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Tianneng Power International : ANNUAL REPORT 2020

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Tianneng Energy Worldwide : ANNUAL REPORT 2020

CONTENTS

2

Company Info

4

Firm Profile

5

Monetary Highlights

7

Chairman’s Assertion

11

Administration Dialogue and Evaluation

29

Profiles of Administrators and Senior Administration

33

Company Governance Report

46

Related Transactions

49

Administrators’ Report

59

Unbiased Auditor’s Report

62

Consolidated Assertion of Profit or Loss and Different Complete Revenue

63

Consolidated Assertion of Monetary Place

65

Consolidated Assertion of Modifications in Fairness

66

Consolidated Assertion of Money Flows

68

Notes to the Consolidated Monetary Statements

128

1

CORPORATE INFORMATION

Govt Administrators

Dr. Zhang Tianren (Chairman) Mr. Zhang Aogen

Mr. Shi Borong

Mr. Zhang Kaihong Mr. Zhou Jianzhong

Unbiased Non-Govt Administrators

Mr. Huang Dongliang

Mr. Wu Feng

Mr. Zhang Yong

Audit Committee Members

Mr. Huang Dongliang (Chairman)

Mr. Wu Feng

Mr. Zhang Yong

Remuneration Committee Members

18 Whitfield Street, Causeway Bay, Hong Kong

Auditor

ZHONGHUI ANDA CPA Restricted Unit 701-3 & 8, Citicorp Centre,

Statutory Deal with

Cricket Sq.

Hutchins Drive P.O. Field 2681 Grand Cayman KY1-1111 Cayman Islands

Principal Place of Enterprise in Hong Kong

Suite 3202, 32 Ground,

Central Plaza

18 Harbour Street Wanchai, Hong Kong

Mr. Wu Feng (Chairman)

Mr. Huang Dongliang Mr. Zhang Aogen

Nomination Committee Members

Dr. Zhang Tianren (Chairman)

Mr. Huang Dongliang

Mr. Wu Feng

Firm SecretaryPrincipal Share Registrar

Conyers Belief Firm (Cayman) Restricted Cricket Sq., Hutchins Drive,

P.O. Field 2681,

Grand Cayman KY1-1111, Cayman Islands

Hong Kong Department Share Registrar and Switch Office

Tricor Investor Providers Restricted Stage 54, Hopewell Centre 183 Queen’s Street East Hong Kong

CORPORATE INFORMATION

Public Relations

Porda Havas Worldwide Finance Communications Group Unit 2301, 23/F, The Centrium,

60 Wyndham Road,

Central,

Hong Kong

Itemizing Info

The Inventory Alternate of Hong Kong Restricted Inventory Code: 00819

Firm’s Web site

http://www.tianneng.com.hk

COMPANY PROFILE

Tianneng Energy Worldwide Restricted (“Tianneng Energy” or the “Firm”), along with its subsidiaries (the “Group”), is a number one firm within the sector of motive batteries for new-energy autos in China, based in 1986. In 2007, Tianneng Energy was listed on the Most important Board of The Inventory Alternate of Hong Kong Restricted (Inventory Code: 00819.HK). After greater than 30 years of growth, it has change into a high-tech vitality group specializing in the motive batteries for gentle electrical autos and integrating the analysis and growth (R&D), manufacturing and sale of varied kinds of batteries (together with start-stop batteries for vehicles, energy storage batteries, motive batteries for particular electrical autos and standby batteries), the recycling of waste batteries and renewable vitality, and sensible logistics platforms.

“Accountability, Innovation, Striving and Sharing” are the core values of Tianneng Energy, and these core values give attention to striving for worth, enhancing duties, persistently driving for innovation, continuously producing motivation, boosting core competitiveness, persistently reaching high-quality growth, creating values for purchasers and offering a platform for workers, with the goals to create returns to our shareholders and to offer again to our group by way of concrete actions.

FINANCIAL HIGHLIGHTS

(Quantities are expressed in thousand of RMB besides per share knowledge)

Consolidated Assertion of Complete Revenue (Word 1)

2020

2019

2018

2017

2016

Income

53,525,039

40,613,555

34,750,848

26,903,901

21,480,891

Profit/(Loss) earlier than taxation

2,949,728

2,126,041

1,530,650

1,407,588

1,145,083

Taxation

(445,153)

(400,091)

(295,474)

(227,356)

(239,561)

Profit/(Loss) for the 12 months

2,504,575

1,725,950

1,235,176

1,180,232

905,522

Non-controlling pursuits

27,654

44,123

46,898

1,863

46,976

Profit/(Loss) attributable to the homeowners

of the Firm

2,476,921

1,681,827

1,188,278

1,178,369

858,546

Earnings/(Loss) per share (RMB/share)

– Fundamental

2.20

1.49

1.05

1.05

0.76

– Diluted

2.15

1.47

1.03

1.02

0.74

Consolidated Assertion of Monetary Place (Word 2)

12 months ended 31 December

2020

2019

2018

2017

2016

Complete property Complete liabilities

Web property/Complete fairness

23,200,435 13,741,146 9,459,289

19,130,327 11,843,811 7,286,516

16,856,292 11,467,094 5,389,198

  • 13,981,698 12,129,825

  • 8,918,212 8,023,225

  • 5,063,486 4,106,600

Notes:

  • 1. The outcomes for the years ended 31 December 2016 and 2017 are set out on web page 61 of the Annual Report 2017 of the Firm. The outcomes for the years ended 31 December 2018 and 2019 are set out on web page 56 of the Annual Report 2019 of the Firm. The outcomes for the 12 months ended 31 December 2020 is about out on web page 62 of the Annual Report 2020 of the Firm. All such info is extracted from the financial statements ready underneath Hong Kong Monetary Reporting Requirements (“HKFRSs”).

  • 2. The consolidated assertion of financial place as at 31 December 2016 and 2017 are set out on web page 62 of the Annual Report 2017 of the Firm. The consolidated assertion of financial place as at 31 December 2018 and 2019 are set out on web page 57 of the Annual Report 2019 of the Firm. The outcomes for the 12 months ended 31 December 2020 is about out on web page 63 of the Annual Report 2020 of the Firm. All such info is extracted from the financial statements ready underneath HKFRSs.

FINANCIAL HIGHLIGHTS

SALES TURNOVER

RMB million

60,00050,00040,00030,00020,000

53,525

10,000

0

2019

SEGMENT TURNOVER

*

2020

2,500

2,000

RMB million

1,500

1,000

500

PROFIT ATTRIBUTABLE TO SHAREHOLDERS

2019

Particular function battery consists of battery merchandise primarily for tubular battery, lead-acid starter battery, vitality storage battery and standby battery.

2,477

2020

CHAIRMAN’S STATEMENT

Pursuing Alternatives Strategically Reform and Enchancment

Rising the New Chapter of Inexperienced and Excessive-quality Improvement

Pricey shareholders:

2020 is a rare 12 months, and additionally it is a 12 months for Tianneng Energy to attract an upgraded framework of growth.

Within the face of maximum challenges posed by the coronavirus pandemic, in addition to the complicated world macro setting, the Group has continued within the general growth tone of “steady and progressive”. The Group has been coordinating the pandemic prevention and management whereas sustaining regular manufacturing and operation, and has absolutely carried out the event technique of “intelligentization, globalization, platform-building”. The Group has dedicated to pursue nice alternatives to open up distinguished floor and has efficiently accomplished the focused objectives and duties.

Profit Attributable to Shareholders and Dividend in the course of the 12 months

For the 12 months ended 31 December 2020, the Firm’s consolidated turnover was roughly RMB53,525 million, representing a rise of 31.79% as in comparison with that of the earlier 12 months. Profit attributable to homeowners of the Firm was roughly RMB2,477 million, representing a rise of 47.28% as in comparison with that of the earlier 12 months. Fundamental earnings per share was roughly RMB2.20. The Firm proposes to declare a money dividend of HK40 cents per strange share (the “Share(s)”) held by the shareholders of Tianneng Energy (the “Shareholders”). The proposal shall be topic to the consideration and approval by the Shareholders on the annual basic assembly to be held on 18 June 2021.

2020: Seizing the Alternative and Set up Our New Improvement Sample

In the course of the 12 months, the Group has actively responded to the ever-changing macro setting and market setting, overcame the challenges posed by the pandemic, seized alternatives and optimized methods, which additional established our enterprise mannequin of high-quality growth. The Group locations precedence on the well being and security of its workers with enhancing its competitiveness within the {industry} as its core focus, consolidates the achievements of pandemic prevention and management, and pays shut consideration to its enterprise aims. As well as, the Group is dedicated to the R&D and using new applied sciences, new processes and new supplies to fulfill the wants of various markets and prospects, and thus the core competitiveness of the company has continued to be strengthened.

Digitalized clever manufacturing and promote the high-quality growth. In the course of the 12 months, the Group has continued to reinforce its informatization administration normal, which has additional stimulated efficiency and potential. The Firm continues to optimize its clever manufacturing system, advertising and marketing and model administration system, thus creating a number one complete aggressive benefit within the {industry}.

Clever manufacturing is the important half in the direction of industrial upgrading and transformation. The Group has launched MES system (i.e. manufacturing execution system) by way of our clever manufacturing expertise transformation venture. The Group additionally make the most of IoT expertise to increase digitalized informationization expertise to our manufacturing line, and to construct a visualized manufacturing facility. The development of the MES system is conducive to significantly enhancing the manufacturing efficiency and realizing the complete integration of informationization and automation.

The Group has vigorously deepened the digitalization, and thru complete optimization of enterprise and provide chain processes, we had been capable of improve the transparency and efficiency of our knowledge and data, thus enhancing the execution efficiency and our skill to quickly reply throughout our procurement and manufacturing processes, thereby realizing the flexibility, intelligence and automation of our manufacturing line. The Group has strived to construct a digitalized Tianneng (ᅰ ο˂ঐ) and cloud Tianneng (ථɪ˂ঐ), utilizing knowledge to empower enterprise growth, thus additional strengthening the brand new benefits of high-quality growth.

Creating core competitiveness and mastering new expertise. The Group has continued to extend effort on technological R&D, continuously enhance its R&D system, give attention to key applied sciences and additional construct up its core competitiveness. At present, the Group’s subsidiary specialised in lithium-ion battery has cooperated with SAFT Group, a subsidiary of Complete S.A., one of many world’s main vitality group, to conduct world enterprise within the field of unpolluted vitality industries. The Firm has actively invested within the R&D and industrialization of lithium-ion battery expertise and created varied merchandise within the type of cylindrical, prismatic and pouch shell merchandise, and it has mastered a wide range of high-performance electrolyte supplies and high-safety diaphragm seals utility applied sciences. Along with SAFT Group’s developed technological system, the corporate is ready to successfully enhance properties such because the vitality density, charges and life cycle of lithium-ion battery merchandise.

The Group is aiming to kick begin the collaboration and innovation in each the upstream and downstream of the {industry} chain, in addition to maximize useful resource integration. The Group may also fulfill market calls for by accelerating its tempo in launching differentiated merchandise and options for varied client teams, additional discover greenfield markets, make breakthroughs in aggressive applied sciences in new vitality battery and superior supplies, in addition to speed up the innovation of gasoline cells. The Group not solely adopts on the commercial calls for at present stage within the inexperienced vitality expertise field, but in addition goals on the cutting-edge expertise analysis and growth.

Eager on low-carbon recycling growth and boosting development momentum for brand spanking new options. With the regular progress of the Nation’s aim of “peak carbon dioxide emissions and carbon neutrality”, the event of unpolluted vitality has entered into an “accelerating” phrase. Tianneng, being because the main enterprise within the {industry}, will actively reply to the Nation’s growth technique of inexperienced and low-carbon recycling, and promote vitality conservation and emission discount. The widespread use of sunshine electrical car motive batteries and grid-side vitality storage energy station meets the strategic wants of the balanced growth of urban-rural integration, which has made contributions to rural vitalization, livelihood financial system, new financial system and others. In the meantime, the large potential of growing the aftermarket of recent vitality autos has made the battery recycling {industry} turned the brand new focus of the {industry}. The Group actively assumes its producer’s accountability together with different prolonged obligations. We have now constructed a battery recycle {industry} chain that integrates “recycling-smelting-reproduction”, which has achieved battery life-cycle administration, thus selling inexperienced growth alongside the {industry} chain with its current strengths.

The Group has actively practiced the “Clear waters and inexperienced mountains are as invaluable as mountains of gold and silver principle (ၠ˥ڡʆఱ݊ږʆვʆଣሞ)” and continued to advertise sustainable growth. Till now, the Group has a complete of six entities that had been elected by the Ministry of Trade and Info Know-how as Inexperienced Factories, and with sixteen merchandise being elected as Inexperienced Design Merchandise. Whereas offering low-carbon, low-cost and recyclable journey modes for the mass public, the Firm additionally strongly promotes inexperienced financial growth, enabling it to get pleasure from sound social and ecological benefits.

Dashing as much as globalization, and additional discover the market. In the course of the reporting interval, the Firm’s merchandise not solely sustained a number one place in China, but in addition earned a better model recognition within the worldwide market which led to the achievement of main progress in world presence. The Firm will see such cooperation with world companions as a chance to proceed carrying on with the technological R&D work in futured battery, to reinforce efficiency and competitiveness of vitality merchandise, and to deploy the storage and utility of lithium batteries and high-rate batteries all over the world, in order to extend the Firm’s market share and general strengths. In the meantime, the Firm will set up enhanced the collaborative partnership with high-quality sellers throughout the nation and well-known automaker prospects, whereas the Group will surge its globalized operation by way of, amongst others, manufacturing, markets, analysis and growth, model, capital and skills.

2021: Changing into Innovation-driven to Additional Optimize the Industrial Ecosystem

The Group retains persevering with to emphasise on customer support, create market wants as information, and use digital empowerment as engine and promote clever manufacturing in addition to push up transformation and improve, the Group can also be going to actively intergrate in all the {industry} provide chain, main the cutting-edge expertise of the {industry}, and discover a wider growth area for rising by way of new applied sciences, new situations, and new markets.

The Group will adhere to the sustainable growth technique of “new supplies, new buildings, new applied sciences, new sectors”, adhere to the idea of technological innovation to drive inexperienced growth, additional broaden the product competitiveness of our sequence of battery merchandise, actively increase the enterprise in varied fields resembling renewable assets financial system, provide chain logistics, start-stop and vitality storage, in addition to proceed to discover the applied sciences in areas of gasoline cells and new-generation vitality, in order to attain the idea of “product utility, strategic reserve and R&D” and change into the world’s main inexperienced vitality answer supplier.

Appreciation

I want to take this chance to increase my honest gratitude to all employees for his or her excellent contribution and to administration for his or her steady effort. It’s the fixed effort of each member that facilitates the Group to attain exceptional outcomes. I might additionally like to specific my gratitude to all shareholders, prospects and enterprise companions for his or her long-term assist and affirmation.

Zhang Tianren

Chairman

Hong Kong, 26 March 2021

MANAGEMENT DISCUSSION AND ANALYSIS

Operation Assessment

The Group has adhered to its operational precept of “steady and progressive”. Going through the challenges of COVID-19 pandemic, the Group strengthened its prevention and management of the pandemic, promoted manufacturing and operation, and efficiently achieved the annual objectives as the staff have labored in an efficient and orderly method. The spin-off and itemizing of a subsidiary, Tianneng Battery Group Co., Ltd. (“Tianneng Battery”), Inventory Code: 688819.SH, on the STAR Market of the Shanghai Inventory Alternate had been profitable, which remarks the Group’s high-quality growth coming into right into a upgraded stage.

In the course of the reporting interval, the Group realised turnover of roughly RMB53,525 million, representing a rise of 31.79% year-on-year; and profit attributable to shareholders of roughly RMB2,477 million, representing a rise of 47.28%.

The Group has actively assumed its duties as a number one enterprise within the {industry}, adhered to the trail of high quality model growth, and targeted on manufacturing and operation in addition to buildings up company tradition. In the course of the 12 months, the Group obtained numerous vital awards: on 23 September, Tianneng Battery obtained the “2019 Zhejiang Provincial Authorities High quality Awards (2019ϋएϪ޲ִ݁ۜሯᆤ)” for its glorious high quality and innovation, and have become one of many ten awarded enterprises within the province; on 20 November, the Group was honoured with the title of “Nationwide Civilised Unit (Ό਷˖׼ఊЗ)” on the Nationwide Non secular Civilisation Building Commendation Convention (Ό਷ၚग़˖׼ ܔணڌ࿎ɽึ); and on 27 December, Tianneng’s “high-performance lead-carbon battery industrialisation demonstration venture (৷׌ঐདލཥϫପุʷͪᇍਖ਼ࣩ)” was awarded with China Industrial Awards (ʕ਷ʈุɽᆤ) by the China Federation of Industrial Economics (ʕ਷ʈุ຾᏶ᑌΥึ).

The Firm has now fashioned a product system based mostly on the synergies of lead batteries and lithium-ion batteries, with joint manufacturing capability of over 80 million kVAh. Based on the information by the Ministry of Trade and Info Know-how (MIIT) of the Individuals’s Republic of China, from January to December 2020, the capability of lithium-ion battery amounted to roughly 18.85 billion unit, representing a year-on-year improve of 14.4%; the capability of lead-acid battery was roughly 227.356 million kVAh, representing a year-on-year improve of 16.1% for the foremost merchandise within the battery manufacturing {industry} in China. Each talked about battery has weighted place within the world market of rechargeable batteries. It’s anticipated that the general market demand will proceed to develop.

The Firm’s batteries merchandise are primarily used to supply energy for gentle electrical autos, particular electrical autos, start-stop batteries for vehicles and vitality storage batteries. The kinds of gentle electrical autos embody two-wheeled and three-wheeled electrical bicycles, and micro electrical autos. Amongst which, two-wheeled and three-wheeled electrical autos seek advice from mechatronic gentle autos that use batteries as an influence supply or auxiliary energy, and are put in with motors, controllers and different parts on the premise of strange two-wheeled and three-wheeled autos which might obtain electricity-powered and/or electricity-propelled capabilities. They’re usually used for commute or for carrying hundreds with traits of comfort, financial system and environmental-friendly. They’re one of the frequent transportation in mainland China. The event of the electrical bicycle {industry} has the next traits:

  • 1) Assembly the sturdy demand for commuting, with an enormous consumer base

    As a transportation means, two-wheeled electrical bicycle has a broad vary of client teams in mainland China.

    It’s an environmental-friendly product with reasonably priced worth amongst customers, requires minimal upkeep when in use, and its endurance mileage can meet, on the massive extent, the present short-distance commute wants inside the journey radius in each city and rural areas. Based on the information offered by the China Bicycle Affiliation, possession of electrical bicycles in China has reached roughly 300 million as of the tip of 2019.

  • 2) New nationwide requirements creating new development alternatives, and the {industry}’s focus degree additional will increase

    The nationwide normal for the “Security Technical Specs for Electrical Bicycles” (the “New Nationwide Normal”), which was officially carried out on 15 April 2019, has had nice significance to the high-quality growth of the {industry}. The New Nationwide Normal divides two-wheeled electrical autos into three classes: electrical bicycles, gentle electrical autos and electrical bikes. Amongst which, electrical bicycles should meet varied requirements resembling outfitted pedal-riding capabilities, most velocity not exceeding 25km/h, complete weight not over 55kg, and motor energy not exceeding 400 watts, in addition to acquiring China Obligatory Certification (3C certification). Bicycle fashions not assembly the New Nationwide Normal necessities should full the transition and substitute processes inside specific time intervals in respective areas.

The roll-out and implementation of the New Nationwide Normal coverage have created new development alternatives for the main producers. The requirement for merchandise to move by way of 3C-certification has raised the entry limitations for suppliers and vehicle producers, which boosts the {industry} focus degree. As well as, the New Nationwide Normal has additional pushed the demand of customers to commerce of their previous autos for brand spanking new ones, thus it has change into a pattern amongst main vehicle producers and battery enterprises to strengthen their cooperation in an effort to seize such market alternatives.

3)Wholesome Consciousness promote carbon neutrality, discover new situations and new markets for brand spanking new growth

In 2020, the influence of COVID-19 pandemic not solely modified our existence, but in addition offered the sunshine electrical autos {industry} with additional alternatives for growth. As an illustration, in an effort to cut back interplay in public areas, increasingly more residents choose the “commuting alone” mode, thus two-wheeled electrical autos with options resembling quick, handy, excessive price-performance ratio and zero-emission have change into residents’ first alternative for transportation. In the meantime, since increasingly more customers use on-line procuring because of the affluent growth of the brand new financial system, the expansion of corresponding short-distance supply providers has multiplied and the variety of skilled deliveryman has additionally displayed a rising pattern, leading to gentle electrical autos probably changing from a transportation means to a manufacturing instrument, thereby higher assist the event of the inner financial system in China.

As well as, individuals in Southeast Asian nations have related commuting habits as these in mainland China, subsequently, with the development of highway infrastructure development and the strengthening of the environmental administration idea in Southeast Asian nations, there are nice alternatives for the two-wheeled electrical autos {industry} to discover such potential new markets.

I.

Excessive-end eco-friendly batteries

Excessive-end eco-friendly batteries are sealed maintenance-free lead battery sequence merchandise created by Tianneng Energy counting on its R&D and expertise improvements. They’re environmental-friendly battery merchandise with excessive stability, excessive price-performance ratio and noteworthy recyclability, with utility areas together with gentle electrical autos, particular electrical autos, start-stop techniques in vehicles and vitality storage and backup. Being the Group’s key cornerstone enterprise, it offers steady cashflows for the Group.

In 2020, the Firm’s high-end eco-friendly battery enterprise continued to keep up its high-quality growth. In the course of the reporting interval, the working income within the high-end eco-friendly battery enterprise was roughly RMB28,337 million and gross sales quantity was 83.9722 million kVAh, with a year-on-year improve of 16.32%.

Two-wheeled and three-wheeled electrical autos battery

The Firm is a number one enterprise within the manufacturing and operation of motive batteries for two-wheeled and three-wheeled electrical autos, and has earned widespread model and high quality recognitions amongst customers, with the next growth traits:

(1)

Excessive market share, massive distribution market, sturdy advertising and marketing system

Based on the knowledge offered by the China Battery Trade Affiliation, the market share of the Firm’s merchandise within the gentle electrical car is exceeded 40% in 2018, and the Firm maintained steady development. Beneath basic circumstances, the working life of electrical autos is longer than the working lifetime of motive batteries, and motive batteries are wanted to get replaced a number of instances in the course of the service lifetime of a car, with a substitute cycle of round 0.5 to three years, and excessive possession quantity has led to the distribution gross sales market changing into a number of instances bigger than direct gross sales. Due to this fact, the distribution gross sales market purchased larger contributions to the Firm’s turnover. The Firm has adopted direct gross sales and distribution modes out there, with car producers as main direct gross sales prospects (together with Yadea (ඩࠔ), Aima (ฌီ) and Tailg (̨ཕ)) and a distribution community consisting of over 3,000 distributors all through mainland China.

