CNNC International : Interim results announcement for the six months ended 30th June 2019

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CNNC INTERNATIONAL LIMITED

中 核 國 際 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2302)

INTERIM RESULTS ANNOUNCEMENT

FOR THE SIX MONTHS ENDED 30TH JUNE, 2019

The Board of Directors (the "Board") of CNNC International Limited (the "Company") is pleased to announce the unaudited condensed consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30th June, 2019 (the "Period"), together with comparative figures for the corresponding period of 2018, as follows:

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30th June, 2019

		Six months ended 30th June,
		2019			2018
	NOTES	HK$'000	HK$'000
		(unaudited)	(unaudited)
Revenue	3	1,187,537			717,899
Cost of sales		(1,172,465)	(711,694)
Gross profit		15,072			6,205
Other income and exchange gains, net		1,107			1,910
Selling and distribution expenses		(1,141)	(1,224)
Administrative expenses		(8,144)	(6,623)
Finance costs		(4,574)	-
Profit before taxation		2,320			268
Income tax (expense) credit	4	(37)	4,978
Profit for the period attributable to owners of
the Company	5	2,283			5,246
Other comprehensive income that will not be
reclassified subsequently to profit or loss
Exchange differences arising on translation to
presentation currency		820			648
Fair value gain on an equity investment at fair
value through other comprehensive income
("FVTOCI")		16,846			-
Total comprehensive income for the period,
attributable to owners of the Company		19,949			5,894
Basic earnings per share	7	HK0.47 cent	HK1.07 cents

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30th June, 2019

		30th June,	31st December,
		2019	2018
	NOTES	HK$'000		HK$'000
		(unaudited)		(audited)
Non-current assets		14,893
Property, plant and equipment		15,048
Exploration and evaluation assets		211,188	211,151
Investment in equity instrument at FVTOCI		462,931		-
Deposit paid for acquisition of equity		-
instrument at FVTOCI			2,561
		689,012	228,760
Current assets		274,380
Inventories		100,380
Trade and other receivables and prepayments	8	67,942	103,710
Bank balances and cash		59,382		177,917
		401,704	382,007
Current liabilities
	39,070
Trade, bills and other payables and accruals	9	24,549
Contract liabilities		64,490	15,520
Bank borrowings		108,086		-
Amount due to ultimate holding company		1,974	1,977
Amount due to an intermediate holding		1,908
company		1,910
Amounts due to fellow subsidiaries		134		117
		215,662		44,073
Net current assets		186,042	337,934
Total assets less current liabilities		875,054	566,694
Non-current liability
Bank borrowings		288,411		-
		586,643	566,694
Capital and reserves
	4,892
Share capital		4,892
Reserves		581,751		561,802
Equity attributable to owners of the Company		586,643	566,694

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30th June, 2019

1. BASIS OF PREPARATION
   The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
2. PRINCIPAL ACCOUNTING POLICIES
   The condensed consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair values.
   Except as described below, the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30th June, 2019 are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31st December, 2018.
   Application of new accounting policy in respect of investments in equity instruments at fair value through other comprehensive income ("FVTOCI")
   Investments in equity instruments at FVTOCI is subsequently measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the FVTOCI reserve; and are not subject to impairment assessment. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investment, and will be transferred to accumulated losses.
   Dividends from these investments in equity instruments are recognised in profit or loss when the Group's right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included in the "other income" line item in profit or loss.
   Application of new and amendments to Hong Kong Financial Reporting Standards ("HKFRSs")
   In the current interim period, the Group has applied, for the first time, the following new and amendments to HKFRSs issued by the HKICPA which are mandatory effective for the annual period beginning on or after 1st January, 2019 for the preparation of the Group's condensed consolidated financial statements:

HKFRS 16 HK(IFRIC)-Int 23 Amendments to HKFRS 9 Amendments to HKAS 19 Amendments to HKAS 28 Amendments to HKFRSs

Leases

Uncertainty over Income Tax Treatments Prepayment Features with Negative Compensation Plan Amendment, Curtailment or Settlement Long-term Interests in Associates and Joint Ventures Annual Improvements to HKFRSs 2015-2017 Cycle

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Except as described below, the application of the new and amendments to HKFRSs in the current period has had no material impact on the Group's financial performance and positions for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements.

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases

The Group has applied HKFRS 16 for the first time in the current interim period. HKFRS 16 superseded HKAS 17 Leases ("HKAS 17"), and the related interpretations.

The Group has applied HKFRS 16 retrospectively with the cumulative effect recognised at the date of initial application, 1st January, 2019.

When applying the modified retrospective approach under HKFRS 16 at transition, the Group applied the following practical expedients to leases previously classified as operating leases under HKAS 17, on lease-by-lease basis, to the extent relevant to the respective lease contracts:

1. relied on the assessment of whether leases are onerous by applying HKAS 37 Provisions, Contingent Liabilities and Contingent Assets as an alternative of impairment review;
2. elected not to recognise right-of-use assets and lease liabilities for leases with lease term ends within 12 months of the date of initial application;
3. used hindsight based on facts and circumstances as at date of initial application in determining the lease term for the Group's leases with extension and termination options.

The Group has elected the practical expedient to apply HKFRS 16 to contracts that were previously identified as leases applying HKAS 17 and HK(IFRIC)-Int 4 Determining whether an Arrangement contains a Lease and not apply this standard to contracts that were not previously identified as containing a lease. Therefore, the Group has not reassessed contracts which already existed prior to the date of initial application.

For contracts entered into or modified on or after 1st January, 2019, the Group applies the definition of a lease in accordance with the requirements set out in HKFRS 16 in assessing whether a contract contains a lease.

The Group did not recognise lease liabilities and right-of-use assets at 1st January, 2019.

3. REVENUE AND SEGMENT INFORMATION

Information reported to the Group's executive director, being the chief operating decision maker, for the purposes of resources allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. The Group currently organises its operations into three operating divisions, which also represent the operating segments of the Group for financial reporting purposes, namely trading of mineral property, exploration and selling of mineral properties and supply chain. They represent three major lines of business engaged by the Group. The Group's operating and reportable segments under HKFRS 8 are as follows:

• Trading of mineral property - trading of uranium
• Exploration and selling of mineral properties - exploration and selling of uranium

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