Shandong Molong Petroleum Machinery : PRELIMINARY FINANCIAL DATA FOR THE YEAR 2019

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(A Sino-foreign equity joint venture company incorporated in the People's Republic of China with limited liability)

(Stock Code: 568)

PRELIMINARY FINANCIAL DATA FOR THE YEAR 2019

This announcement is made by Shandong Molong Petroleum Machinery Company Limited (the "Company", together with its subsidiaries, the "Group") pursuant to 13.09(2)(a) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong, the "SFO").

Special reminder：The financial information of the Company for the year of 2019 set out in this announcement is preliminary data audited by the internal audit department of the Company, but have not been audited by an external accounting firm. As such, there may be discrepancies between the above-mentioned data and the final information disclosed in the annual report. Shareholders and potential investors are hereby reminded to exercise caution when dealing in the shares of the Company.

1. KEY FINANCIAL DATA AND FINANCIAL INDICATORS FOR THE YEAR OF 2019 Reporting period: 1 January 2019 - 31 December 2019

								Currency: RMB
						For the year	For the year ended	Year-on-year
			Item			ended	Change Rate
					31 December 2018
						31 December 2019	(%)
Total operating income			4,388,904,215.91	4,452,014,810.12	-1.42%
Operating profit				-189,048,670.21	69,122,996.22	-373.50%
Gross profit					-215,227,132.00	61,162,501.12	-451.89%
Net profit	attributable	to	the equity	-190,952,177.60	92,476,375.01	-306.49%
holders of the Company
Basic earnings per share（RMB）	-0.24	0.12	-300.00%
Return	on	net	assets	on	weighted	-10.33%	4.82%	-15.15%
average basis（%）
						As at 31 December	As at 1 January	Year-on-year
						2019	2019	change
Total assets					5,741,109,434.89	6,607,536,593.37	-13.11%
Equity attributable to equity holders of	1,752,876,061.15	1,944,091,288.19	-9.84%
the Company
Share capital				797,848,400.00	797,848,400.00	0.00%
Net asset per share attributable to
equity	holders	of	the	Company	2.20	2.44	-9.84%
(RMB)

Note: The data in the table is extracted from the Company's consolidated financial statement (unaudited).

2. BRIEF ANALYSIS ON OPERATING RESULTS AND FINANCIAL POSITION

1. Brief Analysis on Operating Results
   For the reporting period, the operating income of the Company was RMB4,388,904,215.91, recording a decrease of 1.42% comparing with that of the previous year; the operating profit was RMB -189,048,670.21, recording a decrease of 373.50% comparing with that of the previous year; the total profit was RMB -215,227,132.00, recording a decrease of 451.89% comparing with that of the previous year; the net profit attributable to the shareholders of the Company was RMB -190,952,177.60, recording a decrease of 306.49% comparing with that of the previous year.
2. Main Reasons for Change in Financial Results
3. 1. the significant increase in the price of raw materials during 2019, which in turn resulted in a significant increase in production costs. At the same time, there has been a decrease in the price of the products of the Company, which in turn resulted in a decrease in profit;
   2. there has been an increase in inspection and maintenance costs as a result of the suspension of production for inspection and maintenance and partial technical modification of production facilities of Shouguang Maolong New Materials Technology Development Company Limited* (壽光懋隆新材料技術開發有限公司), a wholly owned subsidiary of the Company, which has resulted in a limited supply of raw materials to the downstream subsidiaries and thus increased the product costs;
   3. in light of litigations brought by investors, the provisions for loss resulting from claims of investors in 2019 is estimated to be a total of RMB29.17 million; and
   4. the Company has conducted preliminary tests on impairment of goodwill and the estimated provision for impairment of goodwill is in the amount of RMB23.68 million.
4. Brief Analysis on Financial Position
   As at the end of the reporting period, the total assets of the company was RMB5,741,109,434.89,

recording a decrease of 11% comparing with that as at the beginning of the reporting period; the owners' equity attributable to the shareholders of the listed company was RMB1,752,876,061.15, recording a decrease of 9.84% comparing with that as at the beginning of the reporting period; the net assets per share attributable to the shareholders of the listed company was RMB2.20, recording a decrease of 9.84% comparing with that as at the beginning of the reporting period.

3. OTHER INFORMATION

For details of the 2019 annual report of the Company, please refer to the summary and full text of the annual report of the Company expected to be published on 28 March 2020.

4. DOCUMENTS FOR INSPECTION

1. The Comparison-Balance Sheet and the Comparison-Income Statement, signed and sealed by the current legal representative, the accounting supervisor(s) and the responsible person(s) of the accounting department of the Company (the accounting supervisor);
2. The internal audit report signed by the responsible person(s) of the internal audit department; and
3. Other documents as required by the Shenzhen Stock Exchange.

By order of the Board

Shandong Molong Petroleum Machinery Company Limited

Liu Yunlong

Chairman

Shandong, People's Republic of China

26 February 2020

As at the date of this announcement, the Board comprises the executive Directors, namely Mr. Liu Yun Long, Mr. Liu Min, Mr. Zhang Yu Zhi and Mr. Li Zhi Xin; the non-executive Directors, namely Mr. Yao You Ling and Mr. Wang Quan Hong; and the independent non-executive Directors, namely Mr. Tang Qing Bin, Mr. Song Zhi Wang and Mr. Cai Zhong Jie.

* For identification purpose only