equipment | (324) | – | | Impairment (reversal)/loss on contract assets | (504) | 164 | | Impairment loss on property, plant and equipment | 5,522 | – | | Directors' emoluments — Directors | 180 | 180 | | Directors' emoluments — Management | 6,237 | 3,215 | | Directors' emoluments — Share-based payment expense | 1,008 | 570 | [12. Earnings Per Share](index=23&type=section&id=12.%20Earnings%20Per%20Share) Basic earnings per share for the first half of 2021 were RMB5.966 cents, and diluted earnings per share were RMB5.901 cents, both showing significant growth from the prior period, with diluted earnings considering the potential impact of share options Earnings Per Share Calculation Data (For the six months ended June 30) | Indicator | 2021 (RMB '000/share) | 2020 (RMB '000/share) | | :--- | :--- | :--- | | Profit for the period attributable to owners of the Company for basic and diluted EPS calculation | 98,301 | 25,363 | | Weighted average number of ordinary shares for basic EPS calculation | 1,647,650,864 | 1,634,016,389 | | Effect of potential dilutive ordinary shares arising from share options | 18,224,805 | – | | Weighted average number of ordinary shares for diluted EPS calculation | 1,665,875,669 | 1,634,016,389 | - As at June 30, 2020, the Company's outstanding share options had no dilutive effect as their exercise price was higher than the average market price per share[52](index=52&type=chunk) [13. Property, Plant and Equipment](index=24&type=section&id=13.%20Property%2C%20Plant%20and%20Equipment) The Group acquired property, plant, and equipment amounting to approximately RMB42,046 thousand for the six months ended June 30, 2021, a decrease from the prior period Additions to Property, Plant and Equipment (For the six months ended June 30) | Item | 2021 (RMB '000) | 2020 (RMB '000) | | :--- | :--- | :--- | | Additions to property, plant and equipment | 42,046 | 58,897 | [14. Right-of-use Assets](index=24&type=section&id=14.%20Right-of-use%20Assets) In the first half of 2021, the Group renewed a 16-month lease for property and warehouse use, recognizing RMB1,048 thousand in right-of-use assets and lease liabilities - For the six months ended June 30, 2021, the Group renewed an existing lease for property and warehouse use for a period of **16 months**[54](index=54&type=chunk) - Upon commencement of the renewed lease, the Group recognized **RMB1,048,000** in right-of-use assets and lease liabilities[54](index=54&type=chunk) [15. Trade and Bills Receivables](index=24&type=section&id=15.%20Trade%20and%20Bills%20Receivables) As of June 30, 2021, total trade and bills receivables were RMB579,261 thousand, a decrease from the end of 2020, with credit terms typically ranging from 30 to 90 days and quality retention periods of 12 to 24 months Trade and Bills Receivables (As at June 30, 2021) | Item | June 30, 2021 (RMB '000) | December 31, 2020 (RMB '000) | | :--- | :--- | :--- | | Trade receivables | 697,748 | 857,630 | | Provision for doubtful debts | (119,381) | (153,854) | | Bills receivables | 894 | 19,062 | | **Total** | **579,261** | **722,838** | - The Group's credit terms with customers generally range from **30 to 90 days**, with quality retention periods typically **12 to 24 months** after completion of engineering and other services[58](index=58&type=chunk) - As at June 30, 2021, the Group obtained guarantees from a shareholder for individual trade receivables balances of approximately **RMB102,794,000**[58](index=58&type=chunk) Ageing Analysis of Trade Receivables (As at June 30, 2021) | Ageing | June 30, 2021 (RMB '000) | December 31, 2020 (RMB '000) | | :--- | :--- | :--- | | Invoiced: 0 to 30 days | 310,464 | 399,622 | | Invoiced: 31 to 90 days | 27,808 | 23,548 | | Invoiced: 91 to 365 days | 33,683 | 59,730 | | Invoiced: Over 365 days | 132,897 | 184,123 | | Unbilled | 192,896 | 190,607 | | **Total** | **697,748** | **857,630** | [16. Trade and Bills Payables](index=26&type=section&id=16.%20Trade%20and%20Bills%20Payables) As of June 30, 2021, total trade and bills payables were RMB1,035,035 thousand, a slight decrease from the end of 2020, with the largest portion in the 0-30 day ageing category Trade and Bills Payables (As at June 30, 2021) | Item | June 30, 2021 (RMB '000) | December 31, 2020 (RMB '000) | | :--- | :--- | :--- | | Trade payables | 1,026,859 | 980,751 | | Bills payables | 8,176 | 75,369 | | **Total** | **1,035,035** | **1,056,120** | Ageing Analysis of Trade Payables (As at June 30, 2021) | Ageing | June 30, 2021 (RMB '000) | December 31, 2020 (RMB '000) | | :--- | :--- | :--- | | 0 to 30 days | 612,436 | 816,354 | | 31 to 90 days | 92,791 | 54,711 | | 91 to 365 days | 255,615 | 15,376 | | Over 365 days | 66,017 | 94,310 | | **Total** | **1,026,859** | **980,751** | [17. Share Capital](index=27&type=section&id=17.