(2)

Totally complying with the New Nationwide Normal, continuously growing new merchandise

The implementation of the New Nationwide Normal not solely regulates the two-wheeled electrical autos, but in addition raises the entry limitations of the {industry} chain. Towards such backdrop, the Firm has intently adopted the coverage by continuously making enhancements in areas of R&D and product high quality, launching product sequence that past the necessities of the New Nationwide Normal and market calls for, in addition to combining digitalized expertise to supply higher service.

For instance, Tianneng E5 King Kong (E5ږ࡝) merchandise are designed to unravel the ache factors of utilization which are largely welcomed by customers and have options of extraordinarily high-power, high-endurance and long-lifespan. The Firm’s R&D crew has developed highly effective energy-accumulated batteries (ၳঐڃ) for E5 King Kong merchandise. These batteries have grid buildings of high-energy density and glorious conductivity which might cut back battery inside resistance, improve the speed of electrochemical response, and subsequently be certain that underneath the situation of high-power discharge, the battery’s cruising skill change into stronger and its carry out extra steady.

(3)Equipping with industry-leading expertise, lowering prices and growing effectivity with intelligence manufacturing

From 2017 to current, the Firm continues to make R&D and technological enhancements in inexperienced manufacturing, and has elevated the efficiency of uncooked materials utilization and the automation degree of manufacturing strains, which promotes the financial, social and ecological benefits. Manufacturing bases have successively deployed self-developed full-automated manufacturing gear and have utilized the upgraded steady casting and rolling expertise to optimize the grid manufacturing course of, and in addition cancelled the separation (ʱ˪) course of, thus lowering the lack of uncooked supplies. As well as, the clever enchancment in gear, resembling automated casting-and-welding manufacturing gear, automated palletizers and automated plastic injection molding machines, has been achieved remarkably, which has additional elevated the accuracy and the typical labor efficiency within the manufacturing course of.

2.

Mini electrical car batteries

Mini electrical autos are low-speed four-wheelers pushed by lead batteries. The complete cost endurance of this sort of car is often larger than 100 kilometers and may carry individuals or hundreds, and is especially pushed by lead batteries, with a substitute interval of round 1 to five years.

Mini electrical autos are standard, largely as a result of: 1) their price-performance ratio is excessive whereas the price of use is low in contrast with different four-wheelers; 2) they match the wants because the cruising vary of a mini electrical car can usually cowl the every day touring of city and rural residents; 3) their homeowners can cost them simply through the use of family energy immediately, with out putting in particular charging piles.

The mini electrical car market was primarily concentrated within the Jap and Central plains resembling Province of Shandong, Henan and Hebei. In recent times, with intensified efforts towards poverty in mainland China, the development of the agricultural highway networks can also be dashing up and upgrading, increasingly more residents of cities and mountainous areas within the southwest have not confronted transport difficulties, which has additional stimulated the journey calls for between rural and concrete areas and led to a rising demand for autos. The Firm continues to keep up the market main place within the mini electrical car battery sector.

3.

Different high-end eco-friendly batteries

  • (1) Begin-stop batteries

    Begin-stop batteries are primarily used for beginning, ignition and lighting of autos and gear resembling vehicles, bikes and gasoline engines, which might successfully cut back emissions. It’s an energy-saving and emission-reducing expertise that has developed quickly in recent times, with a substitute interval of round 3 to five years. In 2017, China issued the Measures for the Parallel Administration of the Common Gasoline Consumption and New Power Car Factors of Passenger Car Enterprises (“Parallel Level-based Administration”) to limit the manufacturing of enormous displacement autos in respect of common gasoline consumption and new vitality car factors. Thus, the market measurement of the automotive start-stop batteries has surged.

    By way of steady self-dependent innovation, the Firm launched start-stop batteries product of its personal model with an impartial and full technical system to the market in 2017, and has actively made breakthroughs within the manufacturing facility inspection of vehicle manufactures and manufacturing trial run. The Firm at present focuses on the substitute market whereas present process buyer authentication.

    Sooner or later, the Firm will improve manufacturing capability and increase the market whereas actively growing new product and accumulating expertise. As one of many Group’s rising companies, the start-stop battery enterprise is deliberate to constantly develop by way of capability growth, market growth and introduction of abilities.

  • (2) Particular electrical car batteries

    Particular electrical car batteries are primarily utilized in freight gear resembling electrical forklifts, electrical stackers and electrical raise vehicles. Additionally they function the DC energy supply for gear resembling forklifts, tractors, pallet jacks and underground mining locomotives. They’re broadly used at locations resembling airports, stations, ports, vegetable and fruit markets, warehouse of commercial and mining enterprises. The battery merchandise of the identical sequence are additionally utilized in different particular electrical autos resembling electrical tour buses, electrical sweepers, electrical cleansing autos and electrical patrol autos.

    The Group has change into the second largest home model within the field of forklift batteries and has fashioned strategic partnerships with home and abroad famend enterprises resembling Hangcha Group Co., Ltd. (؄ɸණྠ ), Heding Jidian (ձཻዚཥ), KION Baoli (Jiangsu) Forklift Co., Ltd. (ᘒᝧ ɸԓ) and Anhui Heli Co., Ltd. (τᏏΥɢ). The Firm actively conducts cutting-edge analysis on lead batteries with new buildings. It has developed and reserved new construction applied sciences (tubular, bipolar, winding, and horizon lead-acid battery) and fashioned a core patent of “an enclosed battery formation course of for tubular lead-acid batteries”. The technical achievements of the tubular construction have been reworked and utilized to guide batteries for electrical forklifts, with stable financial benefits achieved.

    On the similar time, China is striving to increase home demand and actively encourages its residents consumption. Whereas the autos utilized in warehousing, logistics, tourism and golf carts, and many others. main use particular electrical car batteries, it’s anticipated that the merchandise of corresponding battery sequence may have ample room for development.

(3)Power storage batteries and backup batteries

Power storage lead batteries seek advice from batteries utilized by electrical generator to retailer vitality with substitute cycle of about 5 to eight years, resembling wind and solar energy. Power storage batteries are first charged by wind or photo voltaic vitality, after which the batteries’ DC energy is modified to AC energy by way of an inverter in an effort to provide energy. Lead batteries are broadly used for solar energy storage, wind energy storage and energy station storage. They play a serious function within the growth of inexperienced vitality, as they are often made into large-capacity storage techniques, have low unit vitality value and system value, are secure and dependable, have excessive recycling charges and are adaptable to temperature modifications.

In October 2020, the ten kV vitality storage energy station in Zhicheng of Changxing, during which the vitality storage batteries are offered by Tianneng Energy, was officially related to the grid and put into operation. It’s the first grid-side lead-carbon vitality storage energy station in China. The station connects with the close by substations, achieves the bidirectional conversion and circulation {of electrical} vitality, successfully performs the function of peak-load shifting, and offers extra considerable adjustment means for the secure operation of city energy grids. In recent times, Tianneng Energy has actively explored the event of sensible vitality, used new fashions to develop multi-level vitality storage merchandise and system options and to advertise the extension of commercial chain and high-end upgrading. At current, Tianneng Energy has constructed a number of initiatives, such because the off-grid photovoltaic vitality storage venture in Africa (ڢݲΈͿᎷঐᕎၣධͦ) and the sensible microgrid lead-carbon battery vitality storage energy station (౽ᅆฆၣདލཥϫᎷঐཥ१).

Backup batteries utilized in energy transmission stations to supply closing present to energy items and batteries utilized in public services to supply backup vitality, with substitute cycle of about 5 to eight years. At present, lead batteries are broadly utilized in communication and steady energy provide system. The development of communication networks and the updates of communication applied sciences worldwide will convey steady demand for lead backup batteries.

Tianneng Energy has a full vary of vitality storage batteries merchandise that may present an efficient backup energy assure for world communication, electrical energy, railway, ships, radio and tv broadcast, UPS, digital and client merchandise, and different sectors. On the similar time, the Firm focuses on fulfilling the necessities of vitality storage techniques, e.g. clean connection to new vitality, emergency energy backup, peak and frequency modulation, peak-load shifting and microgrids. Leveraging superior vitality storage applied sciences, concentrating on high-efficiency vitality storage techniques and aiming at distributed sensible energy provide, Tianneng Energy is dedicated to offering “All-in-one” vitality storage system options and built-in techniques to prospects, venture design and engineering development.

  • II. New vitality batteries

    The Firm’s new vitality batteries comprise primarily lithium-ion batteries, the manufacturing and R&D of next-generation battery merchandise resembling gasoline cells. The appliance fields of lithium-ion batteries are primarily divided into two classes: motive area and non-motive area. The appliance fields for motive class embody gentle electrical autos, passenger electrical autos and industrial electrical autos, whereas utility fields for non-motive class embody client digital merchandise and vitality storage. As one of many new vitality batteries, the lithium-ion battery is a vital strategic phase of the Group. In the course of the reporting interval, the Group’s working income within the new vitality battery enterprise was roughly RMB1,059 million, representing a year-on-year improve of 69.03%.

    In November 2019, Tianneng Energy signed a cooperation settlement with SAFT, a subsidiary of the French firm Complete S.A., one of many world’s high vitality group, to kind a three way partnership Tianneng SAFT Power Joint Inventory Firm (˂ঐ܏၅੻ঐ๕ٰ΅Ϟࠢʮ̡) that focuses on the event, manufacture and sale of superior lithium-ion batteries for the Chinese language and world markets. The three way partnership is especially engaged within the design, growth, manufacturing and sale of cylindrical batteries, pouch shell batteries, prismatic batteries and battery administration system. The merchandise can be utilized in gentle electrical autos, grid vitality storage, new vitality autos, digital home equipment and particular industries. The cooperation with SAFT will assist the Group to accumulate the world-leading lithium battery firm’s wealthy expertise within the development and administration of R&D techniques, technological reserve to reinforce the Firm’s world competitiveness.

    For the reason that institution of the three way partnership, the mixing of assets between Tianneng Energy and the French firm has been progressing steadily. Each events have been actively growing new merchandise to fulfill the wants of rising markets and abroad markets, such because the superpower manganese iron lithium module battery (൴ঐ፸᚛቞ᅼଡ଼ཥϫ). Along with the sector of motive batteries, the Firm’s lithium battery enterprise has additionally gained a foothold in sensible vitality storage and backup battery industries. In July 2020, the Firm gained the awards of 12 months 2020 “Greatest Supplier of Techniques Integration Options” and “Greatest Demonstration Challenge for Power Storage” on the seventh World Photo voltaic+Power Storage Convention & Expo. The “engineering R&D and utility of stack system and core parts of high-power gasoline cells (৷̌ଟዷࣘ ཥϫཥ਼ӻ୕ʿࣨːཧ௅΁ٙʈ೻ʷ޼೯ၾᏐ͜)” utilized by the Firm for gasoline cells has been listed as the popular commissioned venture of main R&D plans of Zhejiang Province in 2020 (एϪ޲2020ϋܓ޲ࠠᓃ ޼೯ࠇ೥኿Ꮄ։ৄਖ਼ࣩ).

  • III. Renewable new supplies

    Renewable new supplies seek advice from the fabric restoration and utilization enterprise of the battery primary enterprise developed based mostly on the Prolonged Producer Accountability scheme, and it additionally consists of the disposal of stable wastes and useful resource utilization enterprise. The completed merchandise embody lead metallic, nickel-ion compound and cobalt-ion compound. The Firm is likely one of the first enterprises within the {industry} to enter the renewable new materials {industry}. After over ten years of expertise accumulation and scientific operations, this enterprise phase has change into one of many three main companies of the Firm, and it has had an vital place within the Firm’s future growth plan. In the course of the reporting interval, the Group’s working income in renewable new materials enterprise recorded roughly RMB1,208 million, representing a year-on-year improve of 28.35%. On 21 January 2021, after professional overview, on-site verification and on-line publicity and different procedures, Tianneng Energy was efficiently listed within the second batch of enterprises that meet the “Trade Requirements and Circumstances for the Complete Utilization of Waste Energy Batteries for New Power Automobilesอঐ๕ӛԓᄻᔚਗɢႅཥϫ ၝΥл͜Бุ஝ᇍૢ΁’” by the Ministry of Trade and Info Know-how of China.

In recent times, the Chinese language authorities encourages producers to develop ecological design, set up recycling techniques, and promote useful resource recycling. In the meantime, related legal guidelines and laws promulgated by the Chinese language authorities have additionally specified in particulars the recycling and disposal processes of used batteries, which offer sturdy assist for the wholesome and orderly growth of the recycling {industry}. At current, China strictly prohibits entities with out permits or not in compliance with the necessities of the permits from partaking in operations relating to the gathering, storage, utilization and disposal of hazardous wastes.

In April 2020, the seventeenth assembly of the Standing Committee of the thirteenth Nationwide Individuals’s Congress accredited the amended Legislation of the Individuals’s Republic of China on the Prevention and Management of Environmental Air pollution by Strong Waste ( ʕശɛ͏΍ձ਷ո᜗ᄻيϮݑᐑྤԣطج’), which was formally carried out on 1 September 2020. Such amended regulation primarily consists of: 1) the state units up an Prolonged Producer Accountability scheme for merchandise resembling electrical home equipment, lead storage battery and car motive battery; 2) the state encourages product producers to develop ecological design in addition to promotes the restoration and utilization of assets; 3) the state encourages enterprise items and people to buy and use merchandise with complete use and reusable merchandise.

In June 2020, in an effort to absolutely implement the necessities of Discover of the Common Office of the State Council on Issuing the Implementation Plan for Prolonged Producer Accountability( ਷ਕ৫፬ʮᝂᗫ׵Ι೯͛ପ٫ப΂ ַФՓܓપБ˙ࣩٙஷٝ’), the Nationwide Improvement and Reform Fee drafted the Interim Measures for the Administration of the Recycling and Utilisation of Lead Storage Batteries (Draft for Feedback)( དႅཥ ϫΫϗл͜၍ଣᅲБ፬ج’€ᅄӋจԈᇃ) with related departments. The Interim Measures seek advice from the state implementing the goal accountability system for lead storage battery restoration, and by the tip of 2025, lead storage battery restoration fee should attain over 70%. Furthermore, lead storage battery producers (together with importing firms) shall, by way of strategies resembling self restoration, joint restoration, and commissioned restoration, obtain the restoration targets set by the state.

In September 2020, the Detailed Guidelines for the Implementation of the Measures for the Recycling of Finish-of-Life Automobiles ( జᄻዚਗԓΫϗ၍ଣ፬جྼ݄୚ۆ’), which had been thought-about and accredited by seven ministries together with MOFCOM, was officially carried out. Such detailed guidelines explicitly acknowledged that, the state encourages car producers to have interaction in end-of-life autos (ELV) recycling and dismantling actions. No entity or particular person could have interaction in ELV recycling and dismantling actions if its/his/her qualification has not been acknowledged. The dismantled motive batteries ought to be delivered to the motive battery recycling service networks established by new vitality car producers, or to the echelon utilization enterprises that meet the related nationwide necessities for the administration of echelon utilization of motive batteries, or to the enterprises which have interaction within the complete utilization of waste motive batteries.

To be able to coordinate the geographical benefits of our battery manufacturing bases, the Firm has fashioned a complete of roughly 700,000 tons of supporting waste lead battery disposal capability and roughly 7,000 tons of lithium-ion battery disposal capability and has obtained the {qualifications} for launching pilot recycling initiatives in 15 provinces the place waste battery assets are comparatively concentrated. By way of pipelines, the Firm has cooperated intently with native recycling networks, and the biggest “recycling cloud” platform for used batteries in China has additionally been launched by Tianneng Energy. On the similar time, counting on the terminal shops in China to increase recycling pipelines, the Firm has regularly fashioned a “after-sales +” service mannequin. The Group will proceed to place a lot effort within the renewable new supplies enterprise, increase the recycling system (e.g. LFP battery) sooner or later, in addition to, improve the influence in subdivision fields resembling carbon and modified plastic, thus steadily progressing in the direction of the aim of organising massive round {industry} clusters.

  • IV. Optimizing industrial ecosystem, increasing the worldwide growth

    In 2020, the Firm continues to construct a digitalized Tianneng. Distributors have joined the cloud system, in order that the Firm may be well-informed of the market gross sales scenario, stock product classification. It higher helps distributors to hold out refined operation and administration, additional enhances all the market competitiveness of the Tianneng Energy. The provision chain of Tianchang has built-in the upstream and downstream of the {industry} chain, offering service by methods of freight, storage and financial expertise, to construct an One-stop options for provide chain administration by way of procurement, manufacturing, gross sales and recycling. The buying and selling enterprise of recent vitality supplies focuses on uncooked supplies and metals. The Firm actively builds an “built-in service platform for non-ferrous metallic (ϞЍږ᙮ၝΥ؂ਕ̨̻)” and strives to change into an influential service supplier of non-ferrous metallic system integration within the {industry}.

    For abroad enterprise, the Group has absolutely investigated the market potential in areas resembling Southeast Asia, South Asia, Europe, Center East and Africa, and it has established branches or cooperative organizations in Vietnam, India, Africa and different nations. The Firm will proceed to strengthen cooperations with scientific analysis establishments abroad, proceed to discover cooperation alternatives for up and down streams globally, set up R&D manufacturing bases abroad sooner or later whereas creating a worldwide provide chain community. The Firm is devoted to changing into the world’s main inexperienced vitality answer supplier.

  • V. Boosting capital market, upgrading platform motivation

    On 15 December 2020, the China Securities Regulatory Fee accredited the registration of Tianneng Battery for the preliminary public providing of its shares on the Science and Know-how Innovation Board of the Shanghai Inventory Alternate. On 18 January 2021, Tianneng Battery was efficiently listed on the Shanghai Inventory Alternate. The controlling curiosity of the Firm in Tianneng Battery is roughly 86.53%. Tianneng Battery stays to be a subsidiary of the Firm and its outcomes will proceed to be consolidated into the financial statements of the Firm.

Prospects

The Firm will adhere to the sustainable growth technique of “new supplies, new buildings, new applied sciences, new sectors”, comply with the strategic route of “artificial intelligence, globalization, platform-building”, try to implement future growth of the company, in addition to absolutely promote reforms in effectivity and driving forces. The Firm intends to give attention to the next duties:

  • (1) The enterprise growth plan of high-end eco-friendly battery: conserving regular and pursuing main place on the planet. The Firm will steadily increase the manufacturing and sale of lead batteries sooner or later and increase subdivision fields resembling start-stop and sensible vitality storage on the premise of consolidating the main place of lead motive battery. Concerning the expertise, the Firm will velocity up the R&D and industrialization of the expertise of high-energy lead batteries, resembling lead-carbon batteries and pure lead batteries, and regularly become a worldwide main enterprise of lead batteries, a pacesetter of superior high-energy lead batteries and a maker of worldwide requirements.

    (2) The enterprise growth plan of recent vitality battery: vigorously develop lithium-ion batteries as a core enterprise and strengthen its presences. The Firm intends to proceed to reinforce its manufacturing capability by way of the “high-energy energy lithium battery and PACK venture”. With the Firm’s benefits of established model and channels within the PRC market, the Firm has quickly seized the lithium-ion motive battery marketplace for gentle electrical autos with its mature expertise and working system, and it has regularly expanded its presence within the utility fields resembling sensible vitality storage and standby battery. In the meantime, the Firm has actively launched R&D abilities into the sector of recent battery expertise resembling gasoline cells and established the corresponding mechanism and system, and it has launched a number of R&D initiatives for gasoline cells, together with “Gasoline cell metallic plate reactors (ዷࣘཥϫږ᙮ؐཥ਼)” and “Improvement of high-power graphite plate reactors for industrial autos (ਠ͜ԓ͜ɽ̌ଟͩኈؐཥ਼ٙක೯)”.

    The Firm has additional enhanced its technical, market and administration benefits. These will allow the lithium-ion battery enterprise to change into one of many Firm’s core industries and in addition absolutely strengthen the market competitiveness and market share of the Firm’s lithium-ion battery enterprise within the PRC and worldwide markets.

  • (3) The enterprise growth plan of renewable new supplies: the Firm will actively take part within the nationwide zero-waste metropolis constructing as a strategic growth route, adhere to the idea of inexperienced, low carbon and round growth based mostly on the recycling thought of lead batteries. The Firm integrates the lithium-ion battery recycling with the disposal and useful resource utilization of stable wastes and others, and places a lot effort in constructing a inexperienced sustainable new materials {industry} system.

Leveraging on its benefits in expertise, manufacturing framework, advertising and marketing and branding and data expertise system which have been collected within the battery {industry} for a few years, the Firm will strengthen the worldwide main place of its high-end eco-friendly batteries, improve the product competitiveness of recent vitality batteries, create digitized superior renewable new materials {industry} chain, actively increase companies and proceed with the technological growth of new-generation batteries, with the intention of changing into essentially the most revered first-tier new vitality company worldwide.

Administration Evaluation

Gross profit

The Group’s gross profit elevated by roughly 17.16% to roughly RMB5,492 million in 2020 from RMB4,688 million in 2019, which was attributable to the rise in gross sales quantity and the rise in gross profit margin of batteries. The general gross profit margin decreased by 1.28 share factors to 10.26% from 11.54% in 2019. Amongst which, gross profit margin of producing phase was 17.08%, representing a rise of 1.69 share factors compared with 2019, however the gross profit margin of the newly-added buying and selling phase in 2020 was comparatively low, thus leading to a lower within the general gross profit margin.

Different revenue

Different revenue of the Group elevated by roughly 43.70% from roughly RMB369 million in 2019 to roughly RMB530 million in 2020. The rise was primarily attributable to the rise in authorities grants. Curiosity revenue elevated from roughly RMB93 million in 2019 to roughly RMB138 million in 2020. The rise was primarily attributable to optimised fund allocation and improve in curiosity revenue from deposit.

Promoting and distribution prices

Promoting and distribution prices of the Group elevated by roughly 4.57% from roughly RMB897 million in 2019 to roughly RMB938 million in 2020. The rise in promoting and distribution prices was primarily because of the improve in employees prices and promoting bills.

