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].

Financial Performance - Revenue increased by 163.13% year-on-year to RMB 1,296,344,000[4] - Gross profit rose by 101.91% year-on-year to RMB 177,496,000[4] - Profit attributable to owners for the six months ended June 30, 2020, was RMB 25,363,000, compared to a loss of RMB 32,716,000 for the same period in 2019[4] - Basic and diluted earnings per share for the six months ended June 30, 2020, were RMB 1.552[4] - Operating profit for the period was RMB 56,715,000, compared to an operating loss of RMB 4,332,000 in the previous year[10] - Total comprehensive income for the period attributable to owners was RMB 43,459,000, compared to a loss of RMB 26,101,000 in the previous year[12] - The group’s pre-tax profit for the period was RMB 37,283, a turnaround from a loss of RMB 23,536 in the same period last year[31] - The group's profit for the six months ended June 30, 2020, was RMB 25,363,000, compared to a loss of RMB (32,716,000) for the same period in 2019, indicating a significant recovery[46] Assets and Liabilities - Non-current assets as of June 30, 2020, amounted to RMB 1,177,163,000[13] - Current assets, including inventory, totaled RMB 2,521,374,000 as of June 30, 2020[13] - As of June 30, 2020, the company's total current liabilities amounted to RMB 1,481,848 thousand, a decrease from RMB 1,526,695 thousand as of December 31, 2019[15] - The company's total assets less current liabilities increased to RMB 2,758,978 thousand as of June 30, 2020, up from RMB 2,679,296 thousand as of December 31, 2019[15] - The company reported a total equity of RMB 2,196,387 thousand as of June 30, 2020, an increase from RMB 2,150,993 thousand as of December 31, 2019[15] - The company’s total liabilities as of June 30, 2020, were RMB 562,591 thousand, compared to RMB 528,303 thousand as of December 31, 2019[15] Cash Flow - The net cash generated from operating activities for the six months ended June 30, 2020, was RMB 511,025 thousand, compared to a net cash outflow of RMB 123,225 thousand for the same period in 2019[19] - The net cash and cash equivalents at the end of the period were RMB 1,007,565 thousand, significantly higher than RMB 487,617 thousand at the end of the same period in 2019[19] - The company incurred a net cash outflow from investing activities of RMB 130,930 thousand for the six months ended June 30, 2020, compared to RMB 45,585 thousand for the same period in 2019[19] - The company raised bank loans totaling RMB 148,000 thousand during the financing activities for the six months ended June 30, 2020, compared to RMB 70,000 thousand in the same period of 2019[19] Segment Performance - Revenue from external customers for the Oil and Gas segment was RMB 1,287,834, representing a significant increase from RMB 442,529 in the same period last year, which is a growth of approximately 191%[29] - The total segment profit for the group was RMB 177,496, compared to RMB 87,910 in the previous year, indicating an increase of about 101%[31] - The group's contract assets increased to RMB 296,251 from RMB 161,777 year-over-year, reflecting an increase of approximately 83%[33] - The group's contract liabilities rose to RMB 525,653, up from RMB 299,110, marking a growth of about 76%[33] Operational Highlights - The company secured several large project orders at the Zhuhai site, including the construction of 50 offshore wind power equipment units for a European offshore wind farm, with a total contract value of approximately RMB 2 billion[66] - The company is preparing to fully launch the Arctic LNG 2 module construction project in the second half of the year, despite some delays due to the pandemic[66] - The company has shifted its business focus towards modular construction and energy facilities, successfully participating in several international large-scale projects[64] - The company has a comprehensive layout plan for the construction site to improve core construction capabilities and steadily increase production capacity[99] Employee and Governance - The total number of employees as of June 30, 2020, was 3,348, an increase from 3,172 as of December 31, 2019[97] - The company emphasizes employee development and provides ongoing training opportunities to enhance skills and career growth[98] - The company has adopted the Corporate Governance Code to enhance transparency and protect shareholder interests[165] - The company aims to maintain high standards of corporate governance to improve management efficiency[165] Share Options and Capital Management - The total number of options granted under the 2016 share option plan is capped at 80,035,427 shares, representing 10% of the issued shares at the time of the shareholders' meeting[111] - A total of 48,000,000 options were granted on April 24, 2020, with an exercise price of HKD 0.48[148] - The options granted to directors and employees are part of a share option scheme aimed at incentivizing performance and aligning interests with shareholders[148] - The company has a structured approach to option grants, ensuring that the exercise prices reflect market conditions at the time of grant[148] Corporate Information - The company is listed on the Hong Kong Stock Exchange under the stock code 03303 since September 21, 2006[170] - The registered office is located in Grand Cayman, Cayman Islands[170] - The company’s main business location in Hong Kong is at Central, Hong Kong[170] - The company has a significant presence in Shenzhen, China, with its main office located in Shekou[170]