%20Share%20Capital) As of June 30, 2021, the Company's issued share capital comprised 1,681,306,389 ordinary shares, an increase from the end of 2020, primarily due to the issuance of 47,290,000 new shares from the exercise of share options Summary of Changes in Issued Share Capital (As at June 30, 2021) | Item | Number of Shares | Amount (HKD '000) | Equivalent to (RMB '000) | | :--- | :--- | :--- | :--- | | As at January 1, 2020 and December 31, 2020 | 1,634,016,389 | 16,341 | 14,755 | | Exercise of share options | 47,290,000 | 472 | 395 | | **As at June 30, 2021** | **1,681,306,389** | **16,813** | **15,150** | - Share option holders exercised options to subscribe for a total of **47,290,000** ordinary shares of the Company for a total consideration of approximately **HKD30,819,000** (approximately **RMB25,741,000**)[65](index=65&type=chunk) [18. Related Party Transactions](index=28&type=section&id=18.%20Related%20Party%20Transactions) The Group engaged in several related party transactions during the period, including receiving income from a shareholder's subsidiary and a shareholder, and paying lease liabilities and short-term lease-related fees to associated companies Related Party Transactions (For the six months ended June 30) | Item | 2021 (RMB '000) | 2020 (RMB '000) | | :--- | :--- | :--- | | Income received from/receivable from a subsidiary of a shareholder | 2,372 | 1,654 | | Income received from/receivable from a shareholder | 2,457 | 73,862 | | Lease liabilities paid to associated companies | 941 | – | | Short-term lease related fees with a shareholder | 18 | – | - Lease liabilities paid to associated companies involved a subsidiary of a wholly-owned company of Mr. Wang Lishan, a director of the Group[66](index=66&type=chunk) [19. Seasonality](index=28&type=section&id=19.%20Seasonality) The Group's revenue from the oil and gas and new energy and petrochemical industries is subject to seasonal factors, as well as the number, scale, and progress of projects, making it difficult to predict seasonal trends and their impact on financial performance - The Group's revenue from the oil and gas industry and the new energy and petrochemical industry is affected by seasonal factors[67](index=67&type=chunk) - The Group's financial performance is influenced by the number and scale of projects secured through bidding and the progress of their completion[67](index=67&type=chunk) - The Group cannot predict the trend of seasonal effects and their impact on its financial performance[67](index=67&type=chunk) [20. Capital Commitments](index=29&type=section&id=20.%20Capital%20Commitments) As of June 30, 2021, the Group's contracted but unprovided capital commitments for property, plant, and equipment amounted to RMB9,674 thousand, a decrease from the end of 2020 Capital Commitments (As at June 30, 2021) | Item | June 30, 2021 (RMB '000) | December 31, 2020 (RMB '000) | | :--- | :--- | :--- | | Contracted but not provided for property, plant and equipment | 9,674 | 19,636 | [21. Contingent Liabilities](index=29&type=section&id=21.%20Contingent%20Liabilities) As of June 30, 2021, the Group had no significant contingent liabilities - As at June 30, 2021, the Group had no significant contingent liabilities[70](index=70&type=chunk) [22. Approval of Financial Statements](index=29&type=section&id=22.%20Approval%20of%20Financial%20Statements) The Board of Directors approved and authorized the condensed financial statements for issue on August 25, 2021 - The Board of Directors approved and authorized these condensed financial statements for issue on August 25, 2021[71](index=71&type=chunk) [Management Discussion and Analysis](index=30&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's operational and financial performance for the period, including a review of key financial metrics and an outlook on future strategies and market conditions [1. Review](index=30&type=section&id=1.%20Review) In the first half of 2021, the Group's Penglai and Zhuhai facilities experienced high workloads, successfully delivering major projects, with total outstanding contract value of approximately RMB3 billion, and plans for further facility upgrades - In the first half of 2021, the Group's Penglai and Zhuhai facilities experienced full workloads, showing significant overall growth compared to the same period last year[72](index=72&type=chunk) - The core module construction project for the North American GCGV natural gas chemical plant undertaken by the Penglai facility was successfully completed in March this year, receiving high recognition from the client[72](index=72&type=chunk) - The Zhuhai facility successfully delivered the first vessel of **50** offshore wind power equipment sets for a European offshore wind farm in mid-June 2021[73](index=73&type=chunk) - As at June 30, 2021, the Group's total outstanding contract value was approximately **RMB3 billion**[76](index=76&type=chunk) - The Group initiated the Zhuhai facility's Phase II wharf project in the first half, completing a preliminary feasibility report to enhance future business acquisition and product delivery capabilities[75](index=75&type=chunk) [Revenue](index=32&type=section&id=Revenue) Revenue reached RMB2,042,142 thousand in the first half of 2021, a 57.53% year-on-year increase, with oil and gas business revenue growing by 15.29% and new energy and petrochemicals revenue significantly increasing by 105,742% due to offshore wind power projects Revenue by Business