Shanghai Able Digital Science&Tech Co., Ltd. — Annual Report 2022

Mar 29, 2023

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 2022

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 2022.

FINANCIAL HIGHLIGHTS

Year ended 31 December	2022	2021	Change
	HK$ million	HK$ million
Revenue	5,866.2	4,349.4	34.9%
EBITDA1	2,503.5	1,852.6	35.1%
Adjusted EBITDA2	3,123.2	2,426.9	28.7%
Profit attributable to ordinary shareholders of	1,335.5	1,103.4	21.0%
the Company

1 profit before tax + finance costs + depreciation + amortisation

2 EBITDA + (share of finance costs, depreciation, amortisation, income tax expense and non-controlling interests of a joint venture)

1

Global economic activity is experiencing a broad-based and unexpectedly sharp slowdown, with the highest inflation in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering coronavirus disease 2019 (“ COVID-19 ”) pandemic all weigh heavily on the outlook.

Notwithstanding the challenging macroeconomic environment, compared to 2021, the average Dated Brent and Ural oil prices increased by approximately 42.4% and approximately 10% to US$100.9 per barrel and US$76 per barrel respectively. The revenue of the Group climbed up by approximately 34.9% year-on-year. The Group recorded a profit attributable to ordinary shareholders of the Company of approximately HK$1,335.5 million in 2022 as compared to approximately HK$1,103.4 million in 2021. Such increase in profit attributable to ordinary shareholders of the Company was primarily attributable to the following factors:

• a satisfactory improvement in operating results of the oil and gas business of the Group in 2022, including a substantial share of profit of approximately HK$320.1 million (2021: HK$306.3 million) from the Group’s investment in Karazhanbas oilfield and a profit attributable to ordinary shareholders of the Company with approximately HK$593.5 million (2021: HK$424.8 million) from the Group’s investment in HainanYuedong Block, China. The improvement in operating results from the oil and gas business of the Group as a whole was mainly attributable to an increase in average realised crude oil price, application of new technology and stringent ongoing costs control during the year; and

• a significant improvement in operating results of the Group’s coal segment in 2022, mainly due to an increase in the average selling price of coal as compared to the year ended 31 December 2021, as well as the recording of a significant fair value gain of approximately HK$96.1 million on derivative financial instruments of electricity hedging agreements in Australia.

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FINANCIAL RESULTS

CONSOLIDATED INCOME STATEMENT

Year ended 31 December

Notes Revenue 3 Cost of sales Gross profit Other income, gains and losses, net 4 General and administrative expenses Other expenses, net Finance costs 5 Provision for impairment of trade and other receivables, net Share of profit of: An associate A joint venture Profit before tax 6 Income tax expense 7 Profit for the year Attributable to: Ordinary shareholders of the Company Non-controlling interests Earnings per share attributable to ordinary shareholders of the Company 8 Basic Diluted	2022 HK$’000 5,866,160 (4,031,373) 1,834,787 174,958 (304,763) (69,007) (141,816) (41,394) 102,398 320,147 1,875,310 (475,188) 1,400,122 1,335,537 64,585 1,400,122 HK cents 17.00 17.00	2021 HK$’000 4,349,406 (3,162,643) 1,186,763 188,531 (324,906) (52,671) (83,822) (91) 116,220 306,299 1,336,323 (222,176) 1,114,147 1,103,366 10,781 1,114,147 HK cents 14.04 14.04

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 December

Profit for the year Other comprehensive income Other comprehensive income/(loss) that may be reclassified to profit or loss in subsequent periods: Cash flow 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 Reclassification adjustments for foreign operations deregistered or disposed of, net Share of other comprehensive income/(loss) of an associate, net of tax Share of other comprehensive income of a joint venture Net other comprehensive loss that may be reclassified to profit or loss in subsequent periods Other comprehensive income that will not be reclassified to profit or loss in subsequent periods: Re-measurement gain on defined benefit plan: Changes in fair value Income tax effect Share of other comprehensive (loss)/income of a joint venture Share of other comprehensive income of an associate Net other comprehensive (loss)/income that will not be reclassified to profit or loss in subsequent periods Other comprehensive (loss)/income for the year, net of tax Total comprehensive income for the year Attributable to: Ordinary shareholders of the Company Non-controlling interests	2022 HK$’000 1,400,122 (6,000) 1,800 (4,200) (251,582) – 66,922 2,161 (186,699) 2,723 (817) 1,906 (21,170) 1,803 (17,461) (204,160) 1,195,962 1,154,612 41,350 1,195,962	2021 HK$’000 1,114,147 (13,405) 4,022 (9,383) 77,158 (3,967) (65,519) 1,488 (223) 11,996 (3,599) 8,397 8,647 25,038 42,082 41,859 1,156,006 1,136,702 19,304 1,156,006

