[Company Information](index=3&type=section&id=Company%20Information) This section provides fundamental details about the company [Definitions](index=4&type=section&id=Definitions) This section defines key terms and abbreviations used throughout the report [Financial Highlights](index=7&type=section&id=Financial%20Highlights) [2020 Annual Financial Performance Overview](index=7&type=section&id=2020%20Annual%20Financial%20Performance%20Overview) In 2020, the company's total revenue decreased by 4.25% to RMB 1.274 billion, while gross profit increased by 13.44% to RMB 224 million, and profit attributable to shareholders grew by 6.44% to RMB 92.5 million, with a proposed final dividend of RMB 0.25 per share (tax inclusive) 2020 Annual Key Financial Indicators | Indicator | 2020 | 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | RMB 1.2737 billion | RMB 1.3303 billion | -4.25% | | Gross Profit | RMB 223.6 million | RMB 197.1 million | +13.44% | | Profit Attributable to Company Shareholders | RMB 92.5 million | RMB 86.9 million | +6.44% | | Proposed Final Dividend | RMB 0.25 per share (tax inclusive) | - | - | [Chairman's Report](index=8&type=section&id=Chairman's%20Report) [Business Review and Operating Results](index=8&type=section&id=Business%20Review%20and%20Operating%20Results) Despite the challenges of the COVID-19 pandemic in 2020, the Group's total gas sales increased by 4.34% to 385 million cubic meters, with gross profit margin rising to 17.55% and net profit attributable to shareholders growing by 6.44% to RMB 92.5 million - Total gas sales increased by **4.34% to 385 million cubic meters** in 2020[19](index=19&type=chunk) - Optimized procurement and cost control led to a **2.73 percentage point increase in gross profit margin to 17.55%**, driving a **6.44% growth in net profit attributable to shareholders to RMB 92.5 million**[19](index=19&type=chunk) - The Board proposed a final dividend of **RMB 0.25 per share (tax inclusive)** to share operating results[19](index=19&type=chunk) [Corporate Social Responsibility](index=8&type=section&id=Corporate%20Social%20Responsibility) In response to the COVID-19 pandemic in early 2020, the Group actively fulfilled its social responsibilities by ensuring employee protection, maintaining gas supply, implementing relief policies, and promoting online services - Ensured natural gas supply for local residents and industrial users during the pandemic, maintaining continuous operations[20](index=20&type=chunk) - Implemented government-mandated customer relief measures such as "no supply cut-off for overdue payments" and early execution of off-peak prices[22](index=22&type=chunk) - Launched "contactless business services" by promoting online service platforms via web and mobile apps[20](index=20&type=chunk) [Future Outlook](index=9&type=section&id=Future%20Outlook) The Group plans to capitalize on China's "14th Five-Year Plan" and the high-quality green development strategy in the Yangtze River Delta region, with the Dushan Port LNG receiving terminal project enhancing its "gas source plus terminal" industrial chain competitiveness - The Dushan Port LNG receiving terminal project's tank farm is largely complete, and the pier construction is approximately 50% finished, which will significantly enhance the Group's core industrial chain competitiveness[23](index=23&type=chunk) - The Group will leverage its geographical advantages to actively explore business growth and comprehensive clean energy development, aligning with the national strategy for high-quality green development in the Yangtze River Delta region[23](index=23&type=chunk) [Management Discussion and Analysis](index=10&type=section&id=Management%20Discussion%20and%20Analysis) [Market and Business Review](index=10&type=section&id=Market%20and%20Business%20Review) In 2020, China's natural gas consumption grew by 7.2%, with the Group's gas sales increasing by 4.34% to 385 million cubic meters, despite a slight revenue decrease due to pandemic-related price reductions - In 2020, China's natural gas consumption reached **328.78 billion cubic meters**, a year-on-year increase of **7.2%**[25](index=25&type=chunk) - The Group's total gas sales increased by **4.34% to 385 million cubic meters** for the year[27](index=27&type=chunk) - Due to price reduction measures during the pandemic, 2020 annual revenue decreased by **4.25% to RMB 1.2737 billion**[29](index=29&type=chunk) - As of the end of 2020, the Group operated a pipeline network of approximately **943 kilometers**, serving about **380,000 households**, with approximately **31,000 new households** added during the year[29](index=29&type=chunk) [Outlook](index=11&type=section&id=Outlook) Driven by "dual carbon" goals, natural gas will play a more prominent role as a clean energy source, with Zhejiang Province planning to increase natural gas consumption to about 13% by 2025, creating growth opportunities for the Group - Zhejiang Province plans to increase the share of natural gas consumption in its primary energy mix to approximately **13% by 2025**, presenting growth opportunities for the company[33](index=33&type=chunk) - The company will accelerate the construction of the Dushan Port receiving terminal project, leveraging its core "gas source plus terminal" competitive advantage to expand terminal customer gas consumption scale[34](index=34&type=chunk) [Financial Overview](index=13&type=section&id=Financial%20Overview) In 2020, the Group's revenue decreased by 4.25% to RMB 1.274 billion due to lower average gas sales prices, but gross profit increased by 13.44% to RMB 224 million, and profit attributable to owners of the parent company grew by 6.44% to RMB 92.5 million, with significant improvements in liquidity and leverage ratios 2020 Annual Financial Performance Summary | Indicator | 2020 | 2019 | Reason for Change | | :--- | :--- | :--- | :--- | | Revenue | RMB 1.2737 billion | RMB 1.3303 billion | -4.25%, decrease in average natural gas selling price | | Gross Profit | RMB 223.6 million | RMB 197.1 million | +13.44%, increase in natural gas sales gross profit and larger scale of construction services | | Finance Costs | RMB 11.7 million | RMB 19.3 million | -39.38%, reduction in interest expense due to decrease in short-term borrowings | | Profit Attributable to Owners of the Parent Company | RMB 92.5 million | RMB 86.9 million | +6.44%, diversified procurement and strengthened in-house construction capabilities reduced costs | 2020 Year-End Financial Position Summary | Indicator | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Current Ratio | 1.49 | 0.38 | | Gearing Ratio | 56.01% | 73.66% | | Capital Gearing Ratio | 15.18% | 54.20% | | Cash and Bank Balances | RMB 344.3 million | RMB 63.1 million | [Human Resources and Others](index=14&type=section&id=Human%20Resources%20and%20Others) As of the end of 2020, the Group had 362 employees with total employee costs of approximately RMB 43.1 million, and provided a loan guarantee of RMB 506.3 million to its joint venture, Hangjiaxin, with no significant investments, acquisitions, or disposals during the year - As of December 31, 2020, the Group employed **362 staff**, with total employee costs of approximately **RMB 43.1 million**[49](index=49&type=chunk) - The Group provided a loan guarantee of **RMB 506.3 million** to its joint venture, Hangjiaxin[46](index=46&type=chunk) [Use of Proceeds from Global Offering](index=15&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering) The company listed on the Stock Exchange on July 16, 2020, raising net proceeds of approximately HKD 334 million (approximately RMB 302 million) from its global offering, with RMB 69.83 million utilized by year-end for capital injection into the Hangjiaxin project, pipeline network upgrades, and general working capital Net Proceeds from Global Offering as of December 31, 2020 | Intended Use of Net Proceeds | Allocated Amount (RMB '000) | Utilized (RMB '000) | Unutilized (RMB '000) | | :--- | :--- | :--- | :--- | | Payment of registered capital and provision of shareholder loans to Hangjiaxin | 241,697 | 51,550 | 190,147 | | Upgrading of Jiaxing's pipeline network and operating facilities | 30,212 | 8,982 | 21,230 | | Working capital and general corporate purposes | 30,212 | 9,295 | 20,917 | | **Total** | **302,121** | **69,827** | **232,294** | [Biographies of Directors, Supervisors, and Senior Management](index=16&type=section&id=Biographies%20of%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) This section provides biographical information for the company's directors, supervisors, and senior management [Report of the Board of Directors](index=24&type=section&id=Report%20of%20the%20Board%20of%20Directors) [Principal Business and Dividends](index=24&type=section&id=Principal%20Business%20and%20Dividends) The Group primarily engages in the sale of piped natural gas, LNG, and LPG in Jiaxing, along with related construction and installation services, and proposed a final dividend of RMB 0.25 per share (tax inclusive) for 2020, totaling RMB 34.46 million - The Group's principal business involves the sale of gas and provision of construction and installation services in Jiaxing[85](index=85&type=chunk) - The Board recommended a final dividend of **RMB 0.25 per share (tax inclusive)** for 2020, totaling **RMB 34.46 million**[90](index=90&type=chunk) [Share Capital and Major Shareholders](index=26&type=section&id=Share%20Capital%20and%20Major%20Shareholders) As of the end of 2020, the company's total share capital was 137,844,500 shares, comprising 100 million domestic shares and 37,844,500 H shares, with Jiaxing City Urban Investment Development Group Co., Ltd. and parties controlled by Chairman Sun Lianqing as major shareholders - As of December 31, 2020, the company's total share capital was **137,844,500 shares**, divided into **100 million domestic shares** and **37,844,500 H shares**[97](index=97&type=chunk) Major Shareholder Holdings (as of December 31, 2020) | Shareholder Name | Capacity | Number of Shares (Domestic Shares) | Approximate Percentage of Total Share Capital | | :--- | :--- | :--- | :--- | | Urban Development | Beneficial Owner | 32,757,502 | 23.76% | | Sun Lianqing | Interest in Controlled Corporations (Concert Parties) | 31,720,806 | 23.01% | | Zhuji Yujia | Beneficial Owner | 11,894,374 | 8.63% | [Connected Transactions](index=35&type=section&id=Connected%20Transactions) During the reporting period, the Group engaged in several continuing connected transactions, including leasing pipeline networks and LNG stations from Jiaxing Pipeline Network Company and purchasing piped natural gas (approximately RMB 584 million annually), leasing properties to Qingyuan Hotel (approximately RMB 5.1 million annually), and purchasing construction materials from Zhuji Jinfeng (approximately RMB 5.6 million annually), all confirmed as fair and reasonable - Signed a master supply agreement with Jiaxing Pipeline Network Company for the purchase of piped natural gas, with total annual fees of approximately **RMB 584 million** as of the end of 2020[139](index=139&type=chunk) - Leased commercial properties to related party Qingyuan Hotel, with total annual rental income of approximately **RMB 5.1 million** as of the end of 2020[131](index=131&type=chunk) - Purchased construction materials from related party Zhuji Jinfeng, with total annual purchase price of approximately **RMB 5.6 million** as of the end of 2020[136](index=136&type=chunk) [Major Customers and Suppliers](index=38&type=section&id=Major%20Customers%20and%20Suppliers) As of the end of 2020, the Group exhibited high concentration among its customers and suppliers, with the top five customers accounting for 20.81% of total revenue and the top five suppliers for 68.79% of total purchases - The top five customers accounted for approximately **20.81% of total revenue**, with the largest customer accounting for **7.36%**[143](index=143&type=chunk) - The top five suppliers accounted for approximately **68.79% of total purchases**, with the largest supplier accounting for **53.31%**, indicating high supplier concentration[143](index=143&type=chunk) [Report of the Supervisory Committee](index=40&type=section&id=Report%20of%20the%20Supervisory%20Committee) [Supervisory Committee's Annual Oversight Opinion](index=40&type=section&id=Supervisory%20Committee's%20Annual%20Oversight%20Opinion) The Supervisory Committee affirmed that in 2020, the company operated lawfully with proper decision-making procedures, diligent directors and senior management, no actions harming shareholder interests, and true and complete financial statements, with IPO proceeds used in compliance - The company's operational decision-making procedures were lawful, and directors and senior management were loyal, diligent, and dutiful, with no violations found[159](index=159&type=chunk) - The financial statements objectively, truly, and reasonably reflected the company's operations, management, and financial position[160](index=160&type=chunk) - The use of proceeds from the initial public offering strictly adhered to regulations and disclosed purposes, with no instances of non-compliant use[161](index=161&type=chunk) [Corporate Governance Report](index=41&type=section&id=Corporate%20Governance%20Report) [Corporate Governance Practices and the Board of Directors](index=41&type=section&id=Corporate%20Governance%20Practices%20and%20the%20Board%20of%20Directors) The company is committed to high corporate governance standards, complying with all Code Provisions since listing, with the only deviation being the combined roles of Chairman and CEO held by Mr. Sun Lianqing, a structure deemed conducive to swift decision-making by the Board, which comprises eight directors including three independent non-executive directors - The company has complied with all applicable Code Provisions of the Corporate Governance Code since its listing, with one deviation: the roles of Chairman and Chief Executive Officer are not separated, both held by Mr. Sun Lianqing[165](index=165&type=chunk)[172](index=172&type=chunk) - The Board of Directors comprises eight directors, including two executive directors, three non-executive directors, and three independent non-executive directors, meeting the Listing Rules' requirements for the number and proportion of independent non-executive directors[168](index=168&type=chunk)[173](index=173&type=chunk) [Board Committees](index=44&type=section&id=Board%20Committees) The Board has three committees: Audit, Remuneration, and Nomination; the Audit Committee, composed of three independent non-executive directors, reviews financial information and internal controls; the Remuneration Committee, comprising one non-executive and two independent non-executive directors, reviews remuneration policies; and the Nomination Committee, consisting of one executive and two independent non-executive directors, reviews Board composition and director nominations - The Audit Committee consists of three independent non-executive directors, with Mr. Zheng Xueqi as Chairman[184](index=184&type=chunk) - The Remuneration Committee comprises one non-executive director and two independent non-executive directors, with Mr. Yu Youda as Chairman[186](index=186&type=chunk) - The Nomination Committee consists of one executive director and two independent non-executive directors, with Mr. Sun Lianqing as Chairman[189](index=189&type=chunk) [Risk Management and Internal Control](index=49&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is responsible for establishing and overseeing the effectiveness of risk management and internal control systems, which were reviewed and deemed effective and adequate for 2020, with an internal control consultant engaged for further enhancement - The Board is responsible for overseeing the effectiveness of risk management and internal control systems, which were reviewed and deemed effective and adequate for 2020[202](index=202&type=chunk) - The company has engaged an internal control consultant to review the Group's internal control systems for further improvement[205](index=205&type=chunk) [Shareholder Rights and Communication](index=51&type=section&id=Shareholder%20Rights%20and%20Communication) The company has established procedures to protect shareholder rights, allowing shareholders holding 10% or more of voting shares to request an extraordinary general meeting, and those holding 3% or more to propose resolutions 10 days prior to a general meeting, while ensuring convenient, equal, and timely