"Road of hardships to greatness - comprehensively improve management standard and promote high-quality development"

Dear Shareholders,

2022 was an extraordinary year. The global industrial and supply chains were severely impacted by the intensified international geopolitical conflicts. The world's energy and resource production, pattern of trade and supply structure have been reshaped. Coupled with the contagion of inflation, the global economic development encountered great difficulties and the business environment became more complex and severe, and uncertainties increased. Under the leadership of the Board, the management and all staff of the Group continued to strive for success in the past year and continued to prioritize stability while pursuing progress. Through hedging against adverse effects by adopting effective management measures, maintaining the stability of the team, promoting the application of new technologies and techniques, optimizing management operational arrangements and improving efficiency, comprehensively strengthening risk prevention and control capabilities, and further exploring the potential in its operations, the Company has created a new landscape of overall improvement in its management standard and high-quality development for its business.

In 2022, the Group seized the opportunity of high commodities prices, endeavored to tap into market potential in depth and continued to reduce costs and increase efficiency. Thus, the Group achieved a historic breakthrough in operating performance, realising a consolidated operating revenue of approximately HK$5,866.2 million, representing a year-on-year increase of approximately 34.9%; net profit attributable to ordinary shareholders of the Company of approximately HK$1,335.5 million, representing a year-on-year increase of approximately 21.0%. Various financial indicators and the financial position have been improved.

On behalf of the Board, I would like to express my highest appreciation to my fellow management and all of my colleagues for their relentless efforts and achievements over the past year. In addition, on behalf of the Group, I would also like to extend my heartfelt gratitude to all our shareholders, customers, suppliers, financial institutions and business partners for their support and trust throughout these years.

Oil and Gas Business

Oil and gas upstream development business is one of the Group's major core businesses. During the year under review, the Group's oil and gas business division worked cohesively and endeavored to overcome difficulties. According to the overall deployment, the Group explored and realised development potential through scientifically introducing various reserves and production enhancement measures, improving safety management system, strengthening compliance management, arranging for hidden danger investigation, promoting application of new processes and new technologies, thus enhancing the operating efficiency of the oil and gas business, and securing safe and environmentally friendly production. The Yuedong oilfield made steady adjustments to development plan, and the drilling operation of new wells in D platform has commenced successfully. With increasing production brought about by new wells gradually commencing, coupled with increasing exploration and development efforts, as well as technological and innovative efforts, the decline rate of old wells was slowed down and operating cost was reduced. The selling price of asphalt products from the Karazhanbas oilfield has been significantly increased through public bidding due to early preparation for the production upgrade. The Seram oilfield in Indonesia actively promoted the Lofin-2 gas trial, and reduced its comprehensive costs through refined management. These progresses not only enhanced the Group's operating efficiency, but also consolidated the foundation for the Group's high-quality development, demonstrating the corporate comprehensive competitiveness. 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 a year-on-year increase of approximately 37.5%, and contributed net profit attributable to ordinary shareholders of the Company of approximately HK$611.8 million, representing a year-on-year increase of approximately 32.0%.

Non-oil-and-gas Businesses

The Group's non-oil-and-gas businesses include aluminium smelting, coal, import and export trading as well as investment in AWC, which are important sources of income and profit for the Group. In 2022, taking advantage of the favorable market environment and fully exercising its rights as a shareholder of each joint venture project in the non-oil-and-gas businesses, the Company 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 overall results of the non-oil-and-gas businesses continued to improve. The coal business achieved a net profit attributable to ordinary shareholders of the Company of approximately HK$454.5 million, representing a yearon- year increase of approximately 361.7%; and the aluminum smelting business achieved net profit attributable to ordinary shareholders of the Company of approximately HK$164.7 million, representing a year-on-year decrease of approximately 37.4%. The sales volume of aluminum smelting at the PSA was approximately 61,000 tonnes, representing a year-on-year increase of approximately 3.5%. The Australian Power Hedging Agreement achieved a fair value gain of approximately HK$96.1 million; and the profit attributable to equity investments in AWC increased significantly, with dividends of approximately HK$152.3 million distributed to the Group. The Company's non-oil-and-gas businesses achieved annual revenue of approximately HK$4,012.0 million, representing a year-on-year increase of approximately 33.7%, and 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%.

Environmental, Social and Governance ("ESG")

Sustainable development is an essential condition for enterprises to secure future competitiveness. The Group has been proactively performing corporate social responsibilities and integrating the concept of sustainable development into all aspects of the Group's operations. In 2022, the Group continued its efforts in environmental protection, human resources, operational management, community investment, etc. By implementing a series of environmental protection and emission reduction projects such as refined node management on power saving, as well as constantly improving the ESG-related performances, the Group achieved good results, and its competitiveness of sustainable development has been further consolidated.

The Group put efforts into promoting long-term career development of employees, strengthened internal training for employees, optimized the welfare policy for employees, implemented the safety work protocols for employees in an all-round way and protected employees' rights. At the same time, adhering to the concept of "Working and Growing Together", the Group enhanced its performance of sustainable development jointly with suppliers and contractors. In addition, the Group implemented a comprehensive anti-corruption policy and organized anti-corruption training for employees to prevent corruption incidents. The Group also attaches importance to the management of community development where it operates, and continues to actively contribute to public welfare undertakings such as poverty alleviation, community development and volunteer service together with all stakeholders, establishing good corporate image. The Group has published its "Environmental, Social and Governance Report" for eight consecutive years, and has elaborated and promoted the benefits of sustainable development to internal and external stakeholders.

Looking ahead to 2023, the impact of the COVID-19 is gradually fading away and the countries in the world are returning to normalcy. However, there is still no sign of easing for the Russia-Ukraine crisis. International geopolitics is undergoing profound changes. The international and domestic economic outlook is still not optimistic. Fraught with difficult external and business environment, commodity prices continue to fluctuate. Facing the new landscape and new challenges, the Group will stick to its three core objectives of "mitigating risks, improving quality and efficiency, and optimizing management". Through deepening of reform and vigorous innovation, the Group continues to pragmatically pursue cost reduction and efficiency improvement. Meanwhile, the Group will also strengthen the integrated management of risk control, compliance and internal control, optimize the management system and procedures of the Company, and improve the Company's business process informatization construction. The Group strives to capture new development opportunities, constantly improves production efficiency and economic benefits, and aims to reward our shareholders and investors with better results!