CHYY Development Group Limited — Interim / Quarterly Report 2021

Nov 12, 2021

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(Incorporated in the Cayman Islands with limited liability) Stock Code: 8128

TECHNOLOGY AND RESOURCES LINKS Third Quarterly Report 2021

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CHARACTERISTICS OF THE GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”)

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given that the companies listed on GEM are generally small and midsized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the main board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this report, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report.

This report, for which the directors of China Geothermal Industry Development Group Limited (the “Company”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the GEM (the “GEM Listing Rules”) of The Stock Exchange for the purpose of giving information with regard to the Company. The directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this report is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this report misleading.

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China Geothermal Industry Development Group Limited Third Quarterly Report 2021

HIGHLIGHTS

Revenue for the nine months ended 30 September 2021 (the “Review Period”) amounted to approximately HK$138,565,000.

Net loss after tax of the Group for the Review Period amounted to approximately HK$45,418,000.

No dividend was declared for the Review Period.

FINANCIAL REVIEW

The following table provides a brief summary of the financial results of China Geothermal Industry Development Group Limited (the “Company”) and its subsidiaries (collectively the “Group”). For more detailed information, please refer to the unaudited consolidated financial statements for the Review Period and for the nine months ended 30 September 2020.

	Three months ended 30 September 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Three months ended 30 September 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Nine months ended 30 September 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Nine months ended 30 September 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)
Revenue – Shallow geothermal energy – Air conditioning/shallow geothermal heat pump – Property investment and development Loss for the period Loss attributable to owners of the parent	44,922 2,420 2,777 50,119 (16,707) (16,703)	40,659 36,930 3,267 80,856 (25,658) (24,538)	127,460 3,744 7,361 138,565 (45,418) (43,666)	132,435 55,356 10,695
				198,486
				(10,798
				(15,365

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During the Review Period, the Group’s revenue amounted to approximately HK$138,565,000 which was mainly contributed by shallow geothermal energy utilisation business as compared with that of approximately HK$198,486,000 for the corresponding period last year. The revenue decreased by approximately HK$59,921,000 as compared with that of corresponding period last year. During the period, the revenue from the shallow geothermal energy utilization system and the sales of relevant equipment has declined which was mainly attributable to the new contracts of engineering projects secured in the first three quarters was relatively low. Also, the gross profit of the signed contracts has decreased and the number of projects under construction has decreased compared with the same period last year, resulting in the shrinkage of the income scale and the decrease of gross profit.

Furthermore, the substantial decrease in coal-to-electricity projects in Hebei region during the period led to the sales contract of HYY Ground Source Heating Devices dropped significantly as compared with the same period last year. The Group’s gross profit margin for the nine months ended 30 September 2021 was 21.16% which has decreased by 7.34% as compared with 28.50% for the corresponding period last year.

Other income and gains decreased from approximately HK$24,357,000 in the corresponding period last year to approximately HK$11,710,000 for the nine months ended 30 September 2021. This was mainly due to no waiver of the account payables during the period.

Selling and distribution expenses amounted to approximately HK$15,912,000 and HK$13,608,000 for the nine months ended 30 September 2021 and 2020 respectively. The selling and distribution expenses in the Review Period increased as compared with the corresponding period last year which was mainly due to the increase of expenses for the expansion of other markets by the Group.

During the Review Period, administrative expenses increased by approximately HK$7,051,000 or 11.91% as compared with that of nine months ended 30 September 2020. The increase in administrative expenses was mainly due to the increase of HK$6,300,000 in research and development expenses of the Group for the first three quarters as compared with the corresponding period last year.

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China Geothermal Industry Development Group Limited Third Quarterly Report 2021

Finance costs amounted to approximately HK$3,305,000 for the nine months ended 30 September 2021 as compared with approximately HK$22,534,000 for the last corresponding period. The finance cost mainly represented the borrowing cost on the loan. The decrease was mainly attributable to the repayment of loan.

For the nine months ended 30 September 2021, the loss was approximately HK$45,418,000, whereas loss was approximately HK$10,798,000 for the corresponding period in last year. The substantial increase of loss during the period was mainly due to the significant decline in the scale of revenue affected by the volatile epidemic situation and the decrease in gross profit margin resulted in a decrease in gross profit.