Financial Performance - The company reported a total revenue of RMB 3,202.94 million for the year ended December 31, 2019, with a gross profit of RMB 442.4 million and a net profit of RMB 1,760.62 million[13]. - Basic and diluted earnings per share for 2019 were RMB 0.0027 each[14]. - The company did not recommend the payment of a final dividend for the year ended December 31, 2019[15]. - The company recorded a revenue of approximately RMB 1,760,624,000 in 2019, an increase of 18.48% or RMB 274,660,000 compared to 2018[31]. - The gross profit for 2019 was approximately RMB 320,294,000, representing a 77.44% increase from RMB 180,505,000 in 2018, with an overall gross margin rising from 12.15% to 18.19%[36]. - The profit attributable to the owners of the company in 2019 was approximately RMB 4,424,000, a decrease of 83.39% from RMB 26,637,000 in 2018[42]. - The total other income for the group in 2019 was approximately RMB 58,353,000, primarily from interest income, insurance claims, and government subsidies[39]. Revenue Sources and Growth - Revenue from the oil and gas equipment engineering and integrated services business increased by 64.42% or RMB 633,287,000, primarily due to the peak construction phase of a natural gas chemical module project[31]. - In 2019, the company's revenue from the oil and gas equipment engineering and integrated services segment was RMB 328,989,000, with a gross margin of 20%[38]. - The company had over RMB 5 billion in backlog orders as of the end of 2019[19]. - The company reported revenue from construction contracts and other service contracts recognized over time amounted to RMB 1,673,280,000, accounting for approximately 95% of the total revenue for the year ended December 31, 2019[183]. Operational Developments - The company expanded its construction site area to approximately 1 million square meters to meet the needs of large project construction[19]. - A significant contract worth over RMB 3 billion was awarded for the construction of core compressor and generator modules for the Arctic LNG 2 project[19]. - The traditional offshore service business remained stable, with new markets being explored, including offshore wind power installation services[21]. - The company anticipates challenges in human resources and project management due to several large projects being at peak construction simultaneously[25]. - The modular construction approach is expected to become mainstream in industries such as energy, chemicals, and marine engineering, presenting significant market opportunities[25]. Management and Governance - Liu Lei serves as the Executive Director and Chairman, having joined the company in June 2000[59]. - Wang Ning Sheng, the Executive Director and President, joined the company in 2012 and has extensive management experience in the oil and gas industry[60]. - The company has a strong management team with diverse backgrounds in engineering, finance, and project management, enhancing operational efficiency[67]. - The management team includes independent non-executive directors with significant experience in finance and accounting, ensuring robust governance[63]. - The company has adopted the Corporate Governance Code to enhance transparency and protect shareholder interests[143]. Financial Management and Risk Control - The company aims to strengthen risk management and cost control while actively exploring new high-value business markets[27]. - The board is responsible for risk management and internal control systems, which are designed to manage risks rather than eliminate them[158]. - The company has established a comprehensive internal management system to ensure compliance and effective monitoring of business operations[158]. - The audit committee supervises the financial reporting process and ensures compliance with accounting policies[162]. Employee and Stakeholder Engagement - The company emphasizes employee welfare, offering reasonable compensation and benefits, and encourages continuous training and development[72]. - The company is committed to sustainable development and increasing communication with stakeholders in response to market changes[77]. - The company has established a safety monitoring department to ensure compliance with national safety production and environmental protection laws[76]. Shareholder Information - The company reported a share premium reserve of approximately RMB 1,733,618,000 and cumulative losses available for distribution to shareholders of approximately RMB 5,364,000 as of December 31, 2019[79]. - The company has a significant shareholder, Sanju Environmental (Hong Kong) Limited, holding 641,566,556 shares, which is 39.26% of the issued share capital[119]. - The total sales from the top five customers indicate a high concentration risk, which may impact future revenue stability[128]. Audit and Compliance - The independent auditor confirmed that the consolidated financial statements fairly reflect the group's financial position as of December 31, 2019[178]. - Key audit matters identified include goodwill impairment assessment and revenue recognition for construction contracts[180]. - The audit process identified and assessed risks of material misstatement in the consolidated financial statements due to fraud or error[194]. - The audit report highlighted key audit matters that were most significant to the audit of the current period's consolidated financial statements[198].