access to company information through a shareholder communication policy - Shareholders holding **10% or more** of the company's voting shares, individually or in aggregate, have the right to request the Board to convene an extraordinary general meeting[214](index=214&type=chunk) - Shareholders holding **3% or more** of the company's voting shares, individually or in aggregate, have the right to submit ad hoc proposals in writing **10 days prior** to a general meeting[215](index=215&type=chunk) [Independent Auditor's Report](index=54&type=section&id=Independent%20Auditor's%20Report) [Auditor's Opinion](index=54&type=section&id=Auditor's%20Opinion) Ernst & Young issued an unmodified opinion on the company's consolidated financial statements for the year ended December 31, 2020, affirming they present a true and fair view in accordance with IFRS and Hong Kong Companies Ordinance, with key audit matters including revenue recognition for piped natural gas sales and construction services - The auditor issued an **unmodified opinion**, stating that the consolidated financial statements present a true and fair view of the Group's financial position and performance[225](index=225&type=chunk) - Key audit matters include revenue recognition for: 1) piped natural gas sales, due to numerous customers and estimates for unmetered portions at year-end; and 2) construction services, involving significant management judgment on performance progress[227](index=227&type=chunk)[229](index=229&type=chunk)[231](index=231&type=chunk) [Consolidated Financial Statements](index=59&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=59&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement presents the company's revenue, costs, expenses, and profit for the 2020 fiscal year, with total revenue of RMB 1.274 billion, profit for the year of RMB 95.48 million, and profit attributable to owners of the parent company of RMB 92.52 million 2020 Annual Consolidated Statement of Profit or Loss Summary | Item (RMB '000) | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 1,273,713 | 1,330,332 | | Gross Profit | 223,572 | 197,065 | | Profit Before Tax | 125,462 | 117,342 | | Profit for the Year | 95,482 | 89,366 | | Profit Attributable to Owners of the Parent Company | 92,520 | 86,898 | | Basic Earnings Per Share (RMB) | 0.79 | 0.87 | [Consolidated Statement of Financial Position](index=60&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) This statement reflects the company's assets, liabilities, and equity as of December 31, 2020, with total assets of RMB 1.715 billion, total liabilities of RMB 961 million, and total equity of RMB 754 million, indicating a significant improvement in the company's asset-liability structure compared to the previous year 2020 Year-End Consolidated Statement of Financial Position Summary | Item (RMB '000) | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total Non-Current Assets | 1,224,426 | 1,186,847 | | Total Current Assets | 490,593 | 167,922 | | **Total Assets** | **1,715,019** | **1,354,769** | | Total Current Liabilities | 329,297 | 443,675 | | Total Non-Current Liabilities | 631,289 | 554,265 | | **Total Liabilities** | **960,586** | **997,940** | | **Total Equity** | **754,433** | **356,829** | [Consolidated Statement of Cash Flows](index=63&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) This statement details the company's cash inflows and outflows for the 2020 fiscal year, showing net cash inflow from operating activities of RMB 178 million, net cash outflow from investing activities of RMB 94.05 million, and net cash inflow from financing activities of RMB 195 million due to the IPO, resulting in a significant increase in cash and cash equivalents to RMB 342 million at year-end 2020 Annual Consolidated Statement of Cash Flows Summary | Item (RMB '000) | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 177,981 | 125,011 | | Net Cash Flows Used in Investing Activities | (94,053) | (16,879) | | Net Cash Flows from/(Used in) Financing Activities | 195,243 | (131,228) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 279,171 | (23,096) | | Cash and Cash Equivalents at Year-End | 342,317 | 63,146 | [Notes to the Financial Statements](index=65&type=section&id=Notes%20to%20the%20Financial%20Statements) The notes provide detailed explanations of accounting policies, key accounting estimates, and supplementary disclosures for various financial statement items, including revenue breakdown, asset and liability details, related party transactions, and financial risk management [Note 5: Revenue](index=93&type=section&id=Note%205%3A%20Revenue) In 2020, the Group's total revenue was RMB 1.274 billion, with revenue from contracts with customers totaling RMB 1.267 billion, primarily from piped natural gas sales (RMB 877 million), LNG sales (RMB 134 million), and construction services (RMB 109 million), though piped natural gas sales' proportion of revenue decreased Classification of Revenue from Contracts with Customers for 2020 | Revenue Source | 2020 (RMB '000) | 2019 (RMB '000) | | :--- | :--- | :--- | | Sales of piped natural gas | 877,238 | 1,081,889 | | Sales of liquefied natural gas | 133,719 | 11,862 | | Sales of liquefied petroleum gas | 54,267 | 75,554 | | Provision of construction services | 108,909 | 63,215 | | Provision of installation and management services | 49,045 | 52,931 | | Others | 42,400 | 37,354 | | **Total** | **1,266,778** | **1,322,805** | [Note 30: Interest-bearing Bank Borrowings](index=126&type=section&id=Note%2030%3A%20Interest-bearing%20Bank%20Borrowings) As of the end of 2020, the Group's total interest-bearing bank borrowings amounted to RMB 114.5 million, all non-current secured loans, a significant reduction from RMB 193.4 million in 2019, collateralized by investment properties, property, plant and equipment, and other assets - As of December 31, 2020, total interest-bearing bank borrowings amounted to **RMB 114.5 million**, all of which were non-current (long-term) borrowings[457](index=457&type=chunk)[458](index=458&type=chunk) - The borrowings were secured by investment properties, property, plant and equipment, and pledged deposits with a total carrying amount of approximately **RMB 148.6 million**[459](index=459&type=chunk) [Note 36: Related Party Transactions](index=131&type=section&id=Note%2036%3A%20Related%20Party%20Transactions) The Group engaged in transactions with several related parties, most notably purchasing natural gas from Jiaxing Pipeline Network Company for RMB 584 million in 2020, incurring lease liability interest expenses of RMB 9.26 million for gas pipeline leases, and providing a bank loan guarantee of RMB 506 million for its joint venture, Hangjiaxin 2020 Major Related Party Transactions | Related Party | Transaction Content | Amount (RMB '000) | | :--- | :--- | :--- | | Jiaxing Pipeline Network Company | Purchase of natural gas | 583,825 | | Zhuji Jinfeng | Purchase of construction materials | 5,618 | | Qingyuan Hotel | Rental income | 5,108 | | Gas/Fueling Stations | Transportation income | 2,341 | - Provided a bank loan guarantee of **RMB 506 million** for the joint venture Hangjiaxin[475](index=475&type=chunk) [Note 39: Financial Risk Management Objectives and Policies](index=143&type=section&id=Note%2039%3A%20Financial%20Risk%20Management%20Objectives%20and%20Policies) The Group faces primary financial risks including interest rate, foreign exchange, credit, and liquidity risks, with IPO proceeds introducing Hong Kong Dollar exchange rate risk, and liquidity managed through cash flow monitoring; capital management saw a significant reduction in the capital gearing ratio from 54.20% in 2019 to 15.18% in 2020, indicating lower financial leverage - The Group's primary financial risks include interest rate, foreign exchange, credit, and liquidity risks[498](index=498&type=chunk) - The capital gearing ratio significantly decreased from **54.20%** at the end of 2019 to **15.18%** at the end of 2020[520](index=520&type=chunk) [Four-Year Financial Summary](index=153&type=section&id=Four-Year%20Financial%20Summary) [2017-2020 Financial Trends](index=153&type=section&id=2017-2020%20Financial%20Trends) Over the past four years, the Group's revenue grew from RMB 884 million in 2017 to RMB 1.274 billion in 2020, peaking in 2019, while gross profit and profit attributable to company shareholders showed steady growth, with the latter increasing from RMB 62.3 million in 2017 to RMB 92.52 million in 2020, and total assets and shareholder equity significantly increasing in 2020 due to IPO financing 2017-2020 Key Financial Data (RMB '000) | Indicator | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 883,604 | 1,258,782 | 1,330,332 | 1,273,713 | | Gross Profit | 151,621 | 170,257 | 197,065 | 223,572 | | Profit Attributable to Company Shareholders | 62,299 | 70,342 | 86,898 | 92,520 | | Non-Current Assets | 1,175,452 | 1,218,516 | 1,186,847 | 1,224,426 | | Current Assets | 134,675 | 162,258 | 167,922 | 490,593 | | Equity Attributable to Company Shareholders | 253,778 | 324,120 | 341,018 | 735,660 |

