中能控股(00228) - 2023 - 中期业绩

Interim Results Announcement This section serves as the overarching announcement for the company's interim financial performance and related disclosures Financial Summary Provides a concise overview of the company's key financial performance metrics for the period ended June 30, 2023 Financial Summary for the Six Months Ended June 30, 2023 | Metric | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | Increase/(Decrease) | | :--- | :--- | :--- | :--- | | Revenue | 168,281 | 185,555 | (9.3)% | | EBITDA | 112,859 | 140,266 | (19.5)% | | EBITDA Margin | 67.1% | 75.6% | (8.5)% | | Profit Attributable to Owners of the Company | 35,141 | 61,875 | (43.2)% | | Net Profit Margin | 20.9% | 33.3% | (12.4)% | | Basic Earnings Per Share (HK Cents) | 0.37 | 0.65 | (43.1)% | | Diluted Earnings Per Share (HK Cents) | 0.30 | 0.50 | (40.0)% | Condensed Consolidated Statement of Comprehensive Income Details the company's revenues, expenses, and overall profit or loss for the six months ended June 30, 2023 Condensed Consolidated Statement of Comprehensive Income (For the Six Months Ended June 30, 2023) | Item | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 168,281 | 185,555 | | Direct Costs | (21,609) | (29,561) | | Other Income | 1,043 | 2,847 | | Selling and Distribution Expenses | (14,587) | (17,351) | | Staff Costs | (8,299) | (9,557) | | Short-term Lease Costs | (2,089) | (240) | | Depreciation of Right-of-Use Assets | (4,775) | (5,736) | | Depreciation of Property, Plant and Equipment | (18,506) | (20,834) | | Amortization of Intangible Assets | (13,277) | (15,741) | | Fair Value Gains or Losses on Financial Assets at Fair Value Through Profit or Loss | (5,995) | (5,188) | | Reversal of Impairment Loss on Property, Plant and Equipment | 479 | 4,316 | | Reversal of Impairment Loss on Intangible Assets | 1,836 | 16,603 | | Fees under Petroleum Contract | (4,761) | (2,770) | | Other Operating Expenses | (5,120) | (4,388) | | Finance Costs | (26,567) | (26,883) | | Profit Before Income Tax | 46,054 | 71,072 | | Income Tax Expense | (11,560) | (9,365) | | Profit for the Period | 34,494 | 61,707 | | Profit for the Period Attributable to Owners of the Company | 35,141 | 61,875 | | Profit for the Period Attributable to Non-controlling Interests | (647) | (168) | | Total Comprehensive Loss for the Period | (45,831) | (13,738) | | Total Comprehensive Loss for the Period Attributable to Owners of the Company | (44,618) | (12,971) | | Total Comprehensive Loss for the Period Attributable to Non-controlling Interests | (1,213) | (767) | Condensed Consolidated Statement of Financial Position Presents the company's assets, liabilities, and equity as of June 30, 2023, and December 31, 2022 Condensed Consolidated Statement of Financial Position (As at June 30, 2023) | Item | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Non-current Assets | | | | Right-of-Use Assets | 7,669 | 12,820 | | Exploration and Evaluation Assets | 253 | 265 | | Intangible Assets | 1,105,467 | 1,168,668 | | Deferred Tax Assets | 10,658 | 22,820 | | Current Assets | | | | Trade Receivables | 56,761 | 187 | | Financial Assets at Fair Value Through Profit or Loss | 22,858 | 28,854 | | Other Receivables, Deposits and Prepayments | 26,908 | 32,193 | | Cash and Bank Balances | 134,167 | 131,296 | | Total Assets | 2,476,790 | 2,560,109 | | Current Liabilities | | | | Other Payables and Accruals | 181,342 | 196,240 | | Lease Liabilities | 2,752 | 8,106 | | Amount Due to a Shareholder | 33,835 | 33,835 | | Other Borrowings | 292,110 | 305,760 | | Net Current Liabilities | (269,345) | (351,411) | | Non-current Liabilities | | | | Other Borrowings | 172,270 | 180,320 | | Lease Liabilities | 73 | 1,441 | | Convertible Bonds | 113,621 | 107,789 | | Net Assets | 1,680,787 | 1,726,618 | | Total Equity | 1,680,787 | 1,726,618 | Notes to the Condensed Consolidated Interim Financial Statements Provides detailed explanations and disclosures for the figures presented in the interim financial statements 1. Basis of Preparation Outlines the accounting standards used and the going concern assessment for the interim financial statements - The interim financial statements are prepared in accordance with HKAS 34 and Appendix 16 of the Listing Rules, consistent with the accounting policies and methods used in the 2022 annual financial statements[18] - As of June 30, 2023, the Group's current liabilities exceeded current assets by approximately HK$269 million (December 31, 2022: HK$351 million), primarily due to payables for property, plant and equipment and other borrowings[19] - Directors believe the Group can meet its financial obligations over the next 12 months through shareholder financial support, negotiation with contractors and creditors for extended repayment terms, bank borrowings, and maintaining operating cash flow, thus preparing the statements on a going concern basis[21] 2. Adoption of New and Revised HKFRSs Discusses the adoption of new accounting standards and their impact on the financial statements - The Group has adopted all new and revised HKFRSs effective for accounting periods beginning on or after January 1, 2023[22] - The adoption of new standards has not resulted in significant changes to the Group's accounting policies, financial statement presentation, or reported amounts, and directors anticipate no material impact from future applications[26] 3. Revenue and Segment Information Details the company's revenue sources and performance across its reportable operating segments - The Group has three reportable operating segments: natural gas exploration, production and distribution (primarily in Kashgar and Karamay, Xinjiang), sales of food and beverage business, and money lending business[23][34] Reportable Segment Revenue and Profit (For the Six Months Ended June 30, 2023) | Segment | Revenue from External Customers (HK$ Thousand) | Reportable Segment Profit Before Income Tax (HK$ Thousand) | | :--- | :--- | :--- | | Exploration, Production and Distribution of Natural Gas | 168,281 | 62,499 | | Sales of Food and Beverage Business | – | (246) | | Money Lending Business | – | (93) | | Total | 168,281 | 62,160 | Reportable Segment Revenue and Profit (For the Six Months Ended June 30, 2022) | Segment | Revenue from External Customers (HK$ Thousand) | Reportable Segment Profit Before Income Tax (HK$ Thousand) | | :--- | :--- | :--- | | Exploration, Production and Distribution of Natural Gas | 185,555 | 83,064 | | Sales of Food and Beverage Business | – | (236) | | Money Lending Business | – | (62) | | Total | 185,555 | 82,766 | - All revenue is derived from Mainland China and entirely from natural gas sales, recognized at a point in time[45] 4. Other Income Presents a breakdown of the company's other income streams for the reporting period Other Income (For the Six Months Ended June 30, 2023) | Item | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Interest Income | 690 | 923 | | Others | 353 | 1,924 | | Total | 1,043 | 2,847 | 5. Finance Costs Details the company's finance-related expenses incurred during the reporting period Finance Costs (For the Six Months Ended June 30, 2023) | Item | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Interest on Other Borrowings | 20,418 | 20,923 | | Interest on Lease Liabilities | 318 | 698 | | Interest on Convertible Bonds | 5,831 | 5,262 | | Total Interest Expense | 26,567 | 26,883 | 6. Profit Before Income Tax Explains the components contributing to the company's profit before income tax Components of Profit Before Income Tax (For the Six Months Ended June 30, 2023) | Item | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Depreciation of Right-of-Use Assets | 4,775 | 5,736 | | Depreciation of Property, Plant and Equipment | 18,506 | 20,834 | | Amortization of Intangible Assets | 13,277 | 15,741 | | Fair Value Loss on Financial Assets at Fair Value Through Profit or Loss | 5,995 | 5,188 | | Reversal of Impairment Loss on Property, Plant and Equipment | (479) | (4,316) | | Reversal of Impairment Loss on Intangible Assets | (1,836) | (16,603) | | Net Foreign Exchange Gain | (4) | (52) | | Staff Costs (including Directors' Emoluments) | 8,299 | 9,557 | 7. Income Tax Expense Details the company's income tax expenses and related provisions Income Tax Expense (For the Six Months Ended June 30, 2023) | Item | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Current Tax | – | – | | Deferred Tax Expense | 11,560 | 9,365 | | Total Tax Expense for the Period | 11,560 | 9,365 | - The Group has not made provisions for Hong Kong Profits Tax and PRC Enterprise Income Tax, as income is not sourced from Hong Kong and there are unutilized tax losses to offset profits[49] 8. Dividends States the company's dividend policy and declarations for the reporting period - No dividends were paid or proposed for the six months ended June 30, 2023, nor have any been proposed since the end of the reporting period[56] 9. Earnings Per Share Calculates the basic and diluted earnings per share for the reporting period Basic Earnings Per Share (For the Six Months Ended June 30, 2023) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company (HK$ Thousand) | 35,141 | 61,875 | | Weighted Average Number of Ordinary Shares Issued | 9,505,344,000 | 9,505,344,000 | | Basic Earnings Per Share (HK Cents) | 0.37 | 0.65 | Diluted Earnings Per Share (For the Six Months Ended June 30, 2023) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company for Diluted EPS Calculation (HK$ Thousand) | 40,972 | 67,137 | | Weighted Average Number of Ordinary Shares Issued | 9,505,344,000 | 9,505,344,000 | | Effect of Potential Dilutive Ordinary Shares from Convertible Bonds | 4,045,654,761 | 4,045,654,761 | | Diluted Earnings Per Share (HK Cents) | 0.30 | 0.50 | 10. Property, Plant and Equipment Provides details on the company's property, plant, and equipment, including depreciation and impairment reversals - For the six months ended June 30, 2023, a reversal of impairment loss of approximately HK$479 thousand was recognized for Kashgar project's property, plant and