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 December

Notes Non-current assets Property, plant and equipment Right-of-use assets Goodwill Mining assets Exploration, evaluation and development expenditure Investment in an associate Investment in a joint venture Prepayments, deposits and other receivables Time deposit Deferred tax assets Total non-current assets Current assets Inventories Trade receivables 10 Prepayments, deposits and other receivables Derivative financial instruments Cash and deposits 11 Total current assets Current liabilities Accounts payable 12 Tax payable Accrued liabilities and other payables Derivative financial instruments Bank and other borrowings Lease liabilities Provisions for long-term employee benefits Provisions Total current liabilities Net current assets Total assets less current liabilities	2022 HK$’000 3,601,304 75,915 – 189,405 27,737 2,784,400 2,374,903 29,626 102,972 56,823 9,243,085 560,457 297,358 105,469 102,995 2,130,203 3,196,482 106,899 59,136 869,273 – 96,166 30,709 41,487 75 1,203,745 1,992,737 11,235,822	2021 HK$’000 3,838,772 83,123 24,682 112,049 112,627 2,893,101 2,073,765 38,594 88,754 187,832
		9,453,299
		431,595 704,889 167,372 21,012 1,925,573
		3,250,441
		135,803 54,113 919,545 643 240,669 26,463 46,667 1,163
		1,425,066
		1,825,375
		11,278,674

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 December

Non-current liabilities Bank and other borrowings Lease liabilities Deferred tax liabilities Provisions for long-term employee benefits Provisions Total non-current liabilities Net assets Equity Equity attributable to ordinary shareholders of the Company Issued capital Reserves Non-controlling interests Total equity	2022 HK$’000 2,486,640 30,898 328,871 15,268 608,457 3,470,134 7,765,688 392,886 7,352,545 7,745,431 20,257 7,765,688	2021 HK$’000 3,418,480 41,102 256,016 19,919 619,833 4,355,350 6,923,324 392,886 6,551,531 6,944,417 (21,093) 6,923,324

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NOTES

1. BASIS OF PREPARATION

The significant accounting policies applied in the preparation of the consolidated financial statements of the Group are set out below. The consolidated 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. The consolidated financial statements have been prepared under the historical cost convention, except for derivative financial instruments and defined benefit pension plans plan assets which have been measured at fair value. The consolidated 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 2022. 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.

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1. BASIS OF PREPARATION (continued)

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. Accounting policies of subsidiaries have been changed where necessary in the Financial Statements to ensure consistency with the accounting policies adopted by the Group.

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.

When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in consolidated profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. It means the amounts previously recognised in other comprehensive income are reclassified to profit or loss or transferred to another category of equity as specified or permitted by applicable HKFRSs.

2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the following new and revised HKFRSs which are effective for the current accounting period beginning on 1 January 2022:

Standard No.	Title
Annual Improvements Project	Annual Improvements to HKFRSs 2018-2020
Amendments to HKFRS 16	Covid-19-related rent concessions
Amendments to HKFRS 3	Reference to Conceptual Framework
Amendments to HKAS 16	Property, plant and equipment – Proceeds before
	intended use
Amendments to HKAS 37	Onerous contracts – cost of fulfilling a contract
AG 5 (Revised)	Revised Accounting Guideline 5 Merger Accounting for
	Common Control Combinations

The adoption of the above new and revised HKFRSs in the current year has no material impact to the Group.

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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) the aluminium smelting segment comprises the operation of the Portland Aluminium Smelter (“ 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 import of other commodity products and manufactured goods such as steel into Australia and New Zealand; and

• (d) the crude oil segment comprises the operation of oilfields and the sale of crude 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/(loss) before tax except that interest income, finance costs, and share of profit of an associate and a joint venture as well as head office and corporate expenses are excluded from such measurement.

Segment assets exclude investment in an associate, investment in a joint venture, deferred tax assets, cash and deposits, and other unallocated head office and corporate assets as these assets are managed on a group basis.

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

For the year ended 31 December 2022, revenue for the import and export of commodities comprise of the import of steel products from various countries for distribution in Australia and New Zealand.

In the second half of the year, a Deed of Termination was signed to cease the import and distribution arrangement with its business partner for steel products. Sales of the Group’s steel products was last transacted in November 2022. Management is in the process of collecting the associated trade receivables and settling its outstanding liabilities for the steel operations as at year-end. There is no material impact on the Group’s profitability from the cessation of the steel import and distribution operations.

Notwithstanding the cessation of its import and distribution of the steel products, other trading activities, such as commission earned for export of commodities, have continued during the year. In addition, management is in advanced negotiations with external parties to develop new trading product lines.