Company Information [Board of Directors and Key Personnel](index=3&type=section&id=Board%20of%20Directors%20and%20Key%20Personnel) This section details the company's board of directors, supervisors, committee members, and key professional advisors - The company's board comprises executive, non-executive, and independent non-executive directors, with **Mr. Sun Lianqing** serving as Chairman and Chief Executive Officer[3](index=3&type=chunk) - The Audit Committee consists of three independent non-executive directors, with **Mr. Zheng Xueqi** as Chairman[3](index=3&type=chunk) - The company's auditor is **Ernst & Young**, with legal advisors including **Messrs. Chiu & Partners** (Hong Kong law) and **Jiayuan Law Firm** (PRC law)[3](index=3&type=chunk) Definitions [Definitions of Key Terms](index=4&type=section&id=Definitions%20of%20Key%20Terms) This section defines key terms and abbreviations used throughout the report, covering company entities, financial instruments, industry terms, and regulatory frameworks - "The Company" refers to Jiaxing Gas Group Co, Ltd, established on March 15, 1998[5](index=5&type=chunk) - "Hangjiaxin" refers to Zhejiang Hangjiaxin Clean Energy Co, Ltd, in which the Company holds a **51% equity interest** and is considered a joint venture[5](index=5&type=chunk) - "Reporting Period" refers to the six-month period from January 1, 2020, to June 30, 2020[6](index=6&type=chunk) Management Discussion and Analysis [Market Review](index=6&type=section&id=Market%20Review) This section reviews the group's operational and financial performance for the period, including market conditions, segment analysis, and future outlook - In the first half of 2020, the COVID-19 pandemic posed significant challenges to China's economic growth, leading to restricted economic activity and weak downstream demand for natural gas[8](index=8&type=chunk) - China's economy rebounded from negative to positive growth in the second quarter, with key indicators showing recovery and a significant increase in the energy sector's work resumption rate, ensuring business recovery for the Group in the second half of the year[10](index=10&type=chunk)[12](index=12&type=chunk) [Business Review](index=6&type=section&id=Business%20Review) The Group's revenue decreased by 13.77% to RMB 558.1 million in the first half of 2020, with gross profit down 12.23% to RMB 89.0 million, while gross margin slightly increased to 15.95% 2020 First Half Key Financial Indicators Comparison | Indicator | 2020 First Half (RMB million) | 2019 First Half (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 558.1 | 647.2 | -13.77% | | Gross Profit | 89.0 | 101.4 | -12.23% | | Gross Margin | 15.95% | 15.67% | +0.28pp | | Profit Attributable to Owners of the Parent | 40.3 | 48.8 | -17.42% | - As of June 30, 2020, the Group operated a natural gas pipeline network of approximately **896.6 kilometers** in Jiaxing, serving **358,000 residential users** and **1,712 industrial and commercial users**[11](index=11&type=chunk)[13](index=13&type=chunk) - The reservoir construction for the Zhejiang Jiaxing (Pinghu) LNG Emergency Peak Shaving and Storage Terminal Project is approximately **80% complete**, with expected completion in the fourth quarter of 2020[11](index=11&type=chunk) [Segment Analysis](index=7&type=section&id=Segment%20Analysis) This section details the Group's revenue performance across various business segments, highlighting changes driven by gas prices, market strategies, and the pandemic's impact 2020 First Half Segment Revenue Comparison | Business Type | 2020 First Half (RMB million) | 2019 First Half (RMB million) | YoY Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Piped Natural Gas Sales | 427.2 | 516.4 | -17.27% | Decline in upstream gas prices, reduced industrial and commercial gas consumption due to pandemic | | Liquefied Natural Gas Sales | 16.9 | 6.5 | +160.00% | Capitalizing on low prices, optimizing gas source structure, developing new users | | Liquefied Petroleum Gas Sales | 25.4 | 42.4 | -40.09% | Pandemic impact on industrial user demand, decrease in international oil market unit prices | | Natural Gas Pipeline Construction and Installation | 65.3 | 57.5 | +13.57% | Increase in completed projects | | Natural Gas Transportation | 1.8 | 2.9 | -37.93% | Market conditions and customer station renovation factors led to reduced transport volume | | Steam Sales | 10.3 | 10.2 | +0.98% | Stable with slight increase | | Building Materials Sales | 6.6 | 7.5 | -12.00% | Pandemic impact led to reduced engineering material sales | - From January to June 2020, the total piped natural gas supply was **153.3 million cubic meters**, a **10.09% decrease** year-on-year, with residential consumption accounting for **19.37%** and industrial and commercial consumption for **80.63%**[14](index=14&type=chunk) [Natural Gas Price Adjustments](index=8&type=section&id=Natural%20Gas%20Price%20Adjustments) During the reporting period, there were no new adjustments to the guided prices for piped natural gas sales and city gate prices in Jiaxing - From June 20 to June 30, 2020, there were no new adjustments to the guided prices for piped natural gas sales and city gate prices in Jiaxing[22](index=22&type=chunk) [Outlook](index=8&type=section&id=Outlook) The Group's future development will benefit from Zhejiang Province's natural gas system reform, which encourages direct transactions between upstream and downstream enterprises to reduce gas costs - Zhejiang Provincial Development and Reform Commission's plan to encourage direct transactions between upstream and downstream natural gas enterprises aims to reduce corporate gas costs, presenting policy opportunities for the Group[23](index=23&type=chunk) - Jiaxing City's business environment, ranked among the top 20 economically active cities, provides strong support for the Group's future business development[24](index=24&type=chunk) - The Group plans to pursue a diversified development strategy, expanding sales of peripheral products like gas stoves and water heaters, offering maintenance services, and developing a "Smart Gas" three-year plan to advance informatization[25](index=25&type=chunk)[26](index=26&type=chunk) [Financial Overview](index=9&type=section&id=Financial%20Overview) This section outlines the Group's financial performance for the first half of 2020, noting decreases in revenue and gross profit due to lower gas sales prices and volumes 2020 First Half Financial Overview Key Indicators | Indicator | 2020 First Half (RMB million) | 2019 First Half (RMB million) | YoY Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Revenue | 558.1 | 647.2 | -13.77% | Decrease in average natural gas selling price and slight reduction in sales volume | | Gross Profit | 89.0 | 101.4 | -12.23% | Decrease in natural gas selling price and slight reduction in sales volume | | Gross Margin | 15.95% | 15.67% | +0.28pp | Improved gross margins for LPG, steam sales, and gas pipeline construction | | Other Income and Gains | 1.3 | 0.6 | +116.67% | Increase in government grants | | Finance Costs | 6.8 | 8.9 | -23.60% | Decrease in short-term borrowings, leading to reduced interest expenses | | Income Tax Expense | 11.9 | 16.3 | -26.99% | - | | Profit Attributable to Owners of the Parent | 40.3 | 48.8 | -17.42% | Impact of pandemic and pricing concessions leading to reduced gross profit | [Liquidity and Financial Position](index=10&type=section&id=Liquidity%20and%20Financial%20Position) As