Shanghai Able Digital Science&Tech Co., Ltd. — Annual Report 2018

Mar 28, 2019

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

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(incorporated in Bermuda with limited liability)

(Stock Code: 1205)

ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2018

The board of directors (the “ Board ”) of CITIC Resources Holdings Limited (the “ Company ”) announces the consolidated results of the Company and its subsidiaries (collectively, the “ Group ”) for the year ended 31 December 2018.

FINANCIAL HIGHLIGHTS

Year ended 31 December	2018	2017	Change
	HK$ million	HK$ million
Revenue	4,427.3	3,602.9	22.9%
EBITDA1	2,070.9	2,100.4	(1.4%)
Adjusted EBITDA2 Proft attributable to shareholders	2,433.9 905.3	1,660.7 518.3	46.6% 74.7%

1 profit before tax + finance costs + depreciation + amortisation + asset impairment losses

• 2 EBITDA + (share of finance costs, depreciation, amortisation, income tax expense and non-controlling interests of a joint venture) – share of reversal of asset impairment loss of a joint venture – pre-tax fair value gain on a financial asset at fair value through profit or loss

The Group’s segments and investments, except the aluminium smelting segment, recorded profits for the year:

• improved operating results from the Group’s oil business, including in Kazakhstan, attributable to a relatively higher average crude oil realised price and stringent ongoing cost control

• significant increases in share of profit from the Group’s interests in CITIC Dameng Holdings Limited (“ CDH ”) and Alumina Limited (“ AWC ”)

• better contribution from the Group’s coal segment, benefitting from a higher average selling price of coal

• reduced operating loss from the Group’s aluminium smelting segment, attributable to higher production and sales volumes of aluminium (as a result of the restoration of production capacity of the Portland Aluminium Smelter (the “ PAS ”) to pre-outage level in 4Q 2017) and an increase in the average selling price of aluminium

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FINANCIAL RESULTS

CONSOLIDATED INCOME STATEMENT Year ended 31 December

Notes REVENUE 3 Cost of sales Gross proft Other income and gains 4 Selling and distribution costs General and administrative expenses Other expenses, net Finance costs 5 Share of proft of: Associates A joint venture Provision for impairment of items of property, plant and equipment Provision for impairment of other assets PROFIT BEFORE TAX 6 Income tax expense 7 PROFIT FOR THE YEAR ATTRIBUTABLE TO: Shareholders of the Company Non-controlling interests EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY 8 Basic Diluted	2018 HK$’000 4,427,317 (3,613,628) 813,689 98,277 (21,696) (425,334) (88,853) (287,359) 635,202 563,271 1,287,197 (323,366) (13,066) 950,765 (465) 950,300 905,253 45,047 950,300 HK cents 11.52 11.52	2017 HK$’000 3,602,947 (3,116,691) 486,256 542,636 (19,419) (335,005) (145,205) (290,361) 180,096 772,535 1,191,533 (583,353) — 608,180 (123,603) 484,577 518,315 (33,738) 484,577 HK cents 6.60 6.60

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CONSOLIDATED STATEMENT OF COMPREHENSIVE Year ended 31 December PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME/(LOSS) Other comprehensive income/(loss) that may be reclassifed to proft or loss in subsequent periods: Equity instrument at fair value through other comprehensive income: Changes in fair value Income tax effect Cash fow hedges: Effective portion of changes in fair value of hedging instruments arising during the year Income tax effect Exchange differences on translation of foreign operations Share of other comprehensive loss of associates Share of other comprehensive loss of a joint venture Net other comprehensive income/(loss) that may be reclassifed to proft or loss in subsequent periods Other comprehensive income/(loss) that will not be reclassifed to proft or loss in subsequent periods: Equity instrument at fair value through other comprehensive income: Changes in fair value Income tax effect Re-measurement gain on defned beneft plan: Changes in fair value Income tax effect Share of other comprehensive loss of a joint venture Share of other comprehensive income of an associate Net other comprehensive loss that will not be reclassifed to proft or loss in subsequent periods OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR, NET OF TAX TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO: Shareholders of the Company Non-controlling interests	INCOME 2018 HK$’000 950,300 — — — (343,844) 103,154 (240,690) (155,974) (223,569) (22,434) (642,667) 650 (195) 455 1,565 (471) 1,094 (15,366) 7,589 (6,228) (648,895) 301,405 271,647 29,758 301,405	2017 HK$’000 484,577 61 (18) 43 872,300 (261,690) 610,610 287,183 — — 897,836 — — — 5,590 (1,677) 3,913 (17,798) — (13,885) 883,951 1,368,528 1,377,283 (8,755) 1,368,528

