CHYY Development Group Limited — Interim / Quarterly Report 2021

Aug 13, 2021

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

TECHNOLOGY AND RESOURCES LINKS Interim 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 Interim Report 2021

HIGHLIGHTS

Revenue for the six months ended 30 June 2021 (the “Review Period”) amounted to approximately HK$88,446,000.

Net loss after tax of the Group for the Review Period amounted to approximately HK$28,711,000.

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 six months ended 30 June 2020.

	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Six months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Six months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)
Revenue – Shallow geothermal energy – Air conditioning/shallow geothermal heat pump – Property investment and development Profit/(loss) for the period Profit/(loss) attributable to owners of the parent	57,925 242 4,584 62,751 (5,352) (4,690)	50,504 18,426 3,760 72,690 33,657 27,325	82,538 1,324 4,584 88,446 (28,711) (26,963)	91,776 18,426 7,428
				117,630
				14,860
				9,173

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During the Review Period, the Group’s revenue amounted to approximately HK$88,446,000 which was mainly contributed by shallow geothermal energy utilisation business and approximately HK$117,630,000 for the corresponding period last year. The revenue decreased by approximately HK$29,184,000 as compared with that of corresponding period last year which was mainly attributable to the new contracts of engineering projects secured in the first half year was relatively fewer and the projects in progress that bought forward from previous periods decreased. On the other hand, the substantial decrease in coal-to-electricity projects in Hebei region during the Period led to the demand on HYY Heating Devices by the key customers of Hongyuan Ground Energy Heating Device Technology Co., Ltd* (宏源地能熱寶技術有限公司), the Group’s subsidiary, was significantly decreased as compared with the same period last year.

Other income and gains decreased from approximately HK$24,898,000 in the corresponding period last year to approximately HK$2,345,000 for the six months ended 30 June 2021. This was mainly attributable to the waiver of the account payables recorded in the corresponding period last year.

Selling and distribution expenses amounted to approximately HK$10,471,000 and HK$8,400,000 for the six months ended 30 June 2021 and 2020 respectively. The selling and distribution expenses for the Review Period increased as compared with the corresponding period last year was mainly due to the strengthening of the other markets expansion by the Group during the period under review as compared with the same period last year which was affected by epidemic control.

During the Review Period, administrative expenses increased by approximately HK$5,963,000 or 15.07% as compared with that of six months ended 30 June 2020. Administrative expenses increased which was mainly attributable to the increase of management activities.

Finance costs amounted to approximately HK$1,867,000 for the six months ended 30 June 2021 as compared with approximately HK$10,337,000 for last corresponding period. The finance costs mainly represented the borrowing costs on the loan. The decrease was mainly attributable to the repayment of loan.

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China Geothermal Industry Development Group Limited Interim Report 2021

For the six months ended 30 June 2021, the loss for the period was approximately HK$28,711,000, whereas the profit was approximately HK$14,860,000 for the corresponding period last year. It was mainly attributable to the decrease in revenue resulted to the decrease in gross profit. On the other hand, the waiver of payables, the increase of changes in the fair value of investment properties and the reversal of provision on contract assets and the trade receivables recorded in the corresponding period last year did not exist in the current period this year.

Order Book

As at 30 June 2021, the Group has contracts on hand of approximately HK$83,700,000.

Liquidity, Capital Structure and Gearing Ratio

Net current liabilities of the Group as at 30 June 2021 was approximately HK$34,577,000 (net current liabilities as at 31 December 2020: approximately HK$22,599,000). As at 30 June 2021, the bank borrowing amounted to approximately HK$20,625,000, bearing interest rate at 5.5% per annum which is repayable within one year. The loan will be due in November 2021 according to the loan agreement.

As at 30 June 2021, the Group had cash and cash equivalents of approximately HK$63,886,000 (31 December 2020: approximately HK$63,172,000). Cash and cash equivalents on the condensed consolidated statement of financial position include funds available for general corporate purposes.

Non-controlling interests amounted to approximately HK$27,322,000 which mainly represents the interests attributable to non-controlling shareholders of the Group’s subsidiaries in the PRC.

The gearing ratio of the Group, based on total net debt (including interestbearing bank borrowings, lease liabilities, trade and bills payables, financial liabilities included in other payables and accruals, less cash and cash equivalents) to the equity (representing equity attributable to owners of the parent) plus net debt of the Group, was 54.8% as at 30 June 2021 (31 December 2020: 57.5%).

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Charges on Asset

As at 30 June 2021, certain properties with a carrying amount of approximately HK$9,720,000 were pledged to secure a bank loan.

In addition, the following assets were previously pledged to China Energy Conservation and Environmental Protection Group* (中國節能環保集團有限 公司) (“CECEP”), a major shareholder of the Company, in return for CECEP to provide guarantee in favour of the bank for securing the bank loan for the Group. As the Group has fully repaid the bank loan that secured by CECEP in April 2021, the Group has liaised with CECEP to release all the following pledged assets.