Financial Performance - Revenue decreased by 30.72% year-on-year to RMB 492,668,000[4] - Gross profit fell by 52.28% year-on-year to RMB 87,910,000[4] - The company reported a loss attributable to owners of RMB 32,716,000 for the six months ended June 30, 2019, compared to a profit of RMB 18,663,000 in the same period of 2018[4] - Basic loss per share for the six months ended June 30, 2019, was RMB 2.002[4] - Total comprehensive loss attributable to owners for the period was RMB 26,101,000[12] - The group reported a loss attributable to owners of the company of approximately RMB 32,716,000, with a basic loss per share of RMB 2.002[107] - The overall gross margin decreased from 25.90% to 17.84% due to a lower bidding strategy for major projects[101] Assets and Liabilities - Non-current assets amounted to RMB 1,689,394,000 as of June 30, 2019[14] - Current assets totaled RMB 2,030,478,000 as of June 30, 2019[14] - Cash and cash equivalents decreased to RMB 476,846,000 from RMB 900,712,000 at the end of 2018[14] - As of June 30, 2019, the total current liabilities amounted to RMB 1,093,290 thousand, a decrease from RMB 1,392,070 thousand as of December 31, 2018, representing a reduction of approximately 21.5%[16] - The total assets less current liabilities stood at RMB 2,626,582 thousand, up from RMB 2,571,404 thousand, indicating an increase of approximately 2.1%[16] - The total equity as of June 30, 2019, was RMB 2,088,883 thousand, a slight decrease from RMB 2,133,016 thousand as of December 31, 2018, reflecting a decline of about 2.1%[16] - The total accounts payable decreased to RMB 562,549 thousand as of June 30, 2019, down from RMB 659,695 thousand as of December 31, 2018, indicating a reduction of approximately 15%[78] Cash Flow - The net cash used in operating activities for the six months ended June 30, 2019, was RMB (123,225) thousand, an improvement compared to RMB (915,656) thousand for the same period in 2018[19] - The net cash used in financing activities was RMB (252,750) thousand, compared to RMB (56,801) thousand in the previous year, showing a significant increase in cash outflow[19] - The cash and cash equivalents decreased by RMB 421,560 thousand, down from RMB 720,639 thousand, marking a decline of approximately 58.5%[19] - As of June 30, 2019, the group had cash and bank deposits of approximately RMB 487,617,000, down from RMB 902,562,000 at the end of 2018[108] Investments and Expenditures - The company reported a net cash outflow from investing activities of RMB (45,585) thousand, contrasting with a net inflow of RMB 222,303 thousand in the prior year[19] - Fixed asset purchases amounted to approximately RMB 62,695,000 for the six months ended June 30, 2019, significantly higher than RMB 19,028,000 for the same period in 2018[73] - The group invested approximately RMB 57,000,000 in the construction of the foundation and supporting facilities at the Penglai site, expected to be completed in the second half of 2019[111] - The company has committed capital expenditures of RMB 69,360 thousand for fixed assets as of June 30, 2019, compared to RMB 67,677 thousand at the end of 2018, showing a slight increase in capital commitments[89] Revenue Breakdown - Revenue from the oil and gas equipment engineering and integrated services business was RMB 442,529,000, an increase of RMB 1,012,000 or 0.23% year-on-year[99] - Revenue from other energy and refining equipment engineering and integrated services decreased by 82.95% or RMB 217,128,000, primarily due to the completion of projects from 2017[96] - The group generated revenue from external customers amounting to RMB 492,668,000 for the six months ended June 30, 2019, an increase from RMB 711,127,000 for the same period in 2018[58] Employee and Corporate Governance - The total number of employees increased to 2,991 as of June 30, 2019, from 2,747 as of December 31, 2018, with technical workers rising from 1,546 to 1,833[121] - The company emphasizes the importance of employee development and continuous training[122] - The board of directors has adopted the Corporate Governance Code as per the Stock Exchange's listing rules to enhance transparency and protect shareholder interests[163] - The company has complied with the Corporate Governance Code during the reporting period, with minor deviations aimed at improving management efficiency[163] Share Options and Major