BUSINESS REVIEW AND OUTLOOK

During the period under review, the Group recorded approximately HK$138,565,000 in revenue as compared with approximately HK$198,486,000 in the same period last year. Revenue dropped by approximately HK$59,921,000 as compared with that of the same period last year which was mainly attributable to the revenue of shallow geothermal energy utilization system and equipment sales declined as well as the gross profit of the contracts decreased. The Group’s gross profit margin for the first nine months ended 30 September 2021 was 21.16% which was decreased by 7.34% from approximately 28.50% of the same period last year.

During the period under review, the loss was approximately HK$45,418,000, compared with a loss of approximately HK$10,798,000 in the same period last year. The increase in the loss during the period was mainly due to the substantial decline in the scale of revenue and the decrease in gross profit resulted by the decline in gross profit margin.

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During the period under review, the management of the Group earnestly summed up experience and lessons, adjusted business ideas, intensified market development, and calmly responded to the impact of the epidemic and the changes in the external environment. In order to grasp the additional coalto-electricity projects in the central and western regions, we have intensified the market work in Yan’an, Shanxi, Xinjiang and other places with an aim to realizing the implementation of coal-to-electricity demonstration projects. On the other hand, we have actively promoted projects utilizing shallow geothermal energy as an alternative energy for heating for public buildings, such as Dalian Suoyu Bay Professional Football Stadium Project and Daxing Shouzuo Project, which contracts are about to sign in the fourth quarter. These projects will provide a strong guarantee for the results performance in the fourth quarter. At the same time, we have also strengthened the market development and increased investment in the areas along the Yangtze River, for example, we signed a contract to invest HK$8,200,000 in the ground-source heat pump project of Rongcheng Hospital in Changsha, Hunan, which has been in operation. Apart from carrying out the engineering construction, we also secured a 15-year operation service contract which will provide guarantee for the cooling and heating operation sector in future.

During the period under review, the Group paid close attention to the implementation of the projects for the transformation of the water source heat pump to single well circulation technology in Xingtai, Hebei, the transformation of water source heat pump to air source in Anxin County, Hebei, and the transformation of coal-fired boiler to single well circulation technology in Ci County, Hebei. Giving full play to the coordination with China Energy Conservation and Environmental Protection Group Corporation, step up the implementation of the first phase of Xiangtan Hongsheng Yipin Mansion, and strive to build a demonstration project in the area along the Yangtze River.

During the period under review, the Group conscientiously carried out the heating maintenance work, formulated heating emergency plans, organized a standby emergency repair team to deal with emergency repairs in the conditions of extreme weather or sudden failures, and required the emergency repair team to be on standby for 24 hours and shall arrive at the site within 2 hours upon receiving repairment request. At the same time, it is equipped with necessary repair tools and spare parts to ensure that the heating service is completed on time and with quality.

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China Geothermal Industry Development Group Limited Third Quarterly Report 2021

During the period under review, the Company has continuously improved the fundamental management. In terms of cost control, we further improved the procurement process and procedures of the Group Material Center, carried out the development, evaluation, and maintenance of suppliers, improved the signing of and management of the procurement contracts, etc., through market research, field inspections, factory supervision and products acceptance, etc. In this way, suppliers have been assessed in different aspect, such as quality, delivery cycle, price, timeliness and after-sales service for the products provided by suppliers, dynamically improved the management of the list of qualified suppliers so as to reduce procurement costs. We also further strengthened the collection of accounts receivable, and assigned accounts receivable to each responsible person of which the collection assessment is strictly carried out. According to the Company’s development status, the human resources structuring plan is correspondingly formulated so as to optimize such resources and to reduce the costs.

In recent years, our country has been vigorously developing low-carbon and environmental protection industries and implementing clean heating. As a clean energy company for shallow geothermal heating, the Company actively responds to the country’s call to implement sustainable development strategies to create a green and environmentally friendly heating concept for which we try to put it into practice.

