Securities code: 601808 securities abbreviation: China Oilfield Services Limited(601808) Announcement No.: pro 2022-003
China Oilfield Services Limited(601808)
Announcement on the provision for asset impairment
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The company and all members of the board of directors guarantee that the contents of the announcement are true, accurate and complete, and shall be responsible for any false records and errors in the announcement
Leading statements or major omissions shall bear individual and joint liabilities.
After deliberation and approval by the board of directors and the board of supervisors of China Oilfield Services Limited(601808) (hereinafter referred to as “the company” or “the company”), the company will withdraw the provision for asset impairment in 2021, as follows:
1、 Overview of provision for asset impairment this time
1. Reasons for withdrawing provision for asset impairment
Under the influence of multiple factors such as the continuous global New Coronavirus pneumonia epidemic, the international oil and gas industry fluctuation and the accelerated transformation of the energy industry, the international oil companies are still cautious in their investment in oil and gas exploration and development. The operating price and utilization rate of some large equipment of the company are low, showing signs of impairment. According to the provisions of accounting standards for Business Enterprises No. 8 – asset impairment and Hong Kong Financial Reporting Standard No. 36 – asset impairment, the company conducted an impairment test on assets with signs of impairment at the end of 2021.
2. Details of the provision for asset impairment
The company conducts impairment test on fixed assets in strict accordance with relevant provisions of accounting standards. The recoverable amount of the asset shall be determined according to the higher one between the net amount of the fair value of the asset minus the disposal expenses and the present value of the expected future cash flow of the asset. If the recoverable amount of the asset is lower than the book value, the impairment provision shall be accrued.
When predicting the future cash flow of the drilling platform, the company comprehensively determines the platform utilization rate, daily rate, estimated cost, capital expenditure and other relevant data based on the estimation of the future market trend. The discount rate adopts the company’s long-term weighted average cost of capital. The net amount of the fair value of the asset minus the disposal expenses shall be determined according to the market price evaluation report issued by the relevant asset broker. The company’s provision for asset impairment is about RMB 2.01 billion.
3. The impact of the provision for asset impairment on the company’s financial position
The provision for asset impairment will reduce the total profit of the company in 2021 by about RMB 2.01 billion.
2、 Notes of the board of directors on the provision for asset impairment this time
The board of directors of the company believes that the provision for asset impairment this time is based on the principle of prudence, fully based, truly and fairly reflects the company’s financial situation and asset value, and agrees to the provision for asset impairment this time.
3、 Opinions of the board of supervisors on the provision for asset impairment this time
The board of supervisors of the company believes that the resolution procedure for withdrawing the provision for asset impairment this time complies with relevant laws, regulations and the articles of association, has sufficient basis, complies with the accounting standards for business enterprises, Hong Kong financial reporting standards, the company’s accounting policies and the actual situation of the company, can fairly reflect the company’s asset status, and agrees to withdraw the provision for asset impairment this time.
4、 Independent opinions of independent non-executive directors on the provision for asset impairment this time
The independent non-executive director of the company believes that the provision for asset impairment this time complies with the relevant provisions of the accounting standards for business enterprises, Hong Kong Financial Reporting Standards and the company’s accounting policies, fairly reflects the asset value of the company, ensures the standardized operation of the company and does not harm the legitimate interests of the company and minority shareholders, and agrees to the provision for asset impairment this time.
5、 Other explanatory matters
The above data are only preliminary accounting data and have not been audited by certified public accountants. The specific and accurate financial data shall be subject to the audited 2021 annual report officially disclosed by the company. Please pay attention to the investment risks.
6、 Directory of documents for future reference
1. Resolutions of the first meeting of the board of directors in 2022;
2. Resolutions of the first meeting of the board of supervisors in 2022;
3. Opinions of independent directors.
It is hereby announced.
China Oilfield Services Limited(601808) board of directors
January 22, 2022