Administrative bills

Administrative bills elevated by roughly 19.33% from roughly RMB663 million in 2019 to roughly RMB791 million in 2020. Such improve was primarily because of the improve in employees value and consultancy bills.

Finance prices

Finance prices decreased by roughly 16.82% from roughly RMB255 million in 2019 to roughly RMB212 million in 2020, which was primarily because of the lower in mortgage measurement and the rates of interest of loans in the course of the 12 months.

Taxation

Tax fees of the Group elevated by roughly 11.26% from roughly RMB400 million in 2019 to roughly RMB445 million in 2020, which was primarily because of the improve in profit in the course of the 12 months.

Liquidity and Monetary Sources

The web money from working actions for the 12 months of 2020 was roughly RMB2,102 million (2019: RMB1,739 million). On this 12 months, the Group had a greater revenue and strengthened the administration of prepayments and account payables enabling the general money flow of working actions to keep up at degree.

As at 31 December 2020, the financial institution balances and money (together with pledged financial institution deposits) of the Group was roughly RMB5,759 million (31 December 2019: roughly RMB5,446 million). As at 31 December 2020, the Group obtained undrawn banks services of roughly RMB8,985 million (31 December 2019: roughly RMB6,500 million). The financial institution balances and money (together with pledged financial institution deposits) of roughly RMB5,634 million, RMB105 million, RMB20.63 million and RMB0.01 million had been denominated in Renminbi, Hong Kong {Dollars}, US {Dollars} and Euros respectively. Because the financial institution balances in Hong Kong {Dollars}, US {Dollars} and Euros collectively accounted for roughly 2.18% of the overall balances, the Group’s related alternate threat is low.

As at 31 December 2020, the online present property of the Group had been roughly RMB3,242 million (31 December 2019: internet present property of roughly RMB1,693 million). The rise was primarily attributable to the rise in inventories, payments receivables, prepayments and financial institution deposits of the Firm, and that the Firm was capable of management the extent of its liabilities and financial dangers.

As at 31 December 2020, the curiosity bearing borrowings, finance leases and mortgage notes (collectively as “curiosity bearing loans”) of the Group with maturity of inside one 12 months completely amounted to roughly RMB919 million (31 December 2019: roughly RMB1,659 million). The curiosity bearing loans of the Group with maturity of a couple of 12 months amounted to roughly RMB719 million (31 December 2019: RMB253 million). During which, the curiosity bearing loans of RMB1,543 million carried fixed and variable rates of interest starting from 2.23% to 4.79% (2019: 4.08% to eight.00%) every year. The Firm will intently monitor the modifications in rate of interest and assess the rate of interest threat.

The target of the Firm’s financial coverage is to keep up wholesome capital construction to attenuate the capital value by way of prudent financial administration. In the course of the 12 months underneath overview, the Group continued to additional make use of long-term loans in an effort to optimize its mortgage construction.

Monetary Place

Property

As at 31 December 2020, the overall property of the Group had been roughly RMB23,200 million, representing a rise of 21.28% as in comparison with roughly RMB19,130 million as at 31 December 2019. Amongst them, non-current property elevated by roughly 18.24% to roughly RMB7,526 million and present property elevated by roughly 22.79% to roughly RMB15,674 million. The foremost purpose for the rise of non-current property was because of the capital expenditure on manufacturing vegetation and gear upgrading. The rise in present property was primarily attributable to the rise in inventories, invoice receivables, prepayments and financial institution deposits.

Liabilities

As at 31 December 2020, the overall liabilities of the Group had been roughly RMB13,741 million, representing a rise of roughly 16.02% as in comparison with roughly RMB11,844 million as at 31 December 2019. Amongst them, non-current liabilities elevated by roughly 69.65% to roughly RMB1,309 million, primarily because of the improve in long-term curiosity bearing borrowings; present liabilities elevated by roughly 12.28% to roughly RMB12,432 million, primarily because of the improve in account payables and contract liabilities.

Evaluation by Key Monetary KPIs

Profitability:

2020

2019

Return on fairness

29.91%

27.23%

Gross revenue margin

10.26%

11.54%

– Buying and selling

0.19%

-0.22%

– Gross sales of batteries and battery associated equipment

17.08%

15.39%

Web revenue margin

4.68%

4.25%

The general gross revenue margin in 2020 decreased in comparison with 2019 because of the improve of buying and selling enterprise. Not contemplating the buying and selling enterprise, the gross profit margin elevated by 1.69 share level to 17.08% in 2020 in comparison with 2019.

Liquidity:

2020

2019

Present ratio

1.26

1.15

Fast ratio

0.90

0.82

Each the ratios above in 2020 elevated compared with these in 2019, primarily resulting from a better improve of present property as in comparison with that of the present liabilities.

Working Cycle:

2020

2019

Stock turnover days

31 34

Account receivables turnover days Account payables turnover days

7 8

17 21

Payments and account receivables turnover days Payments and account payables turnover days

18 18

37 45

The stock turnover days decreased by 3 days to 31 days in 2020 because of the enhancement of manufacturing capability in 2020. Account receivables turnover days decreased by 1 day from 2019 to 7 days in 2020 resulting from improved administration of account receivables in 2020. Account payables turnover days for 2020 decreased by 4 days to 17 days primarily because of the lower in account payables. Payments and account receivables turnover days had been principally the identical as final 12 months. Payments and account payables turnover days decreased by 8 days to 37 days because of the lower in account payables.

Capital:

Web debt ratio

Curiosity protection ratio (Word)

Word: EBITDA divided by complete curiosity bills

Because the curiosity bearing debt (“Debt”) and the money and financial institution balances as at 31 December 2020 had been RMB1,638 million and RMB4,456 million respectively, the online debt was RMB-2,818 million. The web debt ratio was principally the identical as final 12 months. There was sufficient complete capital in the course of the 12 months.

The curiosity protection ratio elevated by 6.18 instances from the prior 12 months, and the power to make curiosity funds remained sturdy.

Return of Shareholders:

2019

-30.77% 11.22

2020

2019

Incomes per share (Fundamental) (RMB)

2.20

1.49

Dividend per share (HK cent/share)

40(Word)

39

Word: representing the dividend proposed by the Firm’s Board for 2020, which is topic to approval on the annual basic assembly.

Capital Expenditure

The capital expenditure in 2020 was roughly RMB1,180 million (2019: roughly RMB1,118 million). A majority of expenditure was incurred on the lithium-ion battery segments, the start-and-stop battery segments and development funding within the recycling segments.

Capital Commitments

The quantity contracted for however not acknowledged within the consolidated financial statements in respect of the acquisition of property, plant and gear as at 31 December 2020 was roughly RMB1,338 million (31 December 2019: roughly RMB852 million).

Gearing Ratio

The Group’s gearing ratio (which is predicated on the quantity of complete curiosity bearing loans divided by complete property multiplied by 100%) as at 31 December 2020 was roughly 7.06% (31 December 2019: roughly 9.99%).

Publicity to Alternate Fee Fluctuation

Because the Group’s operations had been primarily performed in China and nearly all of companies had been transacted in Renminbi, the Group has arrange insurance policies to strike a stability between uncertainty and the danger of alternative loss because of the rising significance of its exposures to fluctuations in foreign currency. International foreign money ahead contracts can be utilized to remove the foreign money exposures. In the course of the 12 months, the Group has entered into sure overseas foreign money ahead contracts and intently monitored the motion of overseas foreign money charges. The Board is of the view that the Firm’s working money flow and liquidity will not be topic to significant overseas alternate fee threat.

Contingent Liabilities

The Group didn’t have any significant contingent liabilities as at 31 December 2020 (31 December 2019: Nil).

Pledge of Property

As at 31 December 2020, the financial institution services of the Group had been secured by financial institution deposits, payments receivables, property, plant and gear and pay as you go lease funds. The mixture internet ebook worth of the property pledged amounted to roughly RMB2,784 million (31 December 2019: RMB2,891 million).

Worker and Remuneration Insurance policies

As at 31 December 2020, the Group employed a complete of 24,379 workers (31 December 2019: 21,676 workers). Employees prices excluding administrators’ emoluments of the Group for the 12 months of 2020 amounted to roughly RMB2,259 million (2019: RMB1,950 million). The prices included fundamental salaries and advantages in addition to employees advantages resembling discretionary bonus, medical and insurance policy, pension scheme (together with the schemes underneath the statutory requirement of the federal government resembling pension insurance coverage in China and obligatory provident fund in Hong Kong), unemployment insurance policy and share choice scheme and many others. Aggressive remuneration packages had been provided to workers. The Firm has adopted incentive packages (together with share choice scheme) to encourage worker efficiency and offered a spread of coaching packages for the event of its employees.

Please seek advice from the paragraphs headed “Emolument Coverage” within the “Administrators’ Report” part of this annual report for the mechanism for figuring out the emolument payable to the Administrators.

Significant Investments Held

Save for the disclosures in Word 22 and Word 30 to the consolidated financial statements, there have been no different significant investments held by the Group as at 31 December 2020. Such funding refers to its elevated holdings of these glorious firms within the {industry}, reflecting its confidence within the prospect of the {industry} and the rise in company curiosity.

Materials Acquisition and Disposal

On 18 January 2021, the shares of Tianneng Share had been individually listed on the Science and Know-how Innovation Board of the Shanghai Inventory Alternate (the “Separate Itemizing”). Pursuant to the Separate Itemizing, Tianneng Share issued a complete of 116,600,000 A shares at a suggestion worth of RMB41.79 per share to buyers. Upon completion of the Separate Itemizing and the brand new concern, the Group’s controlling curiosity in Tianneng Share was lowered from 98.33% to 86.53%.

Save as disclosed above, the Group has no materials acquisition and disposal as at 31 December 2020.

Buy, Sale or Redemption of the Firm’s Listed Shares

Please seek advice from the paragraph headed “Share Capital and Challenge of Securities” as set out within the “Administrators’ Report” part of this annual report for the acquisition, sale and redemption of the Firm’s shares on this 12 months.

Principal Dangers and Uncertainties

Many financial specialists intently monitor whether or not the worldwide and China financial system development will decelerate in coming years. The Group’s conventional enterprise such because the sale of e-bike battery could also be underneath uncertainties if the buyer market downturn exists. It’s the purpose that the Group began industries transformation and upgrading a couple of years in the past, aiming to diversify the danger of over reliance on any single enterprise phase.

Previously few years, labour value in China constantly elevated and the production-oriented entities in China had been going through the growing strain of upper manufacturing value. The Group will apply extra assets in establishing manufacturing automation system in an effort to cut back manpower per manufacturing unit. On the similar time, the brand new incentive scheme might be adopted as the opposite method for enhancing the manpower efficiency.

Please refer to notice 4, 5, 6, 29, 43 and 45 to the consolidated financial statements for different dangers and uncertainties.

Future Improvement

For the Group’s future plans and growth, please seek advice from the paragraph headed “Prospects” within the “Administration Dialogue and Evaluation” part of this annual report.

Closure of Register of Members

The register of members of the Firm might be closed from Friday, 11 June 2021 to Friday, 18 June 2021 (each days inclusive), throughout which interval no switch of the shares of the Firm might be registered. To be able to qualify for attending the annual basic assembly of the Firm of this 12 months, all share certificates, along with duly accomplished switch kinds, should be lodged with the Firm’s Hong Kong department share registrar, Tricor Investor Providers Restricted, at Stage 54, Hopewell Centre, 183 Queen’s Street East, Hong Kong, no later than 4:30 p.m. on Thursday, 10 June 2021.

Additional, the register of members of the Firm might be closed from Monday, 28 June 2021 to Wednesday, 30 June 2021 (each days inclusive), throughout which interval no switch of the shares of the Firm might be registered. To be able to set up entitlements to the proposed final dividend, all transfers accompanied by the related share certificates should be lodged with the Firm’s Hong Kong department share registrar, Tricor Investor Providers Restricted, at Stage 54, Hopewell Centre, 183 Queen’s Street East, Hong Kong not later than 4:30 p.m. on Friday, 25 June 2021. Topic to the approval of the shareholders on the annual basic assembly of the Firm to be held on Friday, 18 June 2021, the proposed final dividend is anticipated to be paid on or earlier than Friday, 30 July 2021.

PROFILES OF DIRECTORS AND SENIOR MANAGEMENT

Govt Administrators

Dr. ZHANG Tianren ੵ˂΂௹ɻ

Aged 58, is the chairman (the “Chairman”) of the board of administrators (the “Board”), president and founding father of our Group. Dr. ZHANG is answerable for our general administration and formulation of our enterprise methods. Dr. ZHANG graduated from Zhejiang College with a grasp diploma of administration, and was an honorary doctorate of the Worldwide American College ( ߕ਷̋ψ਷ყɽኪ ) and a visiting professor of the Zhejiang Sci-tech College. Dr. ZHANG has 35 years of expertise in technological analysis and growth and administration of rechargeable battery {industry} in China. Dr. ZHANG was the manufacturing facility supervisor of Zhejiang Changxing Storage Battery Manufacturing unit in the course of the interval between 1989 and 2002, and has been the chairman and the overall supervisor of Tianneng Battery since 2003. Dr. ZHANG is at present the chairman of Tianneng Share, which is a listed firm on the Science and Know-how Innovation Board of the Shanghai Inventory Alternate.

Along with his key place in our Group, Dr. ZHANG was additionally a member of the twelfth and thirteenth Nationwide Individuals’s Congress, an govt committee member of All-China Federation of Trade and Commerce and vice chairman of Zhejiang Federation of Trade and Commerce. In addition to, he was a vp of China Electrical Tools Trade Affiliation, vice council chairman of China Battery Trade Affiliation, a member of China EV100, vp of the Nationwide Know-how and Tools Trade Affiliation (Ό਷ ʈਠᑌ߅Ҧༀ௪ุਠึਓึڗ), president of Battery Trade Affiliation of Zhejiang Province and and many others.

Dr. ZHANG was awarded as one of many World Excellent Chinese language at eleventh World Excellent Chinese language Award, 1st New Technological Retailers in Zhejiang, 2009 Excellent Zhejiang Retailers, High Ten Influential Individuals of the PRC Electrical Equipment Trade 2009, the Personalities for the 12 months within the Chinese language Market Financial system Award 2011, 2012 Bauhinia Cup Excellent Entrepreneur, the 2012 Ernst & Younger Entrepreneur of the 12 months, 2014 Honorary Zhejiang Service provider and Distinguished Zhejiang Service provider (ɚ ཧɓ̬ϋΈ࿲एਠe௫̈एਠ ), eighth Excellent Entrepreneur of China and 2016 World New Power Enterprise Chief. Dr. ZHANG is the youthful brother of Mr. ZHANG Aogen.

Mr. ZHANG Aogen ੵસ࣬΋͛

Aged 63, is our govt Director and vice-president and is answerable for our overseas commerce and abroad funding capabilities. Mr. ZHANG joined Zhejiang Changxing Storage Battery Manufacturing unit as a deputy manufacturing facility supervisor in 1988 and was appointed as a deputy basic supervisor of Tianneng Battery in 2001. Mr. ZHANG attended the seminar of enterprise administration for senior president in Zhejiang College from September 2007 to December 2008. Mr. ZHANG is at present a director of Tianneng Share, which is a listed firm on the Science and Know-how Innovation Board of the Shanghai Inventory Alternate. Mr. ZHANG is a senior economist and has expertise in gross sales administration, procurement administration in addition to commerce and funding. Mr. ZHANG can also be an elder brother of Dr. ZHANG Tianren, chairman of our Board.

Mr. SHI Borong

̦Ь࿲΋͛

Aged 67, is our govt Director and vp. Mr. SHI joined Zhejiang Changxing Storage Battery Manufacturing unit in 1989 and was promoted as deputy manufacturing facility supervisor of Zhejiang Changxing Storage Battery Manufacturing unit in 1990. He acted as deputy basic supervisor of Tianneng Battery in 2003 and was appointed because the standing deputy basic supervisor of Tianneng Battery in 2010. In September 2013, Mr. SHI was appointed because the chairman of Tianneng Battery (Anhui) Co., Ltd. and Anhui Zhongneng Energy Provide Co., Ltd. Mr. SHI attended the seminar of enterprise administration for senior president in Zhejiang College from August 2007 to September 2008. Mr. SHI is a senior economist and has 31 years of administration expertise in rechargeable battery enterprises.

Mr. ZHANG Kaihong ੵකߎ΋͛

Aged 63, is our govt Director, vp and the chief professional of technical middle. Mr. ZHANG joined Zhejiang Changxing Storage Battery Manufacturing unit in 1988 and acted as deputy manufacturing facility supervisor of Zhejiang Changxing Storage Battery Manufacturing unit in 1992. Mr. ZHANG was additionally appointed as deputy basic supervisor of Tianneng Battery in 2003 and as basic supervisor of Tianneng Wuhu in 2006. From February 2014, Mr. ZHANG was appointed as a vice-president of nationwide degree expertise centre of the Group. Mr. ZHANG attended the seminar of enterprise administration for senior president in Zhejiang College from August 2007 to September 2008. Mr. ZHANG is a senior engineer with 34 years of expertise in analysis and growth, high quality management and company administration of rechargeable battery merchandise.

Mr. ZHOU Jianzhong մܔʕ΋͛

Aged 50, is our govt Director and vp. Mr. ZHOU is answerable for selling the event of strategic and rising industries of our Group in addition to helping the president in operations and administration. Mr. ZHOU joined the Group in 1996 and has been the top of market administration part of Tianneng Battery, standing deputy basic supervisor of Tianneng Energy Provide, standing deputy basic supervisor of Tianneng Battery, standing deputy basic supervisor of Tianneng Power Know-how, basic supervisor of Tianneng Energy Power and basic supervisor of Tianneng Energy Provide Materials. He was appointed as vice-president of the Group in 2011. Mr. ZHOU attended the seminar of enterprise administration for senior president in Zhejiang College from September 2007 to December 2008, and attended the coaching program for basic managers in China Europe Worldwide Enterprise College from July 2017 to March 2018. Mr. ZHOU is at present a director of Tianneng Share, which is a listed firm on the Science and Know-how Innovation Board of the Shanghai Inventory Alternate. He’s a senior economist with 26 years of expertise within the gross sales and administration of rechargeable batteries and company administration.

Unbiased Non-Govt Administrators

Mr. WU Feng юቜ΋͛

Aged 70, was appointed as an impartial non-executive Director in June 2015. Mr. WU graduated from Taiyuan Institute of Know-how (˄ࡡʈኪ৫) in 1981 with a grasp diploma of engineering. In 2014, Mr. WU was awarded an honorary doctorate diploma by the College of Massachusetts Boston in America. Mr. WU is at present the professor, tutor of PHD college students and the chief professor of the vitality and environmental supplies self-discipline of Beijing Institute of Know-how, the academician of Chinese language Academy of Engineering, the academician of the Worldwide Eurasian Academy of Sciences and vice council chairman of China Battery Trade Affiliation. Mr. WU takes the lead within the area of recent secondary battery and associated vitality assets in China. He took cost of and undertook a number of vital and key nationwide researches and particular initiatives. Mr. WU was appointed because the “Chief Scientist of the Particular Challenge of New Secondary Battery of Nationwide (973) Key Fundamental Analysis Program” by the Ministry of Science and Know-how of the PRC for 3 times in a row. Mr. WU was an impartial director of Shenzhen Senior Know-how Materials Co., Ltd., which is a listed firm on Shenzhen Inventory Alternate in China, till his resignation in October 2018. Mr. WU was an impartial director of EVE Power Co., Ltd. which is a listed firm on Shenzhen Inventory Alternate in China, till his resignation in October 2019.

Mr. HUANG Dongliang ර໨Ԅ΋͛

Aged 65, was appointed as an impartial non-executive Director in February 2007. Mr. HUANG graduated from Zhongnan Finance College in 1988 with a bachelor diploma majored in economics. Mr. HUANG obtained the qualifications of professor, senior accountant and registered tax agent in China. Mr. HUANG is a certified public accountant registered underneath the Chinese language Institute of Licensed Public Accountants. Mr. HUANG is at present an impartial director of Zhejiang Medication Co., Ltd. (एϪᔼᖹٰ΅Ϟࠢʮ̡) which is a listed firm on Shanghai Inventory Alternate. Mr. HUANG was an impartial director of Lander Sports activities Improvement Co., Ltd. (ഺত༺᜗ԃ೯ٰ࢝΅Ϟࠢʮ̡), which is a listed firm on Shenzhen Inventory Alternate in China, till his retirement in Could 2018.

Mr. ZHANG Yong ੵಪ΋͛

Aged 45, was appointed as an impartial non-executive Director in August 2018. Mr. ZHANG graduated from Fudan College, majoring in worldwide finance and obtained a doctoral diploma in economics. Mr. ZHANG is at present a researcher of the Complete Analysis Institute of Shanghai Free Commerce Zone of Fudan College (ూ͇ɽኪɪऎІ൱ਜၝΥ޼Ӻ ৫), a component time professor of Nanjing College, a component time tutor for postgraduate college students of Shanghai College of Finance and Economics and a visiting professor of Shanghai Lixin College of Accounting and Finance (ɪऎͭڦึࠇږፄኪ৫).

Senior Administration

Mr. ZHAO Haimin Ⴛऎઽ΋͛

Aged 56, is the vice-president of the Group. Mr. ZHAO is answerable for managing the analysis centre in addition to the knowledge expertise fee of the Group. Mr. ZHAO joined us in 2004 as an assistant to the overall supervisor and deputy basic supervisor, and many others. of Tianneng Battery Firm. Mr. ZHAO was answerable for aftersale providers, human assets and gross sales administration of the Group, throughout which he organized and carried out the primary monitoring system of laser printing for high quality and aftersale informationalization and the introduction of abroad high-end abilities underneath the nationwide “Thousand Abilities Program” (਷࢕ɷɛ) in respect of the field of recent vitality. Mr. ZHAO graduated from Bengbu Industrial Know-how Institute (঵਽ʈุҦஔኪࣧ), majoring in textile. Later, he attended a vocational faculty and a college for company administration and was enrolled within the MBA programme in China College of Geosciences in 2009. Mr. ZHAO is a professorate senior engineer. He has intensive information in non-woven materials and battery separators. Previous to becoming a member of us, Mr. ZHAO was an assistant to the overall supervisor in Huzhou KINGSAFE Group Co., Ltd. (ಳψ ږɧ೯ණྠ ) and was answerable for the administration of expertise, manufacturing and gross sales.