FINANCIAL RESULTS

The Board of Directors (the “Board”) of China Geothermal Industry Development Group Limited (the “Company”) is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (collectively the “Group”) for the three months and nine months ended 30 September 2021 together with the unaudited comparative figures for the corresponding periods in 2020 as follows:

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the nine months ended 30 September 2021

Notes	Three months ended 30 September 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Three months ended 30 September 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Nine months ended 30 September 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Nine months ended 30 September 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)
Revenue 3 Cost of sales Gross profit Other income and gains 3 Selling and distribution expenses Administrative expenses Gain on disposal of a subsidiary Reversal of impairment losses on trade and bills receivables, net Reversal of impairment losses on contract assets, net Finance costs 4 Fair value changes on financial assets designated at fair value through profit or loss Fair value changes on investment properties Others expenses Share of profits and losses of: Associates Share-based payment expenses Loss before tax 5 Income tax expense 6 Loss for the period Attributable to: Owners of the parent Non-controlling interests Loss per share attributable to ordinary equity holders of the parent 8 Basic and diluted (expressed in HK$ cents)	50,119 (49,535) 584 9,365 (5,441) (20,753) – – – (1,438) – – (16) 837 – (16,862) 155 (16,707) (16,703) (4) (16,707) (0.376)	80,856 (67,427) 13,429 (541) (5,208) (19,665) – – – (12,197) (1,436) 43 1,344 971 (2,205) (25,465) (193) (25,658) (24,538) (1,120) (25,658) (0.551)	138,565 (109,249) 29,316 11,710 (15,912) (66,273) 5,672 – – (3,305) – – (109) (6,660) – (45,561) 143 (45,418) (43,666) (1,752) (45,418) (0.985)	198,486 (141,917)
				56,569 24,357 (13,608) (59,222) – 3,437 6,799 (22,534) (1,436) 6,255 (2,048) (5,126) (2,205)
				(8,762) (2,036)
				(10,798)
				(15,365) 4,567
				(10,798)
				(0.345)

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China Geothermal Industry Development Group Limited Third Quarterly Report 2021

C O N D E N S E D C O N S O L I D A T E D S T A T E M E N T O F COMPREHENSIVE INCOME

For the nine months ended 30 September 2021

Three months ended 30 September Nine months ended 30 September Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Loss for the period Other comprehensive income/ (loss): Other comprehensive income/ (loss) that may be reclassified to profit or loss in subsequent periods: Exchange differences: Exchange differences on translation of foreign operations Share of other comprehensive income/(loss) of associates Net other comprehensive income/ (loss) that may be reclassified to profit or loss in subsequent periods	(16,707) 3,084 4 3,088	(25,658) (6,678) (61) (6,739)	(45,418) 5,352 328 5,680	(10,798)
				(20,378) (104)
				(20,482)

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Three months ended 30 September Nine months ended 30 September Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Other comprehensive income/ (loss) that will not be reclassified to profit or loss in subsequent periods: Equity investments designated at fair value through other comprehensive income Changes in fair value Loss on property revaluation Net other comprehensive loss that will not be reclassified to profit or loss in subsequent periods Other comprehensive income/ (loss) for the period, net of tax Total comprehensive loss for the period Attributable to: Owners of the parent Non-controlling interests	– – – 3,088 (13,619) (15,371) 1,752 (13,619)	– (826) (826) (7,565) (33,223) (33,453) 230 (33,223)	– – – 5,680 (39,738) (40,066) 328 (39,738)	(2,780) (390)
				(3,170)
				(23,652)
				(34,450)
				(42,591) 8,141
				(34,450)

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China Geothermal Industry Development Group Limited Third Quarterly Report 2021

N O T E S T O T H E C O N D E N S E D C O N S O L I D A T E D FINANCIAL STATEMENTS

For the nine months ended 30 September 2021

1. CORPORATE INFORMATION

China Geothermal Industry Development Group Limited (the “Company”) was incorporated in Cayman Islands as an exempted company with limited liability and its shares are listed on the GEM of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The addresses of the registered office and principal place of business of the Company are P.O. Box 31119, Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman KY1-1205, Cayman Islands and 8/F, Chung Hing Commercial Building, 62-63 Connaught Road Central, Hong Kong respectively.