Segment Analysis (For the six months ended June 30) | Product/Service | 2021 (RMB '000) | % of Total Revenue | 2020 (RMB '000) | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Equipment engineering and integrated services for the oil and gas industry | 1,484,698 | 73 | 1,287,834 | 99 | | Equipment engineering and integrated services for the new energy and petrochemical industry | 546,147 | 26 | 516 | 0 | | Others | 11,297 | 1 | 7,994 | 1 | | **Total** | **2,042,142** | **100** | **1,296,344** | **100** | - Revenue from new energy and petrochemical equipment engineering and integrated services increased by approximately **105,742%** or approximately **RMB545,631,000** year-on-year, primarily due to contributions from offshore wind power equipment projects at the Zhuhai facility[77](index=77&type=chunk) [Cost of Sales and Services](index=34&type=section&id=Cost%20of%20Sales%20and%20Services) Cost of sales and services was approximately RMB1,778,637 thousand, a 58.97% year-on-year increase, mainly due to a significant increase in workload, with direct costs accounting for 91.93% and growing by 67.10% - During the reporting period, the Group's cost of sales and services was approximately **RMB1,778,637,000**, an increase of approximately **RMB659,789,000** or **58.97%** compared to the same period last year[80](index=80&type=chunk) - Direct costs amounted to approximately **RMB1,635,045,000**, accounting for **91.93%** of total cost of sales and services, an increase of approximately **RMB656,570,000** or **67.10%** from approximately **RMB978,475,000** in the prior period[80](index=80&type=chunk) [Gross Profit](index=34&type=section&id=Gross%20Profit) Total gross profit for the reporting period was approximately RMB263,505 thousand, a 48.46% year-on-year increase, but the overall gross profit margin decreased to 12.90% due to lower margins on some projects - During the reporting period, the Group's total gross profit was approximately **RMB263,505,000**, an increase of approximately **RMB86,009,000** or **48.46%** compared to approximately **RMB177,496,000** in the prior period[81](index=81&type=chunk) - The overall gross profit margin decreased from **13.69%** in the prior period to **12.90%**, primarily due to lower gross margins recorded on some projects undertaken in the first half of this year[81](index=81&type=chunk) Gross Profit by Business Segment Analysis (For the six months ended June 30) | Product/Service | 2021 Gross Profit (RMB '000) | 2021 Gross Profit Margin (%) | 2020 Gross Profit (RMB '000) | 2020 Gross Profit Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Equipment engineering and integrated services for the oil and gas industry | 309,570 | 21 | 179,091 | 14 | | Equipment engineering and integrated services for the new energy and petrochemical industry | (46,185) | (8) | (216) | (42) | | Others | 120 | 1 | (1,379) | (17) | | **Total** | **263,505** | **100** | **177,496** | **100** | [Other Income](index=35&type=section&id=Other%20Income) Other income for the first half of 2021 was approximately RMB25,862 thousand, mainly comprising interest income, fair value gains on forward exchange contracts, and government grants - The Group's other income for the first half of 2021 was approximately **RMB25,862,000**[84](index=84&type=chunk) - It primarily comprised interest income, fair value gains on forward exchange contracts, and government grants[84](index=84&type=chunk) [Administrative and Other Operating Expenses](index=36&type=section&id=Administrative%20and%20Other%20Operating%20Expenses) Total administrative and other operating expenses increased by approximately 68% to RMB185,064 thousand, mainly due to higher share option expenses and staff remuneration - Total administrative and other operating expenses increased by approximately **68%** or approximately **RMB74,839,000** year-on-year to approximately **RMB185,064,000**[85](index=85&type=chunk) - Compared to last year, expenses such as share option costs and staff remuneration increased this year[85](index=85&type=chunk) [Finance Costs](index=36&type=section&id=Finance%20Costs) Finance costs for the reporting period were approximately RMB14,633 thousand, primarily consisting of bank interest expense of RMB11,437 thousand and other charges of RMB3,196 thousand - During this reporting period, the Group's finance costs were approximately **RMB14,633,000**[86](index=86&type=chunk) - It primarily comprised bank interest expense of approximately **RMB11,437,000** and other charges such as bank handling fees of approximately **RMB3,196,000**[86](index=86&type=chunk) [Profit for the Period Attributable to Owners of the Company](index=36&type=section&id=Profit%20for%20the%20Period%20Attributable%20to%20Owners%20of%20the%20Company) Profit attributable to owners of the Company for the first half of 2021 was approximately RMB98,301 thousand, a significant increase of approximately 288% year-on-year, with basic earnings per share of approximately RMB5.966 cents - In the first half of 2021, profit attributable to owners of the Company was approximately **RMB98,301,000**, a significant increase of approximately **288%** or approximately **RMB72,938,000** year-on-year[87](index=87&type=chunk) - Basic earnings per share attributable to owners of the Company was approximately **RMB5.966 cents**[87](index=87&type=chunk) [Liquidity and Financial Resources](index=36&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2021, the Group had cash and bank deposits of approximately RMB1,344,933 thousand, net cash inflow from operating activities of RMB363,012 thousand, available bank credit facilities of RMB702,470 thousand, and bank guarantees under engineering contracts of RMB730,909 thousand Liquidity and Cash Flows (As at June 30) | Item | June 30, 2021 (RMB '000) | December 31, 2020 (RMB '000) | | :--- | :--- | :--- | | Cash plus bank deposits | 1,344,933 | 1,191,173 | | Net cash inflow from operating activities | 363,012 | - | | Net cash inflow from investing activities | 2,887 | - | | Net cash outflow from financing activities | 204,210 | - | - As at June 30, 2021, the Group had available bank credit facilities of approximately **RMB702,470,000** (December 31, 2020: **RMB570,620,000**)[88](index=88&type=chunk) - As at June 30, 2021, the Group obtained bank guarantees under performance bonds for engineering contracts of approximately **RMB730,909,000** (December 31, 2020: **RMB1,048,565,000**)[88](index=88&type=chunk) [Capital Structure](index=37&type=section&id=Capital%20Structure) As of June 30, 2021, the Company's share capital consisted of 1,681,306,389 ordinary shares, and net assets were approximately RMB1,896,255 thousand, a decrease from the end of 2020 - As at June 30, 2021, the Company's share capital comprised **1,681,306,389** ordinary shares (December 31, 2020: **1,634,016,389** ordinary shares)[90](index=90&type=chunk) - As at June 30, 2021, the Group's net assets were approximately **RMB1,896,255,000** (December 31, 2020: **RMB2,249,345,000**)[90](index=90&type=chunk) [Significant Investments](index=37&type=section&id=Significant%20Investments) The Group further improved equipment and facilities at its Penglai and Zhuhai sites in the first half of the year and will continue to focus investments on the Zhuhai site to meet current and potential project demands - In the first half of this year, the Group further improved equipment and facilities at its Penglai and Zhuhai sites[91](index=91&type=chunk) - The Group will continue to focus investments on the Zhuhai site to improve equipment and facilities, meeting the demands of existing and potential projects[91](index=91&type=chunk) [Foreign Exchange Risk](index=37&type=section&id=Foreign%20Exchange%20Risk) Operating primarily in China with RMB as the functional currency, the Group faces foreign exchange rate fluctuation risks between RMB and other currencies like USD and EUR in its international business, which it manages by reducing foreign currency assets and considering exchange rate risks in contracts - The Group's primary operating locations are in China, and the functional currency of its main operating subsidiaries is RMB[92](index=92&type=chunk) - Fluctuations in the exchange rates of RMB against other currencies such as USD and EUR pose foreign exchange risks to the Group[92](index=92&type=chunk) - The Group will endeavor to reduce the amount of assets denominated in USD, EUR, and other currencies, conduct rolling forecasts of exchange rates, and consider potential exchange rate risks in business contracts[92](index=92&type=chunk) [Pledge of the Group's Assets](index=37&type=section&id=Pledge%20of%20the%20Group%27s%20Assets) As of June 30, 2021, the Group had approximately RMB112,291 thousand in bank deposits pledged as collateral for bank loans, guarantees, letters of credit, and bank acceptance bills - As at June 30, 2021, the Group had bank deposits of approximately **RMB112,291,000** (December 31, 2020: **RMB136,073,000**) pledged as collateral for bank loans, issued guarantees, letters of credit, and bank acceptance bills[93](index=93&type=chunk) [Contingent Liabilities](index=38&type=section&id=Contingent%20Liabilities) As of June 30, 2021, the Group had no significant contingent liabilities - As at June 30, 2021, the Group had no significant contingent liabilities[94](index=94&type=chunk) [Capital Management](index=38&type=section&id=Capital%20Management) The Group aims to maintain operational capability and maximize shareholder returns by optimizing its gearing ratio, which increased to 26.42% as of June 30, 2021, primarily due to a decrease in total equity from dividend payments - The Group's primary capital management objective is to maintain its ability to operate as a going concern and maximize shareholder returns by optimizing its gearing ratio[95](index=95&type=chunk) Gearing Ratio (As at June 30, 2021) | Item | June 30, 2021 (RMB '000) | December 31, 2020 (RMB '000) | | :--- | :--- | :--- | | Total bank borrowings | 500,950 | 519,700 | | Total equity | 1,896,255 | 2,249,345 | | Gearing ratio | 26.42% | 23.10% | - The increase in the gearing ratio during the period was primarily due to a decrease in total equity resulting from the payment of an interim special dividend and the declaration of a final dividend