Chu Kong Ptrlm&Ntrl Gs Stl Pipe Hldg : Announcements and Notices - 2019 Interim Results Announcement for the Six Months Ended 30 June 2019

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CHU KONG PETROLEUM AND NATURAL GAS STEEL PIPE HOLDINGS LIMITED

珠江石油天然氣鋼管控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1938)

2019 INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2019

The board ("Board") of directors ("Directors") of Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited (the "Company") announces the unaudited condensed consolidated financial statements of the Company and its subsidiaries (collectively, the "Group") for the six months ended 30 June 2019 together with the comparative figures for the corresponding period in

2018 as follows:

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 June 2019

		Six months ended 30 June
		2019	2018
		(Unaudited)	(Unaudited)
	Notes	RMB'000	RMB'000
REVENUE	5	491,880		475,730
Cost of sales		(388,530)	(432,536)
Gross profit		103,350		43,194
Other income and gains	5	58,341		44,852
Selling and distribution expenses		(35,391)	(32,838)
Administrative expenses		(162,650)	(231,072)
Other expenses, net		(10,571)	(44,254)
Exchange gain/(loss), net		19,331	(2,041)
Finance costs	6	(233,424)	(187,045)
Fair value gain on investment properties		74,008	-
Fair value loss on a derivative financial instrument		(2,573)	-
Share of loss of a joint venture		(12,756)	(13,166)
LOSS BEFORE TAX	7	(202,335)	(422,370)
Income tax (expenses)/credit	8	(11,460)	109,859
LOSS FOR THE PERIOD		(213,795)	(312,511)
Attributable to:
	(212,800)
Owners of the parent		(313,152)
Non-controlling interests		(995)	641
		(213,795)	(312,511)
LOSS PER SHARE
ATTRIBUTABLE TO
ORDINARY EQUITY HOLDERS OF THE PARENT	9	RMB(0.21)	RMB(0.31)
Basic and diluted

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INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2019

	Six months ended 30 June
	2019	2018
	(Unaudited)	(Unaudited)
	RMB'000	RMB'000
LOSS FOR THE PERIOD	(213,795)	(312,511)
OTHER COMPREHENSIVE LOSS
Other comprehensive loss that may be reclassified to profit
or loss in subsequent periods:
Exchange differences on translation of foreign operations	(2,669)	(31,901)
Net other comprehensive loss that may be reclassified to
profit or loss in subsequent periods	(2,669)	(31,901)
OTHER COMPREHENSIVE LOSS	(2,669)	(31,901)
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD	(216,464)	(344,412)
Total comprehensive loss attributable to:
Owners of the parent	(215,469)	(345,053)
Non-controlling interests	(995)	641
	(216,464)	(344,412)

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INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2019

		As at	As at
		30 June	31 December
		2019		2018
		(Unaudited)	(Audited)
	Notes	RMB'000	RMB'000
NON-CURRENT ASSETS		2,755,617
Property, plant and equipment	10		2,805,810
Investment properties	11	403,000		1,160,000
Right-of-use assets		1,107,874	-
Long term prepayments and deposits		115,931	111,320
Prepaid land lease payments		-	1,087,394
Investment in a joint venture		19,075	31,832
Deferred tax assets		161,600	161,600
Pledged deposits		-	80,000
Total non-current assets		4,563,097		5,437,956
CURRENT ASSETS
	334,302
Inventories	12		223,057
Properties under development		1,799,192	1,691,699
Completed properties held for sale		420,831	749,869
Trade and bills receivables	13	497,646		540,225
Prepayments, deposits and other receivables		933,197	674,844
Due from a related party		84,563	84,676
Financial assets at fair value through		200
profit or loss		-
Pledged and restricted bank balances		583,775	539,060
Cash and bank balances		83,903	66,907
		4,737,609		4,570,337
Non-current assets classified as held for sale	14	1,160,000		-
Total current assets		5,897,609		4,570,337
CURRENT LIABILITIES
	758,434
Trade and bills payables	15		688,464
Interest-bearing bank and other borrowings	16	1,663,757		2,012,848
Contract liabilities		1,013,997	896,765
Other payables and accruals		1,529,868	762,458
Fixed rate bonds and notes	17	148,397		-
Derivative financial instrument		25,557	22,984
Due to a director		123,498	118,944
Tax payable		109,829	107,583
Liabilities directly associated with the		5,373,337		4,610,046
	248,843
assets classified as held for sale	14		-
Total current liabilities		5,622,180		4,610,046
NET CURRENT ASSETS/(LIABILITIES)		275,429		(39,709)
TOTAL ASSETS LESS CURRENT LIABILITIES		4,838,526		5,398,247

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		As at	As at
		30 June	31 December
		2019		2018
		(Unaudited)	(Audited)
	Notes	RMB'000	RMB'000
NON-CURRENT LIABILITIES
Interest-bearing bank and other borrowings	16	4,123,114		4,084,871
Fixed rate bonds and notes	17	14,898		157,406
Government grants		349,867	350,899
Deferred tax liabilities		336,838	574,798
Total non-current liabilities		4,824,717		5,167,974
Net assets		13,809		230,273
EQUITY
Equity attributable to owners of the parent
Issued capital		88,856		88,856
Reserves		(85,472)	129,997
		3,384		218,853
Non-controlling interests		10,425	11,420
Total equity		13,809		230,273

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NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

1. CORPORATE INFORMATION
   Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited (the "Company") was incorporated in the Cayman Islands on 9 January 2008 as an exempted company with limited liability under the Companies Law, Cap.22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. The Company's registered office is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands and its principle place of business in Hong Kong is located at suites nos. 1, 2 and 19, 15th Floor, Tower 3, China Hong Kong City, 33 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong. The Company and its subsidiaries (together, the "Group") are principally engaged in the manufacture and sale of seam welded steel pipes and the provision of related manufacturing services and property development and investment. There were no significant changes in the nature of the Group's principal activities during the period.
   In the opinion of the directors of the Company (the "Directors"), the holding company and ultimate holding company of the Company is Bournam Profits Limited, which was incorporated in the British Virgin Islands.
2. BASIS OF PREPARATION
   These interim condensed consolidated financial statements for the six months ended 30 June 2019 have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rule") and International Accounting Standards ("IAS") 34 "Interim Financial Reporting" issued by the International Accounting Standards Board (the "IASB"). These interim condensed consolidated financial statements are presented in Renminbi ("RMB") and all values are rounded to the nearest thousand except when otherwise indicated.
   These interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2018.
   Going concern basis
   The Group recorded a consolidated loss of RMB213,795,000 for the period ended 30 June 2019 (30 June 2018: loss of RMB312,511,000). As at 30 June 2019, the Group recorded net current assets of RMB275,429,000 (31 December 2018: net current liabilities of RMB39,709,000), included therein were the bank and other borrowings of RMB1,663,757,000 (31 December 2018: RMB2,012,848,000) which were due for repayment or renewal within the next twelve months after 30 June 2019.
   In view of these circumstances, the directors of the Company have considered the future liquidity and performance of the Group and its available sources of finance in assessing whether the Group will have sufficient financial resources to continue as a going concern.
   On 20 June 2019, the Group has entered into a land resumption compensation agreement ("Land Resumption Compensation Agreement") with Guangzhou City Panyu District Land Development Centre*（廣州市番禺 區土地開發中心）("GPDLDC"), pursuant to which GPDLDC will resume, and the Group will sell the land of Phase III Golden Dragon City Fortune Plaza（金龍城財富廣場）("GDC") at the initial compensation of RMB1.16 billion.

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