of June 30, 2020, the Group's current assets increased to RMB 229.8 million, with cash and bank balances at RMB 127.7 million, indicating an improved financial position Liquidity and Financial Position Key Indicators | Indicator | June 30, 2020 (RMB million) | December 31, 2019 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Current Assets | 229.8 | 167.9 | Increase | | Cash and Bank Balances | 127.7 | - | - | | Current Ratio | 0.74 | 0.38 | Improvement | | Debt-to-Asset Ratio | 71.86% | 73.66% | Decrease | | Capital Gearing Ratio | 53.33% | 54.20% | Decrease | | Bank Loans Utilized | 212.3 | - | - | | Unutilized Bank Facilities | 766.0 | - | - | - The Group maintains a net cash position, with utilized bank loans bearing interest at an annual rate of **3.67%-4.99%**[35](index=35&type=chunk) [Exchange Rate Fluctuation Risk](index=10&type=section&id=Exchange%20Rate%20Fluctuation%20Risk) The Group does not face significant exchange rate fluctuation risk as all its operations are in China, with most income and expenses denominated in RMB - The Group's operations are entirely within China, with income and expenses denominated in RMB, resulting in no significant exchange rate fluctuation risk[36](index=36&type=chunk) [Contingent Liabilities](index=11&type=section&id=Contingent%20Liabilities) The Group provides guarantees for the bank loans of its joint venture, Hangjiaxin, but directors deem the likelihood of default to be low, thus no provision has been made - The Group provides guarantees for the bank loans of its joint venture, Hangjiaxin, but directors consider the likelihood of default to be low, thus no provision has been made[37](index=37&type=chunk) - As of June 30, 2020, the Group had no other significant contingent liabilities[38](index=38&type=chunk) [Financial Guarantee Liabilities](index=11&type=section&id=Financial%20Guarantee%20Liabilities) As of June 30, 2020, the Group's bank guarantee for loans granted to its joint venture, Hangjiaxin, increased to RMB 462.9 million from RMB 306.9 million at the end of 2019 Bank Loan Guarantee Amount for Hangjiaxin | Date | Guarantee Amount (RMB million) | | :--- | :--- | | June 30, 2020 | 462.9 | | December 31, 2019 | 306.9 | [Asset Pledges](index=11&type=section&id=Asset%20Pledges) As of June 30, 2020, the Group has pledged investment properties, property, plant and equipment, and prepaid lease payments to secure bank financing, with the total carrying value of pledged assets decreasing from the end of 2019 Total Carrying Value of Pledged Assets | Pledged Asset Type | June 30, 2020 (RMB million) | December 31, 2019 (RMB million) | | :--- | :--- | :--- | | Investment Properties | 183.4 | 194.8 | | Property, Plant and Equipment | 20.9 | 4.1 | | Pledged Deposits | - | 7.1 | | Prepaid Lease Payments | 2.6 | 2.1 | [Human Resources and Employee Remuneration](index=11&type=section&id=Human%20Resources%20and%20Employee%20Remuneration) As of June 30, 2020, the Group had 370 employees, a slight decrease from the previous year, with total employee costs of approximately RMB 23.1 million for the period Human Resources and Employee Remuneration | Indicator | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Total Number of Employees | 370 | 377 | | Total Employee Costs (RMB million) | 23.1 | - | - The Group continuously enhances employee professionalism and overall quality through targeted training programs and competitive remuneration packages[41](index=41&type=chunk) [Events After Reporting Period](index=12&type=section&id=Events%20After%20Reporting%20Period) The Company's shares were listed on the Main Board of the Stock Exchange on July 16, 2020, and the over-allotment option was partially exercised on August 7, 2020 - The Company's shares were listed on the Main Board of the Stock Exchange on **July 16, 2020**, and the over-allotment option was partially exercised on **August 7, 2020**[44](index=44&type=chunk) - Apart from the listing-related matters, no other events significantly impacting the Group occurred between the end of the reporting period and the date of this report[44](index=44&type=chunk) Corporate Governance and Other Information [Interests and Short Positions of Directors, Supervisors and Chief Executive in Shares, Underlying Shares and Debentures](index=13&type=section&id=Interests%20and%20Short%20Positions%20of%20Directors,%20Supervisors%20and%20Chief%20Executive%20in%20Shares,%20Underlying%20Shares%20and%20Debentures) As the company's shares were not listed during the reporting period, relevant disclosure requirements were not applicable; however, directors, supervisors, and the chief executive held long positions in the company's domestic shares as of the report date - As the company's shares were not listed as of June 30, 2020, relevant disclosure requirements are not applicable[47](index=47&type=chunk) Long Positions of Directors, Supervisors and Chief Executive in Domestic Shares | Name | Capacity | Number of Shares (L) | Approximate Percentage of Holding in Relevant Class of Shares | Approximate Percentage of Holding in Total Share Capital of the Company | | :--- | :--- | :--- | :--- | :--- | | Sun Lianqing | Interest in controlled corporation | 31,720,806 | 31.72% | 23.01% | | Xu Songqiang | Beneficial owner | 3,069,891 | 31.72% | 23.01% | - Mr. Sun Lianqing holds a **65% equity interest** in Taiding and, together with other parties acting in concert, jointly holds shares in the Company[49](index=49&type=chunk) [Interests and Short Positions of Substantial Shareholders in Shares and Underlying Shares](index=14&type=section&id=Interests%20and%20Short%20Positions%20of%20Substantial%20Shareholders%20in%20Shares%20and%20Underlying%20Shares) This section discloses the interests of substantial shareholders, excluding directors, supervisors, and the chief executive, in the company's shares and underlying shares - As the company's shares were not listed as of June 30, 2020, relevant disclosure requirements are not applicable[51](index=51&type=chunk) Long Positions of Substantial Shareholders in Domestic Shares | Name | Share Class | Capacity | Number of Shares (L) | Approximate Percentage of Holding in Relevant Class of Shares | Approximate Percentage of Holding in Total Share Capital of the Company | | :--- | :--- | :--- | :--- | :--- | :--- | | Urban Development | Domestic Shares | Beneficial owner | 32,757,502 | 32.76% | 23.76% | | Taiding | Domestic Shares | Beneficial owner | 26,424,222 | 31.72% | 23.01% | | Zhuji Yujia | Domestic Shares | Beneficial owner | 11,894,374 | 11.89% | 8.63% | | ENN Gas Development Co, Ltd | Domestic Shares | Beneficial owner | 7,155,049 | 7.16% | 5.19% | | Maple Leaf Holdings Group Co, Ltd | Domestic Shares | Beneficial owner | 5,364,791 | 5.36% | 3.89% | Long Positions of Substantial Shareholders in H Shares | Name | Share Class | Capacity | Number of Shares (L) | Approximate Percentage of Holding in Relevant Class of Shares | Approximate Percentage of Holding in Total Share Capital of the Company | | :--- | :--- | :--- | :--- | :--- | :--- | | Flat (Hong Kong) Co, Limited | H Shares | Beneficial owner | 6,250,000 | 16.51% | 4.53% | | Hong Kong Hongsheng Wood Industry Trading Co, Ltd | H Shares | Beneficial owner | 5,219,500 | 13.79% | 3.79% | | Mingyuan Group Investment Co, Ltd | H Shares | Beneficial owner | 5,300,000 | 14.00% | 3.84% | [Corporate Governance Summary](index=18&type=section&id=Corporate%20Governance%20Summary) The company is committed to maintaining high standards of corporate governance to protect shareholder interests, though the Corporate Governance Code was not applicable during the pre-listing reporting period - The company is committed to maintaining high standards of corporate governance to protect shareholder interests and enhance corporate value, accountability, and transparency[66](index=66&type=chunk) - Since the listing date, the company has complied with the Corporate Governance Code, but the roles of Chairman and Chief Executive Officer are combined in Mr. Sun Lianqing, and the company will consider separating these roles at an appropriate time[66](index=66&type=chunk)[67](index=67&type=chunk) [Changes in Information of Directors and Supervisors](index=19&type=section&id=Changes%20in%20Information%20of%20Directors%20and%20Supervisors) Subsequent