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 December

Notes NON-CURRENT ASSETS Property, plant and equipment Prepaid land lease payments Goodwill Other assets Investments in associates Investment in a joint venture Derivative fnancial instrument Equity instrument at fair value through other comprehensive income Prepayments, deposits and other receivables Deferred tax assets Total non-current assets CURRENT ASSETS Inventories Trade receivables 10 Prepayments, deposits and other receivables Financial assets at fair value through proft or loss Derivative fnancial instruments Cash and cash equivalents Total current assets CURRENT LIABILITIES Accounts payable 11 Tax payable Accrued liabilities and other payables Derivative fnancial instruments Bank borrowings Finance lease payables Provisions Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES	2018 HK$’000 3,114,985 14,374 24,682 257,921 4,359,615 1,441,411 244,983 — 19,687 33,217 9,510,875 608,854 559,665 788,459 2,190 288,535 1,921,169 4,168,872 158,411 425 777,416 23,743 2,006,729 2,243 44,705 3,013,672 1,155,200 10,666,075	2017 HK$’000 3,860,246 16,411 24,682 268,600 4,327,686 915,940 496,054 845 52,910 —
		9,963,374
		642,719 546,212 1,168,261 3,029 403,649 1,405,672
		4,169,542
		167,093 73 604,982 9,553 386,206 8,970 46,312
		1,223,189
		2,946,353
		12,909,727

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 December

TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Bank and other borrowings Finance lease payables Deferred tax liabilities Provisions Total non-current liabilities NET ASSETS EQUITY Equity attributable to shareholders of the Company Issued capital Reserves Non-controlling interests TOTAL EQUITY	2018 HK$’000 10,666,075 4,209,823 489 — 401,745 4,612,057 6,054,018 392,886 5,748,597 6,141,483 (87,465) 6,054,018	2017 HK$’000 12,909,727 6,602,069 3,020 67,365 290,323 6,962,777 5,946,950 392,886 5,671,287 6,064,173 (117,223) 5,946,950

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NOTES

1. BASIS OF PREPARATION

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“ HKFRSs ”) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“ HKASs ”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants, accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. These financial statements have been prepared under the historical cost convention, except for derivative financial instruments and certain equity investments which have been measured at fair value. These financial statements are presented in Hong Kong dollar (“ HK$ ”) and all values are rounded to the nearest thousand (HK$’000) except when otherwise indicated.

Basis of consolidation

The consolidated financial statements include the financial statements of the Group for the year ended 31 December 2018. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• (a) the contractual arrangement with the other vote holders of the investee;

• (b) rights arising from other contractual arrangements; and

• (c) the Group’s voting rights and potential voting rights.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Profit or loss and each component of other comprehensive income are attributed to shareholders of the Company and also to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises (a) the assets (including goodwill) and liabilities of the subsidiary; (b) the carrying amount of any non-controlling interests; and (c) the cumulative translation differences recorded in equity; and recognises (a) the fair value of the consideration received; (b) the fair value of any investment retained; and (c) any resulting surplus or deficit in profit or loss. The Group’s share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

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2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the following new and revised HKFRSs for the first time for the year’s financial statements.

The Group has adopted the following new statements.	and revised HKFRSs for the first time for the year’s financ
Amendments to HKFRS 2	Classifcation and Measurement of
	Share-based Payment Transactions
Amendments to HKFRS 4	Applying HKFRS 9 Financial Instruments with
	HKFRS 4 Insurance Contracts
HKFRS 9	Financial Instruments
HKFRS 15	Revenue from Contracts with Customers
Amendments to HKFRS 15	Clarifcations to HKFRS 15 Revenue from Contracts with
	Customers
Amendments to HKAS 40	Transfers of Investment Property
HK (IFRIC) – Int 22	Foreign Currency Transactions and Advance Consideration
Annual Improvements 2014 – 2016 Cycle	Amendments to HKFRS 1 and HKAS 28

The adoption of the above new and revised HKFRSs has had no significant financial effect on these financial statements.