• 1) The release of pledge of equity interests in Heng Run Feng Reality (Dalian) Company Ltd., an indirect wholly owned subsidiary of the Group, has been completed as of the reporting date.

• 2) It is in the process of releasing the pledge of China Asset Management – Ever Source Overseas Oriented Asset Management Plan* (華夏基 金－恆有源海外定向資產管理計劃) with a carrying value of approximately HK$59,849,000.

Material Acquisition and Disposal

During the period under review, the Group has completed the disposal of 100% equity interest in HYY Science and Technology Development Group Xinyi Co., Ltd.* (恒有源科技發展集團新沂有限公司) at the consideration of RMB25,830,800. For details of this disposal, please refer to the announcement of the Company dated 26 March 2021.

Save as disclosed above, the Group did not have any material acquisition and disposal during the six months ended 30 June 2021.

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China Geothermal Industry Development Group Limited Interim Report 2021

Significant Investment Held

On 13 November 2020, HYY Investment Management Co., Ltd. (恒有源投資管 理有限公司) (“HYY Investment”), an indirect wholly owned subsidiary of the Company, entered into equity transfer agreement to sell the 4.99965% equity interests in Beijing Life Insurance Co. Ltd. (“Beijing Life”) for a consideration of RMB237,000,000.

At the extraordinary general meeting held on 19 February 2021, the Shareholders of the Company passed the ordinary resolution in respect of the equity transfer agreement. Details of the disposal can be referred to the Company’s circular dated 26 January 2021. HYY Investment has received the total consideration of RMB237,000,000 in July 2021 and the change of shareholders of Beijing Life and the industrial and commercial filing procedures for the articles of association of Beijing Life is under processing.

As at 30 June 2021, the Group still held the investment of 4.99965% of equity interests in Beijing Life pending for the completion of the change of the registration for share transfer. The size of investment as compared to the Group’s total assets as at 30 June 2021 is 14.72%.

Treasury Policies

The Group continues to adopt a conservative treasury policy with all bank deposits being kept in either Hong Kong dollars, or in local currencies of the operating subsidiaries, keeping a minimum exposure to foreign exchange risks.

Contingent Liabilities

As at 30 June 2021, the Group had no material contingent liabilities (31 December 2020: Nil).

Employees

As at 30 June 2021, the Group has approximately 411 employees in total (31 December 2020: approximately 480). The remuneration package of the employees is determined with reference to their performance, experience and their positions, duties and responsibilities in the Group.

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BUSINESS REVIEW AND OUTLOOK

During the period under review, the Group’s revenue amounted to approximately HK$88,446,000, of which revenue of alternative energy engineering accounted for approximately 71.58%, revenue from heating and cooling operation accounted for approximately 21.29%, revenue from leasing of investment property accounted for 5.18% and sales of equipment accounted for 1.1%.

During the period under review, the Group’s revenue fell by 25% as compared with that of the same period last year which was mainly attributable to the significant decline in the revenue of alternative energy projects and sales of heat pump products as compared with that of the same period last year. The decline in revenue from alternative energy projects was mainly due to the fact that the coal-to-electricity projects in the surrounding areas have not yet started in the first half of the year. In particular, the coal-to-electricity projects in Hebei Province are expected to be severely reduced as compared to the same period last year. In addition, the number of new projects also decreased as compared with that of the same period of previous year.

During the period under review, the sales of heat pump products declined, which was mainly due to the significant decrease in the number of projects from a major customer of the Group’s subsidiary, Hongyuan Ground Energy Heating Device Technology Co., Ltd.* (宏源地能熱寶技術有限公司), which led to a severe decline in its procurement of ground source heating device products. The single major customer and high dependence of this customer are also one of the key factors for the decline in the sales of the heat pump products.

In view of the severe decline in the above-mentioned businesses, the Group has adjusted its strategic layout and actively expanded to the surrounding areas to open up new markets, such as Hunan, Anhui, Shandong, Changchun and other places. At the same time, according to the industry condition, the use of shallow geothermal energy will be promoted in the industry by drawing upon the experience gained on the key points and areas. It is expected that related projects will be implemented in the second half of the year.

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China Geothermal Industry Development Group Limited Interim Report 2021

At present, the Rongcheng Hospital project has been successfully implemented in Hunan, and a preliminary intent with Xiangtan Company of CECEP on the Hongsheng Yipin Residence Project (120,000 square meters) has been reached. Cooperative intention on HVAC transformation with regard to the hospitals and the relevant government departments and bureaus in Hunan has been initially formed. In Chengdu area, the demonstration of the technical solutions and the construction of the experimental well were successfully implemented for the Unicorn Island project. In Shandong and Shaanxi areas, cooperation on coal-toelectricity transformation has initially formed intentions. In addition, it has also established synergy in the market with wind power company and solar energy company of CECEP.