equipment, a significant decrease from the prior period (HK$4,316 thousand)[54] - The recoverable amount is determined based on value in use, using a discounted cash flow method with a pre-tax discount rate of 16.8%[54] - No new property, plant and equipment were added during the period[59] 11. Exploration and Evaluation Assets Details the company's exploration and evaluation assets, including any impairment assessments - For the six months ended June 30, 2023, the Group neither acquired exploration and evaluation assets nor recognized any impairment reversals[62][63] - The recoverable amount of Kashgar project's exploration and evaluation assets is based on value in use, determined using a discounted cash flow method with a pre-tax discount rate of 16.8%[63] 12. Intangible Assets Provides information on the company's intangible assets, including amortization and impairment reversals - For the six months ended June 30, 2023, amortization of intangible assets was approximately HK$13,277 thousand, amortized using the units of production method[172] - A reversal of impairment loss of approximately HK$1,836 thousand was recognized for intangible assets during the period, a significant decrease from the prior period (HK$16,603 thousand), as the recoverable amount of the Kashgar project's cash-generating unit exceeded its carrying amount[69] - The recoverable amount of the Kashgar project's cash-generating unit is based on value in use, calculated using a discounted cash flow method with a pre-tax discount rate of 16.8%[69] 13. Trade Receivables Details the company's trade receivables, including aging analysis and collateral information - Trade receivables primarily arise from the natural gas exploration, production and distribution segment, with credit terms typically ranging from 30 to 60 days, and no overdue or impaired amounts[74] Aging Analysis of Trade Receivables (As at June 30, 2023) | Aging | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Within 3 Months | 56,761 | 187 | - As of June 30, 2023, approximately HK$56,761 thousand of trade receivables were pledged as collateral for other borrowings[74] 14. Other Payables and Accruals Presents a breakdown of the company's other payables and accrued expenses Other Payables and Accruals (As at June 30, 2023) | Item | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Payables for Property, Plant and Equipment/Exploration and Evaluation | 121,583 | 142,966 | | Others | 59,759 | 53,274 | | Total | 181,342 | 196,240 | - Payables for costs represent balances due to subcontractors for exploration, evaluation, and development work in the petroleum contract area[75] - Advances from China National Petroleum Corporation amounted to approximately HK$11,617 thousand (December 31, 2022: HK$16,203 thousand)[71] 15. Amount Due to a Shareholder Details the amount owed to a shareholder and its terms - The amount due to a shareholder is unsecured, interest-free, and repayable on demand, totaling HK$33,835 thousand[72] 16. Other Borrowings Provides information on the company's other borrowings, including terms and collateral Other Borrowings (As at June 30, 2023) | Item | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Secured Other Borrowings | 464,380 | 486,080 | - Other borrowings are denominated in RMB, bear an annual interest rate of 8.5%, and are secured by the Group's trade receivables and rights to natural gas sharing amounts and sales revenue under product sharing and sales agreements[73] 17. Convertible Bonds Details the company's convertible bonds, including principal amount, conversion terms, and activity - The outstanding principal amount of convertible bonds is HK$679,670 thousand, maturing 30 years from the issue date, and are non-interest bearing[77] - The conversion price is HK$0.168 per share (subject to adjustment), allowing for the allotment and issue of up to 4,045,654,761 shares if fully exercised[127] - No convertible bonds were converted during the six months ended June 30, 2023, or the year ended December 31, 2022[82] 18. Share Capital Outlines the company's authorized and issued share capital structure Share Capital Structure (As at June 30, 2023) | Item | Number of Shares | Amount (HK$ Thousand) | | :--- | :--- | :--- | | Authorized Share Capital (Ordinary Shares of HK$0.05 each) | 25,000,000,000 | 1,250,000 | | Issued and Fully Paid Share Capital (Ordinary Shares of HK$0.05 each) | 9,505,344,000 | 475,267 | 19. Related Party Transactions Details significant transactions with related parties, primarily key management personnel remuneration Key Management Personnel Remuneration (For the Six Months Ended June 30, 2023) | Item | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Directors - Short-term Employee Benefits | 814 | 810 | | Directors - Bonuses | – | 2,754 | | Total | 814 | 3,564 | Management Discussion and Analysis Provides management's perspective on the company's financial performance, operational highlights, and future outlook (1) Company Profile Introduces the company's principal activities and key