Shareholders - The 2016 Share Option Plan allows for the issuance of up to 80,035,427 shares, representing 10% of the total issued shares at the time of the 2016 annual general meeting, which had 800,354,278 shares outstanding[135] - The updated 2016 Share Option Plan approved in 2018 allows for the issuance of up to 163,401,638 shares, also representing 10% of the total issued shares, which were 1,634,016,389 at the time of the mid-term report[135] - As of June 30, 2019, major shareholders holding 5% or more of the company's shares include Sanju Environmental (Hong Kong) Limited with 641,566,556 shares, representing 39.26%[153] - Wang Lishan holds 396,911,278 shares through Xiangxing Investment Limited, accounting for 24.29% of the total shares[153]

Financial Performance - Revenue decreased by 30.72% year-on-year to RMB 492,668,000[4] - Gross profit decreased by 52.28% year-on-year to RMB 87,910,000[4] - The company reported a loss attributable to owners of RMB 32,716,000 for the six months ended June 30, 2019, compared to a profit of RMB 18,663,000 for the same period in 2018[4] - Basic loss per share for the six months ended June 30, 2019, was RMB 2.002[4] - The board declared no interim dividend for the six months ended June 30, 2019[4] - Operating loss for the period was RMB 4,332,000, compared to an operating profit of RMB 61,208,000 in the previous year[10] - Total comprehensive loss attributable to owners for the period was RMB 26,101,000[12] - The net cash outflow from operating activities was approximately RMB 123,225,000, with total liquid funds (cash and bank deposits) at RMB 487,617,000 as of June 30, 2019[108] - The group reported financial expenses of RMB (19,204,000) for the six months ended June 30, 2019, compared to RMB (25,777,000) for the same period in 2018[59] - Financial expenses for the six months ended June 30, 2019, were RMB 19,204,000, down from RMB 25,777,000 in 2018, indicating a reduction of 25.3%[65] Assets and Liabilities - Non-current assets amounted to RMB 1,689,394,000 as of June 30, 2019[14] - Current assets totaled RMB 2,030,478,000 as of June 30, 2019[14] - Cash and cash equivalents decreased to RMB 476,846,000 from RMB 900,712,000 at the end of 2018[14] - As of June 30, 2019, the total current liabilities amounted to RMB 1,093,290 thousand, a decrease from RMB 1,392,070 thousand as of December 31, 2018, representing a reduction of approximately 21.5%[16] - The net current assets increased to RMB 937,188 thousand from RMB 903,067 thousand, reflecting a growth of about 3.8% year-over-year[16] - The total assets less current liabilities stood at RMB 2,626,582 thousand, up from RMB 2,571,404 thousand, indicating an increase of approximately 2.1%[16] - The net asset value decreased to RMB 2,088,883 thousand from RMB 2,133,016 thousand, showing a decline of about 2.1%[16] - The group’s total liabilities as of June 30, 2019, were RMB 951,439,000, reflecting an increase from the previous year[58] Cash Flow - The cash used in operating activities for the six months ended June 30, 2019, was RMB (123,225) thousand, an improvement from RMB (915,656) thousand in the same period of 2018[19] - The net cash used in investing activities was RMB (45,585) thousand, compared to a net cash inflow of RMB 222,303 thousand in the prior year[19] - The net cash used in financing activities amounted to RMB (252,750) thousand, a significant increase from RMB (56,801) thousand in the previous year[19] - The cash and cash equivalents at the end of the period were RMB 487,617 thousand, down from RMB 720,639 thousand, representing a decrease of approximately 32.3%[19] Shareholder Information - The company reported a net loss attributable to shareholders of RMB 32,716,000 for the six months ended June 30, 2019, compared to a profit of RMB 18,663,000 in the same period of 2018[72] - Basic and diluted loss per share for the six months ended June 30, 2019, was RMB (0.02), compared to earnings of RMB 0.01 per share in 2018[72] - The company did not propose an interim dividend for the six months ended June 30, 2019, consistent with the previous year[65] - As of June 30, 2019, major shareholders include Sanju Environmental (Hong Kong) Co., Ltd. holding 641,566,556 shares, representing 39.26% of the total shares[153] - Wang Lishan holds 396,911,278 shares through Xiangxing Investment Co., Ltd., accounting for 24.29% of the