Under the favorable background of carbon peaking, carbon neutrality and the opening of the national carbon trading market, the Group is currently actively promoting the development of related businesses. It is expected that contacts of related projects will be signed in the second half of the year. At the same time, due contributions can be made to the country’s carbon reduction and synergy as well as the promotion of the overall green transformation of economic and social development.

During the period under review, the Group has completed the disposal of 100% equity interest in HYY Science and Technology Development Group Xinyi Co., Ltd.* (恒有源科技發展集團新沂有限公司), and the relevant consideration of approximately RMB25,830,800 was received. For details of this asset disposal, please refer to the announcement of the Company dated 26 March 2021.

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At the same time, during the period under review, the Group has utilized part of the proceeds from the assets or equity disposal made in 2020 to repay the remaining bank loans. As of the end of the current period, the bank loan with the principal amount of RMB400 million that guaranteed by CECEP has been fully settled which greatly reduced the financial pressure of the Group, and gradually alleviate the financial pressure faced by the Group’s in its future business activities. Combining the market situation, the Company will further control the costs strictly, strengthen the construction and development of ecological properties, and expand shallow geothermal energy to replace traditional energy for the non-combustion heating market and integrated heating and cooling services.

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 six months ended 30 June 2021 together with the unaudited comparative figures for the corresponding periods in 2020 as follows:

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China Geothermal Industry Development Group Limited Interim Report 2021

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 June 2021

Three months ended 30 June Six months ended 30 June Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June Notes 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue 4 Cost of sales Gross profit Other income and gains 4 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 5 Fair value changes on investment properties Other expenses Share of profits and losses of: Associates	62,751 (38,911) 23,840 224 (5,395) (25,762) 5,672 – – (1,071) – (4) (2,852)	72,690 (37,810) 34,880 18,833 (512) (14,558) – 49 – (4,482) 6,212 (3,392) (1,571)	88,446 (59,714) 28,732 2,345 (10,471) (45,520) 5,672 – – (1,867) – (93) (7,497)	117,630 (74,490)
				43,140 24,898 (8,400) (39,557) – 3,437 6,799 (10,337) 6,212 (3,392) (6,097)

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Notes	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Six months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Six months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)
Profit/(loss) before tax 6 Income tax expense 7 Profit/(loss) for the period Attributable to: Owners of the parent Non-controlling interests Earnings/(loss) per share attributable to ordinary equity holders of the parent 9 Basic and diluted (expressed in HK$ cents)	(5,348) (4) (5,352) (4,690) (662) (5,352) (0.105)	35,459 (1,802) 33,657 27,325 6,332 33,657 0.614	(28,699) (12) (28,711) (26,963) (1,748) (28,711) (0.606)	16,703 (1,843)
				14,860
				9,173 5,687
				14,860
				0.204

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China Geothermal Industry Development Group Limited Interim 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 six months ended 30 June 2021

Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Profit/(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	(5,352) 3,764 952 4,716	33,657 21,218 40 21,258	(28,711) 2,268 324 2,592	14,860 (13,700) (43)
				(13,743)

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	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Six months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Six months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)
Other comprehensive (loss)/income 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 Gains 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 profit/(loss) for the period Attributable to: Owners of the parent Non-controlling interests	– – – 4,716 (636) (571) (65) (636)	(2,780) 436 (2,344) 18,914 52,571 43,272 9,299 52,571	– – – 2,592 (26,119) (24,695) (1,424) (26,119)	(2,780) 436
				(2,344)
				(16,087)
				(1,227)
				(9,138) 7,911
				(1,227)

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China Geothermal Industry Development Group Limited Interim Report 2021

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2021

Notes	30 June 2021 HK$’000 (Unaudited)	31 December 2020 HK$’000 (Audited)
NON-CURRENT ASSETS Property, plant and equipment 10 Investment properties Right-of-use assets Deposits paid for acquisitions of land use rights Other intangible assets Investments in associates Equity investments designated at fair value through other comprehensive income Deferred tax assets Contract assets Trade receivables Total non-current assets CURRENT ASSETS Inventories Properties held for sale Trade and bills receivables 11 Prepayments, other receivables and other assets Contract assets Amounts due from related companies Equity investments designated at fair value through other comprehensive income Financial assets at fair value through profit or loss Restricted cash Time deposits Cash and cash equivalents Total current assets	211,855 136,137 702 – 70 42,828 61,244 42 20,213 139,977 613,068 55,092 329,456 46,060 147,269 140,868 – 241,260 41 1,201 – 63,886 1,025,133	213,359 134,743 1,050 17,823 293 49,547 60,577 – 20,213 139,102
		636,707
		24,733 342,652 58,743 225,075 122,504 551 238,831 34 7,326 233 63,172
		1,083,854