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) the aluminium smelting segment comprises the operation of the PAS which sources alumina and produces aluminium ingots in Australia;

• (b) the coal segment comprises the operation of coal mines and the sale of coal in Australia;

• (c) the import and export of commodities segment comprises the export of various commodity products such as aluminium ingots, coal, iron ore, alumina and copper; and the import of other commodity products and manufactured goods such as steel, and vehicle and industrial batteries and tyres into Australia; and

• (d) the crude oil segment comprises the operation of oilfields and the sale of oil in Indonesia and China.

Management monitors the results of the Group’s operating segments separately for the purposes of making decisions about resources 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 before tax except that interest income, fair value gain on a financial asset at fair value through profit or loss, dividend income, finance costs, share of profit of associates and a joint venture, and provision for impairment of assets as well as head office and corporate expenses are excluded from such measurement.

Segment assets exclude investments in associates, investment in a joint venture, equity instrument at fair value through other comprehensive income, deferred tax assets, financial assets at fair value through profit or loss, cash and cash equivalents, and other unallocated head office and corporate assets as these assets are managed on a group basis.

Segment liabilities exclude bank and other borrowings, finance lease payables, deferred tax liabilities, and other unallocated head office and corporate liabilities as these liabilities are managed on a group basis.

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3. OPERATING SEGMENT INFORMATION (continued)

Year ended 31 December 2018 HK$’000 Segment revenue: Sales to external customers Other income Segment results Reconciliation: Interest income and unallocated gains Provision for impairment of items of property, plant and equipment Provision for impairment of other assets Unallocated expenses Unallocated fnance costs Share of proft of: Associates A joint venture Proft before tax Segment assets Reconciliation: Investments in associates Investment in a joint venture Unallocated assets Total assets Segment liabilities Reconciliation: Unallocated liabilities Total liabilities Other segment information: Depreciation and amortisation Unallocated amounts Impairment losses recognised in the consolidated income statement Impairment losses reversed in the consolidated income statement Capital expenditure Unallocated amounts	Aluminium smelting 1,088,131 4,182 1,092,313 (104,791) 963,278 417,086 27,026 — — 3,762	Coal 891,426 93 891,519 211,761 614,612 247,110 42,438 — — 100,019	Import and export of commodities 1,154,390 4,496 1,158,886 51,717 542,322 156,504 429 20,129 — 32	Crude oil 1,293,370 44,178 1,337,548 506,731 3,066,769 389,212 422,638 — (10,929) 174,728	Total 4,427,317 52,949 4,480,266 665,418 45,328 (323,366) 1 (13,066)2 (334,663) (287,359) 635,202 563,271 950,765 5,186,981 4,359,615 1,441,411 2,691,740 13,679,747 1,209,912 6,415,817 7,625,729 492,531 3,830 496,361 20,129 (10,929) 278,541 2,506 281,047 3

1 in respect of the aluminium smelting segment and the coal segment

2 in respect of the coal segment

3 Capital expenditure consists of additions to property, plant and equipment and other assets.

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3. OPERATING SEGMENT INFORMATION (continued)

Year ended 31 December 2017 HK$’000 Segment revenue: Sales to external customers Other income Segment results Reconciliation: Interest income and unallocated gains Dividend income Provision for impairment of items of property, plant and equipment Unallocated expenses Unallocated fnance costs Share of proft of: Associates A joint venture Proft before tax Segment assets Reconciliation: Investments in associates Investment in a joint venture Unallocated assets Total assets Segment liabilities Reconciliation: Unallocated liabilities Total liabilities Other segment information: Depreciation and amortisation Unallocated amounts Impairment losses recognised in the consolidated income statement Impairment losses reversed in the consolidated income statement Capital expenditure Unallocated amounts	Aluminium smelting 707,504 1,946 709,450 (169,085) 1,499,505 346,647 28,929 — — (1,012)	Coal 828,649 27 828,676 91,995 769,864 240,463 110,637 27,441 — 36,083	Import and export of commodities 978,663 4,350 983,013 42,142 641,366 64,551 540 6,574 — 96	Crude oil 1,088,131 31,270 1,119,401 277,873 3,469,620 310,858 420,611 26,422 (24,082) 6,157	Total 3,602,947 37,593 3,640,540 242,925 437,605 67,438 (583,353)1 (218,705) (290,361) 180,096 772,535 608,180 6,380,355 4,327,686 915,940 2,508,935 14,132,916 962,519 7,223,447 8,185,966 560,717 3,943 564,660 60,437 (24,082) 41,324 1,615 42,9392