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3. OPERATING SEGMENT INFORMATION (continued)

Year ended 31 December 2022 HK$’000 Segment revenue: Sales to external customers Other income, gains and losses, net Segment results Reconciliations: Interest income and unallocated gains and losses, net Unallocated expenses Unallocated finance costs Share of profit of: An associate A joint venture Profit before tax Segment assets Reconciliations: Investment in an associate Investment in a joint venture Unallocated assets Total assets Segment liabilities Reconciliations: Unallocated liabilities Total liabilities Other segment information: Depreciation and amortisation Unallocated amounts Impairment losses recognised in the consolidated income statement Unallocated amounts Impairment losses reversed in the consolidated income statement Capital expenditure1 Unallocated amounts Additions to right-of-use assets	Aluminium smelting 1,356,359 119,629 1,475,988 237,360 761,797 433,149 28,355 – (31,200) 28,511 –	Coal 1,368,675 18,153 1,386,828 650,168 680,012 307,431 47,216 – (8,755) 46,790 20,911	Import and export of commodities 1,286,964 4,210 1,291,174 (2,402) 152,980 15,911 – 37,062 (2,658) – –	Crude oil 1,854,162 10,109 1,864,271 946,121 3,442,726 692,479 394,786 15,691 – 345,165 1,224	Total 5,866,160 152,101 6,018,261 1,831,247 22,857 (259,523) (141,816) 102,398 320,147 1,875,310 5,037,515 2,784,400 2,374,903 2,242,749 12,439,567 1,448,970 3,224,909 4,673,879 470,357 16,028 486,385 52,753 69,860 122,613 (42,613) 420,466 1,008 421,474 22,135

1 Capital expenditure consists of additions to property, plant and equipment, mining assets, exploration, evaluation and development expenditure.

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3. OPERATING SEGMENT INFORMATION (continued)

Year ended 31 December 2021 HK$’000 Segment revenue: Sales to external customers Other income, gains and losses, net Segment results Reconciliation: Interest income and unallocated gains and losses, net Unallocated expenses Unallocated finance costs Share of profit of: An associate A joint venture Profit before tax Segment assets Reconciliation: Investment in an associate 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 expenditure1 Unallocated amounts Additions to right-of-use assets	Aluminium smelting 1,257,121 76,430 1,333,551 364,912 554,361 436,538 26,814 91 － 140,752 3,549	Coal 740,707 11,770 752,477 141,420 602,759 258,612 32,395 31,902 － 5,329 10,399	Import and export of commodities 1,003,404 7,715 1,011,119 28,607 622,664 66,916 － － (1,510) － －	Crude oil 1,348,174 13,622 1,361,796 646,872 3,759,396 803,860 355,021 1,039 (4,668) 516,206 10,000	Total 4,349,406 109,537 4,458,943 1,181,811 78,994 (263,179) (83,822) 116,220 306,299 1,336,323 5,539,180 2,893,101 2,073,765 2,197,694 12,703,740 1,565,926 4,214,490 5,780,416 414,230 18,202 432,432 33,032 (6,178) 662,287 4,697 666,984 23,948

1 Capital expenditure consists of additions to property, plant and equipment, mining assets, exploration, evaluation and development expenditure.

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3. OPERATING SEGMENT INFORMATION (continued)

Geographical information

(a) Revenue from external customers

Mainland China Australia Europe Other Asian countries Others	2022 HK$’000 1,743,743 1,256,508 855,594 1,770,043 240,272 5,866,160	2021 HK$’000 1,247,524 978,617 520,924 1,214,270 388,071
		4,349,406

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

(b) Non-current assets

Hong Kong Mainland China Australia Kazakhstan Other Asian countries	2022 HK$’000 25,416 3,195,947 3,514,678 2,375,401 74,820 9,186,262	2021 HK$’000 38,217 3,464,537 3,625,394 2,073,991 63,328
		9,265,467

The non-current assets information above is based on the location of the assets which exclude deferred tax assets.

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3. OPERATING SEGMENT INFORMATION (continued)

Information about major customers

During the year, revenue of HK$1,743,743,000 (2021: HK$1,247,524,000) was derived from sales to a customer of the crude oil segment, which amounted to more than 10% of the Group’s revenue for the year.

During the year, revenue of HK$722,198,000 (2021: HK$532,381,000) and HK$372,122,000 (2021: HK$503,228,000) was derived from sales to two customers of the aluminium smelting segment respectively. One of these two customers amounted to more than 10% of the Group’s revenue for the year.

4. OTHER INCOME, GAINS AND LOSSES, NET

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

Interest income Handling service fees Sale of scrap Reclassification adjustments for foreign operations deregistered or disposed of, net Gain on disposal of items of property, plant and equipment, net Government subsidies Fair value gain on derivative financial instruments The government loan forgiveness Exchange (losses)/gains, net Others	2022 HK$’000 42,489 4,874 5,690 – 262 – 96,127 – (18,062) 43,578 174,958	2021 HK$’000 18,615 7,308 4,382 3,967 7,752 2,691 7,698 64,157 54,656 17,305
		188,531

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5. FINANCE COSTS

An analysis of finance costs is as follows:

Interest expense on bank and other borrowings Interest expense on lease liabilities Other finance charges: Increase in discounted amounts of provisions arising from the passage of time Others	2022 HK$’000 113,589 1,770 115,359 20,621 5,836 141,816	2021 HK$’000 78,439 2,586
		81,025 684 2,113
		83,822