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Notes	30 June 2021 HK$’000 (Unaudited)	31 December 2020 HK$’000 (Audited)
CURRENT LIABILITIES Trade and bills payables 12 Other payables and accruals Contract liabilities Amounts due to associates Amounts due to related companies Interest-bearing bank borrowings Lease liabilities Tax payable Total current liabilities NET CURRENT ASSETS/(LIABILITIES) TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Lease liabilities Deferred income Deferred tax liabilities Total non-current liabilities Net assets	298,638 471,399 44,001 18,076 32,207 20,625 5,667 169,097 1,059,710 (34,577) 578,491 81,441 9,604 38,323 129,368 449,123	279,912 430,934 51,225 17,891 30,341 100,998 5,889 189,263
		1,106,453
		(22,599)
		614,108
		89,590 9,506 37,838
		136,934
		477,174

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China Geothermal Industry Development Group Limited Interim Report 2021

Notes	30 June 2021 HK$’000 (Unaudited)	31 December 2020 HK$’000 (Audited)
EQUITY Equity attributable to owners of the parent Share capital 13 Shares held for Share Award Scheme Other reserves Non-controlling interests Total equity	353,043 (9,608) 78,366 421,801 27,322 449,123	353,043 (7,676) 103,061
		448,428 28,746
		477,174

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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

For the six months ended 30 June 2021

Attributable to owners of the parent Share Capital Share Premium Shares held for Share Awards 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 1 January 2020 (audited) Profit for the period Other comprehensive income/(loss) for the period Total comprehensive income/(loss) for the period Shares purchased for Share Awards Scheme At 30 June 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 – – – – – – – – – – 9,173 9,173 5,687 14,860 – – – – 436 – – (2,780) – (15,967) – (18,311) 2,224 (16,087) – – – – 436 – – (2,780) – (15,967) 9,173 (9,138) 7,911 (1,227) – – (7,676) – – – – – – – – (7,676) – (7,676) 353,043 904,845 (7,676) 2,935 43,052 154,381 7,553 15,096 49,117 (58,714) (844,380) * 619,252 35,950 655,202

Attributable to owners of the parent

																					Share
																					option
						Shares held															reserve/
							for Share				Assets										share		Exchange									Non-
		Share		Share			Awards		Statutory		revaluation	Contributed				Special		Capital			award		fluctuation			Accumulated						controlling		Total
		Capital		Premium			Scheme		reserve		reserve		Surplus			reserve		reserve			reserve		reserve				losses			Total		interests		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 1 January 2021 (audited)		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
Profit for the period		–		–			–		–		–		–			–		–			–		–				(26,963)			(26,963)		(1,748)		(28,711)
Other comprehensive income/(loss)
for the period		–		–			–		–		–		–			–		–			–		2,268				–			2,268		324		2,592
Total comprehensive income/(loss)
for the period		–		–			–		–		–		–			–		–			–		2,268				(26,963)			(24,695)		(1,424)		(26,119)
Shares purchased for Share Awards
Scheme		–		–			(1,932)		–		–		–			–		–			–		–				–			(1,932)		–		(1,932)
At 30 June 2021 (unaudited)		353,043		904,845 *			(9,608)		2,935 *		39,300 *		154,381 *			7,553*		50,878 *			4,620 *		(12,348) *** **				(1,073,798) *			421,801		27,322		449,123

• These reserve accounts comprise the consolidated reserves of HK$78,367,000 (31 December 2020: HK$103,061,000) in the condensed consolidated statement of financial position.

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China Geothermal Industry Development Group Limited Interim Report 2021

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2021

	Six months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)	Six months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)
Net cash flows used in operating activities Net cash flows from investing activities Net cash flows used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of period Effect of foreign exchange rate changes, net Cash and cash equivalents attributable to a disposal group Cash and cash equivalents at the end of period	(92,279) 195,543 (110,452) (7,188) 63,172 7,902 – 63,886	(43,497) 122,119 (52,993)
		25,629 56,871 (4,365) (11)
		78,124

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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 six months ended 30 June 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 in Hong Kong 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, Central, Hong Kong respectively.

During the six months ended 30 June 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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China Geothermal Industry Development Group Limited Interim Report 2021

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 six months ended 30 June 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 Accounting Standard 34 (“HKAS 34”), Interim Financial Reporting, 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 following revised Hong Kong Financial Reporting Standards (“HKFRSs”) effective as of 1 January 2021.

Amendments to HKFRS 9, HKAS Interest Rate Benchmark Reform – 39, HKFRS 7, HKFRS 4 and Phase 2 HKFRS 16 Amendment to HKFRS 16 Covid-19-Related Rent Concessions

The adoption of these amended standards and interpretation did not result in any significant impact on the Group’s financial performance and financial position.

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3. OPERATING SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and services and has four reportable operating segments as follows:

• (a) Shallow geothermal energy segment – provision, installation and maintenance of shallow geothermal energy utilisation system;

• (b) Air conditioning/shallow geothermal heat pump segment – trading of air conditioning/shallow geothermal heat pump products;

• (c) Property investment and development segment – investments in properties for their potential rental income; and

• (d) Securities investment and trading segment – trading of securities and other types of investment.