Ms. WANG Jing ˮ᎑ɾɻ

Aged 57, is our financial controller. Ms. WANG is answerable for the financial administration of the Group. She joined the Group in 2004 because the supervisor of financial division of Tianneng Battery and was appointed as our financial controller in 2009. She has greater than 39 years of financial administration expertise. Ms. WANG graduated from Hangzhou Institute of Electrical Engineering in Industrial Accounting in July 1988 and attended the superior seminar of recent administration (CFO) in Zhejiang Institute of Finance & Economics from June 2008 to June 2009. Previous to becoming a member of us, Ms. WANG labored in Zhejiang Leomax Cement Firm Restricted (एϪɧ๸˥إٰ΅Ϟࠢʮ ̡), Huzhou Kingsafe Group (ಳψږɧ೯ණྠ ) and Huzhou Tianheng United CPA Agency (ಳψ˂ ፅᑌΥึࠇࢪԫਕה) and was answerable for the financial administration and audit.

Ms. HUI Wai Man, Shirley ஢౉ઽɾɻ

Aged 53, is the corporate secretary of the Firm (the “Firm Secretary”). Ms. HUI is answerable for the corporate secretarial affairs of the Group. She joined the Group in September 2009. She is a licensed public accountant in Hong Kong, a fellow member of the Hong Kong Institute of Licensed Public Accountants and the Institute of Chartered Secretaries and Directors in addition to a fellow member of the Hong Kong Institute of Chartered Secretaries. Additionally, she is a member of the Society of Chinese language Accountants and Managements and the Hong Kong Securities Institute. Ms. HUI has over 31 years {of professional} expertise in public accounting and company financing.

CORPORATE GOVERNANCE REPORT

The Firm is dedicated to making sure excessive requirements of company governance. The Board of Administrators (the “Board”) believes that good company governance practices are more and more vital for sustaining and selling buyers’ confidence.

Company Governance Code

The Firm has adopted the provisions of the Company Governance Code (the “Code”) as contained in Appendix 14 to the Itemizing Guidelines in the course of the interval from 1 January 2020 to 31 December 2020. For the 12 months ended 31 December 2020, aside from the Code provision A.2.1, the Firm has complied with the provisions set out within the Code. Dr. Zhang Tianren is each the chairman and CEO of the Firm who’s answerable for managing the Group’s enterprise. The Board considers that vesting the roles of chairman and CEO in the identical individual facilitates the execution of the Firm’s enterprise methods and maximizes the effectiveness of its operation. With the current Board construction and scope of enterprise, the Board considers that there isn’t any imminent must separate the roles into two people. Nevertheless, the Board will proceed to overview the effectiveness of the Group’s company governance construction to evaluate whether or not the separation of the place of the chairman and CEO is critical.

Board of Administrators

Composition

As at 31 December 2020, the Board comprised eight members. Dr. Zhang Tianren is an govt Director, the Chairman and CEO of the Firm. The chief Administrators of the Firm are Mr. Zhang Aogen, Mr. Zhang Kaihong, Mr. Shi Borong and Mr. Zhou Jianzhong. In compliance with Rule 3.10 of the Itemizing Guidelines, the Firm had three impartial non-executive Administrators comprising one-third of the members of the Board, particularly, Mr. Huang Dongliang, Mr. Wu Feng and Mr. Zhang Yong. Mr. Huang Dongliang has acceptable skilled accounting expertise and experience.

All Administrators have distinguished themselves of their field of experience, and have exhibited excessive requirements of non-public {and professional} ethics and integrity. The biographical particulars of every Director are disclosed on pages 29 to 31 of this annual report.

Every impartial non-executive Director has pursuant to Rule 3.13 of the Itemizing Guidelines, confirmed that he’s impartial of the Firm and the Firm additionally considers every of them to be impartial.

Other than Mr. Zhang Aogen being an elder brother of Dr. Zhang Tianren, the Chairman of the Board, there isn’t any different relationship (together with financial, enterprise, household or different materials relationship) amongst members of the Board. All of them are capable of make free and impartial judgment.

Operate

The Board, led by the Chairman, is answerable for formulation and approval of the Group’s growth, enterprise methods and insurance policies, approval of enterprise plans, suggestion of dividend and supervision of administration. Whereas the administration of the Firm was given ample autonomy by the Board to deal with the every day strange course of administration and administration, when the Board delegates elements of its administration and administration capabilities to administration, it has given clear instructions as to the powers of administration, particularly, with respect to the circumstances the place administration shall report again and acquire prior approval from the Board earlier than making selections or coming into into any commitments on behalf of the Firm.

There’s a formal schedule of issues specifically reserved to and delegated by the Board. The Board had given clear instructions to the administration of the Firm that sure issues (together with the next) should be reserved to the Board:

  • – Publication of final, interim and quarterly outcomes (if any) of the Firm;

  • – Dividend distribution or different distributions;

  • – Treasury coverage, accounting coverage and remuneration coverage;

  • – Assessment on inside management system and threat administration;

  • – Modifications to main company construction of the Group or Board composition requiring notification by announcement;

  • – Notifiable transaction and non-exempted related transaction/persevering with related transaction;

  • – Proposed transaction requiring Shareholders’ approval;

  • – Capital re-structuring and concern of recent securities;

  • – Joint-venture with outdoors celebration involving capital dedication from the Group of over 5% of the related measurement take a look at of the Firm; and

  • – Monetary help to the Administrators.

As well as, the Board carries the perform of reviewing the company governance apply and disclosure system as follows:

  • – Assessment the Firm’s insurance policies and practices on company governance;

  • – Assessment and monitor the coaching and steady skilled growth of Administrators and senior administration;

  • – Assessment and monitor the Firm’s insurance policies and practices on compliance with authorized and regulatory necessities;

  • – Assessment and monitor the code of conduct and compliance guide (if any) relevant to workers and Administrators; and

  • – Assessment the Firm’s compliance with the Code and disclosure within the Company Governance Report.

The Firm held 5 Board conferences and one basic assembly in the course of the 12 months ended 31 December 2020. The attendance of particular person Administrators at these conferences was as follows:

Title

Attendance of Board assembly in individualAttendance of basic assembly in individual

Govt Administrators Dr. Zhang Tianren Mr. Zhang Aogen Mr. Zhang Kaihong Mr. Shi Borong

3/5 1/1

3/5 1/1

5/5 1/1

5/5 1/1

Mr. Zhou Jianzhong

3/5 1/1

Unbiased Non-executive Administrators: Mr. Huang Dongliang

5/5 1/1

Mr. Wu Feng

4/5 1/1

Mr. Zhang Yong

5/5 1/1

The time period of appointment of the impartial non-executive Administrators is as follows:

Mr. Huang Dongliang

11 June 2020 to 10 June 2021

Mr. Wu Feng

6 June 2020 to five June 2021

Mr. Zhang Yong

8 August 2018 to 7 August 2021

The Firm has taken out acceptable insurance coverage protection for the Administrators in respect of authorized actions taken towards Administrators and officers of the Group. The Board opinions the extent of the insurance coverage protection yearly.

Duties

In the midst of discharging their duties, the Administrators act in good religion, with due diligence and care, and in the very best pursuits of the Firm and the Shareholders. Their duties embody:

  • – holding common Board conferences specializing in enterprise technique, operational points and financial efficiency;

  • – monitoring the standard, timeliness, relevance and reliability of inside and exterior reporting;

  • – monitoring and managing the potential conflicts of curiosity of administration, Board members and Shareholders, together with misuse of company property and abuse in related transactions; and

  • – guaranteeing processes are in place to keep up the general integrity of the Firm, together with financial statements and inside management techniques.

Board Variety

With a view to reaching a sustainable and balanced growth, the Firm sees growing range on the Board degree as a necessary component in supporting the attainment of its strategic aims and its sustainable growth. In designing the Board’s composition, Board range has been thought-about from numerous elements, together with however not restricted to age, cultural and academic background, ethnicity, skilled expertise, abilities, information and size of service. All Board appointments might be based mostly on meritocracy, and candidates might be thought-about towards goal standards, having due regard for the benefits of range on the Board. Collection of candidates might be based mostly on a spread of range views, together with however not restricted to age, cultural and academic background, skilled expertise, abilities, information and size of service. The final word choice might be based mostly on advantage and contribution that the chosen candidates will convey to the Board. Based on Rule 13.92 of the Itemizing Guidelines, the above Board range coverage of the Firm has been accredited by the Board and adopted by the Nomination Committee (as defined beneath) on 30 August 2013 and amended with impact from 1 January 2019 in compliance with the Itemizing Guidelines.

The nomination committee of the Firm (the “Nomination Committee”) holds assembly not less than every year to overview the range of the Board, discusses the measurable aims, together with information, acceptable skilled qualifications, related enterprise background and expertise, abilities, related administration experience and independence of Administrators, and offers suggestion to the Board. In the course of the 12 months, the Nomination Committee took the view that the measurable aims had been achieved to a big extent. It paid explicit consideration to the cultural and academic background, skilled and technical expertise, and abilities of the members of Board and in addition reviewed the composition of govt Administrators and impartial non-executive Administrators in order to make sure acceptable independence inside the Board.

Administrators’ Coaching

Pursuant to Provision A.6.5 of the Code, all Administrators ought to take part in steady skilled growth to develop and refresh their information and abilities. The Administrators have been given related guideline supplies to make sure that they’re apprised of the newest modifications within the industrial, authorized and regulatory necessities in relation to the Firm’s companies, and to refresh their information and abilities on the roles, capabilities and duties of a listed firm director.

For the interval from 1 January 2020 to 31 December 2020, all Administrators offered their data of coaching to the Firm.

All Administrators, particularly Dr. Zhang Tianren, Mr. Zhang Aogen, Mr. Zhang Kaihong, Mr. Shi Borong, Mr. Zhou Jianzhong, Mr.

Huang Dongliang, Mr. Wu Feng and Mr. Zhang Yong, participated in steady skilled growth primarily by studying varied supplies relating to administrators’ duties, prevention of breaching the Itemizing Guidelines and disclosure of inside info, and many others.

Firm Secretary’s Coaching

Pursuant to Rule 3.29 of the Itemizing Guidelines, the Firm Secretary should take at least 15 hours of related skilled coaching in every monetary 12 months. The Firm Secretary offered her coaching data to the Firm indicating that she had taken greater than 15 hours of related skilled growth by the use of attending in-house briefings and seminars and studying related guideline supplies.

Shareholders’ Rights

Set out beneath is a abstract of sure rights of the Shareholders as required to be disclosed pursuant to the Code.

Convening a rare basic assembly and procedures for placing ahead proposals by Shareholders at basic assembly

Every basic assembly apart from an annual basic assembly shall be referred to as a rare basic assembly. Common conferences could also be held in any a part of the world as could also be decided by the Board.

Based on Article No. 58 of the Firm’s articles of affiliation, any a number of members holding on the date of deposit of the requisition not lower than one-tenth of the paid up capital of the Firm carrying the precise of voting at basic conferences of the Firm shall always have the precise, by written requisition to the secretary of the Board of the Firm, to require a rare basic assembly to be referred to as by the Board for the transaction of any enterprise specified in such requisition; and such assembly shall be held inside two months after the deposit of such requisition.

If inside twenty-one days of such deposit the Board fails to proceed to convene such assembly, the requisitionist(s) himself (themselves) could accomplish that in the identical method, and all cheap bills incurred by the requisitionist(s) on account of the failure of the Board shall be reimbursed to the requisitionist(s) by the Firm.

Any requisition to convene a rare basic assembly or proposal to be put ahead on the basic assembly may be addressed to the principal workplace of the Firm in Hong Kong marked with the eye of the Firm Secretary. The requisitionists should state of their request(s) the objects of the extraordinary basic assembly to be convened, and such request should be signed by all of the requisitionists. Upon receipt, the Firm will confirm the requisitionists’ particulars and if the request is so as, the Firm will convene the extraordinary basic assembly in accordance with its articles of affiliation.

Enquiries from Shareholders to the Board

To be able to guarantee efficient communication between the Shareholders and the Board, the Firm adopted the Shareholders communication procedures on 24 February 2012. Based on the Shareholders communication procedures, the Board ought to be answerable for sustaining an on-going dialogue with the Shareholders and particularly, use annual basic conferences or different basic conferences to speak with them and encourage their participation. The Chairman of the Board ought to attend the annual basic assembly. He must also invite the impartial non-executive Administrators, chairmen of the audit, remuneration, nomination and another committees (as acceptable) to attend. Of their absence, the chairman ought to invite one other member of the committee or failing this, his duly appointed delegate, to attend. These individuals ought to be accessible to reply questions on the annual basic assembly.

The chairman of the impartial Board committee (if any) must also be accessible to reply questions at any basic assembly to approve a related transaction or another transaction that requires impartial Shareholders’ approval.

Shareholders and buyers are welcome to go to the Firm’s web site and lift enquiries by way of our Investor Relations Division and/or our Firm’s public relations consultant (Porda Havas Worldwide Finance Communications (Group) Holdings Firm Restricted) whose contact particulars can be found on the web site.

Remuneration Committee

The Firm has established a remuneration committee (the “Remuneration Committee”) with specific phrases of reference which deal clearly with its duties and duties. As at 31 December 2020, the Remuneration Committee had three members, comprising Mr. Wu Feng (chairman and impartial non-executive Director), Mr. Huang Dongliang (impartial non-executive Director) and Mr. Zhang Aogen (govt Director).

The phrases of reference of the Remuneration Committee comply with the rules set out within the Code and it’s primarily answerable for making suggestions to the Board on the Firm’s coverage for the remuneration of Administrators and senior administration.

The Remuneration Committee shall meet not less than every year. One committee assembly was held in 2020 to approve and undertake the revised phrases of reference of the Remuneration Committee. The attendance of every member is about out as follows:

Assembly attended

Title

Assembly held

in individual

Mr. Huang Dongliang

1

1

Mr. Wu Feng

1

1

Mr. Zhang Aogen

1

1

In the course of the Remuneration Committee assembly, proposal for adjustment of remuneration bundle for Administrators and senior administration (“the Proposal”) was reviewed and accredited by the Remuneration Committee and the Proposal was proposed to the Board for approval. The Proposal was accredited by the Board.

Nomination Committee

The Firm has established the Nomination Committee with specific phrases of reference which deal clearly with its duties and duties. As at 31 December 2020, the Nomination Committee had three members, comprising Dr. Zhang Tianren (the chairman and an govt Director), Mr. Huang Dongliang (impartial non-executive Director) and Mr. Wu Feng (impartial non-executive Director).

The phrases of reference of the Nomination Committee have been decided as regards to the Code. The Nomination Committee is answerable for figuring out potential new Administrators and recommending to the Board for choice. A Director appointed by the Board is topic to re-election by the Shareholders on the first annual basic assembly after his/her appointment. Beneath the Firm’s articles of affiliation, at every annual basic assembly, one-third of the Administrators in the intervening time (or if their quantity is just not a a number of of three, the quantity nearest to however not lower than one-third) shall retire from office by rotation offered that each Director shall be topic to retirement by rotation at an annual basic assembly not less than as soon as each three years.

Appointment and Re-election of Administrators

The Board has established and adopted a written nomination coverage (the “Nomination Coverage”) specifying the method and standards for the choice and suggestion of candidates for directorship of the Firm.

Choice standards

The Nomination Committee shall, based mostly on these standards as set out within the Nomination Coverage (resembling repute for integrity, qualifications and expertise, time dedication and contribution to range of the Board in keeping with the Board range coverage, and many others.), determine and advocate the proposed candidate to the Board for approval of an appointment. Within the case of re-appointment of Director, the Nomination Committee would consider components resembling contribution, attendance in conferences and degree of participation from the retiring Administrators. The place the candidate is appointed for the place of impartial non-executive Director, the Nomination Committee may also assess his/her independence as regards to the necessities set out within the Itemizing Guidelines.

Nomination procedures

In appointing a brand new Director, the Nomination Committee and/or the Board will first name a gathering of the Nomination Committee and invite nominations of candidates from Board members for its consideration previous to the assembly.

The Nomination Committee might also put ahead candidates who will not be nominated by the Board. The Nomination Committee shall then make suggestions for the Board’s consideration and approval. The data, together with biography, independence (for nomination of non-executive or impartial non-executive Administrators solely), proposed remuneration and different info as required underneath the relevant legal guidelines and laws might be included within the round to Shareholders. A Shareholder might also serve to the principal workplace of the Firm in Hong Kong a discover in writing for its intention to suggest a decision to elect a sure candidate as Director and a discover by the nominated individual of his/her willingness to be elected in keeping with the articles of affiliation, with out the Board’s suggestion or nomination of the Nomination Committee apart from these candidates as set out within the round. The Board shall then contemplate and have the final choice on all issues relating as to whether to have the really helpful candidates to face for election at a basic assembly. The Nomination Committee shall make sure the transparency and equity of the choice process.

New Administrators, on appointment, might be given an induction bundle containing all key authorized and Itemizing Guidelines’ necessities in addition to tips on the duties and obligations to be noticed by a Director. The bundle may also embody the newest printed financial reviews of the Firm and the documentation for the company governance practices adopted by the Board. The senior administration will subsequently conduct such briefing as is critical to offer the brand new Administrators extra detailed info on the Group’s operations, enterprise and actions.

Based on Clause 87 of the articles of affiliation of the Firm, at every annual basic assembly one-third of the Administrators in the intervening time (or, if their quantity is just not a a number of of three (3), then the quantity nearest to however not lower than one-third) shall retire from office by rotation offered that each Director shall be topic to retirement at an annual basic assembly not less than as soon as each three years. A retiring Director shall be eligible for re-election and shall proceed to behave as a Director all through the assembly at which he retires. The Administrators to retire by rotation shall embody (as far as vital to determine the variety of Administrators to retire by rotation) any Director who needs to retire and to not supply himself for re-election. Any additional Administrators so to retire shall be these of the opposite Administrators topic to retirement by rotation who’ve been longest in office since their final re-election or appointment and in order that as between individuals who turned or had been final re-elected Administrators on the identical day these to retire shall (except they in any other case agree amongst themselves) be decided by lot. Any Director appointed by the Board pursuant to Article 86(3) shall not be taken into consideration in figuring out which explicit Administrators or the variety of Administrators who’re to retire by rotation. The Administrators shall have the facility occasionally and at any time to nominate any individual as a Director both to fill an informal emptiness on the Board or as an addition to the present Board. Any Director appointed by the Board to fill an informal emptiness shall maintain office till the first basic assembly of members after his appointment and be topic to re-election at such assembly and any Director appointed by the Board as an addition to the present Board shall maintain office solely till the subsequent annual basic assembly of the Firm and shall then be eligible for re-election.

Based on code provision A.4.2 of the Code of the Itemizing Guidelines, all Administrators appointed to fill an informal emptiness ought to be topic to election by Shareholders on the first basic assembly after appointment. Each Director, together with these appointed for a specific time period, ought to be topic to retirement by rotation not less than as soon as each three years. Potential new Administrators are chosen on the premise of their qualification, abilities and expertise which the Nomination Committee considers will make a optimistic contribution to the efficiency of the Board.

When making suggestions relating to the appointment of any proposed candidate to the Board or re-appointment of any current member(s) of the Board, the Nomination Committee shall contemplate a wide range of components together with with out limitation the next in assessing the suitability of the proposed candidate:

  • a. Status for integrity;

  • b. {Qualifications} together with skilled {qualifications}, abilities, information and expertise which are related to the Firm’s enterprise and company technique;

  • c. Willingness to commit sufficient time to discharge duties as a Board member and different directorships and significant commitments;

  • d. Variety in all elements, together with however not restricted to gender, age (18 years or above), cultural and academic background, ethnicity, skilled expertise, abilities, information and size of service; and

  • e. Such different views acceptable to the Firm’s enterprise.

These components are for reference solely, and will not be meant to be exhaustive and decisive. The Nomination Committee could contemplate different components in order to make sure that the Board has a stability of abilities, expertise and variety of views acceptable to the necessities of the Firm’s enterprise. The Nomination Committee has the discretion to appoint any individual, because it considers acceptable.

The Nomination Committee shall meet not less than every year. One committee assembly was held in 2020 to overview the composition of the Board, contemplate the independence of the impartial non-executive Administrators and the retirement of Administrators. The attendance of every member is about out as follows:

Assembly attendedAssembly held

in individual

Dr. Zhang Tianren Mr. Huang Dongliang Mr. Wu Feng

1 1

1 1

1 1

Remuneration of the Senior Administration and Administrators

The remuneration of the senior administration of our Group for the 12 months ended 31 December 2020 falls inside the following band:

Variety of Individuals

Nil to RMB1,000,000

4

Mannequin Code for Securities Transactions by Administrators

The Firm has adopted the Mannequin Code for Securities Transactions by Administrators of Listed Issuers (the “Mannequin Code”) contained in Appendix 10 to the Itemizing Guidelines. Having made specific enquiry, all administrators of the Firm have complied with the required normal set out within the Mannequin Code all year long ended 31 December 2020.

Audit Committee

The Firm has established an audit committee (the “Audit Committee”) in compliance with Rule 3.21 of the Itemizing Guidelines. As at 31 December 2020, the Firm’s Audit Committee comprised three impartial non-executive Administrators, particularly Mr. Huang Dongliang (chairman), Mr. Wu Feng and Mr. Zhang Yong.

The first duties of the Audit Committee (inter alia) are to overview the financial reporting course of and inside management system of the Group, and to make proposals to the Board as to appointment, renewal and resignation of the Firm’s impartial exterior auditors and the associated remuneration and appointment phrases. The Audit Committee has reviewed the annual report with the administration and the Firm’s impartial exterior auditors and really helpful its adoption by the Board.

The written phrases of reference, which describe the authority and duties of the Audit Committee, are usually reviewed and had been up to date by the Board to adjust to provision C.3.3 of the Code in 2020. The Audit Committee held two conferences in the course of the 12 months ended 31 December 2020. The attendance of every member is about out as follows:

Assembly attended

Title

Assembly held

in individual

Mr. Huang Dongliang

2

2

Mr. Wu Feng

2

2

Mr. Zhang Yong

2

2

The Audit Committee oversees the monetary reporting course of. On this course of, the administration of the Firm is answerable for the preparation of the Group’s financial statements together with the number of appropriate accounting insurance policies. Unbiased exterior auditors are answerable for auditing and testifying to the Group’s monetary statements and evaluating the Group’s system of inside controls. The Audit Committee oversees the respective works of the administration and the impartial exterior auditors to observe the processes and safeguards employed by them. The Audit Committee reviews to the Board on its findings after every of its assembly. With impact from 1 January 2020, the Audit Committee oversees the Group’s threat administration system.

The Audit Committee reviewed and mentioned the Group’s monetary statements for the 12 months ended 31 December 2020 with the administration and impartial exterior auditors. The Audit Committee additionally obtained reviews and met with the impartial exterior auditors to debate the overall scope of their audit work and their evaluation of the Group’s inside controls.