for 2020[98](index=98&type=chunk) [Employees Information and Remuneration Policy](index=39&type=section&id=Employees%20Information%20and%20Remuneration%20Policy) As of June 30, 2021, the Group had 3,547 employees, with remuneration based on position, responsibilities, and performance, including social insurance and housing provident fund/MPF contributions, and a focus on employee development through on-the-job training Number of Employees (As at June 30, 2021) | Category | June 30, 2021 (persons) | December 31, 2020 (persons) | | :--- | :--- | :--- | | Total employees | 3,547 | 3,568 | | Management and technical staff | 1,555 | 1,625 | | Skilled workers | 1,992 | 1,943 | - The Group determines employee remuneration and incentives based on industry standards, job position, responsibilities, and performance[99](index=99&type=chunk) - The Group contributes to social insurance (pension, medical, unemployment, work injury) and housing provident funds for employees in mainland China, and MPF for Hong Kong employees as required[99](index=99&type=chunk) [2. Outlook](index=40&type=section&id=2.%20Outlook) Looking ahead, rising international oil prices are driving a recovery in oil and gas market demand, alongside strong demand in the offshore wind power equipment market; the Group will pursue large-scale construction projects, improve management, optimize operations, control costs, upgrade the Zhuhai facility, and seek new business opportunities - Steady increases in international oil prices are driving a recovery in oil and gas market demand, stimulating the marine engineering market, such as FPSO construction, with a significant increase expected in FPSO topside module construction opportunities[101](index=101&type=chunk) - The natural gas facilities and offshore wind power equipment markets are also expected to maintain strong demand[101](index=101&type=chunk) - The Group will further improve its management structure, optimize operations, control costs, and vigorously advance the implementation of existing projects[101](index=101&type=chunk) - The Group will promote the upgrade and construction of the Zhuhai facility to enhance its capability to undertake larger projects, while also seeking and researching new business opportunities, including acquisitions, to expand its business scale[101](index=101&type=chunk) [Directors' Report and Corporate Governance](index=41&type=section&id=Directors%27%20Report%20and%20Corporate%20Governance) This section details the Board's activities, including dividend policy, use of proceeds, share option schemes, directors' and major shareholders' interests, and compliance with corporate governance standards [Interim Dividend](index=41&type=section&id=Interim%20Dividend) The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2021 - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2021[103](index=103&type=chunk) [Use of Proceeds](index=41&type=section&id=Use%20of%20Proceeds) The Company raised approximately HKD962 million net proceeds from a subscription in 2017; as of June 30, 2021, most funds were used as planned for oil and gas equipment project working capital and general working capital, with a portion for Zhuhai business enhancement and facility expansion, and the remaining balance to be used in 2021-2022 based on business needs - The net proceeds from the subscription amounted to approximately **HKD962,000,000**[107](index=107&type=chunk) Use of Proceeds (As at June 30, 2021) | Planned Use | Use of Proceeds | Plan for Remaining Proceeds | | :--- | :--- | :--- | | Approximately HKD500 million for working capital related to design, procurement, installation, and construction projects of oil and gas equipment and facilities, and build-transfer projects | Fully utilized as planned | — | | Approximately HKD250 million for capital expenditures to enhance the Group's Zhuhai business and expand production equipment and office facilities | Approximately HKD166 million used for the Group's Zhuhai facility production and office facilities expenditures | The remaining approximately HKD84 million will be used for the Group's Zhuhai business production equipment and office facilities expenditures as business needs arise, with the unutilized balance expected to be used in 2021-2022 | | Approximately HKD212 million for the Group's general working capital | Fully utilized as planned | — | - Due to unfavorable market conditions in 2018 and 2019, the utilization of proceeds from the subscription was slower than originally planned, and the Group proactively slowed down some investments in the Zhuhai facility's construction[109](index=109&type=chunk) [Share Options](index=43&type=section&id=Share%20Options) The Company has a share option scheme to reward contributors, with a regularly updated authorized limit and approval requirements for options granted to directors, major shareholders, or their associates; 100 million options were granted on June 10, 2021, with an estimated fair value of approximately HKD49,291 thousand - The Company's share option scheme aims to grant options to selected individuals as a reward or return for their contributions to the