1 in respect of the crude oil segment

2 Capital expenditure consists of additions to property, plant and equipment and other assets.

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3. OPERATING SEGMENT INFORMATION (continued)

Geographical information

(a) Revenue from external customers

China Australia Europe Other Asian countries Others	2018 HK$’000 1,484,539 951,484 387,846 1,394,118 209,330 4,427,317	2017 HK$’000 1,328,021 802,895 275,919 1,188,905 7,207
		3,602,947

The revenue information above is based on the location of the customers.

(b) Non-current assets

Hong Kong China Australia Kazakhstan Other Asian countries	2018 HK$’000 2,765 3,868,235 3,894,475 1,441,930 12,332 9,219,737	2017 HK$’000 2,265 4,169,892 4,544,686 918,284 58,802
		9,693,929

The non-current assets information above is based on the location of the assets which exclude other assets, equity instrument at fair value through other comprehensive income and deferred tax assets.

Information about major customers

During the year, revenue of HK$1,170,523,000 was derived from sales to a customer of the crude oil segment and HK$520,406,000 was derived from sales to a customer of the aluminium smelting segment. Revenue from each of these two customers amounted to 10% or more of the Group’s revenue for the year.

In 2017, revenue of HK$920,045,000 was derived from sales to a customer of the crude oil segment and HK$474,090,000 was derived from sales to a customer of the aluminium smelting segment. Revenue from each of these two customers amounted to 10% or more of the Group’s revenue for 2017.

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4. OTHER INCOME AND GAINS

An analysis of the Group’s other income and gains is as follows:

Interest income Dividend income from a fnancial asset at fair value through proft or loss Handling service fees Fair value gain on a fnancial asset at fair value through proft or loss * Sale of scrap Reversal of impairment of other receivables Gain on disposal of partial participating interest in a production sharing contract Government subsidies Others	2018 HK$’000 36,080 — 4,112 — 4,774 10,929 17,482 11,255 13,645 98,277	2017 HK$’000 19,767 67,438 3,916 411,278 6,077 24,082 — — 10,078
		542,636

• The Group reassessed and concluded that it has significant influence over AWC effective 30 June 2017. Consequently, the investment was reclassified from a financial asset at fair value through profit or loss to an investment in an associate on 30 June 2017. Prior to the reclassification, the investment was measured at its fair value based on the closing price of AWC shares on 29 June 2017. As a result, a pre-tax fair value gain of HK$411,278,000 in respect of the Group’s interest in AWC was recognised in the consolidated income statement, representing the excess amount of such fair value over its carrying amount as at 31 December 2016.

5. FINANCE COSTS

An analysis of finance costs is as follows:

Interest expense on bank and other borrowings Interest expense on a fnance lease Total interest expense on fnancial liabilities not at fair value through proft or loss Other fnance charges: Increase in discounted amounts of provisions arising from the passage of time Others	2018 HK$’000 277,801 513 278,314 9,005 40 287,359	2017 HK$’000 281,421 1,481
		282,902 7,419 40
		290,361

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6. PROFIT BEFORE TAX

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

	2018	2017
	HK$’000	HK$’000
Cost of inventories sold	3,613,628	3,116,691
Depreciation	490,058	538,581
Amortisation of other assets	5,086	24,884
Amortisation of prepaid land lease payments	1,217	1,195
Loss/(gain) on disposal of items of
property, plant and equipment, net	(235)	6,086
Fair value losses on derivative fnancial instruments, net *	45,655	29,535
Exchange losses, net *	24,656	33,564
Impairment of other receivables, net	—	29,781
Provision for impairment of trade receivables, net	20,129	6,574
Provision for impairment of items of property, plant and equipment	323,366	583,353
Provision for impairment of other assets	13,066	—

• These amounts were included in “Other expenses, net” in the consolidated income statement.

7. INCOME TAX EXPENSE

Current – Hong Kong Current – Elsewhere Charge for the year Underprovision/(overprovision) in prior years Deferred Total tax expense for the year	2018 HK$’000 — 473 (8) — 465	2017 HK$’000 — 168 35 123,400
		123,603

The statutory rate of Hong Kong profits tax was 16.5% (2017: 16.5%) on the estimated assessable profits arising in Hong Kong. No provision for Hong Kong profits tax was made as the Group had no assessable profits arising in Hong Kong during the year (2017: Nil).

