Chiho Environmental : ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

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CHIHO ENVIRONMENTAL GROUP LIMITED

齊 合 環 保 集 團 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 976)

ANNOUNCEMENT OF ANNUAL RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2020

FINANCIAL HIGHLIGHTS

The outbreak of the novel coronavirus pandemic has caused significant impact to the up- and downstream industries in all the countries where the Group operates, as such, the Group's core recycling business has also been inevitably affected, particularly in the first half of 2020.

The Group has implemented swift actions to ensure a safe working environment for the employees while keeping our business operations running. Necessary measures were implemented to reduce costs, preserve cash and ensure liquidity.

Thanks to the strong rebound of industrial activities and the increasing demand for metals across the globe, the Group's tonnage volume of recycled metals has strongly improved in the second half of 2020, and also increased compared to the same period in 2019.

The Group sold 4.3 million tonnes of recycled products in the coronavirus pandemic year 2020, a 9.7% decrease comparing to 2019. Revenue for the year was HK$13,368.1 million, a reduction of 13.0% compared to prior year.

Despite of the drop in revenue and volume, the gross profit for the year was HK$946.5 million, displaying a strong increase of 7.8% compared to 2019. The gross profit margin improved to 7.1% (2019: 5.7%) due to a consequent margin management.

The Group strives continuously to improve business efficiencies. Consequently, specific non-performing assets were being restructured or disposed of, leading to one- off non-cash impairments amounting to HK$519.2 million. Including the impairments, the Group reported a net loss attributable to shareholders of HK$848.1 million for the year ended 31 December 2020 (2019: HK$128.7 million).

The Group's cash generated from operations for the year stood at HK$953.7 million (2019: HK$803.6 million).

The Board does not recommend the payment of a final dividend in 2020 (2019: Nil).

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ANNUAL RESULTS

The board (the "Board") of directors (the "Directors") of Chiho Environmental Group Limited (the "Company") is pleased to present the audited consolidated results of the Company and its subsidiaries (the "Group", "we" and "our") for the year ended 31 December 2020 prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRS") as follows (together with the comparative figures for the year ended 31 December 2019):

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the year ended 31 December 2020

		2020					2019
	Notes	HK$M	HK$M
Revenue	3	13,368.1					15,363.4
Cost of sales	5	(12,421.6)	(14,485.5)
Gross profit		946.5					877.9
Other income		139.7					127.0
Other (losses)/gains, net	4	(79.7)	44.0
Impairments on non-financial assets	4	(519.2)	(0.9)
Net reversal of impairment on financial assets		7.4					39.4
Distribution and selling expenses	5	(54.0)	(51.5)
Administrative expenses	5	(1,084.8)	(970.1)
		(644.1)	65.8
Finance income		11.0					23.6
Finance costs		(243.5)		(236.2)
Finance costs, net	6	(232.5)		(212.6)
Share of post-tax loss of an associate		(0.1)	(0.3)
Share of post-tax profit of joint ventures		66.9					47.6
Loss before income tax		(809.8)	(99.5)
Income tax expense	7	(54.4)	(34.3)
Loss for the year		(864.2)	(133.8)
Loss attributable to:
Shareholders of the Company		(848.1)	(128.7)
Non-controlling interests		(16.1)	(5.1)
		(864.2)	(133.8)
Loss per share attributable to
shareholders of the Company for the year
(expressed in HK$ per share)
Basic loss per share	9	(0.53)	(0.08)
Diluted loss per share	9	(0.53)	(0.08)

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2020

	2020				2019
	HK$M	HK$M
Loss for the year	(864.2)	(133.8)
Other comprehensive income/(loss)
Item that may be reclassified to
profit or loss:
Currency translation differences on
foreign operations	389.5				(92.4)
Items that will not be reclassified to profit or loss:
Change in fair value of equity investments
at fair value through other
comprehensive income	(1.1)	(7.5)
Remeasurements of post-employment
benefit obligations	(1.2)	(4.6)
Share of other comprehensive loss of
joint ventures	(1.3)	(4.4)
Income tax relating to these items	0.6				1.9
Other comprehensive income/(loss)
for the year, net of tax	386.5				(107.0)
Total comprehensive loss for the year	(477.7)	(240.8)
Total comprehensive loss for the year
attributable to:
Shareholders of the Company	(463.7)	(234.0)
Non-controlling interests	(14.0)	(6.8)
	(477.7)	(240.8)

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CONSOLIDATED BALANCE SHEET

At 31 December 2020

		2020	2019
	Notes	HK$M		HK$M
ASSETS
Non-current assets
Property, plant and equipment		2,623.9	2,982.9
Right-of-use assets		844.5	1,185.8
Investment properties		20.7	9.1
Intangible assets		957.2	1,115.0
Investments accounted for using
the equity method		696.4	630.9
Financial assets at fair value through profit or loss		0.9	1.9
Financial assets at fair value through
other comprehensive income		104.6	98.7
Other non-current assets	10	4.2	17.0
Deferred income tax assets		110.4	109.3
		5,362.8	6,150.6
Current assets
Inventories		1,169.3	1,495.9
Trade, bills and other receivables	10	1,709.0	1,375.8
Fixed return investment		-	88.4
Amounts due from related parties		129.3	47.9
Derivative financial instruments		14.3	25.0
Tax recoverable		23.0	29.9
Pledged bank deposits		122.7	191.7
Cash and cash equivalents		913.8	784.8
		4,081.4	4,039.4
Assets held for sale		428.7		-
		4,510.1	4,039.4
Total assets		9,872.9	10,190.0

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		2020		2019
	Notes	HK$M	HK$M
EQUITY AND LIABILITIES
Equity attributable to shareholders of
the Company
Share capital		16.1		16.1
Other reserves		7,009.8		6,614.9
Accumulated losses		(2,548.3)	(1,689.7)
		4,477.6		4,941.3
Non-controlling interests		(13.4)	(10.3)
Total equity		4,464.2		4,931.0
Non-current liabilities
Borrowings		178.3		226.4
Lease liabilities		342.3		569.4
Retirement benefit obligations		29.7		27.3
Other payables	11	102.6		96.6
Deferred income tax liabilities		363.8		342.8
		1,016.7		1,262.5
Current liabilities
Trade, bills and other payables	11	1,689.5		1,066.9
Current income tax liabilities		93.7		101.2
Borrowings		2,120.1		2,569.0
Lease liabilities		202.2		191.7
Amounts due to related parties		63.4		37.5
Derivative financial instruments		59.7		30.2
		4,228.6		3,996.5
Liabilities directly associated
with assets held for sale		163.4		-
		4,392.0		3,996.5
Total liabilities		5,408.7		5,259.0
Total equity and liabilities		9,872.9		10,190.0

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