6. PROFIT BEFORE TAX

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

Cost of inventories sold Depreciation of property, plant and equipment Depreciation of right-of-use assets Amortisation of mining assets Reclassification adjustments for foreign operations deregistered or disposed of, net Gain on disposal of items of property, plant and equipment, net Loss on disposal of items of exploration, evaluation and development expenditure, net Written off of items of property, plant and equipment Fair value (gain)/loss on derivative financial instruments, net Exchange losses/(gains), net Write-back of inventories to net realisable value (Reversal)/provision for impairment of trade receivables Provision for impairment of exploration, evaluation and development expenditure Reversal of impairment of property, plant and equipment Provision for impairment of goodwill Provision for impairment of an associate* Provision for impairment of other receivables, net	2022 HK$’000 4,031,373 450,498 27,631 8,256 – (262) – – (98,362) 18,062 (54) (2,604) – (31,200) 24,682 45,178 43,998	2021 HK$’000 3,162,643 404,410 26,114 1,908 (3,967) (7,752) 124 1,039 28,704 (54,656) (6,178) 91 31,902 – – – –

• Included in “Other expenses, net” in the consolidated income statement.

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7. INCOME TAX EXPENSE

Current – Hong Kong Current – Elsewhere Charge for the year Underprovision/(overprovision) in prior years Deferred taxation Total tax expense for the year	2022 HK$’000 – 163,554 2,586 309,048 475,188	2021 HK$’000 – 61,670 (19) 160,525 222,176

Assessable profits derived in Hong Kong is subject to a tax rate of 16.5% (2021:16.5%). No provision for Hong Kong profits tax was made as the Group had no assessable profits arising in Hong Kong during the year (2021: 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% (2021: 30%).

Indonesia: The corporate tax rate applicable to the subsidiary which is operating in Indonesia was 25% (2021: 25%). 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 15% (2021: 15%).

Mainland China: The Group’s subsidiaries registered in Mainland China were subject to corporate income tax at a rate of 25% (2021: 25%).

Kazakhstan: The Group’s subsidiary incorporated in Kazakhstan was subject to corporate income tax at the rate of 20% (2021: 20%).

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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$1,335,537,000 (2021: HK$1,103,366,000) and the weighted average number of ordinary shares in issue during the year, which was 7,857,727,149 (2021: 7,857,727,149) shares.

The Group had no potentially dilutive ordinary shares in issue during 2022 (2021: same).

9. DIVIDEND

Proposed final dividend of HK6.00 cents (2021: HK4.50 cents) per ordinary share	2022 HK$’000 471,464	2021 HK$’000 353,598

The proposed final dividend for the year is subject to the approval of shareholders at the forthcoming annual general meeting of the Company.

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	2022 HK$’000 143,098 212 85,617 68,431 297,358	2021 HK$’000 331,680 216,475 82,314 74,420
		704,889

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

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11. CASH AND DEPOSITS

Cash and bank balances Time deposits Less: Time deposit with original maturity more than three months Time deposit with original maturity more than one year Cash and cash equivalents Deposits with a fellow subsidiary Time deposit with original maturity more than three months Cash and deposits	2022 HK$’000 707,948 361,346 1,069,294 – (102,972) 966,322 1,163,881 – 2,130,203	2021 HK$’000 748,355 706,062
		1,454,417 (58,939) (88,754)
		1,306,724 559,910 58,939
		1,925,573

12. 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	2022 HK$’000 106,895 – 4 106,899	2021 HK$’000 135,719 61 23
		135,803

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

13. EVENTS AFTER THE REPORTING PERIOD

On 15 March 2023, Alcoa had announced that the Portland Aluminium Smelter, which the Group holds a 22.5% interest, will begin to immediately reduce its overall production due to operational instability. Production at the smelter will be reduced to approximately 75% of its total capacity of 358,000 metric tons per year. Previously, the smelter had been operating at about 95% of its total capacity. As at the date of this announcement, management is still assessing the financial implications arising from the reduction in production capacity including its impact on the valuation of the associated assets and the on-going profitability of the aluminium segment which the asset relates to.

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BUSINESS REVIEW

Operating Environment and Results

In 2022, the global energy and resource industry underwent drastic changes, and the landscape of energy and resource production, trading and supply-demand structure developed over decades was reshaped, and the operating environment faced by the Group was exceptionally complex and severe. Firstly, the intensified international geopolitical conflicts affected related resource countries. Meanwhile, the geographical balance of energy supply and demand in the world was broken and commodity prices fluctuated dramatically. Secondly, the global industrial and supply chains were severely impacted, which caused obstacles to the production and operation of the energy and resource industry. In addition, as the global financial market entered a new cycle of US dollar interest rate hikes and inflation spread across the world, the operation of the Group was under great pressure of cost increase and the Group’s resource and energy businesses suffered at various degrees.