Taxes on profits assessable elsewhere were calculated at the rates of tax prevailing in the jurisdictions in which the Group operates.

Australia: The Group’s subsidiaries incorporated in Australia were subject to Australian income tax at a rate of 30% (2017: 30%).

Indonesia: The corporate tax rate applicable to the subsidiary which is operating in Indonesia was 30% (2017: 30%). The Group’s subsidiary owning a participating interest in the oil and gas properties in Indonesia was subject to branch tax at the effective tax rate of 14% (2017: 14%).

China: The Group’s subsidiaries registered in China were subject to corporate income tax at a rate of 25% (2017: 25%).

According to HKAS 12 Income Taxes, deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled.

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8. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY

The calculation of the basic earnings per share amount was based on the profit for the year attributable to ordinary shareholders of the Company of HK$905,253,000 (2017: HK$518,315,000) and the weighted average number of ordinary shares in issue during the year, which was 7,857,727,149 (2017: 7,857,727,149) shares.

The calculation of the diluted earnings per share amount was based on the profit for the year attributable to ordinary shareholders of the Company. The weighted average number of ordinary shares used in the calculation was the number of ordinary shares in issue during the year, as used in the basic earnings per share calculation, and the weighted average number of ordinary shares assumed having been issued at no consideration on the deemed exercise or conversion of all dilutive potential ordinary shares into ordinary shares.

No adjustment was made to the basic earnings per share amount presented for the years ended 31 December 2018 and 2017 in respect of a dilution. There were no dilutive potential ordinary shares arising from share options as (a) in respect of the year ended 31 December 2018, the share options expired during the year; and (b) in respect of the year ended 31 December 2017, the average share price of the Company during 2017 did not exceed the exercise price of the then outstanding share options.

9. DIVIDEND

DIVIDEND
	2018	2017
	HK$’000	HK$’000
Proposed fnal dividend of HK 3.50 cents (2017: HK 2.50 cents)
per ordinary share	275,020	196,443

The proposed final dividend for the year is subject to the approval of shareholders at the forthcoming annual general meeting of the Company. The final dividend of HK 2.50 cents per ordinary share for the year ended 31 December 2017, totalling HK$196,443,000, was approved by shareholders at the annual general meeting of the Company held on 22 June 2018 and was paid during the year.

10. TRADE RECEIVABLES

An ageing analysis of the trade receivables, based on the invoice date and net of loss allowance, was as follows:

Within one month One to two months Two to three months Over three months	2018 HK$’000 321,885 88,509 63,325 85,946 559,665	2017 HK$’000 324,727 74,532 45,716 101,237
		546,212

The Group normally offers credit terms of 30 to 120 days to its established customers.

11. ACCOUNTS PAYABLE

An ageing analysis of the accounts payable, based on the invoice date, was as follows:

Within one month One to three months Over three months	2018 HK$’000 158,350 — 61 158,411	2017 HK$’000 148,125 — 18,968
		167,093

The accounts payable are non-interest-bearing and are normally settled on terms of 30 to 90 days.

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BUSINESS REVIEW

Crude oil

The Group’s crude oil business as a whole achieved a substantial improvement in operating results, attributable to a relatively higher average crude oil realised price and stringent ongoing cost control.

During the year, the Group continued to implement optimal maintenance plans to minimise the negative impact on oil production caused by the continuing natural decline of existing wells. The Group’s overall average daily production was 49,390 barrels (100% basis) for the year, which was comparable to 49,980 barrels for 2017. The Karazhanbas oilfield in Kazakhstan and the Yuedong oilfield in China recorded daily production of 39,600 barrels and 7,890 barrels (both on 100% basis), respectively, comparable to 2017. The Seram Block in Indonesia recorded daily production of 1,900 barrels (100% basis), representing a 33% drop to the previous year, due to a steeper natural decline of existing wells.

Results of the Karazhanbas oilfield were bolstered by a write-back of a prior year provision for impairment.

