China Oriental : Announcements and Notices - Announcement of 2018 Annual Results

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.

(incorporated in Bermuda with limited liability)

(Stock Code: 581)

ANNOUNCEMENT OF 2018 ANNUAL RESULTS

FINANCIAL HIGHLIGHTS

	Year ended 31 December
	2018		2017		Change
Sales volume (tonnes)
- Self-manufactured steel products	10.45 million		11.75 million		(11.1%)
- Trading of steel products	0.08 million		0.10 million		(20.0%)
	10.53 million		11.85 million		(11.1%)
Revenue (RMB)
- Sale of self-manufactured steel products	35.68 billion		36.50 billion		(2.3%)
- Sales of properties	0.19 billion		1.14 billion		(82.9%)
- Others	4.91 billion		3.71 billion		32.3%
	40.78 billion		41.35 billion		(1.4%)
Gross profit (RMB)
- Sale of self-manufactured steel products	6,602 million		6,946 million		(5.0%)
- Sales of properties	72 million		147 million		(51.0%)
- Others	117 million		199 million		(41.2%)
	6,791 million		7,292 million		(6.9%)
Gross profit per tonne (RMB)
- Sale of self-manufactured steel products	632 yuan		591 yuan		6.9%

*For identification purpose only

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	Year ended 31 December
	2018	2017	Change
EBITDA1 (RMB)	7,619 million	7,474 million	1.9%
EBITDA margin	18.7%	18.1%	N/A
EBIT2 (RMB)	6,459 million	6,406 million	0.8%
EBIT margin	15.8%	15.5%	N/A
Profit before income tax (RMB)	6,299 million	6,408 million	(1.7%)
Profit for the year (RMB)	4,861 million	4,883 million	(0.5%)
Profit attributable to owners
of the Company (RMB)	4,782 million	4,839 million	(1.2%)
Basic earnings per share (RMB)	1.31 yuan	1.39 yuan	(5.8%)
Final dividends per share (HK$)	0.11 dollar	0.22 dollar	(50.0%)
Special dividends per share (HK$)	0.07 dollar	0.11 dollar	(36.4%)
Total dividends per share for the year5 (HK$)	0.37 dollar	0.46 dollar	(19.6%)
Return on equity3	30.5%	41.8%	N/A
	As at 31 December
	2018	2017	Change
Total assets (RMB)	29.61 billion	24.41 billion	21.3%
Net assets value per share
(exclude non-controlling interests) (RMB)	4.68 yuan	3.94 yuan	18.8%
Debt-to-capital ratio 4	15.9%	16.9%	N/A

1China Oriental Group Company Limited (the "Company") defines EBITDA as profit for the year before finance (costs)/ income - net, income tax expense, amortisation of intangible assets, amortisation of leasehold land and land use rights, depreciation and non-recurring items. Non-recurring item for the year ended 31 December 2018 included approximately RMB 34 million (2017: nil) as impairment loss on investment in an associate.

2The Company defines EBIT as profit for the year before finance (costs)/income - net, income tax expense and non- recurring items. Non-recurring item for the year ended 31 December 2018 included approximately RMB 34 million (2017: nil) as impairment loss on investment in an associate.

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Return on equity is calculated as profit attributable to owners of the Company divided by the average of the beginning and ending balances of the equity attributable to owners of the Company for that year.

Debt-to-capital ratio is calculated as total debt divided by total capital. Total debt includes current and non-current borrowings, other long-term payables and loans from related parties. Total capital includes non-current borrowings and its equity attributable to owners of the Company.

5Total dividends per share for the year include interim dividend of HK$ 0.19 per share (2017: HK$ 0.13 per share).