During the nine months ended 30 September 2021, the Group was involved in the following principal activities:

• Provision, installation and maintenance of shallow geothermal energy utilisation system

• Trading of air conditioning/shallow geothermal heat pump products

• Investment in properties for their potential rental income

• Trading of securities and other types of investments

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2. B A S I S O F P R E P A R A T I O N A N D C H A N G E S I N ACCOUNTING POLICIES AND DISCLOSURES

2.1 Basis of preparation

The condensed consolidated financial statements for the nine months ended 30 September 2021 have been prepared in accordance with the applicable disclosure requirements of Chapter 18 of the Rules Governing the Listing of Securities on the GEM of The Stock Exchange of Hong Kong Limited (the “GEM Listing Rules”) and with Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). The condensed consolidated financial statements are presented in Hong Kong dollars and all values are rounded to the nearest thousand except when otherwise indicated.

The 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 consolidated financial statements for the year ended 31 December 2020.

2.2 Changes in accounting policies and disclosures

The accounting policies adopted in the preparation of the condensed consolidated financial statements are consistent with those applied in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2020, except for the adoption of the new and revised Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations effective as of 1 January 2021. The Group has not early adopted any other standards, interpretations or amendments that have been issued but are not yet effective.

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China Geothermal Industry Development Group Limited Third Quarterly Report 2021

3. REVENUE, OTHER INCOME AND GAINS

An analysis of revenue is as follows:

Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue from contracts with customers Revenue from other sources Gross rental income Types of goods or services Sale, installation and maintenance of shallow geothermal energy utilisation system Sale of air conditioning/ shallow geothermal heat pump products Rental income Total revenue	47,342 2,777 50,119 44,922 2,420 2,777 50,119	77,589 3,267 80,856 40,659 36,930 3,267 80,856	131,204 7,361 138,565 127,460 3,744 7,361 138,565	187,791 10,695
				198,486
				132,435 55,356 10,695
				198,486

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Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Geographical market Mainland China Total revenue Timing of revenue recognition Goods transferred at a point in time Services transferred over time Total revenue from contracts with customers Rental income Total revenue	50,119 50,119 2,420 44,922 47,342 2,777 50,119	80,856 80,856 36,930 40,659 77,589 3,267 80,856	138,565 138,565 3,744 127,460 131,204 7,361 138,565	198,486
				198,486
				55,356 132,435
				187,791 10,695
				198,486

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China Geothermal Industry Development Group Limited Third Quarterly Report 2021

Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Other income Interest income Sale of scrap materials Dividend income from financial assets at fair value through profit or loss Dividend income from financial assets at fair value through other comprehensive income Government grants_(Note)_ Waiver of trade payable Others Loss Fair value change on financial assets at fair value through profit or loss	8,452 – 3 – 254 – 656 9,365 – 9,365	47 – – – 506 495 (1,609) (541) (1,436) (1,977)	8,541 – 3 – 1,208 – 1,958 11,170 – 11,170	156 375 – 3,053 3,380 17,124 269
				24,357
				(1,436)
				22,921

Note: Government grants have been received in respect of certain heating projects of the Group. There are no unfulfilled conditions or contingencies relating to these grants.

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4. FINANCE COSTS

An analysis of finance costs is as follows:

Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest on bank loans Guarantee fee on bank loans Interest on lease liabilities	1,406 – 32 1,438	11,049 1,119 29 12,197	3,273 – 32 3,305	21,326 1,119 89
				22,534

5. LOSS BEFORE TAX

Loss before tax is arrived at after charging:

		Three months ended	Three months ended	Nine months ended	Nine months ended
		30 September		30 September
		2021	2020	2021	2020
		HK$’000	HK$’000	HK$’000	HK$’000
		(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Cost of inventories sold		18,507	35,911	46,907	52,170
Cost of services provided		31,028	31,516	62,342	89,747
Depreciation		6,090	2,451	9,760	10,205
Employee benefit expense
(including directors’
and chief executive
remuneration)		23,173	12,034	52,573	39,370
Reversal of impairment
losses on trade and
bills receivables, net		–	–	–	(3,437)
Reversal of impairment
losses on contract
assets, net		–	–	–	(6,799)

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China Geothermal Industry Development Group Limited Third Quarterly Report 2021

6. INCOME TAX EXPENSE

Pursuant to the laws and regulations of the Cayman Islands and the BVI, the Group is not subject to any income tax in the Cayman Islands and the BVI during both periods.