Also during the year, the Group completed its sale of a 10% participating interest in the production sharing contract which grants the right to explore, develop and produce petroleum from the Seram Block until 31 October 2019 (the “ PSC ”) to an independent third party. Additionally, the Group successfully renewed the PSC for a term of 20 years commencing from 1 November 2019. The Group therefore retains a 41% participating interest in the PSC and remains the operator of the Seram Block.

Metals

The PAS resumed normal operations in 4Q 2017 with the restoration of its production capacity to pre-outage level. As a result, both production and sales volumes increased during the year. This, as well as a higher average selling price of aluminium than in 2017, meant a better operating performance from the PAS than in the previous year, although the PAS still made an operating loss due to sharp increases in certain production costs such as alumina and carbon materials. As the performance of the PAS was expected to be hampered by higher prices of electricity and alumina going forward, an impairment was provided in respect of the PAS.

The Group’s equity interest in AWC was reclassified on 30 June 2017 from a financial asset at fair value through profit or loss to an investment in an associate. Accordingly, in respect of the Group’s interest in AWC, a share of profit using the equity method was recorded for 2H 2017 and for the full year of 2018. Attributable to an increase in the average selling price of alumina, AWC recorded an increase in its results for the year.

CDH also recorded an increase in its results for the year, attributable to an increase in average selling prices of some of its major manganese products.

Coal

The Group’s coal segment benefitted from a higher average selling price of coal, but was impacted by a provision for impairment in respect of its mining assets. Overall, the segment recorded a better operating profit for the year.

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Import and export of commodities

During the year, the Group further strengthened its marketing strategy to meet the ever-changing market environment and trading behaviours. Attributable to an increase in commodities prices, the Group’s import and export of commodities segment recorded a better profit.

FINANCIAL MANAGEMENT

During the year, the Group managed to reduce its debt from internal resources. The Group’s financial position remained strong throughout the year.

OUTLOOK

The Group believes that oil and commodities prices will at least remain steady at current levels, which should continue to benefit the Group. Meanwhile, the Group will try to make solid progress to achieve its major production and operation targets. As the global economic and political environments cast uncertainties on oil and commodities prices, the Group will continue to closely monitor the changing market environment and take appropriate actions to create returns for shareholders.

The Group will consider resuming the exploration of the Lofin area of the Seram Block. The Group will also endeavour in promoting application of new technologies to improve productivity in the Yuedong oilfield and plans to add new wells in the oilfield under a managed drilling program.

To strengthen its business portfolio, release investment value and promote sustainable growth, the Group will continue to look for quality investment opportunities. In addition, the ongoing support from CITIC Limited will drive the Group to achieve its objectives.

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

Cash

As at 31 December 2018, the Group had cash and cash equivalents of HK$1,921.2 million.

Borrowings

As at 31 December 2018, the Group had total debt of HK$6,219.3 million, which comprised:

• unsecured bank borrowings of HK$2,316.6 million;

• unsecured other borrowing of HK$3,900.0 million; and

• finance lease payables of HK$2.7 million.

Most of the transactions of the Group’s import and export of commodities business are debt funded. However, in contrast to term loans, these borrowings are self liquidating, transaction specific and of short durations, and matching the terms of the underlying transaction. When sale proceeds are received at the completion of a transaction, the related borrowings are repaid accordingly.

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In December 2016, the Company entered into a facility agreement with a syndicate of financial institutions in respect of an unsecured 3-year term loan facility of US$310 million (HK$2,418 million) (the “ A Loan ”). The proceeds of the A Loan were used to finance the repayment of a term loan of US$310 million signed in March 2014. During the year, the A Loan was partially prepaid in the amount of US$93.0 million (HK$725.4 million). As at 31 December 2018, the outstanding balance was US$217.0 million (HK$1,692.6 million).

In May 2017, the Company entered into a facility agreement with a bank in respect of an unsecured 3-year term loan facility of US$40 million (HK$312 million) (the “ B Loan ”). Part of the proceeds of the B Loan was used to finance the repayment of the then outstanding balance of a term loan of US$40 million signed in September 2012. As at 31 December 2018, the outstanding balance was US$40.0 million.

In June 2017, a wholly-owned subsidiary of the Company entered into a facility agreement with a subsidiary of CITIC Limited (a substantial shareholder of the Company) in respect of an unsecured 5-year term loan facility of US$500 million (HK$3,900 million) (the “ C Loan ”). The proceeds of the C Loan were used mainly to finance the repayment of a term loan of US$490 million (HK$3,822 million) signed in June 2015. As at 31 December 2018, the outstanding balance was US$500.0 million.