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The board (the "Board") of directors (the "Director(s)") of the Company is pleased to announce the audited consolidated results of the Company and its subsidiaries (the "Group") for the year ended 31 December 2018 together with the comparative figures as follows:

CONSOLIDATED STATEMENT OF PROFIT OR LOSS
		Year ended 31 December
		2018		2017
	Note	RMB'000		RMB'000
Revenue	3	40,782,302		41,352,596
Cost of sales	4	(33,991,503)		(34,060,715)
Gross profit		6,790,799		7,291,881
Other income	5	35,394		37,661
Distribution costs	4	(85,817)		(103,641)
Administrative expenses	4	(735,705)		(751,310)
Reversal of/(provision for) impairment on financial assets, net	4	218,371		(135,231)
Other expenses	4	(23,148)		(22,009)
Gains/(losses) from derivative financial instruments	6	29,872		(75,196)
Other gains - net	7	231,311		163,040
Operating profit		6,461,077		6,405,195
Finance income	8	35,721		81,001
Finance costs	8	(161,315)		(78,855)
Finance (costs)/income - net		(125,594)		2,146
Impairment loss on investment in an associate		(34,122)		-
Share of results of associates and a joint venture		(1,941)		389
Profit before income tax		6,299,420		6,407,730
Income tax expense	9	(1,438,899)		(1,524,566)
Profit for the year		4,860,521		4,883,164
Profit attributable to:
Owners of the Company		4,781,678		4,839,080
Non-controlling interests		78,843		44,084
		4,860,521		4,883,164
Earnings per share for profit attributable to
owners of the Company
(expressed in RMB per share)
- Basic earnings per share	10	RMB 1.31		RMB 1.39
- Diluted earnings per share	10	RMB 1.31		RMB 1.37

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
	Year ended 31 December
	2018		2017
	RMB'000		RMB'000
Profit for the year	4,860,521		4,883,164
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Fair value gains on financial assets at fair value
through other comprehensive income	5,735		-
Fair value losses on available-for-sale financial assets	-		(7,317)
Items reclassified to profit or loss
Transfer of fair value gains previously credited to reserve to
statement of profit or loss upon disposal of financial assets
at fair value through other comprehensive income	(2,635)		-
Transfer of fair value gains previously credited to reserve to
statement of profit or loss upon disposal of available-for-sale
financial assets	-		(1,259)
	3,100		(8,576)
Total comprehensive income for the year	4,863,621		4,874,588
Attributable to:
Owners of the Company	4,784,778		4,830,504
Non-controlling interests	78,843		44,084
	4,863,621		4,874,588

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CONSOLIDATED BALANCE SHEET
		As at 31 December
		2018	2017
ASSETS	Note	RMB'000		RMB'000
Non-current assets		181,499
Leasehold land and land use rights	12		187,311
Property, plant and equipment	12	7,559,747	8,160,582
Investment properties	12	187,184	238,920
Intangible assets	12	129,647	94,132
Investment in associates and a joint venture		121,858	157,921
Available-for-sale financial assets		-	432,111
Financial assets at fair value through		487,376
other comprehensive income				-
Financial assets at fair value through profit or loss	18	243,120		-
Prepayments, deposits and other receivables	13	729,364		-
Loan receivables	17	720,000		-
Deferred income tax assets		270,989	179,339
Total non-current assets		10,630,784	9,450,316
Current assets
		168,790
Properties under development and held for sale	14		282,019
Inventories	15	3,107,511	3,069,897
Trade receivables	16	661,951	693,932
Prepayments, deposits and other receivables	13	1,439,935	1,422,590
Amounts due from related parties		185,906	173,951
Prepaid current income tax		29,176	80,101
Loan receivables	17	40,328		-
Notes receivable - bank acceptance notes	16	1,364,128	3,282,570
Derivative financial instruments		2,157	209
Financial assets at fair value through profit or loss	18	6,567,243	2,766,237
Restricted bank balances		527,542	417,151
Cash and cash equivalents		2,845,229	2,766,396
Structured bank deposits	19	2,037,900		-
Total current assets		18,977,796	14,955,053
Total assets		29,608,580	24,405,369
EQUITY
Equity attributable to owners of the Company		380,628
Share capital			364,762
Share premium		3,532,234	2,820,785
Other reserves		1,473,735	1,744,091
Retained earnings		12,020,989	8,982,541
		17,407,586	13,912,179
Non-controlling interests		273,962	192,589
Total equity		17,681,548	14,104,768

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