total shares[150] Operational Highlights - The company completed and delivered 6 projects in the first half of 2019, with 18 projects currently under construction, reflecting ongoing operational capacity[92] - The company secured a large construction contract from TECHNIP France S.A. for the Arctic LNG 2 project, with a total contract value exceeding RMB 3 billion[95] - The company’s traditional offshore oil and gas service business volume has increased compared to the same period last year, benefiting from rising domestic capital expenditures in the sector[95] - The company has expanded its operational capacity by leasing an additional 200,000 square meters of land, which is expected to nearly double project delivery capabilities[92] - The GCGV project in Texas, with a total construction value exceeding RMB 2 billion, is progressing into full construction phase in the first half of 2019[92] Lease Accounting - The company adopted the new Hong Kong Financial Reporting Standard 16 "Leases" effective January 1, 2019, which introduced a single accounting model for leases[21] - The company confirmed additional right-of-use assets and lease liabilities upon transitioning to HKFRS 16, with both assets and liabilities increasing by RMB 37,801 thousand as of January 1, 2019[36] - The total right-of-use assets amounted to RMB 32,043 thousand, down from RMB 37,801 thousand on January 1, 2019, representing a decrease of approximately 15.5%[28] - The right-of-use assets related to properties amounted to RMB 31,796 thousand as of June 30, 2019, compared to RMB 37,493 thousand on January 1, 2019[28] - As of June 30, 2019, the group recognized right-of-use assets of RMB 5,060,000 and lease liabilities of RMB 5,019,000 due to the first-time application of HKFRS 16[44] Corporate Governance - The board of directors has adopted the Corporate Governance Code to enhance transparency and protect shareholder rights[163] - The company has established an audit committee consisting of three independent non-executive directors to oversee financial reporting and risk management[165] - The company has complied with listing rules and appointed three independent non-executive directors, including a financial expert[167]

Financial Performance - In 2018, the company reported total revenue of RMB 1,485,964,000, a gross profit of RMB 724,469,000, and a net profit of RMB 180,505,000[8]. - Basic and diluted earnings per share for 2018 were RMB 0.0163 and RMB 0.0162, respectively[9]. - The company's total revenue for 2018 was approximately RMB 1,485,964,000, an increase of 105% or RMB 761,495,000 compared to 2017[20]. - Revenue from the oil and gas equipment engineering and integrated services segment increased by 113.65% or RMB 522,964,000, while revenue from other energy and refining equipment engineering and integrated services rose by 114.86% or RMB 259,449,000[22]. - The gross profit for 2018 was approximately RMB 180,505,000, a 102% increase from RMB 89,426,000 in 2017, maintaining a gross margin of 12%[26]. - The company’s attributable profit for 2018 was approximately RMB 26,637,000, a decrease of 52.08% compared to RMB 55,581,000 in 2017[31]. - The net cash outflow from operating activities was approximately RMB 650,578,000, while net cash inflow from investing activities was about RMB 200,812,000[32]. - The company reported a foreign currency translation gain of RMB 54,935 thousand in 2018, a recovery from a loss of RMB 64,127 thousand in 2017[200]. - Total comprehensive income for the year amounted to RMB 81,572 thousand, a substantial improvement from a loss of RMB 8,546 thousand in 2017[200]. Dividends and Share Capital - The board proposed a final dividend of HKD 0.02 per share for the year ended December 31, 2018[10]. - As of December 31, 2018, the company's share premium reserve was approximately RMB 1,733,618,000, with retained earnings available for distribution to shareholders amounting to approximately RMB 55,090,000[65]. - The company's authorized share capital was HKD 40,000,000, comprising 4,000,000,000 ordinary shares as of 2018[70]. - The company issued 2,000,000 ordinary shares during 2018 due to the exercise of share options by option holders[71]. - As of December 31, 2018, the total number of ordinary shares was 1,634,016,389, an increase from 1,632,016,389 shares in 2017[72]. Operational Developments - The company established