to the reporting period, Independent Non-executive Director Mr. Zheng Xueqi was appointed as an independent non-executive director and chairman of the audit committee of China Shun Ke Long Holdings Limited - Independent Non-executive Director **Mr. Zheng Xueqi** was appointed as an independent non-executive director and chairman of the audit committee of China Shun Ke Long Holdings Limited[68](index=68&type=chunk) - Apart from the aforementioned disclosure, there were no other changes in director/supervisor information from the end of the reporting period to the date of this interim report[68](index=68&type=chunk) [Audit Committee and Review of Interim Report](index=19&type=section&id=Audit%20Committee%20and%20Review%20of%20Interim%20Report) The company has established an Audit Committee comprising three independent non-executive directors, whose terms of reference comply with the Corporate Governance Code - The company's Audit Committee comprises three independent non-executive directors, with terms of reference compliant with the Corporate Governance Code[69](index=69&type=chunk) - The Audit Committee has reviewed the interim results and confirmed their preparation in accordance with applicable accounting standards and adequate disclosure[69](index=69&type=chunk) [Standard Code for Securities Transactions](index=19&type=section&id=Standard%20Code%20for%20Securities%20Transactions) The company has adopted a standard code for securities transactions by directors, no less exacting than that set out in Appendix 10 of the Listing Rules, and all directors have confirmed compliance since the listing date - The company has adopted a standard code for directors' securities transactions, and all directors have confirmed compliance since the listing date[70](index=70&type=chunk)[71](index=71&type=chunk) - This code also applies to employees who may possess price-sensitive information, and no breaches by employees have been identified[71](index=71&type=chunk) [Interim Dividend](index=19&type=section&id=Interim%20Dividend) The Board of Directors does not recommend the payment of any interim dividend for the reporting period - The Board of Directors does not recommend the payment of any interim dividend for the reporting period[72](index=72&type=chunk) [Use of Net Proceeds from Listing](index=20&type=section&id=Use%20of%20Net%20Proceeds%20from%20Listing) As of August 12, 2020, the company's net proceeds from listing totaled approximately HKD 334.0 million, which remain unutilized and are earmarked for specific strategic investments and operational needs - As of August 12, 2020, the net proceeds from the listing totaled approximately **HKD 334.0 million** and remain unutilized[74](index=74&type=chunk) Intended Use of Net Proceeds from Listing | Intended Use | Percentage of Net Proceeds Allocated | Allocated Amount (HKD million) | Expected Utilization Date | | :--- | :--- | :--- | :--- | | Payment of Hangjiaxin's registered capital or provision of shareholder loans | 80% | 267.2 | Q2 2021 | | Upgrading pipeline network and operating facilities | 10% | 33.4 | Before end of 2022 | | Working capital and general corporate purposes | 10% | 33.4 | Before end of 2022 | Independent Review Report [Summary of Independent Review Report](index=21&type=section&id=Summary%20of%20Independent%20Review%20Report) Ernst & Young conducted an independent review of the interim condensed consolidated financial information for the six months ended June 30, 2020, concluding no material non-compliance with IAS 34 - Ernst & Young reviewed the interim financial information in accordance with Hong Kong Standard on Review Engagements[77](index=77&type=chunk)[78](index=78&type=chunk) - The review concluded that nothing came to their attention to suggest that the interim financial information was not prepared, in all material respects, in accordance with International Accounting Standard 34[79](index=79&type=chunk) Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income [Overview of Profit or Loss and Comprehensive Income](index=22&type=section&id=Overview%20of%20Profit%20or%20Loss%20and%20Comprehensive%20Income) For the six months ended June 30, 2020, the company reported revenue of RMB 558,143 thousand and gross profit of RMB 88,997 thousand, with profit for the period at RMB 41,303 thousand 2020 First Half Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary | Indicator | 2020 First Half (RMB thousand) | 2019 First Half (RMB thousand) | | :--- | :--- | :--- | | Revenue | 558,143 | 647,175 | | Cost of Sales | (469,146) | (545,823) | | Gross Profit | 88,997 | 101,352 | | Other Income and Gains | 1,272 | 583 | | Selling and Distribution Costs | (10,109) | (9,626) | | Administrative Expenses | (19,945) | (21,197) | | Finance Costs | (6,780) | (8,885) | | Profit Before Tax | 53,235 | 66,039 | | Income Tax Expense | (11,932) | (16,276) | | Profit for the Period | 41,303 | 49,763 | | Profit Attributable to Owners of the Parent | 40,256 | 48,750 | | Non-controlling Interests | 1,047 | 1,013 | | Basic and Diluted Earnings Per Share (RMB) | 0.40 | 0.49 | Interim Condensed Consolidated Statement of Financial Position [Overview of Financial Position](index=23&type=section&id=Overview%20of%20Financial%20Position) As of June 30, 2020, the company's total non-current assets slightly decreased to RMB 1,185,057 thousand, while total current assets increased to RMB 229,840 thousand, reflecting changes in liabilities and equity 2020 June 30 Interim Condensed Consolidated Statement of Financial Position Summary | Indicator | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Total Non-current Assets | 1,185,057 | 1,186,847 | | Total Current Assets | 229,840 | 167,922 | | Total Current Liabilities | 309,485 | 443,675 | | Net Current Liabilities | (79,645) | (275,753) | | Total Non-current Liabilities | 707,280 | 554,265 | | Net Assets | 398,132 | 356,829 | | Equity Attributable to Owners of the Parent | 381,274 | 341,018 | | Non-controlling Interests | 16,858 | 15,811 | | Total Equity | 398,132 | 356,829 | Interim Condensed Consolidated Statement of Changes in Equity [Overview of Changes in Equity](index=25&type=section&id=Overview%20of%20Changes%20in%20Equity) For the six months ended June 30, 2020, equity attributable to owners of the parent increased from RMB 341,018 thousand to RMB 381,274 thousand, primarily due to total comprehensive income for the period 2020 First Half Interim Condensed Consolidated Statement of Changes in Equity Summary | Indicator | January 1, 2020 (RMB thousand) | June 30, 2020 (RMB thousand) | | :--- | :--- | :--- | | Total Equity Attributable to Owners of the Parent | 341,018 | 381,274 | | Non-controlling Interests | 15,811 | 16,858 | | Total Equity | 356,829 | 398,132 | | Total Comprehensive Income for the Period (Attributable to Owners of the Parent) | - | 40,256 | | Special Reserve - Safety Fund | 10,925 | 12,248 | - In the first half of 2019, the company declared a final dividend of **RMB 70,000 thousand**, while no dividends were paid in the first half of 2020[88](index=88&type=chunk) Interim Condensed Consolidated Statement of Cash Flows [Overview of Cash Flows](index=26&type=section&id=Overview%20of%20Cash%20Flows) For the six months ended June 30, 2020, net cash generated from operating activities increased to RMB 58,777 thousand, while financing activities shifted from a net outflow to a net inflow, resulting in increased cash and cash equivalents 2020 First Half Interim Condensed Consolidated Statement of Cash Flows Summary | Cash Flow Type | 2020 First Half (RMB thousand) | 2019 First Half (RMB thousand) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 58,777 | 50,925 | | Net Cash (Used in)/Generated from Investing Activities | (11,665) | 19,793 | | Net Cash Generated from/(Used in) Financing Activities | 15,004 | (50,585) | | Net Increase in Cash and Cash Equivalents | 62,116 | 20,133 | | Cash and Cash Equivalents at End of Period | 125,262 | 106,375 | - Net cash generated from operating activities increased, primarily due to cash inflows after adjusting for profit before tax[90](index=90&type=chunk) - Financing activities shifted from a net outflow to a net inflow, mainly due to an increase in new interest-bearing bank