Group[110](index=110&type=chunk) - Unless approved by shareholders, the total number of shares to be issued upon exercise of all options granted under the 2016 Share Option Scheme and any other share option schemes of the Company shall not exceed **163,401,638** shares in aggregate[112](index=112&type=chunk) - As at the grant date of the options in 2021 (June 10, 2021), the estimated fair value of the options was approximately **HKD49,291,000** (equivalent to **RMB41,074,000**), calculated using the binomial option pricing model[157](index=157&type=chunk) Details of Options Granted on June 10, 2021 | Item | Value | | :--- | :--- | | Number of options granted | 100,000,000 | | Share price on grant date | 1.43 HKD | | Expected volatility | 64.03% | | Expected term | 3 years | | Risk-free rate | 0.25% | | Expected dividend yield | 1.39% | [Directors' and Chief Executive's Interests and/or Short Positions in the Shares, Underlying Shares and Debentures of the Company or any of its Associated Corporations](index=53&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%2For%20Short%20Positions%20in%20the%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20or%20any%20of%20its%20Associated%20Corporations) As of June 30, 2021, several directors and key executives held interests in the Company's shares, controlled corporate interests, or share options, with Mr. Wang Lishan holding 23.61% controlled corporate interest and 1.05% beneficial ownership, and Mr. Cao Yunsheng holding 0.48% controlled corporate interest and 1.21% beneficial ownership Directors' and Chief Executive's Shareholdings (As at June 30, 2021) | Director Name | Capacity | Number of Shares (L) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Wang Lishan | Controlled corporation interest | 396,911,278 | 23.61% | | | Beneficial owner | 17,628,000 | 1.05% | | | Share options | 2,300,000 | 0.14% | | Cao Yunsheng | Controlled corporation interest | 8,000,000 | 0.48% | | | Beneficial owner | 20,360,000 | 1.21% | | | Share options | 8,840,000 | 0.53% | | Gao Zhiqiang | Share options | 4,000,000 | 0.24% | | Wang Ningsheng | Share options | 5,000,000 | 0.30% | | Liu Yunian | Beneficial owner | 2,900,000 | 0.17% | | | Share options | 3,600,000 | 0.21% | | Qi Daqing | Beneficial owner | 2,710,000 | 0.16% | | | Share options | 2,340,000 | 0.14% | | Su Yang | Beneficial owner | 1,160,000 | 0.07% | | | Share options | 2,340,000 | 0.14% | | Zheng Yimin | Beneficial owner | 1,060,000 | 0.06% | | | Share options | 2,340,000 | 0.14% | [Substantial Shareholders' Interests and/or Short Positions in the Shares and Underlying Shares of the Company](index=55&type=section&id=Substantial%20Shareholders%27%20Interests%20and%2For%20Short%20Positions%20in%20the%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of June 30, 2021, substantial shareholders included Sanju Environmental (Hong Kong) Co., Limited and its parent Beijing Sanju Environmental New Materials Co., Ltd. (both 38.16%), Xiangxing Investment Co., Ltd. and its controller Mr. Wang Lishan (both 23.61%), and Capital Pilot Limited and its controller Mr. Xiao Shuming (both 9.64%) Substantial Shareholders' Shareholdings (As at June 30, 2021) | Shareholder Name/Name | Capacity | Number of Shares (L) | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Sanju Environmental (Hong Kong) Co., Limited | Beneficial owner | 641,566,556 | 38.16% | | Beijing Sanju Environmental New Materials Co., Ltd. | Controlled corporation interest | 641,566,556 | 38.16% | | Xiangxing Investment Co., Limited | Beneficial owner | 396,911,278 | 23.61% | | Wang Lishan | Controlled corporation interest | 396,911,278 | 23.61% | | | Beneficial owner | 17,628,000 | 1.05% | | | Share options | 2,300,000 | 0.14% | | Capital Pilot Limited | Person with security interest in shares | 161,995,555 | 9.64% | | Xiao Shuming | Controlled corporation interest | 161,995,555 | 9.64% | | Kang Minzhu | Spouse's interest | 161,995,555 | 9.64% | | Lu Chunyan | Controlled corporation interest | 161,995,555 | 9.64% | | Jinhua Xin (Hong Kong) Technology Co., Limited | Beneficial owner | 161,995,555 | 9.64% | [Directors' Right to Acquire Shares or Debentures](index=57&type=section&id=Directors%27%20Right%20to%20Acquire%20Shares%20or%20Debentures) Except for options granted to directors under the Company's share option scheme in previous years, no directors or chief executives held, were granted, or exercised any other rights to subscribe for shares, warrants, or debentures of the Company or its associated corporations during the period - Except for options granted to directors under the Company's share option scheme in previous years, no directors or chief executives (including their spouses and children under 18) held, were granted, or exercised any other rights to subscribe for shares (or warrants or debentures, if applicable) of the Company, any of its specific businesses, or its associated corporations during the period[172](index=172&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=57&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the reporting period - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the reporting