Based mostly on these opinions, discussions and the report of the impartial exterior auditors, the Audit Committee really helpful for the Board’s approval of the consolidated financial statements for the six months ended 30 June 2020 and the 12 months ended 31 December 2020, with the Auditors’ Report thereon.

The Audit Committee really helpful to the Board that the Shareholders be requested to re-appoint ZHONGHUI ANDA CPA Restricted (“ZHONGHUI ANDA”) because the Group’s impartial exterior auditor for the 12 months ending 31 December 2021.

Unbiased Exterior Auditor

Deloitte Touche Tohmatsu (“Deloitte”) has resigned because the auditor of the Group with impact from 18 December 2019 after taking into consideration, amongst different components, the extent of audit charges, the skilled threat related to the audit and its accessible inside assets in gentle of present work flows for the Firm’s financial 12 months ending 31 December 2019.

The Board, with the advice from the Audit Committee, has resolved to nominate ZHONGHUI ANDA as the brand new auditor of the Group with impact from 24 December 2019 to fill the informal emptiness following the resignation of Deloitte and to carry office till the conclusion of the forthcoming annual basic assembly of the Firm.

Deloitte has confirmed in its letter of resignation dated 18 December 2019 that there have been no issues related to its resignation because the auditor of the Group that have to be delivered to the eye of holders of the Firm’s securities or the Firm’s collectors. As well as, there have been no circumstances related with its resignation that Deloitte considers ought to be delivered to the eye of members or collectors of the Firm’s subsidiaries established in Hong Kong.

Save as disclosed above, there have been no different modifications in auditor of the Firm in the course of the previous three years.

The Board and the Audit Committee confirmed that there was no disagreement or dispute between the Firm and Deloitte aside from the 2019 annual audit payment and that there have been no unresolved points in regards to the change of the auditor. The Board and the Audit Committee additionally confirmed that there have been no different issues or circumstances related to the change of the Group’s auditor that have to be delivered to the eye of holders of the Firm’s securities or the Firm’s collectors.

The Audit Committee opinions a letter from the impartial exterior auditor of the Firm, ZHONGHUI ANDA, confirming its independence, approves its appointment, discusses the scope of its audit and approves its charges.

ZHONGHUI ANDA has offered annual statutory audit providers in respect of the Firm’s financial statements ready underneath HKFRSs for the 12 months ended 31 December 2020. ZHONGHUI ANDA has additionally reviewed the 2020 unaudited interim financial report of the Firm, ready underneath HKFRSs.

In the course of the 12 months ended 31 December 2020, the payment paid and payable to ZHONGHUI ANDA in respect of audit and audit associated providers amounted to roughly RMB1,750,000. In respect of non-audit providers, the charges paid and payable to ZHONGHUI ANDA referring to overview on interim financial report amounted to roughly RMB580,000.

Inner Management and Threat Administration

The Board is answerable for sustaining an sufficient system of inside controls inside the Group and reviewing their effectiveness not less than yearly, masking all materials controls, together with financial, operational and compliance controls in addition to threat administration capabilities. The Board is dedicated to strengthening the Group’s inside management system, and has established a sequence of inside management insurance policies and procedures. The system of inside controls is designed to facilitate efficient and efficient operations, to safeguard property and to make sure the standard of inside and exterior reporting and compliance with relevant legal guidelines and laws. Additionally it is designed to supply cheap, however not absolute, assurance that materials misstatement or loss may be averted, and to handle and reduce dangers of failure in operation techniques.

The Firm engaged a world skilled administration consultancy firm, BT Company Governance Restricted (“BTCG”), to evaluate and consider the danger and effectiveness of its system of inside controls as much as 31 December 2020. The Audit Committee members, along with the senior administration, have reviewed, thought-about and mentioned all of the findings and suggestions of the inner management overview referring to the inner management system that operates inside the Group, and the Audit Committee is satisfied that the inner management system of the Group is sound and sufficient. Pursuant to the system enchancment suggestions made by BTCG, the Group will proceed to enhance its inside administration and management techniques.

The Board has additionally performed an annual overview on the effectiveness of the accounting and financial reporting perform of the Firm and takes the view that the Firm possesses sufficient assets and its employees are outfitted with appropriate qualifications and expertise on this regard.

Going ahead, the Firm will conduct common opinions of the Firm’s inside management and threat administration techniques and their effectiveness to make sure that the curiosity of the Shareholders is safeguarded.

Going Concern

The Administrators, having made acceptable enquiries, contemplate that the Firm has sufficient assets to proceed in operational existence for the foreseeable future and that, because of this, it’s acceptable to undertake the going concern foundation in making ready the financial statements.

Communication with Shareholders

The target of Shareholder communication is to supply the Shareholders with detailed details about the Firm in order that they will train their rights because the Shareholders in an knowledgeable method. The Firm makes use of a spread of communication instruments to make sure the Shareholders are stored nicely knowledgeable. These embody basic assembly, annual report, varied notices, bulletins and circulars. Process for demanding voting by ballot has been included in all circulars accompanying discover convening basic assembly and the detailed procedures for conducting a ballot has been learn out by the Chairman at basic assembly. The final assembly offers the Shareholders with a helpful discussion board and encourages the Shareholders to attend the overall conferences of the Firm to lift feedback and alternate views with the Board. The Chairman, Administrators and impartial exterior auditor, the place acceptable, can be found to reply questions on the assembly.

Administrators’ Accountability in Making ready the Monetary Statements

The Administrators acknowledge that it’s their duties to organize the financial statements. The duties of the impartial exterior auditor with respect to financial reporting are set out within the Unbiased Auditor’s Report on web page 59 to web page 61.

Constitutional Paperwork

There are not any significant modifications within the Firm’s constitutional paperwork in the course of the 12 months ended 31 December 2020.

CONNECTED TRANSACTIONS

Formation of Joint Enterprise Firm

As set out within the announcement dated 17 January 2020, on 17 January 2020, Tianneng Holding (an oblique wholly-owned subsidiary of the Firm), Tianneng Monetary (an oblique wholly-owned subsidiary of the Firm) and Prime Chief (a related individual of the Firm) entered into the JV Association pursuant to which the events agreed to determine the JV Firm within the PRC. As at 17 January 2020, Prime Chief is wholly-owned by Dr. Zhang. Dr. Zhang is a controlling shareholder and an govt Director of the Firm. Accordingly, Prime Chief is an affiliate of Dr. Zhang and a related individual of the Firm pursuant to the Itemizing Guidelines.

Tianneng Holding, Tianneng Monetary and Prime Chief anticipate to speculate a complete of RMB170,000,000 into the JV Firm by contributing to its registered capital. Tianneng Holding, Tianneng Monetary and Prime Chief have agreed to contribute RMB85,000,000, RMB42,500,000 and RMB42,500,000, respectively, representing 50%, 25% and 25% of the registered capital of the JV Firm, respectively. 30% of the capital contributions might be payable by the events in money upon institution of the JV Firm and the remaining 70% of the capital contributions might be payable by the events in money earlier than 30 December 2020.

The Group focuses totally on analysis and growth, manufacturing and gross sales of high-end ecofriendly batteries, new vitality batteries, inexperienced renewable supplies and their associated merchandise.

To be able to improve the profitability and core competitiveness of the Group, Tianneng Holding and Tianchang Holding Co., Ltd.* (˂࿫છٰϞࠢʮ̡) entered into the Tianneng Factoring JV Association on 31 December 2019, pursuant to which the events agreed to determine one other three way partnership firm, Tianneng Factoring, to supply factoring financing providers, administration of gross sales ledgers, accounts receivable assortment, provision on non-commercial dangerous debt ensures and different associated providers to its upstream and downstream enterprise companions. For particulars of the Tianneng Factoring JV Association, please seek advice from the announcement of the Firm dated 31 December 2019.

To supply extra complete financial options to each upstream and downstream enterprise companions of the Group and to fulfill the growing calls for of leasing and financial leasing providers from such enterprise companions, the Group intends to supply leasing and financial leasing providers and different associated providers by way of the funding within the JV Firm. By coming into into the JV Association, the Group can leverage on the financial assets of Prime Chief, thus lowering the danger to the Group of finishing up the brand new financial leasing enterprise by way of the JV Firm. The funding within the JV Firm is according to the Group’s long-term company technique and potential enterprise transformation. The Group believes that the growth and diversification of its financial options to its enterprise companions will additional improve the profitability and core competitiveness of the Group and may range dangers with an intention to enhance the returns for the Shareholders.

Please seek advice from the announcement dated 17 January 2020 for additional particulars.

* for identification function solely

CONNECTED TRANSACTIONS

Non-exempt Persevering with Related Transactions

Previous Persevering with Related Transactions and Grasp Buy Settlement

Background

As set out within the announcement dated 25 December 2020, Zhejiang Changtong Know-how Firm Restricted* ( एϪ䆽ஷ ߅ҦϞࠢʮ̡ ) (“Zhejiang Changtong”) is an organization established within the PRC. As Ms. Zhang Mei’e, being the sister of Dr. Zhang Tianren (an govt Director, the Chairman of the Board and a controlling shareholder has the which means ascribed to it underneath the Itemizing Guidelines of the Firm) and Mr. Zhang Aogen (an govt Director), acquired 90% shareholding curiosity in Zhejiang Changtong in December 2019, Zhejiang Changtong then turned an organization immediately and collectively owned by Ms. Zhang Mei’e and her partner, Mr. Ni Danqing, as to 90% and 10%, respectively. As Ms. Zhang Mei’e and Mr. Ni Danqing are associates has the which means ascribed to it underneath the Itemizing Guidelines of Dr. Zhang Tianren and Mr. Zhang Aogen, Zhejiang Changtong has change into a related individual of the Firm because the completion of the change of enterprise registration in respect of the fairness switch on 30 December 2019 by advantage of Rule 14A.12(2) of the Itemizing Guidelines.

Causes for the transactions

As Zhejiang Changtong produces sure plastic and glass fiber parts, that are the important supplies for the manufacturing of the parts of lead storage batteries by the Firm, buying these parts from Zhejiang Changtong is a part of the Firm’s strange companies.

Pricing foundation and coverage

Based on the Itemizing Guidelines, the Firm and Zhejiang Changtong entered into the 2020 Grasp Buy Settlement (the “2020 MPA”) on 1 January 2020, pursuant to which the Firm will buy sure plastic and glass fiber parts from Zhejiang Changtong occasionally for a interval of 1 12 months commencing 1 January 2020 and expiring on 31 December 2020, each days inclusive.

In view of the expiry of the 2020 MPA on 31 December 2020, on 25 December 2020, the Firm entered into the 2021-23 Grasp Buy Settlement (the “2021-23 MPA”) with Zhejiang Changtong for the acquisition of sure parts for its manufacturing of lead storage batteries (together with plastic and glass fiber parts) by member(s) of the Group from Zhejiang Changtong in the course of the 3-year interval commencing 1 January 2021 and expiring on 31 December 2023, each days inclusive.

In respect of the pricing of the merchandise bought from Zhejiang Changtong, agreed costs ought to be comparable with prevailing market costs; and agreed costs ought to be no much less beneficial than these provided to impartial third celebration enterprises of the identical {industry} because the Group on the materials time, to the extent that these merchandise are of comparable nature, high quality, model and specification.

* for identification function solely

CONNECTED TRANSACTIONS

Exemption and annual caps

The mixture consideration for the transactions underneath the 2020 MPA was roughly RMB280,000,000.

Precise transaction values for the 12 months

The full transaction quantity underneath the 2020 MPA entered into with Zhejiang Changtong for the 12 months ended 31 December 2020 was roughly RMB 263,338,000.

The impartial non-executive Administrators have reviewed the above persevering with related transactions, and confirmed that they’ve been entered into:

  • a) within the strange and common course of companies of the Group;

  • b) on regular industrial phrases; and

  • c) in accordance with the related written agreements governing them on phrases which are honest and cheap and within the pursuits of the Shareholders as a complete.

The auditor of the Firm was engaged to carry out works on the persevering with related transactions set out above in accordance with Hong Kong Normal on Assurance Engagements 3000 “Assurance Engagements Different Than Audits or Critiques of Historic Monetary Info” issued by the Hong Kong Institute of Certified Public Accountants. The auditor has present a letter to the Board confirming that the persevering with related transactions disclosed above:

  • (1) have been accredited by the listed issuer’s Board;

  • (2) had been, in all materials respects, in accordance with the pricing insurance policies of the Group;

  • (3) had been entered into, in all materials respects, in accordance with the related agreements governing the transaction; and

  • (4) haven’t exceeded the cap.

A replica of the auditor’s letter might be offered by the Firm to the Hong Kong Inventory Alternate.

In the course of the 12 months, the Group has not entered into another vital related transaction or persevering with related transaction which ought to be disclosed pursuant to the requirement underneath the Itemizing Guidelines. The Administrators confirmed that the Firm has complied with the relevant necessities underneath Chapter 14A of the Itemizing Guidelines with regard to the associated celebration transactions set out in notice 48 to the financial statements which had been additionally related transactions or persevering with related transactions.

DIRECTORS’ REPORT

The Administrators current their annual report and the audited consolidated monetary statements for the 12 months ended 31 December 2020.

Principal Actions

The Firm acts as an funding holding firm and offers company administration providers. The Group is principally engaged within the manufacturing of motive batteries in China. The actions of principal subsidiaries are proven in notice 51 to the consolidated financial statements.

Outcomes and Appropriations

The outcomes of the Group for the 12 months ended 31 December 2020 are set out within the consolidated assertion of profit or loss and different complete revenue on web page 62. The Administrators suggest to declare a final dividend of HK40.00 cents per Share (2019: HK39.00 cents).

Property, Plant and Tools

In the course of the 12 months, roughly RMB74 million and RMB141 million development in progress had been accomplished and transferred to buildings and plant and equipment, respectively. In the course of the 12 months, the Group continued to increase its manufacturing services. The Group acquired buildings, plant and equipment for roughly RMB679 million. Particulars of those and different actions within the property, plant and gear of the Group in the course of the 12 months are set out in notice 18 to the consolidated financial statements.

Enterprise Assessment

Particulars of the Firm’s enterprise overview are set out within the “Administration Dialogue and Evaluation” part of this annual report, of which this Administrators’ Report kinds half.

Share Capital and Challenge of Securities

Particulars of the motion in the course of the 12 months within the share capital of the Firm are set out in notice 40 to the consolidated financial statements.

On 1 June 2020, the Firm repurchased 602,000 shares and on 30 June 2020 cancelled 602,000 Shares by way of purchases on the Hong Kong Inventory Alternate. The full quantity paid to accumulate the shares was roughly HK$5,300,000 (equal to roughly RMB4,891,000), whereas the best worth per Share paid was HK$8.88 and the bottom worth per share paid was HK$8.68. The repurchases had been made for the benefit of the Firm and the Shareholders as a complete with a view to enhancing the online property worth per share of the Firm and earnings per share.

In the course of the 12 months, save as disclosed above, neither the Firm nor any of its subsidiaries bought, bought or redeemed any of the Firm’s listed securities.

Distributive Reserves of the Firm

As at 31 December 2020, the Firm’s reserve accessible for distribution amounted to roughly RMB727 million (2019: RMB780 million). Beneath the Firm Legislation (Revised) Chapter 25 of the Cayman Islands, the share premium of the Firm is on the market for distribution or paying dividends to Shareholders topic to the provisions of its memorandum or articles of affiliation and offered that instantly following the distribution of dividends, the Firm is ready to pay its money owed as they fall due within the strange course of enterprise.

Administrators

The administrators of the Firm in the course of the 12 months and as much as the date of this report had been:

Govt Administrators:

Dr. Zhang Tianren (Chairman) Mr. Zhang Aogen

Mr. Zhang Kaihong Mr. Shi Borong

Mr. Zhou Jianzhong

Unbiased non-executive Administrators: Mr. Huang Dongliang

Mr. Wu Feng

Mr. Zhang Yong

The time period of appointment of the impartial non-executive Administrators is as follows:

Mr. Huang Dongliang

11 June 2020 to 10 June 2021

Mr. Wu Feng

6 June 2020 to five June 2021

Mr. Zhang Yong

8 August 2018 to 7 August 2021

In accordance with Article 86 and/or Article 87 (because the case could also be) of the Firm’s articles of affiliation, Mr. Zhang Kaihong, Mr. Shi Borong and Mr. Zhang Yong will retire from office and, being eligible, supply themselves for re-election on the forthcoming annual basic assembly (“AGM”).

Administrators’ Service Contracts

All the govt Administrators and impartial non-executive Administrators of the Firm have entered into providers contracts or a letter of appointment with the Firm respectively. The time period of appointment of Dr. Zhang Tianren, Mr.

Zhang Aogen, Mr. Zhang Kaihong, Mr. Shi Borong and Mr. Huang Dongliang, is 3 years from 11 June 2007; the time period of appointment of Mr. Zhou Jianzhong is 3 years from 27 March 2015; the time period of appointment of Mr. Wu Feng, is 1 12 months from 6 June 2015; the time period of appointment of Mr. Zhang Yong is 3 years from 8 August 2018. The time period of appointment of every Director is renewable by mutual settlement of each events except terminated by not lower than three months’ prior discover in writing served by both celebration. All Administrators are topic to retirement by rotation and re-election on the Firm’s AGM not less than as soon as each three years in accordance with Article No. 87 of the Firm’s articles of affiliation.

Save as disclosed above, no Director proposed for re-election on the AGM has a service contract which isn’t terminable by the Group inside one 12 months with out fee of compensation (apart from statutory compensation).

Permitted Indemnity

The Firm has taken out acceptable insurance coverage protection for the Administrators in respect of authorized actions taken towards Administrators and officers of the Group. The Board opinions the extent of the insurance coverage protection yearly.

Administrators’ and Chief Govt’s Pursuits in Shares, Underlying Shares and Debentures

As at 31 December 2020, the pursuits and the quick positions of the Administrators and the chief govt of the Firm within the Shares, underlying Shares and the debentures of the Firm and its related firms (inside the which means of Half XV of the Securities and Futures Ordinance (“SFO”)), as recorded within the register maintained by the Firm underneath Part 352 of the SFO or as notified to the Firm and the Inventory Alternate pursuant to the Mannequin Code had been as follows:

Administrators’ and Chief Govt’s Pursuits in Shares, Underlying Shares and

Debentures (Continued)

(a)Lengthy positions

Bizarre Shares of HK$0.1 every of the Firm:

Title of Director

CapabilityVariety of Shares held

Zhang Tianren

Curiosity of a managed company (notice 2)

410,355,650 (L) 36.44%

Combination approximate share of issued share capital of the Firm

(notice 1)

(notice 7)

Curiosity of partner (notice 2)

438,000 (L) 0.04%Zhang Aogen

Curiosity of a managed company (notice 3)

13,641,022 (L) 1.21%

Zhang Kaihong

Curiosity of a managed company (notice 4)

18,884,174 (L) 1.68%

Shi Borong

Curiosity of a managed company (notice 5)

15,686,141 (L) 1.39%

Zhou Jianzhong

Curiosity of a managed company (notice 6)

2,362,815 (L) 0.21%

Huang Dongliang

Helpful proprietor

240,000 (L) 0.02%

Notes:

  • 1. The letters “L” and “S” denote lengthy place and quick place within the Shares of the Firm respectively.

  • 2. The 410,355,650 Shares of the Firm had been held by Prime Chief World Restricted, which was wholly-owned by Dr. Zhang Tianren. 438,000 Shares are held by Ms. Yang Yaping and the curiosity within the remaining 180,000 Shares arises from the share choices granted to Ms. Yang Yaping, partner of Dr. Zhang Tianren.

  • 3. The 13,641,022 Shares of the Firm had been held by High Benefits Worldwide Restricted, which was wholly-owned by Mr. Zhang Aogen.

  • 4. The 18,884,174 Shares of the Firm had been held by Lots Gold Holdings Restricted, which was wholly-owned by Mr. Zhang Kaihong.

  • 5. The 15,686,141 Shares of the Firm had been held by Exact Asia World Restricted, which was wholly-owned by Mr. Shi Borong.

  • 6. The two,362,815 Shares of the Firm had been held by Centre Wealth Restricted, which was wholly-owned by Mr. Zhou Jianzhong.

  • 7. Shareholding share is predicated on 1,126,124,500 issued Shares of the Firm as at 31 December 2020.

Administrators’ and Chief Govt’s Pursuits in Shares, Underlying Shares and

Debentures (Continued)

(b)Different pursuits and quick positions

Save as disclosed above, on 16 June 2014, the Firm has granted 58,660,000 choices to subscribe for Shares in accordance with the Firm’s share choice scheme adopted pursuant to a decision handed by the then Shareholders on 26 February 2007 (the “Scheme”). Among the many choices, 2,215,000 choices had been granted to the associates of the Administrators. The names of the grantees who’re associates of the Administrators had been listed within the announcement dated 16 June 2014.

Retirement Benefits Scheme

Particulars of the retirement benefits scheme of the Group are set out in notice 46 to the consolidated financial statements.

Administrators’ Rights to Purchase Shares or Debentures

Save as disclosed on web page 55, at no time in the course of the 12 months was the Firm, its mum or dad firm or any of its subsidiaries a celebration to any preparations to allow the Administrators of the Firm or any of their spouses or youngsters underneath 18 years of age to accumulate benefits by the use of acquisition of shares in, or debt securities, together with debentures, of the Firm or another physique company.

Administrators’ Curiosity in Rivals

As on the date of this report, inside the information of the Administrators, no Director or any of his/her respective associates has any curiosity in a enterprise which competes or could compete with the enterprise of the Group.

Administrators’ Pursuits in Contracts of Significance

No transaction, association or contract of significance, to which the Firm, or any of its subsidiaries was a celebration and during which a Director or any entity in reference to any Director had a fabric curiosity, whether or not immediately or not directly, subsisted on the finish of the 12 months or at any time in the course of the 12 months.

Administration Contracts

No contracts in regards to the administration and administration of the entire and any substantial a part of the enterprise of the Firm had been entered into or existed in the course of the 12 months.