The Group addressed the challenges posed by the external business environment while maintaining stability and made substantive efforts to ensure safe and stable production and operation. The Group focused on the sustainable development of the Company and adhered to the bottom-line thinking. The management has adopted effective management measures to manage adverse effects and the Group has optimized its investment and expenses, and maintained stability of the employees. It also promoted the application of new technologies and techniques, strengthened safety investigations and reduced its debt level. In addition, the Group continuously builds its long-term competitive advantage by improving the overall management standard of the Company, promoting the refined management of production processes, optimizing operational arrangements, improving efficiency, strengthening costs control and enhancing the Group’s risk resilience.

On the other hand, in 2022, prices of oil, aluminium and coal fluctuated sharply at high levels. Brent oil price averaged US$100.9 per barrel for the year, increasing by approximately 42.4% year-on-year. LME aluminum ingot price averaged US$2,858.1 per tonne for the year, increasing by 4.3% year-on-year. Coal price averaged US$286.5 per tonne for the year, increasing by 114% year-on-year. The above commodity prices were generally favourable to the improvement of the Group’s economic benefits.

Driven by the increase in commodity prices and the measures taken by the Group to address the challenging external business environment, and thanks to the efforts of all staff, the Group successfully accomplished its production and operation targets in 2022 with its operating results hitting a record high.

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In 2022, the Group achieved revenue of approximately HK$5,866.2 million, representing a year-on-year increase of approximately 34.9%; and recorded net profit attributable to ordinary shareholders of the Company of approximately HK$1,335.5 million, representing a yearon-year increase of approximately 21.0%. As at 31 December 2022, the Group’s total assets amounted to approximately HK$12,439.6 million, and net assets attributable to ordinary shareholders of the Company were approximately HK$7,745.4 million. The debt ratio and interest-bearing debt ratio dropped to approximately 37.6% and 25.0%, respectively. The return on net assets reached approximately 18.0%. The Company proposes to pay a final dividend for the year ended 31 December 2022 of HK6.00 cents per ordinary share (2021: HK4.50 cents).

Oil and Gas Business

In 2022, the Group’s oil and gas business division weathered the political turmoil in Kazakhstan and the impact from COVID-19 pandemic. It seized the opportunity to enjoy favourable oil prices and planned production arrangements in advance. The Group explored and realised development potential through scientifically introducing various reserves and production enhancement measures, improving safety management system, promoting application of new processes and new technologies, optimizing the management of various production segments, thus enhancing the output and operating efficiency of the oil and gas business. In 2022, the Group’s oil and gas business achieved operation output of 17,961,000 barrels and working interest output of 9,663,000 barrels, representing an increase of approximately 1.6% and 1.6%, respectively when compared to 2021. The oil and gas business achieved annual revenue of approximately HK$1,854.2 million, representing an increase of approximately 37.5% year-on-year, and contributed net profit attributable to ordinary shareholders of the Company of approximately HK$611.8 million.

• In respect of the KBM (i.e. JSC Karazhanbasmunai) oilfield, with the joint efforts of the shareholders from both China and Kazakhstan, the Group successfully took active measures to stabilize the workforce and resumed normal production at the oilfield in an orderly manner, despite the political turmoil in Kazakhstan. At the same time, the Group actively promoted the integrated governance of the first and third layers in the East Zone and the PTV2 layer in the Central Zone, and promoted the techniques of dissection, injection distribution, segment plugging and high-temperature plugging on a large scale to achieve stability while increasing production. The Group promoted the rolling exploration and expansion of the submerged mountain reservoir and the re-evaluation of the reservoir in the West Binhai Zone to continuously increase the recoverable reserves, and strengthened the production and operation management of the oilfield, making significant progress in core indicators such as production uptime of oil wells, maintenance-free period and operating time. In 2022, the KBM oilfield achieved working interest output of approximately 7,154,000 barrels and contributed profit attributable to ordinary shareholders of the Company of approximately HK$320.1 million, representing a year-on-year increase of approximately 4.5%.

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– In respect of the Yuedong oilfield, the Group made steady adjustments to development plan, and the drilling operation of new wells in D platform has commenced successfully, achieving continuous progress in production. With increasing exploration and development efforts, the Group successfully drilled the first appraisal well in the Hainan Block in 2022, securing important exploration and appraisal results and expanding reserve scale of the new block. With enhanced technological innovation efforts, the Group developed a number of applicable technologies and processes represented by thermal recovery with water plugging and composite throughput, effectively slowing down the decline rate of old wells. By continuously establishing a long-term cost reduction and efficiency improvement mechanism, refining energy consumption management and strengthening control over the operating process, operating cost was reduced. In 2022, the Yuedong oilfield achieved working interest output of approximately 2,340,000 barrels and contributed net profit attributable to ordinary shareholders of the Company of approximately HK$593.5 million, representing a yearon-year increase of approximately 39.7%.