operational projects - The Company's principal business is investment holding, with subsidiaries engaged in oil and gas exploration, natural gas distribution, food and beverage sales, and money lending businesses[92] - The Group owns two oil and gas exploration, development, and production projects: the Kashgar project (located in the Kashgar North Block of the Tarim Basin, Xinjiang, China) and the Karamay project (located near Karamay City, Xinjiang, China)[86][87][93] (2) Business Review Reviews the company's overall business performance, revenue drivers, and profit changes for the period - In the first half of 2023, the Group's revenue decreased by 9.3% to approximately HK$168 million, primarily due to slower-than-expected domestic economic recovery, reduced natural gas demand from warmer spring temperatures, and scheduled maintenance at the Kashgar project[94] - Profit attributable to owners of the Company decreased by 43.2% to approximately HK$35,141 thousand, and total comprehensive loss attributable to owners of the Company increased by 244.0%, mainly impacted by RMB depreciation and HKD appreciation[94] (a) Natural Gas Exploration, Production and Distribution Segment Focuses on the performance and key metrics of the natural gas business segment - The natural gas exploration, production and distribution segment contributed revenue of approximately HK$168,281 thousand (a 9.3% year-on-year decrease) and profit before income tax of approximately HK$62,499 thousand (a 24.8% year-on-year decrease)[107] - Natural gas allocation from the Kashgar project decreased from approximately 152 million cubic meters in the first half of 2022 to approximately 147 million cubic meters in the first half of 2023[107] - The Kashgar project's petroleum contract is for a term of 30 years from June 1, 2009, with development costs borne by China National Petroleum Corporation and the Group at 51% and 49% respectively[97] (b) Sales of Food and Beverage Business Reviews the performance of the food and beverage segment, noting its challenges - In the first half of 2023, the sales of food and beverage business segment recorded no revenue, with a segment loss before tax expense of approximately HK$246 thousand (first half of 2022: HK$236 thousand)[98] - The food and beverage industry has been severely impacted by the 2019 pandemic, and the Group will continue to monitor the economic environment and review future resource allocation[98] (c) Money Lending Business Reviews the performance of the money lending segment and its credit policy - In the first half of 2023, the money lending business segment generated no revenue, with a segment loss before tax expense of approximately HK$93 thousand (first half of 2022: HK$62 thousand)[99] - Due to economic uncertainties from the pandemic and US-China trade tensions, the Group continues to adopt stringent credit policies to mitigate credit risk[99] (3) Operating Results Analyzes the company's operating performance, including revenue, EBITDA, and profit drivers - In the first half of 2023, the Group's revenue was approximately HK$168,281 thousand, a 9.3% year-on-year decrease, and EBITDA was approximately HK$112,859 thousand, a 19.5% year-on-year decrease[100][101] - Profit attributable to owners of the Company decreased by 43.2% to approximately HK$35,141 thousand, primarily due to reduced revenue, increased short-term lease expenses, lower reversals of impairment losses on property/intangible assets, increased fair value losses on financial assets, and higher income tax expense[105] - RMB depreciation against HKD led to an increase in exchange losses on foreign operations attributable to owners of the Company from HK$74,846 thousand in the first half of 2022 to HK$79,759 thousand in the first half of 2023[106] - EBITDA margin decreased by 8.5% to 67.1%, and net profit margin decreased by 12.4% to 20.9%, mainly due to significantly lower reversals of impairment losses on property, plant and equipment and intangible assets[114] Exchange Differences on Foreign Operations Discusses the impact of foreign exchange rate fluctuations on the company's overseas operations - RMB depreciation against HKD led to an increase in exchange losses on foreign operations attributable to owners of the Company from HK$74,846 thousand in the first half of 2022 to HK$79,759 thousand in the first half of 2023[106] - Management believes these exchange differences represent only currency translation differences and have no material impact on the Group's operations, thus no measures are currently deemed necessary[110] Natural Gas Business Analysis Provides a detailed financial breakdown of the natural gas exploration, production, and distribution segment Operating Results of Natural Gas Exploration, Production and Distribution Segment (For the Six Months Ended June 30, 2023) | Item | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 168,281 | 185,555 | | Direct Costs | (21,609) | (29,561) | | Other Income | 934 | 2,488 | | Selling and Distribution Expenses | (14,587) | (17,351) | | Operating