Management monitors the results of the Group’s operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on reportable segment profit/loss, which is a measure of adjusted profit/loss before tax. The adjusted profit/loss before tax is measured consistently with the Group’s profit/loss before tax except that share of profits and losses of associates and a joint venture, interest income, certain other income, certain administration costs, and non-leaserelated finance costs are excluded from such measurement.

Segment assets exclude certain investments in associates, deferred tax assets, time deposits, restricted cash and cash and cash equivalents as these assets are managed on a group basis.

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China Geothermal Industry Development Group Limited Interim Report 2021

Segment liabilities exclude certain amounts due to associates and related companies, interest-bearing bank borrowings, deferred tax liabilities and tax payable as these liabilities are managed on a group basis.

Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices.

(a) Segment revenue and results

The following tables present revenue and profit information for the Group’s operating segments for the six months ended 30 June 2021 and 2020, respectively:

			Shallow	Shallow	Shallow		Air conditioning/Shallow	Air conditioning/Shallow		Property investment	Property investment	Property investment		Securities	investment	investment	investment
			geothermal energy				geothermal	heat pump		and development				and trading					Total
			Six months ended 30 June				Six months ended 30 June			Six months ended 30 June				Six months ended 30			June		Six months ended 30 June
			2021		2020		2021	2020		2021		2020		2021			2020		2021		2020
			HK$’000		HK$’000		HK$’000	HK$’000		HK$’000		HK$’000		HK$’000		HK$’000			HK$’000		HK$’000
		(Unaudited)			(Unaudited)	(Unaudited)		(Unaudited)	(Unaudited)			(Unaudited)	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)
Segment revenue(note 4)
Sales to external customers			82,538		91,776		1,324	18,426		4,584		7,428		–			–		88,446		117,630
Intersegment sales			–		–		993	7,223		–		–		–			–		993		7,223
			82,538		91,776		2,317	25,649		4,584		7,428		–			–		89,439		124,853
Reconciliation:
Elimination of intersegment sales																			(993)		(7,223)
Revenue																			88,446		117,630
Segment results			24,368		26,594		(2,251)	1,129		234		14,920		–			(813)		22,351		41,830
Reconciliation:
Elimination of intersegment results																			(50)		(463)
Share of profits or losses of
associates																			(7,497)		(6,097)
Unallocated other income																			4,580		10,236
Corporate and other unallocated
expenses																			(46,216)		(18,526)
Finance costs (other than interest
on lease liabilities)																			(1,867)		(10,277)
Profit/(loss) before tax																			(28,699)		16,703

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(b) Segment assets and liabilities

The following tables present assets and liabilities information for the Group’s operating segments as at 30 June 2021 and 31 December 2020, respectively:

30 June 2021 Shallow geothermal energy Air conditioning/ shallow geothermal heat pump Property investment and development Securities investment and trading HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Total HK$’000 (Unaudited)
Segment assets 883,110 48,890 483,589 303,258 Reconciliation: Elimination of intersegment receivables Corporate and other unallocated assets Total assets Segment liabilities 849,969 47,867 112,529 9,823 Reconciliation: Elimination of intersegment payables Corporate and other unallocated liabilities Total liabilities	1,718,847 (257,856) 177,210
	1,638,201
	1,020,188 (257,856) 426,746
	1,189,078

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China Geothermal Industry Development Group Limited Interim Report 2021

31 December 2020 Shallow geothermal energy Air conditioning/ shallow geothermal heat pump Property investment and development Securities investment and trading HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) (Audited)	Total HK$’000 (Audited)
Segment assets 788,265 52,225 588,438 300,152 Reconciliation: Elimination of intersegment receivables Corporate and other unallocated assets Total assets Segment liabilities 696,418 48,345 154,936 8,760 Reconciliation: Elimination of intersegment payables Corporate and other unallocated liabilities Total liabilities	1,729,080 (132,292) 123,773
	1,720,561
	908,459 (132,292) 467,220
	1,243,387

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4. REVENUE, OTHER INCOME AND GAINS

An analysis of revenue is as follows:

Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 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	58,167 4,584 62,751	68,930 3,760 72,690	83,862 4,584 88,446	110,202 7,428
				117,630

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China Geothermal Industry Development Group Limited Interim Report 2021

Disaggregated revenue information for revenue from contracts with customers

For the six months ended 30 June 2021

Segments	Shallow geothermal energy HK$’000 (Unaudited)	Air conditioning/ shallow geothermal heat pump HK$’000 (Unaudited)	Total HK$’000 (Unaudited)
Types of goods or services: Sale of industrial products Construction services Total revenue from contracts with customers Geographical markets: Mainland China Timing of revenue recognition: Goods transferred at a point in time Services transferred over time Total revenue from contracts with customers	– 82,538 82,538 82,538 – 82,538 82,538	1,324 – 1,324 1,324 1,324 – 1,324	1,324 82,538
			83,862
			83,862
			1,324 82,538
			83,862