– In respect of the Seram oilfield in Indonesia, the Group actively promoted the Lofin-2 gas trial, explored commercial sales channels of natural gas and sought new growth points of operation benefits, striving to realize better value of the oilfield. The Group also strengthened the dynamic management of oil wells, conducted studies on the distribution of residual oil and sought for replacement potential. In 2022, the Seram oilfield achieved working interest output of approximately 170,000 barrels, and net profit attributable to ordinary shareholders of the Company of approximately HK$18.3 million, representing a year-on-year decrease of approximately 52.8%.

Non-oil-and-gas Businesses

In 2022, taking advantage of the favorable market environment and proactively engaging in management and shareholders affairs of joint venture projects including the Portland Aluminium Smelter and CMJV (i.e. Coppabella and Moorvale coal mines joint venture), the Group urged the project operators to optimize their operation modes, increase production capacity and reduce costs. At the same time, benefiting from the increase in coal price and the fair value gain on derivative financial instruments under the Australian Power Hedging Agreement, the non-oil-and-gas businesses made a significant financial contribution to the Group. In 2022, the Group’s non-oil-and-gas businesses contributed net profit attributable to ordinary shareholders of the Company of approximately HK$705.2 million, representing a year-on-year increase of approximately 12.6%. Such increase was mainly attributable to the increases in coal price and the considerable increase in Australia group companies’ net profit of approximately 71.3%, or approximately HK$257.8 million.

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– In respect of the aluminium smelting business, the Company strived to absorb the pressure of rising costs resulted from inflation. In 2022, the average selling price of aluminium increased by 4.3% and the sales volume of aluminum smelting at the Portland Aluminium Smelter was approximately 61,000 tonnes, representing an increase of approximately 3.5% year-on-year while the Australian Power Hedging Agreement realised a fair value gain of approximately HK$96.1 million. The aluminium smelting business recorded an increase in revenue by approximately 7.9% year-on-year. However, due to the increases in production costs such as electricity and employee’s remuneration, the aluminium smelting business achieved a net profit attributable to ordinary shareholders of the Company of approximately HK$164.7 million, representing a decline of approximately 37.4% year-on-year.

• In respect of the investment in AWC (i.e. Alumina Limited), as a result of the increase in production costs, the Group’s profit attributable to AWC under the equity method decreased significantly compared to that in last year. In 2022, AWC paid dividends of HK$152.3 million (2021: HK$137.1 million) to the Group. As at the end of December 2022, the market capitalisation of AWC was approximately US$287.2 million (at the end of 2021: US$377.4 million) at the closing price as at the end of December 2022, which was approximately US$75.6 million below the carrying amounts of investment.

– In respect of the coal business, in 2022, the average realized selling price of coal by CMJV was approximately US$286.5 per tonne, representing an increase of 1.1 times year-on-year. The coal business achieved a net profit attributable to ordinary shareholders of the Company of approximately HK$454.5 million, representing an increase of approximately 361.7% year-on-year.

– In respect of the import and export trading, in the fourth quarter of 2022, the Group gradually suspended its steel trading operations in Australia and delivered the last shipment in November 2022. The Group is proactively communicating with its customers and collecting account receivables. As at the date of this announcement, there was no material obstacle in the collection of trade receivables. In 2022, the Group recorded a steel import trade volume of approximately 108,000 tonnes, with a net loss attributable to ordinary shareholders of the Company from steel trading operations of approximately HK$27.7 million (2021: net gain of HK$18.4 million).

FINANCIAL MANAGEMENT

In 2022, the Group managed to reduce its debt with internal generated cash flow, with its net debt to net total capital ratio reduced to approximately 6.2% (2021: 20.6%). The Group’s financial position and liquidity remained robust throughout the year.

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OUTLOOK

Opportunities and challenges will coexist in 2023. There is still no sign of easing for the Russia-Ukraine conflict. International geopolitics is undergoing profound changes. Commodity prices have displayed a downward trend, while global industrial chains and supply chains remain very fragile. However, positive factors are also emerging. The recovery of the world’s major economies is relatively strong, including the economic recovery of China in the post-pandemic era, which brings about rising demands that will provide strong support for the stability of global supply chains. Meanwhile, carbon emission reduction and the application of green energy are gaining increasing attention, and the future of new energy development is becoming more and more assured.

In 2023, the Group will continue to adhere to its three core objectives of “mitigating risks, improving quality and efficiency, and optimizing management”. The Group will uphold a bottom-line mindset, strengthen the integrated management of risk, compliance and internal control, improve its risk prevention and control capabilities, and plan ahead to develop advanced schemes to address risks and challenges proactively. The Group will continue to explore its operational potential, optimize production processes, refine management measures, deepen reforms and reinforce innovation, and strive to achieve a steady increase in production. The Group will also continue to optimize the management system in line with the characteristics of its business in a standardized, scientific, modern and systematic manner, improve work efficiency, enhance incentive mechanisms, build competitive advantages and achieve continuous improvement in corporate value.