Expenses | (16,423) | (15,954) | | Amortization | (13,277) | (15,741) | | Depreciation | (22,400) | (25,670) | | Reversal of Impairment | 2,315 | 20,919 | | Finance Costs | (20,735) | (21,621) | | Operating Profit Before Income Tax Expense | 62,499 | 83,064 | - Exploration costs for the six months ended June 30, 2023, were zero (first half of 2022: HK$106 thousand)[112] (4) Financial Review Reviews the company's financial position, liquidity, and key balance sheet items - As of June 30, 2023, the Group's current ratio (current assets to current liabilities) was approximately 47.2% (December 31, 2022: 35.4%), and the total liabilities to total assets ratio was approximately 32.1% (December 31, 2022: 32.6%)[126] - As of June 30, 2023, the Group's cash and cash equivalents amounted to approximately HK$134,167 thousand (December 31, 2022: HK$131,296 thousand)[126] Other Borrowings Details the company's other borrowings, including repayment schedules and collateral - The Group's outstanding secured other borrowings amounted to approximately HK$464,380 thousand (December 31, 2022: HK$486,080 thousand)[126] - Approximately HK$292,110 thousand of other borrowings are due for repayment by June 30, 2024, and the Group plans to roll over these loans by borrowing the same amount upon maturity[125] Convertible Bonds Provides an update on the company's convertible bonds, including principal and conversion terms - The outstanding principal amount of convertible bonds is HK$679,670 thousand, non-interest bearing, and convertible into ordinary shares at HK$0.168 per share (subject to adjustment)[127] - If the conversion rights are fully exercised, up to 4,045,654,761 shares may be allotted and issued, with no conversions occurring during the period[127] Exploration and Evaluation Assets Discusses the reclassification and balance of exploration and evaluation assets - Directors believe that exploration and evaluation assets capitalized and used for revenue generation should be reclassified as petroleum properties under property, plant and equipment[117] - As of June 30, 2023, the balance of exploration and evaluation assets was HK$253 thousand, similar to HK$265 thousand as of December 31, 2022[113] Fair Value of Financial Assets at Fair Value Through Profit or Loss Reviews the fair value of financial assets and factors influencing their changes - As of June 30, 2023, the fair value of financial assets at fair value through profit or loss decreased by 20.8% year-on-year to approximately HK$22,858 thousand[118] - This decrease is primarily due to a subdued stock market sentiment influenced by the slow economic recovery post-pandemic[118] Other Payables and Accruals Discusses changes in other payables and accrued expenses - Other payables and accruals decreased by 7.6% year-on-year to approximately HK$181,342 thousand, mainly due to settlements with contractors of approximately HK$15,000 thousand during the period[119] (5) Outlook Outlines the company's future strategies and plans for its various business segments - The Kashgar project completed its overall development plan filing on July 8, 2019, and entered commercial production on October 1, 2020[121] - Management will continue to seek additional debt and/or equity financing to support the further development of the Kashgar project[134] - The food and beverage segment will continue to monitor the economic environment and review future resource allocation as necessary[129] - The money lending business will continue to seek high-quality borrowers and adopt a prudent approach to reduce the risk of default[130] Other Information Presents additional disclosures and corporate governance details Treasury Management and Policy Describes the company's approach to cash management and risk mitigation - The Group adopts a prudent cash management and risk monitoring approach to minimize risks from foreign currency exchange rates and interest rate fluctuations[131] - Cash is generally held in short-term deposits denominated in HKD, USD, and RMB, with no significant interest rate risk anticipated[131] - The Group's policy is for operating entities to transact in their respective local currencies to reduce currency risk, with no significant exchange risk anticipated[131] Significant Investments Discloses any significant investments held by the company - As of June 30, 2023, the Group held no significant investments other than financial assets at fair value through profit or loss (approximately HK$22,858 thousand)[132] Significant Acquisitions and Disposals Reports on any major acquisition or disposal activities during the period - During the review period, the Group did not undertake any significant acquisitions or disposals[138] Purchase, Sale or Redemption of the Company's Listed Securities States whether the company engaged in any transactions involving its own listed securities - For the six months ended June 30, 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[139] Pledge of Assets Details the company's assets pledged as collateral