No provision for Hong Kong profits tax has been made as the Group did not have any assessable profits subject to Hong Kong profits tax during both periods.

Under the Law of the PRC on Enterprise Income Tax (the “EIT Law”) and Implementation Regulation of the EIT Law, except as stated below, the tax rate of all the other PRC subsidiaries is 25% from 1 January 2008 onwards.

Pursuant to the income tax rules and regulations of the PRC, certain subsidiaries were recognised as high and new technology enterprises and the income tax rate applicable to these subsidiaries was 15% for the nine months ended 30 September 2021 (nine months ended 30 September 2020: 15%).

Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Current – Mainland China Deferred Total tax charge for the period	155 – 155	(193) – (193)	143 – 143	(358) (1,678)
				(2,036)

7. DIVIDENDS

No interim dividend was paid, declared or proposed during the nine months ended 30 September 2021, nor has any dividend been proposed since the end of the interim reporting period (nine months ended 30 September 2020: Nil).

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8. LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of the basic loss per share amounts is based on the loss for the period attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares of 4,433,055,000 (2020: 4,455,420,000) in issue during that period.

The calculation of the basic and diluted loss per share based on:

Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Nine months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Loss Loss for the period attributable to ordinary equity holders of the parent Shares Weighted average number of ordinary shares in issue during the period used in the basic and diluted loss per share calculations	(16,703) ’000 4,447,637	(24,538) ’000 4,455,420	(43,666) ’000 4,433,055	(15,365)
				’000 4,455,420

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China Geothermal Industry Development Group Limited Third Quarterly Report 2021

9. C O N D E N S E D C O N S O L I D A T E D S T A T E M E N T O F CHANGES IN EQUITY (UNAUDITED)

For the nine months ended 30 September 2021

	Attributable to owners of the parent Share capital Share premium Shares held for share award scheme Statutory reserve Assets revaluation reserve Contributed surplus Special reserve Capital reserve Share option reserve/Share award reserve Exchange fluctuation reserve Accumulated losses Total Non- controlling interests Total equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 31 December 2019 (audited) Loss for the period Other comprehensive income/(loss) for the period Total comprehensive income/(loss) for the period Adjustment on expiry of share option Shares purchased for share award scheme At 30 September 2020 (unaudited)	353,043 904,845 – 2,935 42,616 154,381 7,553 17,876 49,117 (42,747) (853,553) 636,066 28,039 664,105 – – – – – – – – – – (15,365) (15,365) 4,567 (10,798) – – – – (390) – – (2,780) – (24,056) – (27,226) 3,574 (23,652) – – – – (390) – – (2,780) – (24,056) (15,365) (42,591) 8,141 (34,450) – 31,174 – – – – – – (31,174) – – – – – – – (5,471) – – – – – – – – (5,471) – (5,471) 353,043 936,019 (5,471) 2,935 42,226 154,381 7,553 15,096 17,943 (66,803) (868,918) 588,004 36,180 624,184 Attributable to owners of the parent Share capital Share premium Shares held for share award scheme Statutory reserve Assets revaluation reserve Contributed surplus Special reserve Capital reserve Share option reserve/ Share award reserve Exchange fluctuation reserve Accumulated losses Total Non- controlling interests Total equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 31 December 2020 (audited) Loss for the period Other comprehensive income/(loss) for the period Total comprehensive income/(loss) for the period Shares purchased for share award scheme At 30 September 2021 (unaudited)	353,043 904,845 (7,676) 2,935 39,300 154,381 7,553 50,878 4,620 (14,616) (1,046,835) 448,428 28,746 477,174 – – – – – – – – – – (43,666) (43,666) (1,752) (45,418) – – – – – – – – 5,352 – 5,352 328 5,680 – – – – – – – – – 5,352 (43,666) (38,314) (1,424) (39,738) – – (3,785) – – – – – – – – (3,785) – (3,785) 353,043 904,845 (11,461) 2,935 39,300 154,381 7,553 50,878 4,620 (9,264) (1,090,501) 406,329 27,322 433,651

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DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS OR SHORT POSITIONS IN THE SHARE CAPITAL OF THE COMPANY AND ITS ASSOCIATED CORPORATIONS