In the operation and management of its existing assets, the Group will adhere to the concept of green and low-carbon development in the whole process and endeavour to save energy and reduce emissions. In the meantime, the Group will strive to explore the business opportunities in the areas of new energy and new materials. The Group will conduct research and explore new development directions around green energy and metal mineral resources. The Group is committed to promoting the low-carbon and green development of the resources and energy industries, with a view to providing reliable energy and materials to society and bringing greater returns to shareholders while achieving high-quality and sustainable development of the Company.

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LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

Cash and Deposits

In 2022, the Group continues to maintain a strong financial position, with cash and deposits balances amounting to approximately HK$2,130.2 million as at 31 December 2022 (31 December 2021: HK$1,925.6 million).

Borrowings

As at 31 December 2022, the Group had total debt of approximately HK$2,644.4 million (31 December 2021: HK$3,726.7 million), which comprised:

• unsecured bank borrowings of approximately HK$1,412.8 million;

• unsecured other borrowings of approximately HK$1,170.0 million; and

• lease liabilities of approximately HK$61.6 million

Most of the transactions in 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, as well as match the terms of the underlying transactions. Upon receipt of sales proceeds following the completion of a transaction, the related borrowings would be repaid accordingly.

The significant decrease in the Group’s borrowings was mainly due to the voluntary prepayment of bank loans amounted to US$130.0 million (equivalent to approximately HK$1,014.0 million) from its surplus cash in 2022. The Group had also refinanced the A loan (as defined below) amounting to US$150.0 million (equivalent to approximately HK$1,170.0 million) with CITIC Finance International Limited (a fellow subsidiary of the Company,“ CITIC Finance ”) in order to reduce the cost of funding.

The Group aims to maintain the cash and deposits and undrawn banking facilities at US$232.7 million (equivalent to approximately HK$1,815.1 million) at a reasonable level to meet the debt repayments and capital expenditures in the coming year.

On 29 December 2022, the Company entered into a facility agreement with CITIC Finance in respect of an unsecured 3-year revolving loan facility of US$150.0 million (equivalent to approximately HK$1,170.0 million) (the “ A Loan ”). The proceeds of the A Loan were used for refinancing the prepayment of the remaining balance of US$110.0 million (equivalent to approximately HK$858.0 million) of the C Loan (as defined below) on 29 December 2022 and the partial prepayment of US$40.0 million (equivalent to approximately HK$312.0 million) of the B Loan (as defined below) on 30 December 2022. As at 31 December 2022, the outstanding balance of the A Loan was US$150.0 million (equivalent to approximately HK$1,170.0 million).

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In December 2019, the Company entered into an unsecured 4-year committed US$200.0 million (equivalent to approximately HK$1,560.0 million) credit facility agreement comprising of a US$100.0 million term loan and a US$100.0 million revolving loan in the form of a self-arranged club loan with 5 financial institutions (the “ B Loan ”) commencing from 31 December 2019. The purpose of the B Loan is to refinance existing indebtedness and/ or general corporate funding requirement to support the operation and growth of the business of the Group. On 30 September 2022 and 30 November 2022, a partial repayment of the B Loan in the amount of US$60.0 million (equivalent to approximately HK$468.0 million) was made by utilizing the Company’s internal sources. On 30 December 2022, the remaining balance of the B Loan in the amount of US$40.0 million (equivalent to approximately HK$312.0 million) was fully prepaid by refinancing from a drawdown of the A Loan. As at 31 December 2022, there was no outstanding balance of the B Loan.

In March 2021, the Company entered into a facility agreement with CITIC Finance in respect of an unsecured 3-year term loan facility of US$150.0 million (equivalent to approximately HK$1,170.0 million) (the “ C Loan ”). The proceeds of the C Loan were used for refinancing the partial prepayment in the amount of US$150.0 million (equivalent to approximately HK$1,170.0 million) of an existing loan. On 31 March 2022 and 30 June 2022, a partial prepayment of the C Loan in the amount of US$40.0 million (equivalent to approximately HK$312.0 million) was made by utilizing the Company’s internal sources. On 29 December 2022, the remaining balance of the C Loan amounting to US$110.0 million (equivalent to approximately HK$858.0 million) was fully prepaid by refinancing from a drawdown of the A Loan. As at 31 December 2022, there was no outstanding balance of the C Loan.

In June 2021, a wholly-owned subsidiary of the Company entered into an unsecured 3-year committed US$200.0 million (equivalent to approximately HK$1,560.0 million) credit facility agreement with China CITIC Bank International Limited (a fellow subsidiary of the Company) (the “ D Loan ”), effective from 24 June 2021. The proceeds of the D Loan were mainly used for the prepayment of the remaining outstanding balance of the existing loan amounting to US$200.0 million (equivalent to approximately HK$1,560.0 million). On 30 June 2022 and 31 August 2022, a partial prepayment of the D Loan in the amount of US$30.0 million (equivalent to approximately HK$234.0 million) was made by utilizing the Company’s internal sources. As at 31 December 2022, the outstanding balance of the D Loan was US$170.0 million (equivalent to approximately HK$1,326.0 million).