Substantial Shareholders

As at 31 December 2020, the register of considerable Shareholders maintained by the Firm pursuant to Part 336 of the SFO reveals that the next individuals, apart from a Director or chief govt of the Firm, had notified the Firm of related pursuits and quick positions within the Shares or underlying Shares of the Firm which must be disclosed to the Firm and the Inventory Alternate pursuant to Divisions 2 and three of Half XV of the SFO within the issued share capital of the Firm:

Bizarre Shares of HK$0.1 every of the Firm:

Approximate share of issued share

Title of Shareholder

CapabilityVariety of Shares heldcapital of the Firm

(Word 1)

(Word 4)Zhang Tianren

Curiosity of a managed company (Word 2)

410,355,650 (L) 36.44%

Curiosity of partner (Word 2)

438,000(L) 0.04%Yang Yaping

Beneficial proprietor (Word 2)

438,000 (L) 0.04%

Curiosity of partner (Word 2)

410,355,650 (L) 36.44%Prime Chief World Restricted

Beneficial proprietor

410,355,650 (L) 36.44%

UBS Group AG

Curiosity of a managed company (Word 3)

62,507,702 (L) 5.55%

58,187,718 (S) 5.17%

Notes:

  • 1. The letters “L” and “S” denote lengthy place and quick place within the Shares of the Firm respectively.

  • 2. The 410,355,650 Shares had been held by Prime Chief World Restricted, which was wholly-owned by Dr. Zhang Tianren. 438,000 Shares are held by Ms. Yang Yaping and the curiosity within the remaining 180,000 Shares arises from the share choices granted to Ms. Yang Yaping, partner of Dr. Zhang Tianren. Ms. Yang Yaping, being the partner of Dr. Zhang Tianren, is deemed to have an interest within the Shares held by Dr. Zhang Tianren.

  • 3. Pursuant to Half XV of the SFO, as at 31 December 2020, UBS Group AG is deemed or taken to be curiosity in 62,507,702 Shares (lengthy place) and is holding a brief place in 58,187,718 Shares of the Firm. The main points of the shareholding pursuits of the subsidiaries immediately and not directly managed by UBS Group AG are set out beneath:-

    Title of managed subsidiary

    Variety of Shares

    UBS AG

    61,327,702(L)

    51,161,889(S)

    UBS Asset Administration Belief Firm UBS Securities LLC

    30,000(L)

    1,150,000(L)

    7,025,829(S)

  • 4. Shareholding share is predicated on 1,126,124,500 issued Shares of the Firm as at 31 December 2020.

Share Choices

The Scheme was adopted pursuant to a decision handed by the Shareholders on 26 February 2007 for the first function of offering incentives or rewards to chose members for his or her contribution to the Group. Particulars of the Scheme are set out in Word 42 to the monetary statements. An strange decision was handed on the annual basic assembly of the Firm held on 16 Could 2014 (the “2014 AGM”) referring to the refreshment of scheme mandate restrict of the Scheme as set out within the supplemental discover of the 2014 AGM. The Scheme expired on 10 June 2017.

On 30 March 2009, a complete of 36,340,000 share choices had been provided to the eligible members underneath the Scheme. 35,310,000 share choices had been accepted and granted on the identical day. On 22 November 2010, a complete of 44,720,000 share choices had been provided and granted to the Administrators and eligible members underneath the Scheme. After the refreshment of the Scheme, on 16 June 2014, a complete of 58,660,000 choices had been provided and granted to the Administrators and eligible members. The main points of the motion of the Firm’s share choices in the course of the reporting interval are as follows:

Closing worth of Firm’sWeighted common closing worth of Firm’s

Title of granteeDate of grant of the choicesTrain interval

Train worth of the choices

Shares instantly earlier than the date of grant

Shares instantly earlier than the date of trainVariety of choice excellent as at 1 January 2020

Variety of choices granted in the course of the intervalVariety of choices exercised in the course of the intervalVariety of choices cancelled in the course of the intervalVariety of choices lapsed in accordance with the phrases of the choices or the

Scheme in the course of the intervalVariety of choices excellent as at 31 December 2020

Approximate shareholding share of the underlying Shares for the choices within the share capital of the

Firm

(HK$)

(HK$)

(HK$)

Huang Dongliang (Unbiased 16/6/2014 non-executive Director)

16/6/2015 to fifteen/6/2024

2.90

2.89

90,000

90,000

0.01%Different eligible members

22/11/2010

16/6/2014

22/11/2011 to 21/11/2020 16/6/2015 to fifteen/6/2024

3.18

3.02

680,000

(680,000)

2.90

2.89

37,066,500

(1,746,000)

35,320,500

3.14%

37,836,500

(2,426,000)

35,410,500

3.14%

On 18 Could 2018, the Firm by strange decision accredited the adoption of a brand new share choice scheme with phrases according to the provisions of Chapter 17 of the Itemizing Guidelines. No choices have but been granted underneath such new share choice scheme.

Unbiased Non-Govt Administrators

Mr. Huang Dongliang has signed a letter of appointment with the Firm for an preliminary interval of three years commencing 11 June 2007 and can proceed thereafter till terminated by both celebration giving not lower than three months’ prior written discover to the opposite. The letters of appointment with the Firm and impartial non-executive Administrators expired on 10 June 2010. Thereafter, the phrases of the impartial non-executive Administrators have been renewed for an extra time period of 1 12 months in annually. Mr. Wu Feng (appointed on 6 June 2015) have signed the letters of appointment with the Firm for an preliminary interval of 1 12 months commencing 6 June 2015. Mr. Zhang Yong (appointed on 8 August 2018) has signed the letter of appointment with the Firm for an preliminary interval of three years commencing 8 August 2018. By mutual settlement of each events, the appointment was renewed for an extra 12 months commencing 6 June 2017. The Firm has obtained, from every of the impartial non-executive Administrators, an annual confirmation of his independence pursuant to Rule 3.13 of the Itemizing Guidelines. The Firm considers the entire impartial non-executive Administrators are impartial.

Discloseable transactions

Acquisition of Land Use Rights in Huzhou, Zhejiang Province

As set out within the announcement dated 5 January 2020, on 3 January 2020, ZCTPS, ZTSTRE and ZTCD, wholly-owned subsidiaries of the Firm, turned the profitable bidder for the land use rights in respect of Land A, Land B and Land C, respectively (topic to the signing of the land switch settlement(s) and fee of the land switch charges), on the Complete Consideration of RMB450 million by way of the Public Bidding.

The Lands are positioned in Huzhou, Zhejiang Province, the PRC. The Group intends to develop the Lands because the Tianneng Taihu Science and Know-how Metropolis, which can comprise headquarters of the Group, enterprise facilities, science and expertise parks, coaching and training facilities, flats and different communal services.

Please seek advice from the announcement dated 5 January 2020 for additional particulars.

Subscriptions of Wealth Administration Merchandise

As set out within the announcement dated 14 October 2020, in the course of the interval from 1 January 2019 and as much as 31 August 2020 (each dates inclusive), the Group subscribed for the Sort A Merchandise which comprised low threat principal preservation kind wealth administration merchandise with both fixed, assured or floating revenue.

In the course of the interval from 1 January 2019 and as much as 31 August 2020 (each dates inclusive), the Group subscribed for the Sort B Merchandise which comprised low to medium threat non-principal preservation kind wealth administration merchandise with non-guaranteed floating revenue.

Please seek advice from the announcement dated 14 October 2020 for additional particulars.

Emolument Coverage

The Group’s emolument insurance policies are as follows:

  • (i) the quantity of remuneration is set on a case by case foundation relying on the Administrators or worker’s related expertise, accountability, workload and the time dedicated to the Group;

  • (ii) non-cash benefits could also be offered on the discretion of the Board to the related Administrators or workers underneath their remuneration bundle; and

  • (iii) the Administrators or workers who’re eligible members underneath the share choice scheme could also be granted, on the discretion of the Board, choices of the share choice scheme adopted by the Firm, as a part of their remuneration bundle.

Dividend Coverage

The Firm has adopted a dividend coverage, pursuant to which the Firm could distribute profit by means of (i) money or (ii) shares as could also be decided by the Board occasionally. The profit distribution coverage of the Firm is:

  • (a) Profit distribution coverage of the Firm shall obtain continuity, stability and sustainability;

  • (b) The Firm targets a payout ratio with stability on distribution of profits and profits retained for enterprise operation and future growth;

  • (c) Profit distribution of the Firm shall consider:

    • (i) the earnings per share of the Firm;

    • (ii) the cheap return in funding of the buyers and the Shareholders in an effort to present incentive for them to proceed to assist the Firm of their long-term growth;

    • (iii) the financial circumstances and marketing strategy of the Firm; and

    • (iv) the market sentiment and circumstances.

Pre-Emptive Rights

There are not any provisions for pre-emptive rights underneath the Firm’s articles of affiliation or the legal guidelines of the Cayman Islands, being the jurisdiction during which the Firm was integrated, which might oblige the Firm to supply new Shares on a professional rata foundation to the present Shareholders.

Main Prospects and Suppliers

In the course of the 12 months, the combination gross sales attributable to the Group’s 5 largest prospects had been lower than 15.08% of the Group’s turnover. The biggest buyer accounted for five.15% of the Group’s complete turnover. In the course of the 12 months, the Group’s five largest suppliers accounted for 13.40% of the Group’s complete buy and the biggest provider accounted for 4.01% of the Group’s complete buy. At no time in the course of the 12 months did a Director, an affiliate of a Director or a Shareholder of the Firm (which to the information of the Administrators owns greater than 5% of the Firm’s share capital) have an curiosity in any of the Group’s five largest suppliers or prospects.

Company Governance

Particulars of the Firm’s company governance practices are set out within the “Company Governance Report” part of this annual report.

Environmental Safety

Particulars of the Firm’s environmental coverage and efficiency are printed within the separate Environmental, Social and Governance Report which might be accessible on the Firm’s web site and the web site of the Inventory Alternate not later than 3 months after the publication of this annual report.

Audit Committee

The Audit Committee was established in accordance with the necessities of the Itemizing Guidelines for the needs of reviewing and offering supervision over the Group’s financial reporting course of and inside controls. As at 31 December 2020, the Audit Committee comprised three impartial non-executive Administrators, particularly, Mr. Huang Dongliang, Mr. Wu Feng and Mr. Zhang Yong.

The Audit Committee meets usually with the Firm’s senior administration and the Firm’s auditors to think about the Firm’s financial reporting course of, the effectiveness of inside controls, the audit course of and threat administration.

The Audit Committee has reviewed the annual outcomes of the Group for the 12 months ended 31 December 2020.

Donations

In the course of the 12 months ended 31 December 2020, the Group made charitable donations of roughly RMB11.6746 million (2019: RMB1.9240 million).

Sufficiency of Public Float

From info publicly accessible to the Firm and inside the information of the Administrators as on the newest practicable date previous to the difficulty of this annual report, not less than 25% of the Firm’s complete issued share capital is held by the general public all year long ended 31 December 2020 as required underneath the Itemizing Guidelines.

Auditor

A decision might be submitted to the AGM to re-appoint ZHONGHUI ANDA because the auditor of the Firm.

On behalf of the Board

Zhang Aogen Director

Hong Kong, 26 March 2021

INDEPENDENT AUDITOR’S REPORT

TO THE SHAREHOLDERS OF TIANNENG POWER INTERNATIONAL LIMITED ˂ঐਗɢ਷ყϞࠢʮ̡

(integrated within the Cayman Islands with restricted legal responsibility)

Opinion

We have now audited the consolidated financial statements of Tianneng Energy Worldwide Restricted (the “Firm”) and its subsidiaries (collectively known as the “Group”) set out on pages 62 to 127, which comprise the consolidated assertion of financial place as at 31 December 2020, and the consolidated assertion of profit or loss and different complete revenue, consolidated assertion of modifications in fairness and consolidated assertion of money flows for the 12 months then ended, and notes to the consolidated financial statements, together with a abstract of significant accounting insurance policies.

In our opinion, the consolidated financial statements give a real and honest view of the consolidated financial place of the Group as at 31 December 2020, and of its consolidated financial efficiency and its consolidated money flows for the 12 months then resulted in accordance with Hong Kong Monetary Reporting Requirements (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) and have been correctly ready in compliance with the disclosure necessities of the Hong Kong Firms Ordinance.

Foundation for Opinion

We performed our audit in accordance with Hong Kong Requirements on Auditing (“HKSAs”) issued by the HKICPA. Our duties underneath these requirements are additional described within the Auditor’s Duties for the Audit of the Consolidated Monetary Statements part of our report. We’re impartial of the Group in accordance with the HKICPA’s Code of Ethics for Skilled Accountants (the “Code”), and we have now fulfilled our different moral duties in accordance with the Code. We consider that the audit proof we have now obtained is sufficient and acceptable to supply a foundation for our opinion.

Key Audit Issues

Key audit issues are these issues that, in our skilled judgment, had been of most significance in our audit of the consolidated financial statements of the present interval. These issues had been addressed within the context of our audit of the consolidated financial statements as a complete, and in forming our opinion thereon, and we don’t present a separate opinion on these issues.

1.

Provision

Confer with Word 36 to the consolidated financial statements

The Group examined the estimation for provision. This estimation is important to our audit as a result of the stability of provision of RMB622,309,000 as at 31 December 2020 is materials to the consolidated monetary statements. As well as, the Group’s estimation entails utility of judgement and is predicated on assumptions and estimates.

INDEPENDENT AUDITOR’S REPORT

Our audit procedures included, amongst others:

  • – Understanding and assessing reasonableness of the methodology adopted by administration by evaluating with the historic estimates towards precise guarantee claims, our information within the Group and the {industry} practices;

  • – Difficult the important thing assumptions on the estimated substitute value and restore value for returned merchandise and predicted future guarantee declare fee made by administration; and

  • – Checking mathematic accuracy of calculation offered by administration.

We contemplate that the Group’s estimation for provision is supported by the accessible proof.

2.

Inventories

Confer with Word 24 to the consolidated financial statements

The Group examined the quantity of stock for impairment. This impairment take a look at is significant to our audit as a result of the stability of stock of RMB4,485,900,000 as at 31 December 2020 is materials to the consolidated monetary statements. As well as, the Group’s impairment take a look at entails utility of judgement and is predicated on estimates.

Our audit procedures included, amongst others:

  • – Assessing the Group’s procedures on ordering and holding of stock;

  • – Evaluating the Group’s impairment evaluation;

  • – Assessing the marketability of the stock;

  • – Assessing the ageing of the stock;

  • – Assessing the online realisable values of the stock; and

  • – Checking subsequent gross sales and utilization of the stock.

We contemplate that the Group’s impairment take a look at for stock is supported by the accessible proof.

Different Info

The administrators are answerable for the opposite info. The opposite info contains all the knowledge within the Firm’s annual report, however doesn’t embody the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements doesn’t cowl the opposite info and we don’t specific any type of assurance conclusion thereon.

INDEPENDENT AUDITOR’S REPORT

In reference to our audit of the consolidated financial statements, our accountability is to learn the opposite info and, in doing so, contemplate whether or not the opposite info is materially inconsistent with the consolidated monetary statements or our information obtained within the audit or in any other case seems to be materially misstated. If, based mostly on the work we have now carried out, we conclude that there’s a materials misstatement of this different info, we’re required to report that truth. We have now nothing to report on this regard.

Duties of Administrators for the Consolidated Monetary Statements

The administrators are answerable for the preparation of the consolidated financial statements that give a real and honest view in accordance with HKFRSs issued by the HKICPA and the disclosure necessities of the Hong Kong Firms Ordinance, and for such inside management as the administrators decide is critical to allow the preparation of consolidated financial statements which are free from materials misstatement, whether or not resulting from fraud or error.

In making ready the consolidated monetary statements, the administrators are answerable for assessing the Group’s skill to proceed as a going concern, disclosing, as relevant, issues associated to going concern and utilizing the going concern foundation of accounting except the administrators both intend to liquidate the Group or to stop operations, or haven’t any practical different however to take action.

Auditor’s Duties for the Audit of the Consolidated Monetary Statements

Our aims are to acquire cheap assurance about whether or not the consolidated financial statements as a complete are free from materials misstatement, whether or not resulting from fraud or error, and to concern an auditor’s report that features our opinion. We report our opinion solely to you, as a physique, and for no different function. We don’t assume accountability in the direction of or settle for legal responsibility to another individual for the contents of this report. Cheap assurance is a excessive degree of assurance, however is just not a assure that an audit performed in accordance with HKSAs will all the time detect a fabric misstatement when it exists. Misstatements can come up from fraud or error and are thought-about materials if, individually or within the mixture, they may fairly be anticipated to affect the financial selections of customers taken on the premise of those consolidated financial statements.

An additional description of our duties for the audit of the consolidated financial statements is positioned on the HKICPA’s web site at:http://www.hkicpa.org.hk/en/standards-and-regulations/standards/auditing-assurance/auditre/ This description kinds a part of our auditor’s report.

ZHONGHUI ANDA CPA Restricted

Certified Public Accountants Sze Lin Tang

Audit Engagement Director Practising Certificate Quantity P03614 Hong Kong, 26 March 2021

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the 12 months ended 31 December 2020

Complete complete revenue for the 12 months attributable to:

Income Price of gross salesGross revenue Curiosity income Different revenue

Different good points and losses Impairment losses, internet of reversal Promoting and distribution prices Administrative bills Analysis and growth prices Different bills

Share of lack of an affiliate Finance prices

Revenue earlier than taxation Taxation

Revenue for the 12 months

Different complete revenue (expense):

Objects that won’t be reclassified to revenue or loss:

Truthful worth modifications of fairness funding at honest worth by way of different complete revenue

21,513 (13,321)Objects which may be reclassified to revenue or loss:

Truthful worth change of debt devices measured at honest worth by way of different complete revenue

Revenue tax referring to objects which may be reclassified subsequently

Complete complete revenue for the 12 monthsRevenue for the 12 months attributable to:

House owners of the Firm Non-controlling pursuits

House owners of the Firm

Non-controlling pursuits

Earnings per share

– Fundamental (RMB)

– Diluted (RMB)Notes

9 10 11

12

13 14

17

7

2020 RMB’000

53,525,039 (48,032,934)

5,492,105 137,930 530,491 36,408

(1,270,497)

(25,643)

(776) (212,131)

2,949,728

(445,153)

2,504,575

2,456

(7,958)

2,518,130

2,476,921 27,654

2,504,575

2,490,476 27,654

2,518,130

2.20 2.15

2019 RMB’000

40,613,555 (35,925,798)

4,687,757 93,091 369,165

(6,311)

(9,348) (32,546)

(937,657) (896,684)

(791,154) (662,969)

(1,153,860)

(16,313)

(254) (255,035)

2,126,041 (400,091)

1,725,950

21,513 (13,321)

(10,414) (1,184)

264

(920)

1,711,709

1,681,827 44,123

1,725,950

1,667,761 43,948

1,711,709

1.49 1.47

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2020

Non-current property

Property, plant and gear Goodwill

Proper-of-use property Curiosity in associates

Fairness investments at honest worth by way of different complete revenue Deferred tax property

Deposit paid for acquisition of property, plant and gear Mortgage receivables

Lengthy-term receivable

Present property Inventories

Properties on the market underneath growth Commerce and different receivables

Mortgage receivables

Quantities due from associated events

Debt devices at honest worth by way of different complete revenue Monetary property at honest worth by way of revenue or loss

Pledged financial institution deposit

Financial institution balances and money

Present liabilities

Payments, commerce and different payables Quantities resulting from associated events Spinoff monetary devices Taxation payables

Borrowings – present portion

Lengthy-term mortgage notes – due inside one 12 months Deferred authorities grants

Lease liabilities

Provision Contract liabilities

Web present property

TOTAL ASSETS LESS CURRENT LIABILITIES

Non-current liabilities

Borrowings – non-current portion Deferred authorities grants Lease liabilities

Deferred tax liabilities

NET ASSETS

Notes

22

23 27

24

25

26

33

28

30

32 33

34

38

35

39

36

34 35 39 23

20

27

37

18

19

21

31

31

2020

RMB’000

5,455,025 23,305

188,808 13,098

7,525,937

4,485,900

389,696

2,349,281

34,825

13,475

2,069,365

572,591

15,674,498

403,788 919,123

2,941,370

12,432,288

3,242,210 10,768,147

2019 RMB’000

4,783,297 499

793,956 593,720

20,670 1,446

327,101 284,036

459,597 451,754

244,377 238,360

– 12,103

6,365,215

3,740,219 –

1,513,995 –

3,709

1,207,570

854,102

1,303,060 1,291,326

4,456,305 4,154,191

12,765,112

7,356,002 6,746,172

142,308 20,024

104

205,778 1,260,415

398,853

38,699 33,859

8,689 7,076

622,309 650,728

1,749,311

11,072,320

1,692,792 8,058,007

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2020

The consolidated monetary statements on pages 62 to 127 had been accredited and authorised for concern by the board of administrators on 26 March 2021 and are signed on its behalf by:

ZHANG Tianren

ZHANG Aogen

Director

Director

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

At 1 January 2019

Revenue for the 12 months

Different complete revenue for the 12 monthsComplete complete (expense) revenue for the 12 monthsSwitch

Capital injection from non-controlling shareholders Fairness transaction with non-controlling shareholders Cost of dividends

Dividend paid to non-controlling pursuits Forfeiture of share choices

Recognition of equity-settled share-based fee (notice 42)

Forfeiture of equity-settled share-based feeAt 31 December 2019

At 1 January 2020

Revenue for the 12 months

Different complete revenue for the 12 monthsComplete complete revenue for the 12 monthsSwitch

Acquisition of subsidiaries

Capital injection from non-controlling shareholders Cost of dividends

Dividend paid to non-controlling pursuits Share repurchase

Forfeiture of share choices

Recognition of equity-settled share-based fee (notice 42)

Forfeiture of equity-settled share-based feeAt 31 December 2020

Share capital RMB’000

109,905

109,905 109,905

109,850

– – – – – – – – (55) – – –

– – – – – – – – – – –

Share premium RMB’000

783,403

783,403 783,403

778,567

– – – – – – – – (4,836)

– – – – – – – – – – –

– – –

Particular reserves RMB’000 (Word 41)

10,000

10,000 10,000

10,000

– – – – – – – – – – –

– – – – – – – – – – – –

Capital reserves RMB’000 (Word 41)

– – – – 225,443 88 – – – – –

251,558 251,558

251,558

26,027

– – – – – – – – – – – –

choices reserve RMB’000

Attributable to homeowners of the Firm

Share Funding complete

Statutory

Discretionary

Non-

surplus

surplus

Collected

controlling

reserves fund

reserve fund

income

Sub-total

pursuits

Complete

RMB’000

RMB’000

RMB’000

RMB’000

RMB’000

RMB’000

(Word 41)

(Word 41)

642,165

143,212

3,514,757

5,147,339

241,859

5,389,198

1,681,827

1,681,827

44,123

1,725,950

(14,066)

(175)

(14,241)