As at 30 September 2021, the interests or short positions of the directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”)) which will be required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short position which they are taken or deemed to have taken under such provisions of the SFO), or which will be required to be entered into the register kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules, were as follows:

Long Positions in Shares and Equity Derivatives

					Percentage of
	Nature of			Number of	total issued
Name of Directors	interest			Shares	Shares(1)
Mr. Xu Shengheng	Beneficial owner			715,646,600	15.83%
	Interest of spouse			982,800
Ms. Chan Wai Kay Katherine	Beneficial owner			62,290,400	1.69%
	Interest of spouse			14,103,600
Mr. Wang Manquan	Beneficial owner			716,800	0.02%
Ms. Liu Ening	Beneficial owner			250,000,000	5.52%
Mr. Zhang Yiying	Beneficial owner			2,504,000	5.58%
	Interest of Controlled			250,000,000
		Corporation(2)
Mr. Jia Wenzeng	Beneficial owner			2,000,000	0.04%
Mr. Wu Desheng	Beneficial owner			2,000,000	0.04%
M. Wu Qiang	Beneficial owner			2,000,000	0.04%
M. Guo Qingui	Beneficial owner			2,000,000	0.04%
M. Guan Chenghua	Beneficial owner			2,000,000	0.04%

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China Geothermal Industry Development Group Limited Third Quarterly Report 2021

Notes:

• (1) The calculation is based on (i) the aggregate number of the shares of the Company (“Shares”) and the underlying Shares, if any; and (ii) the total number of 4,526,925,163 Shares in issue of the Company.

• (2) Universal Zone Limited, which is wholly owned by Mr. Zhang Yiying, holds 250,000,000 Shares.

Save as disclosed above, as at 30 September 2021, none of the directors, chief executive of the Company or their respective associates had any interests or short positions in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which will be required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short position which they are taken or deemed to have taken under such provisions of the SFO), or which will be required to be entered into the register kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the minimum standards of dealing by directors of the Company as referred to in Rules 5.46 to 5.67 of the GEM Listing Rules.

I N T E R E S T S D I S C L O S E A B L E U N D E R S F O A N D SUBSTANTIAL SHAREHOLDERS

So far as is known to the directors of the Company, as at 30 September 2021, persons (other than directors or chief executive of the Company) who had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were required pursuant to Section 336 of the SFO, to be entered into the register referred to therein, were as follows:

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Long Positions in Shares and Underlying Shares

					Percentage of
				Number of	total issued
Name	Nature of interest			Shares	Shares(1)
China Energy Conservation and	Beneficial interest			1,190,000,000	26.29%
Environmental Protection
(Hong Kong) Investment
Company Limited(2)
China Energy Conservation and	Interest of controlled			1,190,000,000	26.29%
Environmental Protection		corporation
Group(2)
Ms. Luk Hoi Man	Beneficial interest			982,800	15.83%
	Interest of spouse			715,646,600
Universal Zone Limited	Beneficial owner			250,000,000	5.52%
Mr. Wang Zhiyu	Interest of spouse			250,000,000	5.52%
Notes:

• (1) The calculation is based on (i) the aggregate number of Shares and the underlying Shares if any; and (ii) the total number of 4,526,925,163 Shares in issue of the Company.

• (2) China Energy Conservation and Environmental Protection (Hong Kong) Investment Company Limited, a wholly-owned subsidiary of China Energy Conservation and Environmental Protection Group, holds 1,190,000,000 Shares.

Save as disclosed above, as at 30 September 2021, the directors of the Company were not aware of any other person (other than directors or chief executive of the Company) who had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were required, pursuant to Section 336 of the SFO, to be entered into the register referred to therein.

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China Geothermal Industry Development Group Limited Third Quarterly Report 2021

SHARE AWARD SCHEME

On 15 January 2020 (the “Adoption Date”), the Board approved the adoption of a share award scheme (the “Share Award Scheme”). The purposes of the Share Award Scheme are to recognise and reward the contribution of eligible participants to the growth and development of the Group, to give incentives to eligible participants in order to retain them for the continual operation and development of the Group and to attract suitable personnel for further development of the Group. For details of the Share Award Scheme, please refer to the announcement of the Company dated 15 January 2020.

