ENN ENERGY(HK:02688)2022-09-05 09:46Financial Performance - Revenue for the first half of 2022 reached RMB 58,332 million, an increase of 41.5% compared to RMB 41,232 million in the same period last year[6]. - Gross profit decreased by 2.1% to RMB 6,894 million from RMB 7,042 million year-on-year[6]. - Profit attributable to owners of the company was RMB 3,104 million, down 17.6% from RMB 3,765 million in the previous year[6]. - Core profit increased by 10.9% to RMB 4,118 million from RMB 3,713 million year-on-year[6]. - The net profit attributable to shareholders fell by 17.6% to RMB 3,104 billion, with basic earnings per share declining by 17.7% to RMB 2.75[15]. - Total revenue for the period reached RMB 58.332 billion, a substantial increase of 41.5%, while overall gross profit decreased by 2.1% to RMB 6.894 billion[13]. - The net profit for the six months ended June 30, 2022, was RMB 3,501 million, compared to RMB 4,430 million in 2021, reflecting a decline of 20.9%[71]. - Basic earnings per share for the period was RMB 2.75, down from RMB 3.34 in the previous year, a decrease of 17.6%[71]. Operational Metrics - The number of urban gas projects in China increased to 254, up from 239, representing a growth of 15 projects[6]. - The total population served by the gas supply network reached 128,199 thousand, a 9.7% increase from 116,831 thousand[6]. - New residential gas users added during the period were 979 thousand, a decrease of 17.2% from 1,182 thousand[6]. - The pipeline gasification rate was 62.7%, slightly up from 62.6%[6]. - The total cumulative energy projects in operation increased to 177, up from 135, representing an increase of 42 projects[6]. - Integrated energy sales volume rose by 34.2% to 10,801 million kWh from 8,049 million kWh year-on-year[6]. - Retail sales of natural gas to industrial, residential, and automotive users increased by 5.1% to 13.065 billion cubic meters, driving retail revenue up by 31.0% to RMB 30.316 billion[10]. - The wholesale gas business revenue surged by 91.4% to RMB 18.696 billion, with gross profit rising by 128.3% to RMB 815 million, effectively offsetting the rising costs in retail gas operations[10]. Cash Flow and Financial Position - Operating cash inflow was RMB 3.147 billion, with free cash flow generated amounting to RMB 689 million after accounting for net financial expenses and capital expenditures[15]. - As of June 30, 2022, the group had cash and cash equivalents of RMB 11.573 billion, an increase of RMB 2.889 billion compared to the end of last year, reflecting operational income and increased debt[18]. - The group's net current liabilities improved significantly to RMB 8.899 billion as of June 30, 2022, primarily due to the issuance of long-term bonds to replace maturing debt[19]. - Total borrowings amounted to RMB 22.022 billion as of June 30, 2022, with fixed-rate borrowings accounting for approximately 95.3%[20]. - The net debt ratio improved to 24.0%, down from 26.6% a year earlier, reflecting better financial management[17]. Strategic Initiatives and Future Outlook - The company anticipates a continued economic recovery in China in the second half of 2022, driven by effective pandemic control and economic policies[31]. - The company plans to focus on high-energy consumption and high-pollution industries, promoting natural gas as a substitute for high-carbon energy[31]. - The company aims to provide customized low-carbon energy solutions, integrating natural gas with renewable energy sources like biomass, solar, and geothermal[31]. - The company is launching three core service products for households: "Safe Home," "Smart Connected Home," and "Low-Carbon Loving Home" to meet customer demands[31]. - The company is enhancing brand promotion and exploring new marketing channels to increase penetration of value-added services among existing customers[31]. Shareholder and Governance Information - The company declared an interim dividend of HKD 0.64 per share, representing approximately 15% of the core profit for the period[32]. - The company maintained a board attendance rate of over 75% for directors during the first half of 2022[36]. - The independent auditor, Deloitte, was reappointed with over 98% shareholder support at the annual general meeting[37]. - The company has established an ESG committee to review and update policies, aiming to achieve emission reduction targets by 2030[36]. Acquisitions and Investments - The group acquired 100% of Pingshan Zhongcheng Gas Co., Ltd. for RMB 60 million on March 28, 2022, to expand market share[141]. - The group acquired 100% equity of Langfang Xin'ao Gaobo Technology Co., Ltd. for RMB 62 million on April 26, 2022, and 100% equity of Ruzhou Yurun Natural Gas Co., Ltd. for RMB 24 million on June 23, 2022[145]. - The net value of the acquired assets was RMB 860 million, with cash payment of RMB 760 million and payable consideration of RMB 100 million[146]. Risk Management and Compliance - The group has established a comprehensive risk management policy and commodity hedging system to manage price risks associated with natural gas[26]. - The group initiated greenhouse gas emissions accounting for Scope 3 and established a cooperation agreement with China University of Petroleum for methane emission control[29].