The Group leases certain plant and machinery for its aluminium and coal mining operations under finance leases. The lease liabilities arising from these finance leases as at 31 December 2022 were approximately HK$14.2 million (31 December 2021: HK$21.2 million).

As at 31 December 2022, the Group’s net debt to net total capital ratio was 6.2% (31 December 2021: 20.6%). Of the Group’s total debt, approximately HK$126.9 million was repayable within one year, including trade finance and lease liabilities.

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Share capital

There was no movement in the share capital of the Company in 2022.

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, 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.

EMPLOYEES AND REMUNERATION POLICIES

As at 31 December 2022, the Group had 206 full time employees, including management and administrative staff (31 December 2021: 179).

In addition, the Group would share the expenses of the subcontractor remuneration in respect of its investments as an operator (including the Seram Block, Indonesia and HainanYuedong Block, China) and jointly owned investments (PAS and CMJV and some exploration rights), involving approximately 1,548 employees in total (2021: 1,519) and amounting to approximately HK$201.1 million (2021: HK$177.8 million).

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.

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FINAL DIVIDEND AND CLOSURE OF REGISTER OF MEMBERS

The Board has resolved to recommend the payment of a final dividend of HK6.00 cents per ordinary share for the year ended 31 December 2022 (the “ Final Dividend ”) to shareholders whose names appear on the register of members of the Company on Tuesday, 27 June 2023. 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 Tuesday, 18 July 2023.

For determining the entitlement of shareholders to the Final Dividend, the register of members of the Company will be closed from Friday, 23 June 2023 to Tuesday, 27 June 2023, 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 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong, not later than 4:30 p.m. on Wednesday, 21 June 2023.

CORPORATE GOVERNANCE CODE

The Board is of the view that the Company has, for the year ended 31 December 2022, 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 ”), save and except for the following deviation from code provision C.2.1 of the Corporate Governance Code.

Code provision C.2.1 of the Corporate Governance Code stipulates that the roles of chairman and chief executive should be separate and should not be performed by the same individual. Following the retirement of Mr. Suo Zhengang, a former executive Director and the former Chief Executive Officer (“ CEO ”), Mr. Sun Yufeng, an executive Director and the Chairman, has assumed the additional role of CEO with effect from 30 September 2022.

The Board believes that, since Mr. Sun has demonstrated suitable management and leadership capabilities along with his thorough understanding of the Group’s business and strategy as from his appointment as an executive Director and the Chairman, vesting the roles of both the Chairman and CEO in Mr. Sun can facilitate and ensure that there will be a smooth and continuous execution of the Group’s business strategies and effectiveness of its operation. Therefore, the Board considers that the deviation from the code provision C.2.1 of the Corporate Governance Code will not be inappropriate. In addition, under the supervision of the Board which, apart from Mr. Sun being the executive Director, comprises a non-executive Director and three independent non-executive Directors, the Board is appropriately structured with balance of power to provide sufficient checks to protect the interests of the Company and its shareholders. Further information is set out in the announcements of the Company dated 30 September 2022 and 28 October 2022.

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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 ended 31 December 2022.

PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY

Neither the Company nor any of its subsidiaries had purchased, redeemed or sold any of the Company’s listed securities during the year ended 31 December 2022.

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 nonexecutive directors of the Company.

The audit committee has reviewed the annual results of the Group for the year ended 31 December 2022 with senior management and the external auditor of the Company.

The figures in respect of the Group’s consolidated statement of financial position, consolidated income statement, consolidated statement of comprehensive income and the related notes thereto for the year ended 31 December 2022 as set out in the preliminary results announcement have been agreed by the Group’s auditor, PricewaterhouseCoopers (“ PwC ”), to the amounts set out in the Group’s draft consolidated financial statements for the year. The work performed by PwC in this respect did not constitute an assurance engagement and consequently no opinion or assurance conclusion has been expressed by PwC on the preliminary results announcement.

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EVENTS OCCURRING AFTER THE REPORTING PERIOD

Save as disclosed in note 13 to the financial information on page 17 of this announcement, the Company’s positive profit alert announcement dated 27 February 2023 and the announcements of the Company dated 27 February 2023 in relation to the update on legal proceedings against CA Commodity Trading PTY Ltd and tax audit results of KBM respectively, there was no other important event or transaction affecting the Group and which is required to be disclosed by the Company to its shareholders from 1 January 2023 up to the date of this announcement.

By Order of the Board CITIC Resources Holdings Limited Sun Yufeng Chairman

Hong Kong, 29 March 2023

As at the date hereof, Mr. Sun Yufeng is an executive director of the Company, Mr. Chan Kin is a non-executive director of the Company, and Dr. Fan Ren Da, Anthony, Mr. Gao Pei Ji and Mr. Look Andrew are independent non-executive directors of the Company.

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