During the nine months ended 30 September 2021, details of the awarded shares under the Share Award Scheme are set out below:

							Number of Shares	Number of Shares	Number of Shares	Number of Shares
												As at
					As at	Granted during			Vested during		Lapsed during	30 September
Awardees	Date of grant		Vesting date		1 January 2021		the period		the period		the period	2021
Directors
Mr. Xu Shengheng	7 July 2020		31 December 2020		4,000,000		–		4,000,000		–	–
Ms. Chan Wai Kay	7 July 2020		31 December 2020		4,000,000		–		4,000,000		–	–
Katherine
Mr. Wang Manquan	7 July 2020		31 December 2020		10,000,000		–		–		10,000,000	–
Mr. Wang Zhiyu #	7 July 2020		31 December 2020		2,000,000		–		–		2,000,000	–
Mr. Zhang Yiying	7 July 2020		31 December 2020		2,000,000		–		2,000,000		–	–
Mr. Jia Wenzeng	7 July 2020		31 December 2020		2,000,000		–		2,000,000		–	–
Mr. Wu Desheng	7 July 2020		31 December 2020		2,000,000		–		2,000,000		–	–
Mr. Wu Qiang	7 July 2020		31 December 2020		2,000,000		–		2,000,000		–	–
Mr. Guo Qingui	7 July 2020		31 December 2020		2,000,000		–		2,000,000		–	–
Mr. Guan Chenghua	7 July 2020		31 December 2020		2,000,000		–		2,000,000		–	–
Employees	7 July 2020		31 December 2020		58,000,000		–		4,000,000		54,000,000	–
Consultants	7 July 2020		31 December 2020		30,000,000		–		30,000,000		–	–
	16 September 2020		31 December 2020		4,000,000		–		4,000,000		–	–

Mr. Wang Zhiyu resigned as non-executive Director of the Company with effect from 12 March 2021.

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COMPETITION AND CONFLICT OF INTERESTS

None of the directors or substantial shareholders of the Company or any of their respective associates has engaged in any business that competes or may compete with the business of the Group or has any other conflict of interests with the Group.

AUDIT COMMITTEE

The Company has established an audit committee with written terms of reference which deal clearly with its authority and duties. The audit committee’s primary duties are to review and to supervise the financial reporting process, risk management and internal control systems of the Group and to provide advice and comments to the directors of the Company.

The audit committee currently comprises five independent non-executive Directors, namely, Mr. Jia Wenzeng, Mr. Wu Desheng, Mr. Wu Qiang, Mr. Guo Qingui and Mr. Guan Chenghua. Mr. Jia Wenzeng is the chairman of the audit committee. The audit committee has reviewed the Group’s unaudited results for the Review Period and has provided advice and comment thereon.

SECURITIES TRANSACTIONS BY DIRECTORS

The Company has not adopted its own code of conduct regarding securities transactions by directors, but having made specific enquiry of all directors and the Company was not aware of any non-compliance with the required standard of dealings as set out in Rules 5.48 to 5.67 of the GEM Listing Rules and its code of conduct regarding securities transactions by directors during the Review Period.

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China Geothermal Industry Development Group Limited Third Quarterly Report 2021

PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY

During the Review Period, neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company’s listed securities, except that, in accordance with the rules of the Share Award Scheme, the trustee of the Share Award Scheme purchased on the open market a total of 46,808,000 shares of the Company at a price between HK$0.074 and HK$0.082 per share, representing approximately 1.03% of the issued share capital of the Company, during the nine months ended 30 September 2021. The relevant consideration was approximately HK$3,791,000.

As at the date of this report, the Board comprises Mr. Xu Shengheng, Ms. Chan Wai Kay, Katherine, Ms. Wang Yan, Mr. Wang Manquan, Ms. Hao Xia and Mr. Dai Qi as executive Directors, Mr. Yang Wei, Mr. Zhang Yiying and Ms. Liu Ening as non-executive Directors, Mr. Jia Wenzeng, Mr. Wu Desheng, Mr. Wu Qiang, Mr. Guo Qingui and Mr. Guan Chenghua as independent non-executive Directors.

By Order of the Board of China Geothermal Industry Development Group Limited Xu Shengheng Chairman

Hong Kong, 10 November 2021

• For identification purpose only

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