subsidiaries in the United States and Canada to supply equipment and provide engineering services in the oil and gas sector[13]. - A significant construction contract was awarded to the subsidiary, with a total weight of nearly 100,000 tons and a contract value exceeding RMB 2 billion[13]. - The company completed the integration of safety and quality systems at its two major sites, maintaining excellent performance in safety and environmental indicators[15]. - The company plans to enhance its market development efforts and pursue both large and medium-sized project opportunities in 2019[16]. - The company anticipates a peak construction period at its Penglai site in mid-2019 and will invest in optimizing site facilities to improve capacity and efficiency[16]. Financial Management - The company's administrative and other operating expenses increased by 156% or RMB 200,389,000 to approximately RMB 328,902,000, primarily due to the consolidation of financial results from the acquisition of Penglai Jutou[29]. - Other income grew by 239% or RMB 161,935,000, mainly due to the reversal of provisions for certain engineering contract claims[28]. - The financial expenses for 2018 totaled approximately RMB 50,819,000, with bank and other loan interest accounting for about RMB 44,801,000[30]. - As of December 31, 2018, the total bank and other loans amounted to RMB 805,999,000, a decrease from RMB 925,772,000 in 2017, resulting in a capital debt ratio of 37.79%, down from 44.96% in 2017[43]. - The total equity as of December 31, 2018, was RMB 2,133,016,000, compared to RMB 2,058,934,000 in 2017, indicating a slight increase in equity[43]. Employee and Management Practices - The total number of employees decreased to 2,747 as of December 31, 2018, from 3,399 in 2017, primarily due to reduced workload in construction sites[44]. - The group encourages long-term employee service and provides ongoing training and development opportunities[45]. - The management team includes experienced professionals with backgrounds in engineering, finance, and management, contributing to the group's operational effectiveness[46][47][48][49][50]. - The company emphasizes the importance of employee welfare, offering reasonable compensation and benefits, and encourages continuous training and development[59]. Corporate Governance - The company has adopted the Corporate Governance Code to enhance transparency and protect shareholder interests[133]. - The board consists of six executive directors and three independent non-executive directors, ensuring a balanced governance structure[137]. - The independent non-executive directors confirmed their independence according to the listing rules[140]. - The company engaged external auditors, Zhongrui Yuehua (Hong Kong), for the fiscal year ending December 31, 2018, with audit service fees amounting to HKD 1,450,000[145]. - The audit committee held two meetings during the year to discuss and approve the consolidated financial reports and dividend payments, and to review the effectiveness of the risk management and internal control systems[149]. Risk Management and Compliance - The company has established a comprehensive internal management system to identify and manage risks that may affect business objectives, ensuring compliance and effective monitoring[146]. - The board is responsible for reviewing the company's compliance with legal and regulatory requirements, ensuring adherence to corporate governance policies[144]. - The independent auditor's report confirms that the financial statements are free from material misstatement due to fraud or error[191]. - The company faces various risks and uncertainties in its operations, which are discussed in detail in the annual report[57]. Revenue Recognition and Accounting Practices - Revenue from construction contracts and other service contracts recognized over time amounts to approximately RMB 890,768,000, accounting for about 60% of the group's total revenue for the year ended December 31, 2018[179]. - The group employs the percentage-of-completion method to recognize revenue from these contracts, based on the ratio of actual costs incurred to estimated total costs[182]. - Key audit matters identified include goodwill impairment assessment and revenue recognition for construction contracts[169]. - The group’s financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance[189].