borrowings[94](index=94&type=chunk) Notes to the Interim Condensed Consolidated Financial Information [Company Information (Notes)](index=28&type=section&id=Company%20Information%20(Notes)) This note reiterates the company's establishment in China as a joint stock limited company, details its main business activities, and confirms its listing on the Stock Exchange on July 16, 2020 - The company has no controlling shareholder, with parties acting in concert holding approximately **23.01%** equity and Jiaxing City Urban Investment Development Group Co, Ltd holding approximately **23.76%** equity[96](index=96&type=chunk) - The Group's principal activities include gas sales (piped natural gas, liquefied natural gas, liquefied petroleum gas), construction and installation services, as well as natural gas transportation, steam and building materials sales, and property leasing[96](index=96&type=chunk) - The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since **July 16, 2020**[97](index=97&type=chunk) [Basis of Preparation and Changes in Accounting Policies of the Group](index=28&type=section&id=Basis%20of%20Preparation%20and%20Changes%20in%20Accounting%20Policies%20of%20the%20Group) The interim condensed consolidated financial information is prepared in accordance with IAS 34 and should be read in conjunction with the historical financial information in the prospectus - The interim condensed consolidated financial information is prepared in accordance with International Accounting Standard 34 and should be read in conjunction with the historical financial information in the prospectus[98](index=98&type=chunk) - Despite net current liabilities, the directors believe the company can continue as a going concern with the support of net proceeds from the listing[99](index=99&type=chunk) - The newly adopted revised International Financial Reporting Standards (such as IFRS 3, IFRS 9, IFRS 16, IAS 1, and IAS 8 amendments) have no significant impact on the Group's financial position and performance for the current period[101](index=101&type=chunk)[102](index=102&type=chunk)[104](index=104&type=chunk) [Operating Segment Information](index=30&type=section&id=Operating%20Segment%20Information) The Group operates a single reportable segment, encompassing gas sales, construction and installation services, and other related services in Jiaxing, with all revenue derived from mainland China - The Group has only one reportable operating segment, which includes gas sales, construction and installation services, and other related services[105](index=105&type=chunk) - All revenue is derived from mainland China[106](index=106&type=chunk) - The Group's business is seasonal, with revenue and operating profit typically higher in the first and fourth quarters of the year[107](index=107&type=chunk) [Revenue (Notes)](index=31&type=section&id=Revenue%20(Notes)) This note details the Group's revenue composition, with revenue from contracts with customers totaling RMB 553,532 thousand for the six months ended June 30, 2020, primarily from goods sales Revenue Composition Analysis | Revenue Source | 2020 First Half (RMB thousand) | 2019 First Half (RMB thousand) | | :--- | :--- | :--- | | Revenue from contracts with customers | 553,532 | 643,408 | | - Sales of piped natural gas | 427,218 | 516,396 | | - Sales of liquefied natural gas | 16,919 | 6,527 | | - Sales of liquefied petroleum gas | 25,432 | 42,381 | | - Sales of steam | 10,278 | 10,151 | | - Sales of building materials | 6,559 | 7,512 | | - Provision of construction services | 41,058 | 29,003 | | - Provision of installation and management services | 24,270 | 28,481 | | - Provision of gas transportation services | 1,768 | 2,947 | | Other sources of income (Total rental income) | 6,907 | 6,685 | | Less: Government surcharges | (2,296) | (2,918) | | Total Revenue | 558,143 | 647,175 | Revenue Recognition Timing | Recognition Timing | 2020 First Half (RMB thousand) | 2019 First Half (RMB thousand) | | :--- | :--- | :--- | | Goods or services transferred at a point in time | 488,204 | 585,924 | | Services transferred over time | 65,328 | 57,484 | [Profit Before Tax](index=32&type=section&id=Profit%20Before%20Tax) This note details the components of the Group's profit before tax, including costs of inventories sold, costs of services provided, loss on disposal of property, plant and equipment, and net impairment losses on financial and contract assets Profit Before Tax Components | Item | 2020 First Half (RMB thousand) | 2019 First Half (RMB thousand) | | :--- | :--- | :--- | | Cost of inventories sold | 434,623 | 518,772 | | Cost of services provided | 34,523 | 27,051 | | Loss on disposal of property, plant and equipment | 19 | 1,115 | | Net impairment losses on financial and contract assets | 53 | (74) | | Net fair value losses | 1,629 | 438 | [Income Tax](index=32&type=section&id=Income%20Tax) The Group is subject to a statutory income tax rate of 25% under China's Enterprise Income Tax Law, with total income tax expense for the six months ended June 30, 2020, amounting to RMB 11,932 thousand - The Group is subject to income tax at a statutory rate of **25%** as stipulated by the PRC Enterprise Income Tax Law[110](index=110&type=chunk) Income Tax Expense Components | Item | 2020 First Half (RMB thousand) | 2019 First Half (RMB thousand) | | :--- | :--- | :--- | | Current tax | 10,057 | 14,841 | | Deferred tax | 1,875 | 1,435 | | Total tax expense for the period | 11,932 | 16,276 | [Dividends (Notes)](index=33&type=section&id=Dividends%20(Notes)) For the six months ended June 30, 2020, the company neither paid nor declared any dividends, in contrast to the prior period's dividend distribution - For the six months ended June 30, 2020, the Company neither paid nor declared any dividends[112](index=112&type=chunk) - In the corresponding period of 2019, a dividend of **RMB 0.70 per ordinary share**, totaling **RMB 70,000,000**, was distributed[112](index=112&type=chunk) [Earnings Per Share Attributable to Ordinary Equity Holders of the Parent](index=33&type=section&id=Earnings%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Parent) Basic earnings per share are calculated based on the profit for the period attributable to ordinary equity holders of the parent and the weighted average of 100,000,000 ordinary shares outstanding during the period - Basic earnings per share are calculated based on the profit for the period attributable to ordinary equity holders of the parent and the weighted average of **100,000,000 ordinary shares** outstanding[113](index=113&type=chunk)[114](index=114&type=chunk) Basic and Diluted Earnings Per Share | Indicator | 2020 First Half | 2019 First Half | | :--- | :--- | :--- | | Profit attributable to ordinary equity holders of the parent (RMB thousand) | 40,256 | 48,750 | | Weighted average number of ordinary shares outstanding (shares) | 100,000,000 | 100,000,000 | | Basic and diluted earnings per share (RMB) | 0.40 | 0.49 | [Property, Plant and Equipment](index=34&type=section&id=Property,%20Plant%20and%20Equipment) As of June 30, 2020, the net book value of property, plant and equipment was RMB 474,334 thousand, with additions of RMB 22,288 thousand and depreciation expense of RMB 24,775 thousand during the period Changes in Carrying Value of Property, Plant and Equipment | Item | 2020 First Half (RMB thousand) | | :--- | :--- | | Carrying value at beginning of period | 482,910 | | Additions | 22,288 | | Depreciation expense for the period | (24,775) | | Disposals | (19) | | Transferred to investment properties | (6,070) | | Carrying value at end of period | 474,334 | - As of June 30, 2020, property, plant and equipment with a net book value of **RMB 20,884 thousand** were pledged as collateral for bank loans[116](index=116&type=chunk) [Trade and Bills Receivables](index=34&type=section&id=Trade%20and%20Bills%20Receivables) As of June 30, 2020, total trade and bills receivables amounted to RMB 46,219 thousand, with a net amount of RMB 43,794 thousand after impairment provisions, showing a decrease from the end of 2019 Trade and Bills Receivables | Item | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 44,768 | 50,665 | | Bills receivables | 1,451 | 887 | | Impairment | (2,425) | (2,427) | | Net amount | 43,794 | 49,125 | - All trade and bills receivables are due within one year[118](index=118&type=chunk) [Trade and Bills Payables](index=35&type=section&id=Trade%20and%20Bills%20Payables) As of June 30, 2020, total trade and bills payables were RMB 98,695 thousand, a slight decrease from the end of 2019, with the majority (RMB 97,814 thousand) due within one year Trade and Bills Payables | Item | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Trade payables | 91,536 | 91,236 | | Bills payables | 7,159 | 9,149 | | Total | 98,695 | 100,385 | Ageing Analysis of Trade and Bills Payables | Ageing | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Within 1 year | 97,814 | 99,441 | | 1 to 2 years | - | 222 | | Over 2 years | - | 659 | [Interest-Bearing Bank Borrowings](index=35&type=section&id=Interest-Bearing%20Bank%20Borrowings) As of June 30, 2020, total interest-bearing bank borrowings amounted to RMB 212,300 thousand, with current portion at RMB 34,000 thousand and non-current portion at RMB 178,300 thousand, bearing interest rates between 3.67% and 4.99% Analysis of Interest-Bearing Bank Borrowings | Type | Effective Interest Rate (%) | June 30, 2020 (RMB thousand) | Maturity | December 31, 2019 (RMB thousand) | Maturity | | :--- | :--- | :--- | :--- | :--- | :--- | | Current bank loans - secured | 3.67–4.99 | 34,000 | 2021 | 4.35–4.79 | 2020 | | Non-current bank loans - secured | 4.70–4.99 | 178,300 | 2022–2029 | 4.99 | 2020–2024 | | Total | - | 212,300 | - | 193,400 | - | Repayment Schedule of Interest-Bearing Bank Borrowings | Repayment Period | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Repayable within one year | 34,000 | 173,400 | | Repayable in the second to fifth year | 67,350 | 20,000 | | Repayable after five years | 110,950 | - | - Certain interest-bearing bank loans are secured by investment properties, property, plant and equipment, and right-of-use assets, with a total carrying value of **RMB 206,909 thousand**[123](index=123&type=chunk) - Interest-bearing bank loans of **RMB 60,000 thousand** are guaranteed by subsidiaries Jiaxing Jia Ran Liquefied Gas Co, Ltd and Jiaxing Jia An Gas Technology Service Co, Ltd[123](index=123&type=chunk) [Share Capital (Notes)](index=37&type=section&id=Share%20Capital%20(Notes)) As of June 30, 2020, the company's ordinary share capital remained consistent with the end of 2019, comprising 100,000 thousand shares with a par value of RMB 100,000 thousand Ordinary Share Capital | Item | Number of Shares (thousand shares) | Par Value (RMB thousand) | | :--- | :--- | :--- | | Ordinary shares at December 31, 2019 and June 30, 2020 | 100,000 | 100,000 | [Contingent Liabilities (Notes)](index=37&type=section&id=Contingent%20Liabilities%20(Notes)) As of June 30, 2020, the Group provided guarantees for bank loans of its joint venture, Hangjiaxin, amounting to RMB 462,910 thousand, with no provision made due to the low likelihood of default Bank Loan Guarantee for Hangjiaxin | Date | Guaranteed Bank Loans (RMB thousand) | | :--- | :--- | | June 30, 2020 | 462,910 | | December 31, 2019 | 306,910 | - The directors believe the likelihood of Hangjiaxin defaulting on its bank loans is very low, thus no provision has been made for this contingent liability[124](index=124&type=chunk) [Commitments](index=37&type=section&id=Commitments) As of June 30, 2020, the Group's contracted but unprovided commitments for property, plant and equipment increased to RMB 3,926 thousand compared to the end of 2019 Contracted but Unprovided Commitments | Item | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Property, plant and equipment | 3,926 | 1,867 | [Related Party Transactions](index=38&type=section&id=Related%20Party%20Transactions) This note details the Group's related parties and their relationships, disclosing various transactions during the reporting period, including purchases, guarantees, and income, along with outstanding balances and key management personnel compensation - The Group's related parties include joint ventures (e.g., gas stations, Hangjiaxin), associates (e.g., Jiaxing Piped LPG, Jiatong New Energy), and companies controlled or significantly influenced by the Company's shareholders or directors[128](index=128&type=chunk)[131](index=131&type=chunk) Summary of Major Related Party Transactions | Transaction Type | Related Party | 2020 First Half (RMB thousand) | 2019 First Half (RMB thousand) | | :--- | :--- | :--- | :--- | | Purchase of liquefied natural gas | Jiatong New Energy | 7 | 30 | | Bank loan guarantee | Hangjiaxin | 156,000 | 109,680 | | Transportation income | Gas stations | 965 | 1,642 | | Rental income | Hangjiaxin, Gas stations, Qingyuan Hotel, Jiaxing Gas Pipeline Company, Nanhu Hetai | 12,178 | 14,412 | | Purchase of natural gas | Jiaxing Gas Pipeline Company | 296,861 | 427,578 | | Sale of natural gas | Qingyuan Hotel, Salon International Hotel, Yuehe Inn | 2,759 | 2,537 | | Purchase of building materials | Zhuji Jinfeng | 2,250 | 2,576 | | Administrative and selling expenses | Qingyuan Hotel, Qingchi Hot Spring | 647 | 1,552 | Outstanding Balances with Related Parties | Item | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Amounts due from related parties before provision | 12,128 | 13,676 | | Amounts due to related parties | 168,655 | 171,418 | Compensation of the Group's Key Management Personnel | Item | 2020 First Half (RMB thousand) | 2019 First Half (RMB thousand) | | :--- | :--- | :--- | | Short-term employee benefits | 1,787 | 2,161 | | Post-employment benefits | 214 | 258 | | Total compensation | 2,001 | 2,419 | [Fair Value and Fair Value Hierarchy of Financial Instruments](index=43&type=section&id=Fair%20Value%20and%20Fair%20Value%20Hierarchy%20of%20Financial%20Instruments) This note discloses the fair value and hierarchy of financial instruments, with total financial assets at fair value through profit or loss amounting to RMB 15,612 thousand as of June 30, 2020 Carrying Amounts and Fair Values of Financial Assets and Liabilities | Item | June 30, 2020 Carrying Amount (RMB thousand) | June 30, 2020 Fair Value (RMB thousand) | | :--- | :--- | :--- | | Financial assets at fair value through profit or loss | 15,612 | 15,612 | | Interest-bearing bank and other borrowings (non-current) | 178,300 | 172,841 | - Management assesses that the fair values of short-term financial instruments such as cash and cash equivalents and trade receivables approximate their carrying amounts[146](index=146&type=chunk) - The fair value of unlisted equity investments is estimated using market-based valuation techniques, with a sensitivity analysis showing that a **10% increase/decrease** in valuation multiples would result in an increase/decrease of **RMB 1,331 thousand** in fair value[149](index=149&type=chunk)[150](index=150&type=chunk) Fair Value Hierarchy of Assets Measured at Fair Value | Item | Level 1 (RMB thousand) | Level 2 (RMB thousand) | Level 3 (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Financial assets at fair value through profit or loss at June 30, 2020 | 1,566 | 737 | 13,309 | 15,612 | | Financial assets at fair value through profit or loss at December 31, 2019 | 1,741 | 735 | 14,763 | 17,239 | [Events After Reporting Period (Notes)](index=47&type=section&id=Events%20After%20Reporting%20Period%20(Notes)) The company was listed on the Main Board of The Stock Exchange of Hong Kong Limited on July 16, 2020, issuing 33,340,000 new shares, and subsequently exercised its over-allotment option on August 7, 2020 - The Company was listed on the Main Board of The Stock Exchange of Hong Kong Limited on **July 16, 2020**, issuing **33,340,000 new shares**[153](index=153&type=chunk) - On **August 7, 2020**, the company exercised its over-allotment option, issuing an additional **4,504,500 new shares**[153](index=153&type=chunk) [Approval of Interim Condensed Consolidated Financial Information](index=47&type=section&id=Approval%20of%20Interim%20Condensed%20Consolidated%20Financial%20Information) The interim condensed consolidated financial information was approved and authorized for issue by the Board of Directors on August 28, 2020 - The interim condensed consolidated financial information was approved and authorized for issue by the Board of Directors on **August 28, 2020**[154](index=154&type=chunk)