for borrowings - As of June 30, 2023, approximately HK$56,761 thousand of trade receivables were pledged as collateral for other borrowings[148] - Rights to natural gas sharing amounts and sales revenue under product sharing and sales agreements were also pledged as collateral for other borrowings[148] Foreign Exchange Risk Discusses the company's exposure to foreign exchange fluctuations and its management approach - The Group is primarily exposed to exchange rate fluctuations between HKD and RMB[149] - The Group's policy is for operating entities to transact in their respective local currencies to minimize currency risk[149] - No foreign exchange hedging transactions were undertaken during the period, but management will closely monitor and consider hedging significant foreign currency risks if necessary[137][149] Capital Commitments Outlines the company's outstanding capital commitments Capital Commitments (As at June 30, 2023) | Item | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Capital expenditure in natural gas exploration, production and distribution segment | 54,584 | 98,246 | | Of which borne by China National Petroleum Corporation | 9,138 | 5,873 | | Capital contributions to subsidiaries | 116,523 | 127,600 | Contingent Liabilities Discloses any significant contingent liabilities of the company - As of June 30, 2023, and December 31, 2022, the Group had no significant contingent liabilities[151] Interim Dividend States the board's recommendation regarding interim dividend payment - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2023[144] Employees and Remuneration Policy Provides information on employee numbers, staff costs, and remuneration policies - As of June 30, 2023, the Group employed a total of 43 employees (December 31, 2022: 41 employees)[157] - Total staff costs (including directors' emoluments) for the first half of 2023 amounted to approximately HK$8,299 thousand (first half of 2022: HK$9,557 thousand)[157] - The Group previously had a share option scheme for employees and eligible participants, which expired on June 25, 2023, with no options granted during the period[157] Events After the Reporting Period Reports on any significant events occurring after the reporting period - No significant events affecting the Group have occurred subsequent to the reporting period and up to the date of this announcement[158] Changes in Information on Directors and Senior Management Details any changes in the company's board of directors or senior management - Mr. Gu Quanrong retired as a Non-executive Director after the Annual General Meeting on June 9, 2023[160] - Mr. Zhao Guoqiang ceased to be Mr. Gu Quanrong's alternate director[160] Corporate Governance Practices Discusses the company's adherence to corporate governance standards and any deviations - The Group complies with the Corporate Governance Code, but deviations exist: the roles of Chairman and Chief Executive are not segregated, the Chairman position is vacant, and the Board intends to identify a suitable candidate to fill the role[162] - Non-executive Directors are not appointed for specific terms but are subject to retirement by rotation as per the Company's Articles of Association[169] - The Group lacks an internal audit function but will review the adequacy and effectiveness of its risk management and internal control systems[156] - Management does not provide monthly updates to the Board, but reports are provided at least quarterly, with urgent matters reported immediately[170] - All current Board members are male; the Company will seek a suitable female candidate to comply with new Listing Rules requirements on board diversity[165] Standard Code for Securities Transactions by Directors Confirms compliance with the standard code for directors' securities transactions - The Company has adopted the Standard Code as set out in Appendix 10 of the Listing Rules as the code of conduct for directors' securities transactions[166] - All incumbent directors confirm compliance with the required standards of the Standard Code throughout the review period[166] Audit Committee Reports on the audit committee's review of the interim financial statements - The Audit Committee, comprising three independent non-executive directors, has adopted terms of reference consistent with the Corporate Governance Code[66] - The Audit Committee has reviewed the Group's unaudited financial statements for the six months ended June 30, 2023, deeming them compliant with applicable accounting standards, Listing Rules, and statutory requirements, with adequate disclosures[66] Publication of Interim Results and Report Provides details on the publication of the interim results and report - This interim results announcement has been published on the HKEXnews website (http://www.hkexnews.hk) and the Company's website (http://www.cnenergy.com.hk)[68](index=68&type=chunk) - The interim report for the six months ended June 30, 2023, will be dispatched to shareholders and published on the aforementioned websites in due course[68]