period[173](index=173&type=chunk) [Corporate Governance](index=57&type=section&id=Corporate%20Governance) The Company adopted the HKEX Corporate Governance Code, striving for high standards of corporate governance, and complied with the code during the reporting period, except for submitting internal monthly financial reports to certain executive directors rather than all Board members - The Company adopted the Corporate Governance Code set out in Appendix 14 of the HKEX Listing Rules, committed to maintaining high standards of corporate governance to enhance corporate transparency and protect shareholders' interests[174](index=174&type=chunk) - During this reporting period, the Company complied with the Corporate Governance Code, except for submitting internal monthly financial reports to executive directors Mr. Cao Yunsheng, Mr. Wang Ningsheng, and Mr. Liu Yunian (who are responsible for monitoring the Company's financial position) instead of all Board members[174](index=174&type=chunk) [Directors' Securities Transactions](index=57&type=section&id=Directors%27%20Securities%20Transactions) The Company's Board adopted the Model Code for Securities Transactions by Directors of Listed Issuers; Independent Non-executive Director Mr. Zheng Yimin sold 550,000 shares during the period without prior written notification and confirmation from the Chairman, for which the Company provided explanation and notification - The Company's Board of Directors adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the HKEX Listing Rules[175](index=175&type=chunk) - Independent Non-executive Director Mr. Zheng Yimin sold a total of **550,000** shares of the Company on June 29, 2021, and July 6, 2021, without prior written notification to and confirmation from the Chairman[175](index=175&type=chunk) [Audit Committee](index=58&type=section&id=Audit%20Committee) The Audit Committee, composed of four independent non-executive directors, reviewed the Group's unaudited interim financial information for the six months ended June 30, 2021, confirming its compliance with applicable accounting standards, Listing Rules, and legal requirements, with appropriate disclosures - The Audit Committee, comprising four independent non-executive directors, is primarily responsible for reviewing the Company's financial information and overseeing the Group's financial reporting system, risk management, and internal control systems[176](index=176&type=chunk) - The Audit Committee reviewed the Group's unaudited interim financial information for the six months ended June 30, 2021, deeming it compliant with applicable accounting standards, Listing Rules, and legal requirements, with appropriate disclosures made[176](index=176&type=chunk) [Others](index=58&type=section&id=Others) The Company complied with Listing Rules regarding the appointment of independent non-executive directors, including four such directors, one of whom is a financial management expert - The Company complied with Listing Rules 3.10(1), 3.10(2), and 3.10A, appointing four independent non-executive directors, including one financial management expert[177](index=177&type=chunk) [Company Information](index=59&type=section&id=Company%20Information) The Company's shares are listed on the Main Board of the HKEX under stock code 03303 since September 21, 2006, with 1,681,306,389 ordinary shares issued and a diverse Board of Directors - The Company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited under stock code **03303**, with a listing date of September 21, 2006[179](index=179&type=chunk) - The number of issued ordinary shares is **1,681,306,389**[179](index=179&type=chunk) - Board members include Executive Directors Wang Lishan (Chairman), Liu Lei (Vice Chairman), Cao Yunsheng (CEO), Gao Zhiqiang (President), Wang Ningsheng, Liu Yunian, and Independent Non-executive Directors Su Yang, Qi Daqing, Zheng Yimin, Tam Kin Yip, and Leung Fung Yee[179](index=179&type=chunk)

Financial Performance - The total revenue for the year 2020 was RMB 4,477,490,000, with a gross profit of RMB 3,647,183,000 and a net profit of RMB 146,712,000[10]. - Basic and diluted earnings per share for 2020 were both RMB 0.0898[11]. - The company recorded revenue of approximately RMB 3,647,183,000 in 2020, an increase of 107.15% or RMB 1,886,559,000 compared to 2019[24]. - Revenue from the oil and gas equipment engineering and integrated services increased by 75.99% or RMB 1,228,267,000, primarily due to the peak construction period of the natural gas chemical module project[24]. - Revenue from the new energy and refining equipment engineering and integrated services surged by 516.00% or RMB 652,640,000, mainly contributed by offshore wind power equipment projects[24]. - The company's gross profit for 2020 was approximately RMB 447,749,000, a 39.79% increase from RMB 320,294,000 in 2019[29]. - The overall gross margin decreased from 18.19% in 2019 to 12.28% in 2020, attributed to lower margins on certain projects[29]. - The profit attributable to owners for 2020 was approximately RMB 146,712,000, an increase of 3,216.27% compared to RMB 4,424,000 in 2019[34]. Dividends and Shareholder