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For the six months ended 30 June 2020

Segments	Shallow geothermal energy HK$’000 (Unaudited)	Air conditioning/ shallow geothermal heat pump HK$’000 (Unaudited)	Total HK$’000 (Unaudited)
Types of goods or services: Sale of industrial products Construction services Total revenue from contracts with customers Geographical markets: Mainland China Timing of revenue recognition: Goods transferred at a point in time Services transferred over time Total revenue from contracts with customers	– 91,776 91,776 91,776 – 91,776 91,776	18,426 – 18,426 18,426 18,426 – 18,426	18,426 91,776
			110,202
			110,202
			18,426 91,776
			110,202

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China Geothermal Industry Development Group Limited Interim Report 2021

Set out below is the reconciliation of the revenue from contracts with customers with the amounts disclosed in the segment information:

For the six months ended 30 June 2021

Segments	Shallow geothermal energy HK$’000 (Unaudited)	Air conditioning/ Shallow geothermal heat pump HK$’000 (Unaudited)	Total HK$’000 (Unaudited)
Revenue from contracts with customers: External customers Intersegment sales Intersegment adjustments and eliminations Total revenue from contracts with customers	82,538 – 82,538 – 82,538	1,324 993 2,317 (993) 1,324	83,862 993
			84,855 (993)
			83,862

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For the six months ended 30 June 2020

Segments	Shallow geothermal energy HK$’000 (Unaudited)	Air conditioning/ shallow geothermal heat pump HK$’000 (Unaudited)	Total HK$’000 (Unaudited)
Revenue from contracts with customers: External customers Intersegment sales Intersegment adjustments and eliminations Total revenue from contracts with customers	91,776 – 91,776 – 91,776	18,426 7,223 25,649 (7,223) 18,426	110,202 7,223
			117,425 (7,223)
			110,202

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China Geothermal Industry Development Group Limited Interim Report 2021

Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 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 equity investment designated at fair value through other comprehensive income Government grants_(Note)_ Waive of trade payables Others	29 – – 6 – 189 224	43 375 3,033 567 16,629 (1,814) 18,833	89 – – 954 – 1,302 2,345	109 375 3,033 2,874 16,629 1,878
				24,898

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.

5. FINANCE COSTS

An analysis of finance costs is as follows:

Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest on bank loans Interest on lease liabilities	1,071 – 1,071	4,451 31 4,482	1,867 – 1,867	10,277 60
				10,337

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6. PROFIT/(LOSS) BEFORE TAX

The Group’s profit/(loss) before tax is arrived at after charging/(crediting):

		Three months ended	Three months ended	Three months ended	Six months ended	Six months ended	Six months ended
		30	June		30	June
		2021		2020	2021		2020
		HK$’000		HK$’000	HK$’000		HK$’000
		(Unaudited)		(Unaudited)	(Unaudited)		(Unaudited)
Cost of inventories sold		22,825		–	28,400		16,259
Cost of services provided		16,086		37,810	31,314		58,231
Depreciation		1,379		4,267	3,670		7,754
Employee benefit expense
(including directors’
and chief executive’s
remuneration)		14,880		13,500	29,400		27,336
Reversal of impairment
loss recognised in
respect of trade and
bills receivables, net		–		(49)	–		(3,437)
Reversal of impairment
loss recognized in
respect of contract
assets, net		–		–	–		(6,799)

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China Geothermal Industry Development Group Limited Interim Report 2021

7. 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 six months ended 30 June 2021 (six months ended 30 June 2020: 15%).

Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 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	4 – 4	124 1,678 1,802	12 – 12	165 1,678
				1,843

8. DIVIDENDS

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

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9. EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of the basic earnings/(loss) per share amounts is based on the profit/(loss) for the period attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares of 4,447,637,000 (30 June 2020: 4,487,517,000) in issue during the period.

The calculations of basic and diluted earnings/(loss) per share are based on:

Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Earnings/(loss) Profit/(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 earnings/(loss) per share calculation	(4,690) ’000 4,447,637	27,325 (26,963) Number of shares ’000 ’000 4,448,109 4,447,637	9,173
			’000 4,487,517

10. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2021, the Group did not have any material acquisition of property, plant and equipment.

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China Geothermal Industry Development Group Limited Interim Report 2021

11. TRADE AND BILLS RECEIVABLES

	30 June 2021 HK$’000 (Unaudited)	31 December 2020 HK$’000 (Audited)
Trade receivables Impairment Trade receivables, net Bills receivables Less: non-current portion Current portion	290,116 (104,199) 185,197 120 186,037 (139,977) 46,060	321,087 (123,465)
		197,622 223
		197,845 (139,102)
		58,743

The Group’s trading terms with its customers are mainly on credit. The credit period is generally three months. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group’s trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest-bearing.