1,681,827

1,667,761

43,948

1,711,709

243,535

(243,535)

225,443

330,999

556,442

88

533

621

(376,251)

(376,251)

(376,251)

(2,793)

(2,793)

1,754

7,590

7,590

224

224

(224)

885,700

143,212

4,578,776

6,664,604

621,912

7,286,516

885,700

143,212

4,578,776

6,664,604

621,912

7,286,516

2,476,921

2,476,921

27,654

2,504,575

13,555

13,555

2,476,921

2,490,476

27,654

2,518,130

127,220

(127,220)

37,553

37,553

70,738

70,738

(404,261)

(404,261)

(404,261)

(57,580)

(57,580)

(4,891)

(4,891)

2,909

13,084

13,084

232

232

(232)

1,012,920

143,212

6,527,357

8,746,160

713,129

9,459,289

revaluation reserve RMB’000

Different honest worth by way of differentrevenue reserve RMB’000

41,647

(120,299)

(3,478)

– – – – – – – – (1,754)

– (13,321)

– (745)

(13,321)

(745)

– –

– – – – – – – –

– – – – – – – –

39,893 39,893

(133,620)

(4,223)

(133,620)

(4,223)

– – – – – – – – – (2,909)

– 21,513 21,513

– (7,958)

(7,958)

– –

– – – – – – – – –

– – – – – – – – –

36,984

(112,107)

(12,181)

CONSOLIDATED STATEMENT OF CASH FLOWS

Web money utilized in investing actions

Money flows from working actions

Revenue earlier than taxation

Changes for:

Curiosity income

Beneficial properties on structured financial institution deposits Amortisation of presidency grants Dividend revenue

Finance prices

Share of lack of an affiliate

Depreciation of property, plant and gear Depreciation of right-of-use property Write-off/lack of property, plant and gear

Recognition of allowance for dangerous and uncertain money owed, internet of reversal Recognition of allowance for inventories

Recognition of allowance for mortgage receivables Share-based funds

Truthful worth modifications of held-for-trading investments Truthful worth modifications of spinoff monetary devicesWorking money flows earlier than actions in working capital Enhance in inventories

Enhance in properties on the market underneath growth Enhance in payments, commerce and different receivables Enhance in debt devices at honest worth by way of different complete revenue Enhance in payments, commerce and different payables Enhance in contract liabilities

Enhance in provisions

Lower in quantity resulting from associated events with commerce nature Lower in quantity due from associated events with commerce nature

Money generated from operations

Curiosity paid

Revenue tax paid

Web money generated from working actionsMoney flows from investing actions

Curiosity obtained

Dividend revenue from fairness investments at honest worth by way of different complete revenue Funding in an affiliate

Proceeds on disposal of property, plant and gear Buy of property, plant and gear

Purchases of economic property at FVTPL Purchases of fairness devices at FVTOCI Cost for spinoff monetary devices Proceeds from spinoff monetary devices Enhance of pledged financial institution deposit

Lower in structured financial institution deposit Asset-related authorities grants obtained

Deposit for acquisition of property, plant and gear Acquisition of right-of-use property

Advance to impartial third events for mortgage receivable Receipt of reimbursement for mortgage receivables

Web money outflow referring to acquisition of subsidiaries accounted for as property acquisition Web money outflow referring to acquisition of subsidiaries

2020 RMB’000

2,949,728

212,131 776

1,124 13,084 (32,664) 26,300

3,522,096 (743,768) (389,696)

121,339 (9,766)

2,571,855

2,101,780

(21,210) (800,613) 772,556 (11,734)

(381,436) 174,131 (73,490) (88,421)

(1,099,119)

2019 RMB’000

2,126,041

(137,930) (93,091)

(54,214) (76,127)

(39,760) (32,357)

(10,007) (13,705)

255,035 254

510,228 460,413

19,011 20,728

51,234 84,814

8,224 32,546

4,831 23,082

– 7,590 (12,735) 2,304

2,784,792 (790,738)

(792,152) (300,303)

(872,209) (239,191)

572,371 918,391

1,192,059 102,088

(28,419) 19,274

(5,526) 5,192

2,493,979

(202,941) (246,002)

(267,134) (509,463)

1,738,514

119,483 92,816

10,007 7,473

(20,000) (1,700)

31,546 19,418

(957,470) (941,966)

(5,672) (4,185)

– (14,724) 12,643 (222,877)

375,714 345,907

123,760 103,388

(185,191) (216,341)

(161,079) (63,528)

– – – –

(883,676)

CONSOLIDATED STATEMENT OF CASH FLOWS

Money flows from financing actions

New financial institution borrowings raised Compensation of borrowings Repayments of mortgage notes Serurity deposit for borrowings Dividend paid

Dividend paid to non-controlling pursuits

Capital contribution from a non-controlling shareholders Fairness transaction with non-controlling shareholders

Issues obtained for subscribing restricted shares of a subsidiary Compensation of restricted shares of a subsidiary

Share repurchase

Compensation of lease liabilities

Web money utilized in financing actionsWeb improve in money and money equivalents

(700,547) (534,398)

Money and money equivalents originally of the 12 months

Money and money equivalents on the finish of the 12 monthsEvaluation of money and money equivalents

Financial institution and money balances

2020 RMB’000

5,502,683 (5,397,489)

70,738 – – – (4,891)

302,114 4,154,191

4,456,305

4,456,305

2019 RMB’000

5,356,232 (5,771,375)

(400,000) (380,000)

(15,000)

(404,261) (376,251)

(57,580) (2,793)

556,442

621

107,400

(2,454)

(9,747) (7,220)

320,440 3,833,751 4,154,191

4,154,191

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

  • 1. Common Info

    Tianneng Energy Worldwide Restricted (the “Firm”) was integrated and registered as an exempted firm with restricted legal responsibility within the Cayman Islands underneath the Firms Legislation of the Cayman Islands on 16 November 2004 and its shares are listed on The Inventory Alternate of Hong Kong Restricted (the “Hong Kong Inventory Alternate”) with impact from 11 June 2007. The addresses of the registered office and principal workplace of the Firm are disclosed within the “Company Info” part of the annual report.

    The Firm is an funding holding firm. The principal actions of its subsidiaries are set out in notice 51 to the consolidated financial statements. The Firm and its subsidiaries are collectively known as the “Group”.

    The consolidated financial statements are offered in Renminbi (“RMB”) which can also be the practical foreign money of the Firm.

  • 2. Adoption of New and Revised Hong Kong Monetary Reporting Requirements

    Within the present 12 months, the Group has adopted all the brand new and revised Hong Kong Monetary Reporting Requirements (the “HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) which are related to its operations and efficient for its accounting 12 months starting on 1 January 2020. HKFRSs comprise Hong Kong Monetary Reporting Requirements (the “HKFRS”); Hong Kong Accounting Requirements (the “HKAS”); and Interpretations. The adoption of those new and revised HKFRSs didn’t lead to significant modifications to the Group’s accounting insurance policies, presentation of the Group’s financial statements and quantities reported for the present 12 months and prior years.

    The Group has not utilized the brand new HKFRSs which have been issued however will not be but efficient. The appliance of those new HKFRSs won’t have materials influence on the financial statements of the Group.

  • 3. Significant Accounting Insurance policies

These consolidated monetary statements have been ready in accordance with HKFRSs issued by the HKICPA, and the relevant disclosures required by the Guidelines Governing the Itemizing of Securities on The Inventory Alternate of Hong Kong Restricted and by the Hong Kong Firms Ordinance.

These consolidated monetary statements have been ready underneath the historic value conference, as modified by the fairness investments at honest worth by way of different complete revenue, debt devices at honest worth by way of different complete revenue, financial property at honest worth by way of profit or loss and spinoff financial devices which are measured at honest values on the finish of every reporting interval, as defined within the accounting insurance policies set out beneath.

The preparation of consolidated monetary statements in conformity with HKFRSs requires using sure key assumptions and estimates. It additionally requires the administrators to train its judgements within the strategy of making use of the accounting insurance policies. The areas involving important judgements and areas the place assumptions and estimates are significant to those consolidated financial statements, are disclosed in notice 4 to the consolidated financial statements.

The significant accounting insurance policies utilized within the preparation of those consolidated financial statements are set out beneath.

3. Significant Accounting Insurance policies (Continued)

Consolidation

The consolidated monetary statements embody the monetary statements of the Firm and its subsidiaries made as much as 31 December. Subsidiaries are entities over which the Group has management. The Group controls an entity when it’s uncovered, or has rights, to variable returns from its involvement with the entity and has the power to have an effect on these returns by way of its energy over the entity. The Group has energy over an entity when the Group has current rights that give it the present skill to direct the related actions, i.e. actions that significantly have an effect on the entity’s returns.

When assessing management, the Group considers its potential voting rights in addition to potential voting rights held by different events, to find out whether or not it has management. A possible voting proper is taken into account provided that the holder has the sensible skill to train that proper.

Subsidiaries are consolidated from the date on which management is transferred to the Group. They’re de-consolidated from the date the management ceases.

The achieve or loss on the disposal of a subsidiary that ends in a lack of management represents the distinction between (i) the honest worth of the consideration of the sale plus the honest worth of any funding retained in that subsidiary and (ii) the Firm’s share of the online property of that subsidiary plus any remaining goodwill referring to that subsidiary and any associated collected translation reserve.

Intragroup transactions, balances and unrealised income are eradicated. Unrealised losses are additionally eradicated except the transaction offers proof of an impairment of the asset transferred. Accounting insurance policies of subsidiaries have been modified the place vital to make sure consistency with the insurance policies adopted by the Group.

Non-controlling pursuits signify the fairness in subsidiaries not attributable, immediately or not directly, to the Firm. Non-controlling pursuits are offered within the consolidated assertion of financial place and consolidated assertion of modifications in fairness inside fairness. Non-controlling pursuits are offered within the consolidated assertion of profit or loss and different complete revenue as an allocation of profit or loss and complete complete revenue for the 12 months between the non-controlling shareholders and homeowners of the Firm.

Profit or loss and every part of different complete revenue are attributed to the homeowners of the Firm and to the non-controlling shareholders even when this ends in the non-controlling pursuits having a deficit stability.

Modifications within the Firm’s possession curiosity in a subsidiary that don’t lead to a lack of management are accounted for as fairness transactions (i.e. transactions with homeowners of their capability as homeowners). The carrying quantities of the controlling and non-controlling pursuits are adjusted to reflect the modifications of their relative pursuits within the subsidiary. Any distinction between the quantity by which the non-controlling pursuits are adjusted and the honest worth of the consideration paid or obtained is recognised immediately in fairness and attributed to the homeowners of the Firm.

Enterprise mixture and goodwill

The acquisition technique is used to account for the acquisition of a subsidiary in a enterprise mixture. The price of acquisition is measured on the acquisition-date honest worth of the property given, fairness devices issued, liabilities incurred and contingent consideration. Acquisition-related prices are recognised as bills within the intervals during which the prices are incurred and the providers are obtained. Identifiable property and liabilities of the subsidiary within the acquisition are measured at their acquisition-date honest values.

3. Significant Accounting Insurance policies (Continued)

Enterprise mixture and goodwill (Continued)

The surplus of the price of acquisition over the Firm’s share of the online honest worth of the subsidiary’s identifiable property and liabilities is recorded as goodwill. Any extra of the Firm’s share of the online honest worth of the identifiable property and liabilities over the price of acquisition is recognised in consolidated profit or loss as a achieve on cut price buy which is attributed to the Firm.

In a enterprise mixture achieved in levels, the beforehand held fairness curiosity within the subsidiary is remeasured at its acquisition-date honest worth and the ensuing achieve or loss is recognised in consolidated profit or loss. The honest worth is added to the price of acquisition to calculate the goodwill.

If the modifications within the worth of the beforehand held fairness curiosity within the subsidiary had been recognised in different complete revenue (for instance, fairness investments at honest worth by way of different complete revenue), the quantity that was recognised in different complete revenue is recognised on the identical foundation as can be required if the beforehand held fairness curiosity had been disposed of.

Goodwill is examined yearly for impairment or extra continuously if occasions or modifications in circumstances point out that it is perhaps impaired. Goodwill is measured at value much less collected impairment losses. The strategy of measuring impairment losses of goodwill is similar as that of different property as acknowledged within the accounting coverage beneath. Impairment losses of goodwill are recognised in consolidated profit or loss and will not be subsequently reversed. Goodwill is allotted to cash-generating items which are anticipated to benefit from the synergies of the acquisition for the aim of impairment testing.

The non-controlling pursuits within the subsidiary are initially measured on the non-controlling shareholders’ proportionate share of the online honest worth of the subsidiary’s identifiable property and liabilities on the acquisition date.

Associates

Associates are entities over which the Group has vital affect. Important affect is the facility to take part within the financial and working coverage selections of an entity however is just not management or joint management over these insurance policies. The existence and impact of potential voting rights which are at present exercisable or convertible, together with potential voting rights held by different entities, are thought-about when assessing whether or not the Group has significant influence. In assessing whether or not a possible voting proper contributes to significant influence, the holder’s intention and financial skill to train or convert that proper is just not thought-about.

Funding in an affiliate is accounted for within the consolidated monetary statements by the fairness technique and is initially recognised at value. Identifiable property and liabilities of the affiliate in an acquisition are measured at their honest values on the acquisition date. The surplus of the price of acquisition over the Group’s share of the online honest worth of the affiliate’s identifiable property and liabilities is recorded as goodwill. The goodwill is included within the carrying quantity of the funding and is examined for impairment along with the funding on the finish of every reporting interval when there may be goal proof that the funding is impaired. Any extra of the Group’s share of the online honest worth of the identifiable property and liabilities over the price of acquisition is recognised in consolidated profit or loss.

The Group’s share of an affiliate’s post-acquisition profits or losses is recognised in consolidated profit or loss, and its share of the post-acquisition actions in reserves is recognised within the consolidated reserves. The cumulative post-acquisition actions are adjusted towards the carrying quantity of the funding. When the Group’s share of losses in an affiliate equals or exceeds its curiosity within the affiliate, together with another unsecured receivables, the Group doesn’t recognise additional losses, except it has incurred obligations or made funds on behalf of the affiliate. If the affiliate subsequently reviews profits, the Group resumes recognising its share of these profits solely after its share of the profits equals the share of losses not recognised.

3. Significant Accounting Insurance policies (Continued)

Associates (Continued)

The achieve or loss on the disposal of an affiliate that ends in a lack of significant influence represents the distinction between (i) the honest worth of the consideration of the sale plus the honest worth of any funding retained in that affiliate and (ii) the Group’s share of the online property of that affiliate plus any remaining goodwill referring to that affiliate and any associated collected translation reserve. If an funding in an affiliate turns into an funding in a three way partnership, the Group continues to use the fairness technique and doesn’t remeasure the retained curiosity.

Unrealised profits on transactions between the Group and its associates are eradicated to the extent of the Group’s pursuits within the associates. Unrealised losses are additionally eradicated except the transaction offers proof of an impairment of the asset transferred. Accounting insurance policies of associates have been modified the place vital to make sure consistency with the insurance policies adopted by the Group.

International foreign money translation

  • (a) Useful and presentation foreign money

    Objects included within the financial statements of every of the Group’s entities are measured utilizing the foreign money of the first financial setting during which the entity operates (the “practical foreign money”). The consolidated financial statements are offered in RMB, which is the Firm’s presentation foreign money and practical foreign money.

  • (b) Transactions and balances in every entity’s financial statements

    Transactions in foreign currency are translated into the practical foreign money on preliminary recognition utilizing the alternate charges prevailing on the transaction dates. Financial property and liabilities in foreign currency are translated on the alternate charges on the finish of every reporting interval. Beneficial properties and losses ensuing from this translation coverage are recognised in profit or loss.

    Non-monetary objects which are measured at honest values in foreign currency are translated utilizing the alternate charges on the dates when the honest values are decided.

    When a achieve or loss on a non-monetary merchandise is recognised in different complete revenue, any alternate part of that achieve or loss is recognised in different complete revenue. When a achieve or loss on a non-monetary merchandise is recognised in profit or loss, any alternate part of that achieve or loss is recognised in profit or loss.

  • (c) Translation on consolidation

    The outcomes and monetary place of all of the group entities which have a practical foreign money totally different from the Firm’s presentation foreign money are translated into the Firm’s presentation foreign money as follows:

    • – Property and liabilities for every assertion of financial place offered are translated on the closing fee on the date of that assertion of financial place;

    • – Revenue and bills are translated at common alternate charges (except this common is just not an inexpensive approximation of the cumulative impact of the charges prevailing on the transaction dates, during which case revenue and bills are translated on the alternate charges on the transaction dates); and

    • – All ensuing alternate variations are recognised within the translation reserve.

3. Significant Accounting Insurance policies (Continued)

International foreign money translation (Continued)

(c)Translation on consolidation (Continued)

On consolidation, alternate variations arising from the interpretation of the online funding in overseas entities and of borrowings are recognised within the translation reserve. When a overseas operation is bought, such alternate variations are recognised in consolidated profit or loss as a part of the achieve or loss on disposal.

Goodwill and honest worth changes arising on the acquisition of a overseas entity are handled as property and liabilities of the overseas entity and translated on the closing fee.

Property, plant and gear

Buildings comprise primarily factories and offices. Property, plant and gear are acknowledged at value much less collected depreciation and impairment loss.

Subsequent prices are included within the asset’s carrying quantity or recognised as a separate asset, as acceptable, solely when it’s possible that future financial benefits related to the merchandise will flow to the Group and the price of the merchandise may be measured reliably. All different repairs and upkeep are recognised in profit or loss in the course of the interval during which they’re incurred.

Depreciation of property, plant and gear is calculated at charges sufficient to jot down off their prices much less their residual values over the estimated helpful lives or annual fee on a straight-line foundation. The principal annual charges are as follows:

Buildings

4.8%

Plant and equipment

9.5%

Motor autos

19%

Furnishings, fixtures and gear

9.5%-19%

The residual values, helpful lives and depreciation technique are reviewed and adjusted, if acceptable, on the finish of every reporting interval.

Building in progress represents buildings underneath development and plant and equipment pending set up, and is acknowledged at value much less impairment losses. Depreciation begins when the related property can be found to be used.

The achieve or loss on disposal of property, plant and gear is the distinction between the online gross sales proceeds and the carrying quantity of the related asset, and is recognised in profit or loss.

Leases

Land and buildings Land use rights

The Group as lessee

Leases are recognised as right-of-use property and corresponding lease liabilities when the leased property can be found to be used by the Group. Proper-of-use property are acknowledged at value much less collected depreciation and impairment losses. Depreciation of right-of-use property is calculated at charges to jot down off their value over the shorter of the asset’s helpful life and the lease time period on a straight-line foundation. The principal annual charges are as follows:

1.52% – 6.06% 1.43% – 2.08%

3. Significant Accounting Insurance policies (Continued)

Leases (Continued)

The Group as lessee (Continued)

Proper-of-use property are measured at value comprising the quantity of the preliminary measurement of the lease liabilities, lease funds pay as you go, preliminary direct prices and the restoration prices. Lease liabilities embody the online current worth of the lease funds discounted utilizing the rate of interest implicit within the lease if that fee may be decided, or in any other case the Group’s incremental borrowing fee. Every lease fee is allotted between the legal responsibility and finance value. The finance value is charged to profit or loss over the lease time period in order to provide a continuing periodic fee of curiosity on the remaining stability of the lease legal responsibility.

Funds related to short-term leases and leases of low-value property are recognised as bills in profit or loss on a straight-line foundation over the lease phrases. Brief-term leases are leases with an preliminary lease time period of 12 months or much less. Low-value property are property of worth beneath US$5,000.

Analysis and growth expenditure

Expenditure on analysis actions is recognised as an expense within the interval during which it’s incurred.

An internally-generated intangible asset arising from growth actions (or from the event section of an inside venture) is recognised if, and provided that, the entire following have been demonstrated:

  • – the technical feasibility of finishing the intangible asset in order that it will likely be accessible to be used or sale;

  • – the intention to finish the intangible asset and use or promote it;

  • – the power to make use of or promote the intangible asset;

  • – how the intangible asset will generate possible future financial benefits;

  • – the provision of sufficient technical, financial and different assets to finish the event and to make use of or promote the intangible asset; and

  • – the power to measure reliably the expenditure attributable to the intangible asset throughout its growth.

The quantity initially recognised for internally-generated intangible asset is the sum of the expenditure incurred from the date when the intangible asset first meets the popularity standards listed above. The place no internally-generated intangible asset may be recognised, growth expenditure is charged to profit or loss within the interval during which it’s incurred.

Subsequent to preliminary recognition, internally-generated intangible asset is measured at value much less collected amortisation and collected impairment losses (if any), on the identical foundation as intangible property acquired individually.

Properties on the market underneath growth

Properties on the market underneath growth are acknowledged on the decrease of value and internet realisable worth. Prices embody acquisition prices, pay as you go land lease funds, development prices, borrowing prices capitalised and different direct prices attributable to such properties. Web realisable worth is set by reference to sale proceeds obtained after the reporting interval much less promoting bills, or by estimates based mostly on prevailing market situation. On completion, the properties are reclassified to properties held on the market on the then carrying quantity.

3. Significant Accounting Insurance policies (Continued)

Inventories

Inventories are acknowledged on the decrease of value and internet realisable worth. Price is set utilizing the weighted common foundation. The price of finished items and work in progress contains uncooked supplies, direct labour and an acceptable proportion of all manufacturing overhead expenditure, and the place acceptable, subcontracting fees. Web realisable worth is the estimated promoting worth within the strange course of enterprise, much less the estimated prices of completion and the estimated prices essential to make the sale.

Recognition and derecognition of financial devices

Monetary property and financial liabilities are recognised within the assertion of financial place when the Group turns into a celebration to the contractual provisions of the devices.

Monetary property are derecognised when the contractual rights to obtain money flows from the property expire; the Group transfers considerably all of the dangers and rewards of possession of the property; or the Group neither transfers nor retains considerably all of the dangers and rewards of possession of the property however has not retained management on the property. On derecognition of a financial asset, the distinction between the asset’s carrying quantity and the sum of the consideration obtained is recognised in profit or loss.

Monetary liabilities are derecognised when the duty specified within the related contract is discharged, cancelled or expires. The distinction between the carrying quantity of the financial legal responsibility derecognised and the consideration paid is recognised in profit or loss.