Information - The board proposed a final dividend of HKD 0.22 per share for the year ended December 31, 2020[12]. - As of December 31, 2020, the company had a share premium reserve of approximately RMB 1,733,618,000 and retained earnings available for distribution to shareholders of approximately RMB 7,103,000[74]. - The company has no predetermined dividend payout ratio, and the board will review the dividend policy periodically[75]. - The company proposed a final dividend of HKD 0.22 per share for the year ended December 31, 2020, subject to shareholder approval at the upcoming annual general meeting[78]. - As of December 31, 2020, the company's issued share capital consisted of 1,634,016,389 ordinary shares, unchanged from 2019[80]. Operational Achievements - The company achieved a 100% on-time delivery rate for 17 completed projects out of 22 operational projects in 2020[15]. - The company completed over 97% of the overall progress for the GCGV gas chemical plant module construction project by the end of 2020[16]. - The company received a large order to supply 50 sets of offshore wind power equipment for a European offshore wind farm project, with a total contract value exceeding RMB 2 billion[15]. - The company maintained over 28 million safe working hours in 2020, achieving zero accident frequency and severity at the Penglai site[18]. - The company is actively transitioning towards clean energy and refining sectors, leveraging its strengths in marine engineering modules[15]. Cost and Expenses - The sales and service costs for 2020 amounted to approximately RMB 3,199,434,000, an increase of 122.13% or RMB 1,759,104,000 compared to 2019[26]. - Administrative and other operating expenses increased by 1.29% or RMB 3,359,000 to approximately RMB 263,211,000 in 2020[32]. - The financial expenses for 2020 totaled approximately RMB 34,122,000, primarily consisting of bank loan interest of about RMB 27,031,000[33]. Assets and Liabilities - As of December 31, 2020, the group's total assets amounted to approximately RMB 2,249,345,000, an increase from RMB 2,150,993,000 in 2019[36]. - The capital debt ratio decreased to 23.10% in 2020 from 31.71% in 2019, primarily due to a reduction in bank and other loans[47]. - The net value of non-current assets was approximately RMB 1,787,180,000 as of December 31, 2020, compared to RMB 1,716,353,000 in 2019[36]. Employee and Management Information - The total number of employees increased to 3,568 as of December 31, 2020, up from 3,172 in 2019[48]. - The company has a strong management team with extensive experience in the oil and gas industry, including executives with backgrounds in engineering and finance[59]. - The management team includes professionals with advanced degrees in business administration and engineering, indicating a strong educational background[59]. - The company emphasizes the importance of employee welfare, offering reasonable compensation and benefits, and implementing various training programs to support long-term development[65]. Corporate Governance - The company is committed to maintaining high standards of corporate governance and transparency in its operations[62]. - The company has appointed several independent non-executive directors with significant experience in finance and accounting, enhancing corporate governance[55][56]. - The board consists of six executive directors and three independent non-executive directors, ensuring a balanced governance structure[151]. - The company has adopted the Corporate Governance Code to enhance transparency and protect shareholder interests[147]. Risk Management and Compliance - The company has established a comprehensive internal management system to manage risks and ensure compliance[162]. - The board is responsible for reviewing the effectiveness of the risk management and internal control systems[162]. - The audit committee held two meetings during the year to review and discuss the company's consolidated financial reports and the effectiveness of risk management and internal control systems[166]. - The company is committed to timely and accurate disclosure of inside information as per the Securities and Futures Ordinance and Listing Rules[164]. Related Party Transactions - The company has complied with the disclosure requirements under the Listing Rules regarding related party transactions[137]. - The independent non-executive directors confirmed that the ongoing related party transactions were conducted in the ordinary course of business and on normal commercial terms[139]. - The external auditor reported no issues regarding the ongoing related party transactions not being approved by the board or not following the group's pricing policy[140]. Audit and Financial Reporting - The independent auditor's report confirmed that the consolidated financial statements fairly reflect the group's financial position as of December 31, 2020[184]. - Key audit matters identified included goodwill impairment assessment and revenue recognition for construction contracts[186]. - The audit committee recommended the reappointment of the external auditor for the fiscal year 2021[168].