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An ageing analysis of the trade and bills receivables as at the end of the reporting period, based on the invoice date and net of loss allowance, is as follows:

	30 June 2021 HK$’000 (Unaudited)	31 December 2020 HK$’000 (Audited)
Within 90 days 91 to 180 days 181 to 365 days Over 365 days	27,636 74,406 11,428 72,567 186,037	106,295 3,995 9,625 77,930
		197,845

12. TRADE AND BILLS PAYABLES

An ageing analysis of the trade and bills payables as at the end of the reporting period, based on the invoice date, is as follows:

	30 June 2021 HK$’000 (Unaudited)	31 December 2020 HK$’000 (Audited)
Within 90 days 91 to 180 days 181 to 365 days Over 365 days	60,793 15,667 7,018 215,160 298,638	121,586 3,509 7,506 147,311
		279,912

The trade and bills payables are non-interest-bearing and are normally settled in six months.

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China Geothermal Industry Development Group Limited Interim Report 2021

13. SHARE CAPITAL

		Number	of shares
		US$0.01 each			Share	capital		Share	capital
		30 June	31 December		30 June	31 December		30 June	31 December
		2021	2020		2021	2020		2021	2020
		’000	’000		US$’000	US$’000		HK$’000	HK$’000
		(Unaudited)	(Audited)		(Unaudited)	(Audited)		(Unaudited)	(Audited)
Ordinary shares
Issued and fully paid		4,526,925	4,526,925		45,269	45,269		353,043	353,043

14. COMMITMENTS

The Group had the following capital commitments at the end of the reporting period:

30 June	31 December
2021	2020
HK$’000	HK$’000
(Unaudited)	(Audited)

Contracted, but not provided for:

– Capital contributions payable to an associate 551 594

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15. RELATED PARTY TRANSACTIONS

• (a) Amounts due from/to related companies and associates are included in the condensed consolidated statement of financial position.

• (b) In addition to the transactions detailed elsewhere in these financial statements, the Group had the following transactions with related parties during the period:

	Three months ended	Three months ended	Three months ended	Three months ended		Six months ended	Six months ended	Six months ended	Six months ended
	30	June				30	June
	2021			2020		2021			2020
	HK$’000			HK$’000		HK$’000			HK$’000
	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)
Associates:
Purchases of products	802			29,789		2,175			29,824
Rental income	–			50		–			100
Other related parties:
Cash deposit	–			6		–			6
Rental expense	–			4		–			16
Interest expense	–			3,918		–			8,283

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China Geothermal Industry Development Group Limited Interim Report 2021

(c) Compensation of key management personnel of the Group:

Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 June Six months ended 30 June 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Short term employee benefits Post-employment benefits Total compensation paid to key management personnel	2,699 – 2,699	3,417 15 3,432	5,633 – 5,633	7,447 31
				7,478

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16. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of the Group’s financial instruments, other than those with carrying amounts that reasonably approximate to fair values, are as follows:

	Carrying amounts 30 June 31 December 2021 2020 HK$’000 HK$’000 (Unaudited) (Audited)	Carrying amounts 30 June 31 December 2021 2020 HK$’000 HK$’000 (Unaudited) (Audited)	Fair values	Fair values
	30 June 2021 HK$’000 (Unaudited)		30 June 2021 HK$’000 (Unaudited)	31 December 2020 HK$’000 (Audited)
Financial assets Trade receivables, non- current portion Equity investments designated at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial liabilities Interest-bearing bank borrowings	139,977 302,504 41 442,522 20,625	139,102 299,408 34 438,544 100,998	139,977 302,504 41 442,522 20,625	139,102 299,408 34
				438,544
				100,998

The Group’s finance department headed by the finance manager is responsible for determining the policies and procedures for the fair value measurement of financial instruments. The finance manager reports directly to the chief financial officer and the audit committee.

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China Geothermal Industry Development Group Limited Interim Report 2021

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

As at 30 June 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 total
				Number of	issued
Name of Directors	Nature of 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 Corporation(2)			250,000,000
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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Notes:

• (1) The calculation is based on (i) the aggregate number of the shares of the Company (“Shares”) and, if any, underlying Shares pursuant to share awards; 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 June 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 June 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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China Geothermal Industry Development Group Limited Interim Report 2021

Long Positions in Shares and Underlying Shares

				Percentage of
			Number of	total issued
Name	Nature of interest		Shares	Shares(1)
China Energy Conservation	Beneficial interest		1,190,000,000	26.29%
and Environmental
Protection (Hong Kong)
Investment Company
Limited(2)
China Energy Conservation	Interest of controlled corporation		1,190,000,000	26.29%
and Environmental
Protection 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, if any, underlying Shares pursuant to share awards; 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.

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Save as disclosed above, as at 30 June 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.

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.