The Group leases certain plant and machinery for its coal mine operations. The lease is classified

as a finance lease.

As at 31 December 2018, the Group’s net debt to net total capital was 41.2% (2017: 48.0%). Of the Group’s total debt, HK$2,009.0 million was repayable within one year, including the A Loan, short-term revolver, trade finance and finance lease payables.

Share capital

There was no movement in the share capital of the Company during the year.

Financial risk management

The Group’s diversified business is exposed to a variety of risks, such as market risks (including foreign currency risk, price risk, interest rate risk and inflation risk), credit risk and liquidity risk. The management of such risks is dictated by a set of internal policies and procedures designed to minimise potential adverse effects to the Group. The policies and procedures have proved effective.

The Group enters into derivative transactions, including principally forward currency contracts, forward commodity contracts, interest rate swap contracts, embedded derivatives and electricity hedge agreements. Their purpose is to manage the foreign currency risk, price risk, interest rate risk and inflation risk arising from the Group’s operations and sources of finance.

Opinion

The Board is of the opinion that, after taking into account the existing available borrowing facilities and internal resources, the Group has sufficient resources to meet its foreseeable working capital requirements.

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EMPLOYEES AND REMUNERATION POLICIES

As at 31 December 2018, the Group had around 300 full time employees, including management and administrative staff.

The Group’s remuneration policy seeks to provide fair market remuneration in a form and value to attract, retain and motivate high quality staff. Remuneration packages are set at levels to ensure comparability and competitiveness with other companies in the industry and market competing for a similar talent pool. Emoluments are also based on an individual’s knowledge, skill, time commitment, responsibilities and performance and by reference to the Group’s profits and performance. Rent-free quarters are provided to some employees in Indonesia.

FINAL DIVIDEND AND CLOSURE OF REGISTER OF MEMBERS

The directors have resolved to recommend the payment of a final dividend of HK 3.50 cents per ordinary share for the year ended 31 December 2018 (the “ Final Dividend ”) to shareholders whose names appear on the register of members of the Company on Tuesday, 2 July 2019. Subject to approval by shareholders at the forthcoming annual general meeting of the Company, the Final Dividend is payable to entitled shareholders on or around 16 July 2019.

For determining the entitlement of shareholders to receive the Final Dividend, the register of members of the Company will be closed from Thursday, 27 June 2019 to Tuesday, 2 July 2019, both days inclusive, during which period no transfer of shares will be registered. For the purpose of ascertaining entitlement of shareholders to the Final Dividend, all transfers of shares accompanied by the relevant share certificates must be lodged with the branch share registrar of the Company in Hong Kong, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not later than 4:30 p.m. on Wednesday, 26 June 2019.

CORPORATE GOVERNANCE CODE

The Board is of the view that the Company has, for the year ended 31 December 2018, applied the principles and complied with the applicable code provisions, and also complied with certain recommended best practices, of the Corporate Governance Code as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”).

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted a code of conduct for dealings in the securities of the Company by its directors (the “ Securities Dealings Code ”) that is based on the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) as set out in Appendix 10 to the Listing Rules (or on terms no less exacting than the Model Code).

All directors have confirmed, following specific enquiry by the Company, that they have complied with the required standards set out in the Securities Dealings Code throughout the year.

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PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY

Neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company’s listed securities during the year.

AUDIT COMMITTEE

The Company has an audit committee which was established in compliance with rule 3.21 of the Listing Rules with responsibility for reviewing and providing supervision over the Group’s financial reporting process. The audit committee comprises the three independent non-executive directors of the Company.

The audit committee has reviewed these financial results with senior management and the external auditor of the Company.

By Order of the Board CITIC Resources Holdings Limited Suo Zhengang Vice Chairman and Chief Executive Officer

Hong Kong, 28 March 2019

As at the date hereof, Mr. Sun Yufeng; Mr. Suo Zhengang; Mr. Sun Yang and Ms. Li So Mui are executive directors of the Company, Mr. Chan Kin is a non-executive director of the Company, and Mr. Fan Ren Da, Anthony; Mr. Gao Pei Ji and Mr. Look Andrew are independent non-executive directors of the Company.

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