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China Geothermal Industry Development Group Limited Interim Report 2021

During the six months ended 30 June 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	Number of Shares
						As at		Granted		Vested			Lapsed		As at
						1 January	during the		during the		during the				30 June
Awardees	Date of grant		Vesting date			2021		period		period			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.

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.

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CORPORATE GOVERNANCE CODE

During the Review Period, the Company has complied with the code provisions of the Corporate Governance Code (the “Code”) set out in Appendix 15 of the GEM Listing Rules, except for the deviations as follows:

Under code provision A.6.7 of the Code requires that independent nonexecutive directors and other non-executive directors shall attend general meetings and develop a balanced understanding of the views of shareholders.

Mr. Yang Wei, Mr. Wang Michael Zhiyu and Mr. Zhang Yiying, the nonexecutive Directors, as well as Mr. Jia Wenzeng, Mr. Wu Desheng, Mr. Wu Qiang, Mr. Guo Qingui and Mr. Guan Chenghua, the independent non-executive Directors, did not attend the extraordinary general meeting held on 19 February 2021 due to their engagement in other business.

Mr. Zhang Yiying and Ms. Liu Ening, the non-executive Directors, as well as Mr. Jia Wenzeng, Mr. Wu Desheng, Mr. Wu Qiang, Mr. Guo Qingui and Mr. Guan Chenghua, the independent non-executive Directors, did not attend the annual general meeting held on 8 June 2021 due to their engagement in other business.

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.

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China Geothermal Industry Development Group Limited Interim Report 2021

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.

UPDATE ON DIRECTORS’ INFORMATION

Pursuant to Rule 17.50A(1) of the GEM Listing Rules, the change in information of the Directors for the six months ended 30 June 2021 is set out below:

Changes of Directors and nominations of the Company

From 4 February 2021, Mr. Xu Shengheng was elected as the chairman of the Group. In addition, Mr. Xu ceased to act as a director of Ever Source Technology Development Group Dalian Co., Ltd. (恒有源科技發展集團大連有限 公司), a subsidiary of the Company, since 3 February 2021. Since 30 April 2021, he ceased to act as a director of Beijing Haidian District Hengyuan Vocational Skills Training School (北京海澱區恒有源職業技能培訓學校), a subsidiary of the Company. Since 22 June 2021, he ceased to act as a director of Dalian Heng Run Feng Jiaye Real Estate Development Co., Ltd.* (大連恒潤豐佳業房地產開發 有限公司), a subsidiary of the Company.

From 4 February 2021, Ms. Wang Yan ceased to be the joint chairman of the Board of the Company and remained as an executive Director, deputy chairman of nomination committee and remuneration committee of the Company.

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

Ms. Liu Ening ceased to act as alternate Director to Mr. Wang Zhiyu and was appointed as non-executive Director of the Company with effect from 12 March 2021.

Mr. Wang Manquan and Ms. Hao Xia were appointed as director of Ever Source Technology Development Group Dalian Co., Ltd.* (恒有源科技發展集團 大連有限公司), a subsidiary of the Company, since 3 February 2021.

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Changes in Directors’ emolument

The annual salary of Mr. Xu Shengheng, the Chairman of the Company, was decreased from HK$3.8 million to HK$2.9 million for the year 2021.

The annual salary of Ms. Chan Wai Kay, Katherine, the Deputy Chairman of the Company, was decreased from HK$1.92 million to HK$1.47 million for the year 2021.

The annual salary of Ms. Wang Yan, an executive Director of the Company, was decreased from HK$2.016 million to HK$1.116 million for the year 2021.

The annual salary of Mr. Wang Manquan, an executive Director of the Company, was decreased from HK$1.62 million to HK$1.458 million for the year 2021.

The annual salary of Ms. Hao Xia, an executive Director of the Company, was decreased from HK$1.2 million to HK$1.08 million for the year 2021.

The annual salary of Mr. Dai Qi, an executive Director of the Company, was decreased from HK$0.84 million to HK$0.756 million for the year 2021.

Each of the non-executive Directors of the Company, namely Mr. Yang Wei, Mr. Zhang Yiying and Ms. Liu Ening, is entitled to an annual directors’ fee of HK$60,000 for the year 2021.

The annual directors’ fee of each of the independent non-executive Directors of the Company, namely Mr. Jia Wenzeng, Mr. Wu Desheng, Mr. Wu Qiang, Mr. Guo Qingui and Mr. Guan Chenghua increased from HK$150,000 to HK$170,000 for the year 2021.

Save as disclosed above, there is no other information required to be disclosed pursuant to Rule 17.50A(1) of the GEM Listing Rules for the six months ended 30 June 2021.

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China Geothermal Industry Development Group Limited Interim 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 the trustee of the Share Award Scheme, pursuant to the rules of the Share Award Scheme, purchased on the open market a total of 24,208,000 shares of the Company, representing approximately 0.53% of the issued share capital of the Company, at a consideration of approximately HK$1,932,000 during the six months ended 30 June 2021.

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, 11 August 2021

• For identification purpose only

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