Monetary property

Monetary property are recognised and derecognised on a commerce date foundation the place the acquisition or sale of an asset is underneath a contract whose phrases require supply of the asset inside the timeframe established by the market involved, and are initially recognised at honest worth, plus immediately attributable transaction prices besides within the case of financial property at honest worth by way of profit or loss (the “Monetary property at FVTPL). Transaction prices immediately attributable to the acquisition of investments at honest worth by way of profit or loss are recognised instantly in profit or loss.

Monetary property of the Group are classified underneath the next classes:

  • – Monetary property at amortised value;

  • – Debt devices at honest worth by way of different complete revenue (the “Debt devices at FVTOCI”);

  • – Fairness investments at honest worth by way of different complete revenue (the “Fairness investments at FVTOCI”) and

  • – Monetary property at FVTPL.

3. Significant Accounting Insurance policies (Continued)

Monetary property (Continued)

  • (i) Monetary property at amortised value

    Monetary property (together with commerce and different receivables) are classified underneath this class in the event that they fulfill each of the next circumstances:

    • – the property are held inside a enterprise mannequin whose goal is to carry property in an effort to accumulate contractual money flows; and

    • – the contractual phrases of the property give rise on specified dates to money flows which are solely funds of principal and curiosity on the principal quantity excellent.

    They’re subsequently measured at amortised value utilizing the efficient curiosity technique much less loss allowance for anticipated credit score losses.

  • (ii) Debt devices at FVTOCI

    Debt devices are classified underneath this class in the event that they fulfill each of the next circumstances:

    • – the property are held inside a enterprise mannequin whose goal is achieved by each accumulating contractual money flows and promoting property; and

    • – the contractual phrases of the property give rise on specified dates to money flows which are solely funds of principal and curiosity on the principal quantity excellent.

    They’re subsequently measured at honest worth. Curiosity revenue calculated utilizing the efficient curiosity technique is recognised in profit or loss.

    The property are handled as financial objects. A overseas foreign money asset is handled as an asset measured at amortised value within the overseas foreign money. Alternate variations on the amortised value are recognised in profit or loss.

    Different good points or losses are recognised in different complete revenue and collected within the debt funding revaluation reserve. On derecognition of an funding, the cumulative good points or losses beforehand collected within the debt funding revaluation reserve are reclassified to profit or loss.

    The loss allowance for anticipated credit score losses is recognised in different complete revenue and doesn’t cut back the carrying quantity of the property.

3. Significant Accounting Insurance policies (Continued)

Monetary property (Continued)

  • (iii) Fairness investments at FVTOCI

    On preliminary recognition, the Group could make an irrevocable election (on an instrument-by-instrument foundation) to designate investments in fairness investments that aren’t held for buying and selling as at honest worth by way of different complete revenue.

    Fairness investments at FVTOCI are subsequently measured at honest worth with good points and losses arising from modifications in honest values recognised in different complete revenue and collected within the funding revaluation reserve. On derecognition of an funding, the cumulative good points or losses beforehand collected within the funding revaluation reserve will not be reclassified to profit or loss.

    Dividends on these investments are recognised in profit or loss, except the dividends clearly signify a restoration of a part of the price of the funding.

  • (iv) Monetary property at FVTPL

    Monetary property are classified underneath this class if they don’t meet the circumstances to be measured at amortised value and the circumstances of debt devices at FVTOCI except the Group designates an fairness funding that’s not held for buying and selling as at honest worth by way of different complete revenue on preliminary recognition.

    Monetary property at FVTPL are subsequently measured at honest worth with any good points or losses arising from modifications in honest values recognised in profit or loss. The honest worth good points or losses recognised in profit or loss are internet of any curiosity revenue and dividend revenue. Curiosity revenue and dividend revenue are recognised in profit or loss.

Loss allowances for anticipated credit score losses

The Group recognises loss allowances for anticipated credit score losses on financial property at amortised value and debt devices at FVTOCI. Anticipated credit score losses are the weighted common of credit score losses with the respective dangers of a default occurring because the weights.

On the finish of every reporting interval, the Group measures the loss allowance for a financial instrument at an quantity equal to the anticipated credit score losses that outcome from all doable default occasions over the anticipated lifetime of that financial instrument (“lifetime anticipated credit score losses”) for commerce receivables, or if the credit score threat on that financial instrument has elevated significantly since preliminary recognition.

If, on the finish of the reporting interval, the credit score threat on a financial instrument (apart from commerce receivables) has not elevated significantly since preliminary recognition, the Group measures the loss allowance for that financial instrument at an quantity equal to the portion of lifetime anticipated credit score losses that represents the anticipated credit score losses that outcome from default occasions on that financial instrument which are doable inside 12 months after the reporting interval.

The quantity of anticipated credit score losses or reversal to regulate the loss allowance on the finish of the reporting interval to the required quantity is recognised in profit or loss as an impairment achieve or loss.

Money and money equivalents

For the aim of the assertion of money flows, money and money equivalents signify money at financial institution and readily available, demand deposits with banks and different financial establishments, and short-term extremely liquid investments that are readily convertible into recognized quantities of money and topic to an insignificant threat of change in worth. Financial institution overdrafts that are repayable on demand and kind an integral a part of the Group’s money administration are additionally included as a part of money and money equivalents.

3. Significant Accounting Insurance policies (Continued)

Monetary liabilities and fairness devices

Monetary liabilities and fairness devices are categorised in keeping with the substance of the contractual preparations entered into and the definitions of a financial legal responsibility and an fairness instrument underneath HKFRSs. An fairness instrument is any contract that evidences a residual curiosity within the property of the Group after deducting all of its liabilities. The accounting insurance policies adopted for specific financial liabilities and fairness devices are set out beneath.

Borrowings and long-term mortgage notice

Borrowings and long-term mortgage notice are initially recognised at honest worth, internet of transaction prices incurred, and subsequently measured at amortised value utilizing the efficient curiosity technique.

Borrowings and long-term mortgage notice are categorised as present liabilities except the Group has an unconditional proper to defer settlement of the legal responsibility for not less than 12 months after the reporting interval.

Commerce and different payables

Commerce and different payables are initially recognised at honest worth and subsequently measured at amortised value utilizing the efficient curiosity technique except the impact of discounting can be immaterial, during which case they’re acknowledged at value.

Spinoff financial devices

Derivatives (together with contingent issues underneath enterprise mixtures) are initially recognised and subsequently measured at honest worth with any good points or losses arising from modifications in honest values recognised in profit or loss.

Fairness devices

Fairness devices issued by the Firm are recorded on the proceeds obtained, internet of direct concern prices.

Income from contracts with prospects

Income is measured based mostly on the consideration specified in a contract with a buyer as regards to the customary enterprise practices and excludes quantities collected on behalf of third events. For a contract the place the interval between the fee by the client and the switch of the promised services or products exceeds one 12 months, the consideration is adjusted for the impact of a significant financing part.

The Group recognises income when it satisfies a efficiency obligation by transferring management over a services or products to a buyer. Relying on the phrases of a contract and the legal guidelines that apply to that contract, a efficiency obligation may be satisfied over time or at a time limit. A efficiency obligation is satisfied over time if:

  • – the client concurrently receives and consumes the benefits offered by the Group’s efficiency;

  • – the Group’s efficiency creates or enhances an asset that the client controls because the asset is created or enhanced; or

  • – the Group’s efficiency doesn’t create an asset with another use to the Group and the Group has an enforceable proper to fee for efficiency accomplished up to now.

If a efficiency obligation is glad over time, income is recognised by reference to the progress in the direction of full satisfaction of that efficiency obligation. In any other case, income is recognised at a time limit when the client obtains management of the services or products.

3. Significant Accounting Insurance policies (Continued)

Different income

Curiosity revenue is recognised utilizing the efficient curiosity technique.

Dividend revenue is recognised when the shareholders’ rights to obtain fee are established.

Worker benefits

  • (a) Worker depart entitlements

    Worker entitlements to annual depart and lengthy service depart are recognised after they accrue to workers. A provision is made for the estimated legal responsibility for annual depart and lengthy service depart on account of providers rendered by workers as much as the on the finish of the reporting interval.

    Worker entitlements to sick depart and maternity depart will not be recognised till the time of depart.

  • (b) Pension obligations

    The Group contributes to defined contribution retirement schemes which can be found to all workers. Contributions to the schemes by the Group and workers are calculated as a share of workers’ fundamental salaries. The retirement benefit scheme value charged in profit or loss represents contributions payable by the Group to the funds.

  • (c) Termination benefits

    Termination benefits are recognised on the earlier of the dates when the Group can not withdraw the supply of these benefits and when the Group recognises restructuring prices and entails the fee of termination benefits.

Share-based funds

The Group points equity-settled share-based funds to sure administrators and workers.

Fairness-settled share-based funds to administrators and workers are measured on the honest worth (excluding the impact of non market-based vesting circumstances) of the fairness devices on the date of grant. The honest worth decided on the grant date of the equity-settled share-based funds is expensed on a straight-line foundation over the vesting interval, based mostly on the Group’s estimate of shares that may ultimately vest and adjusted for the impact of non market-based vesting circumstances.

Borrowing prices

All different borrowing prices are recognised in profit or loss within the interval during which they’re incurred.

Borrowing prices immediately attributable to the acquisition, development or manufacturing of qualifying property, that are property that essentially take a considerable time period to prepare for his or her supposed use or sale, are capitalised as a part of the price of these property, till such time because the property are considerably prepared for his or her supposed use or sale. Funding revenue earned on the non permanent funding of specific borrowings pending their expenditure on qualifying property is deducted from the borrowing prices eligible for capitalisation.

To the extent that funds are borrowed usually and used for the aim of acquiring a qualifying asset, the quantity of borrowing prices eligible for capitalisation is set by making use of a capitalisation fee to the expenditures on that asset. The capitalisation fee is the weighted common of the borrowing prices relevant to the borrowings of the Group which are excellent in the course of the interval, apart from borrowings made specifically for the aim of acquiring a qualifying asset.

3. Significant Accounting Insurance policies (Continued)

Authorities grants

A authorities grant is recognised when there may be cheap assurance that the Group will adjust to the circumstances attaching to it and that the grant might be obtained.

Authorities grants referring to revenue are deferred and recognised in profit or loss over the interval to match them with the prices they’re supposed to compensate.

Authorities grants that change into receivable as compensation for bills or losses already incurred or for the aim of giving fast financial assist to the Group with no future associated prices are recognised in profit or loss within the interval during which they change into receivable.

Authorities grants referring to the acquisition of property are recorded as deferred revenue and recognised in profit or loss on a straight-line foundation over the helpful lives of the associated property.

Taxation

Revenue tax represents the sum of the present tax and deferred tax.

The tax at present payable is predicated on taxable revenue for the 12 months. Taxable revenue differs from revenue recognised in revenue or loss as a result of it excludes objects of revenue or expense which are taxable or deductible in different years and it additional excludes objects which are by no means taxable or deductible. The Group’s legal responsibility for present tax is calculated utilizing tax charges which have been enacted or substantively enacted by the tip of the reporting interval.

Deferred tax is recognised on variations between the carrying quantities of property and liabilities within the consolidated financial statements and the corresponding tax bases used within the computation of taxable revenue. Deferred tax liabilities are usually recognised for all taxable non permanent variations and deferred tax property are recognised to the extent that it’s possible that taxable profits might be accessible towards which deductible non permanent variations, unused tax losses or unused tax credit may be utilised. Such property and liabilities will not be recognised if the non permanent distinction arises from goodwill or from the preliminary recognition (apart from in a enterprise mixture) of different property and liabilities in a transaction that impacts neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable non permanent variations arising on investments in subsidiaries and associates besides the place the Group is ready to management the reversal of the non permanent distinction and it’s possible that the non permanent distinction won’t reverse within the foreseeable future.

The carrying quantity of deferred tax property is reviewed on the finish of every reporting interval and lowered to the extent that it’s not possible that sufficient taxable profits might be accessible to permit all or a part of the asset to be recovered.

Deferred tax is calculated on the tax charges which are anticipated to use within the interval when the legal responsibility is settled or the asset is realised, based mostly on tax charges which have been enacted or substantively enacted by the tip of the reporting interval. Deferred tax is recognised in profit or loss, besides when it pertains to objects recognised in different complete revenue or immediately in fairness, during which case the deferred tax can also be recognised in different complete revenue or immediately in fairness.

The measurement of deferred tax property and liabilities reflects the tax penalties that may comply with from the way during which the Group expects, on the finish of the reporting interval, to recuperate or settle the carrying quantity of its property and liabilities.

Deferred tax property and liabilities are offset when there’s a legally enforceable proper to set off present tax property towards present tax liabilities and after they relate to revenue taxes levied by the identical taxation authority and the Group intends to settle its present tax property and liabilities on a internet foundation.

3. Significant Accounting Insurance policies (Continued)

Phase reporting

Working segments and the quantities of every phase merchandise reported within the financial statements are identified from the financial info offered usually to the Group’s most senior govt administration for the aim of allocating assets and assessing the efficiency of the Group’s varied strains of enterprise.

Individually materials working segments will not be aggregated for financial reporting functions except the segments have related financial traits and are related in respect of the character of services and products, the character of productions processes, the kind or class of consumers, the strategies used to distribute the merchandise or present the providers, and the character of the regulatory setting. Working segments which aren’t individually materials could also be aggregated in the event that they share a majority of those standards.

Associated events

A associated celebration is an individual or entity that’s associated to the Group.

  • (a) An individual or an in depth member of that individual’s household is expounded to the Group if that individual:

    • (i) has management or joint management over the Group;

    • (ii) has significant influence over the Group; or

    • (iii) is a member of the important thing administration personnel of the Firm or of a mum or dad of the Firm.

  • (b) An entity is expounded to the Group (reporting entity) if any of the next circumstances applies:

    • (i) The entity and the Firm are members of the identical group (which implies that every mum or dad, subsidiary and fellow subsidiary is expounded to the others).

    • (ii) One entity is an affiliate or three way partnership of the opposite entity (or an affiliate or three way partnership of a member of a bunch of which the opposite entity is a member).

    • (iii) Each entities are joint ventures of the identical third celebration.

    • (iv) One entity is a three way partnership of a 3rd entity and the opposite entity is an affiliate of the third entity.

    • (v) The entity is a post-employment benefit plan for the benefit of workers of both the Group or an entity associated to the Group. If the Group is itself such a plan, the sponsoring employers are additionally associated to the Group.

    • (vi) The entity is managed or collectively managed by an individual identified in (a).

    • (vii) An individual identified in (a)(i) has significant influence over the entity or is a member of the important thing administration personnel of the entity (or of a mum or dad of the entity).

    • (viii) The entity, or any member of a bunch of which it’s a half, offers key administration personnel providers to the Firm or to a mum or dad of the Firm.

3. Significant Accounting Insurance policies (Continued)

Impairment of property

On the finish of every reporting interval, the Group opinions the carrying quantities of its tangible and intangible property besides goodwill, investments, investories, tax recoverable and receivables, to find out whether or not there may be any indication that these property have suffered an impairment loss. If any such indication exists, the recoverable quantity of the asset is estimated in an effort to decide the extent of any impairment loss. The place it’s not doable to estimate the recoverable quantity of a person asset, the Group estimates the recoverable quantity of the cash-generating unit to which the asset belongs.

Recoverable quantity is the upper of honest worth much less prices of disposal and worth in use. In assessing worth in use, the estimated future money flows are discounted to their current worth utilizing a pre-tax low cost fee that reflects present market assessments of the time worth of cash and the dangers specific to the asset.

If the recoverable quantity of an asset or cash-generating unit is estimated to be lower than its carrying quantity, the carrying quantity of the asset or cash-generating unit is lowered to its recoverable quantity. An impairment loss is recognised instantly in revenue or loss, except the related asset is carried at a revalued quantity, during which case the impairment loss is handled as a revaluation lower.

The place an impairment loss subsequently reverses, the carrying quantity of the asset or cash-generating unit is elevated to the revised estimate of its recoverable quantity, however in order that the elevated carrying quantity doesn’t exceed the carrying quantity that may have been decided (internet of amortisation or depreciation) had no impairment loss been recognised for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognised instantly in profit or loss, except the related asset is carried at a revalued quantity, during which case the reversal of the impairment loss is handled as a revaluation improve.

Provisions and contingent liabilities

Provisions are recognised for liabilities of unsure timing or quantity when the Group has a gift authorized or constructive obligation arising on account of a previous occasion, it’s possible that an outflow of financial benefits might be required to settle the duty and a dependable estimate may be made. The place the time worth of cash is materials, provisions are acknowledged at this time worth of the expenditures anticipated to settle the duty.

The place it’s not possible that an outflow of financial benefits might be required, or the quantity can’t be estimated reliably, the duty is disclosed as a contingent legal responsibility, except the chance of outflow is distant. Doable obligations, whose existence will solely be confirmed by the incidence or non-occurrence of a number of future occasions are additionally disclosed as contingent liabilities except the chance of outflow is distant.

Occasions after the reporting interval

Occasions after the reporting interval that present extra details about the Group’s place on the finish of the reporting interval or those who point out the going concern assumption is just not acceptable are adjusting occasions and are reflected within the financial statements. Occasions after the reporting interval that aren’t adjusting occasions are disclosed within the notes to the consolidated financial statements when materials.

4. Crucial Judgements and Key Estimates

Key sources of estimation uncertainty

The important thing assumptions in regards to the future, and different key sources of estimation uncertainty on the finish of the reporting interval, which have a big threat of inflicting a fabric adjustment to the carrying quantities of property and liabilities inside the subsequent financial 12 months, are mentioned beneath.

  • (a) Guarantee provision

    The Group offers a guaranty as much as fifteen months on all lead-acid motive battery merchandise. For lead-acid motive battery merchandise discovered to be faulty underneath the phrases of the guarantee, the Group undertakes to interchange the battery freed from cost for merchandise returned inside eight months from the date of sale, and to restore the battery freed from cost for merchandise returned between the ninth month and the fifteenth month after the date of sale. Estimated prices associated to product guarantee are accrued on the time of sale and are based mostly upon varied components together with the historic precise guarantee claims, the estimated substitute value and restore value for returned merchandise, predicted future guarantee declare fee as regards to prior experiences and volumes of merchandise bought. The quantity of guarantee is adjusted as required to reflect the precise prices incurred when info turns into accessible. In case the place the precise future guarantee bills are much less or greater than anticipated, a fabric reversal or additional recognition of guarantee provision could come up, which might be recognised in profit or loss for the interval during which such a reversal or additional recognition takes place.

  • (b) Inventories

    Inventories are acknowledged on the decrease of value and internet realisable worth. The price of completed items and work in progress contains uncooked supplies, direct labour, different direct prices and associated manufacturing overheads. Web realisable worth is the estimated promoting worth within the strange course of enterprise, much less all estimated prices of completion and prices essential to make the sale.

    The Group doesn’t have a basic provision coverage on stock based mostly on growing old given the character of inventories that aren’t topic to frequent put on and tear and frequent technological modifications. Nevertheless, operational procedures have been in place to observe this threat as majority of working capital is dedicated to inventories. Procedurewise, the gross sales and the advertising and marketing managers overview the stock growing old itemizing on a periodical foundation to determine any aged inventories. The carrying worth of the aged stock objects is then in comparison with the respective internet realisable worth in an effort to confirm whether or not allowance is required to be made for any out of date and slow-moving objects.

    As well as, bodily depend on all inventories are carried out on a periodical foundation in an effort to decide whether or not allowance have to be made in respect of any out of date and faulty inventories identified. On this regard, the administrators of the Firm are satisfied that valuation threat is minimal and sufficient allowance for out of date and slow-moving inventories has been made within the consolidated monetary statements. The administration estimates the online realisable worth for completed items based mostly totally on the newest market costs and present market circumstances. The web realisable worth for finished items might be affected if the precise market costs and market circumstances are lower than anticipated.

  • (c) Provision of anticipated credit score losses for commerce receivables

    The Group makes use of provision matrix to calculate anticipated credit score losses for sure commerce receivables. The supply charges are based mostly on inside credit score scores as groupings of varied debtors which have related loss patterns. The supply matrix is predicated on the Group’s historic default charges bearing in mind forward-looking info that’s cheap and supportable accessible with out undue prices or effort. At each reporting date, the historic noticed default charges are reassessed and modifications within the forward-looking info are thought-about.

  • 4. Crucial Judgements and Key Estimates (Continued)

    Key sources of estimation uncertainty (Continued)

    • (d) Truthful worth of funding

      Within the absence of quoted market costs in an energetic market, the administrators estimate the honest worth of the Group’s Debt devices at FVTOCI and monetary property at FVTPL, particulars of that are set out in notice 6 to the consolidated monetary statements.

    • (e) Property, plant and gear and depreciation

      The Group determines the estimated helpful lives, residual values and associated depreciation fees for the Group’s property, plant and gear. This estimate is predicated on the historic expertise of the particular helpful lives and residual values of property, plant and gear of comparable nature and capabilities. The Group will revise the depreciation cost the place helpful lives and residual values are totally different to these beforehand estimated, or it would write-off or write-down technically out of date or non-strategic property which have been deserted or bought.

  • 5. Monetary Threat Administration

The Group’s actions expose it to a wide range of monetary dangers: overseas foreign money threat, worth threat, rate of interest threat, credit score threat and liquidity threat. The Group’s general threat administration programme focuses on the unpredictability of financial markets and seeks to minimise potential opposed results on the Group’s financial efficiency.

  • (a) International foreign money threat

    The Group has minimal publicity to overseas foreign money threat as most of its enterprise transactions, property and liabilities are principally denominated within the practical currencies of the Group entities which is RMB. The Group at present doesn’t have a overseas foreign money hedging coverage in respect of overseas foreign money transactions, property and liabilities. The Group will monitor its overseas foreign money publicity intently and can contemplate hedging significant overseas foreign money publicity ought to the necessity come up.

  • (b) Worth threat

    The Group is uncovered to fairness worth threat by way of its investments in listed fairness securities measured at FVTPL and FVTOCI. For fairness securities measured at FVTPL quoted within the Inventory Alternate, the administration manages this publicity by sustaining a portfolio of investments with totally different dangers. As well as, the Group additionally invested in sure quoted fairness securities for investees working in battery {industry} sector for long run strategic functions which had been designed as FVTOCI. The Group has appointed a particular crew to observe the value threat and can contemplate hedging the danger publicity ought to the necessity come up. The Group mitigates its worth threat by performing detailed due diligence evaluation of the funding.

5. Monetary Threat Administration (Continued)

  • (b) Worth threat (Continued)

    Sensitivity evaluation

    The sensitivity analyses beneath have been decided based mostly on the publicity to fairness worth dangers on the reporting date. For sensitivity evaluation function, the sensitivity fee is 10% (2019: 10%) in present 12 months on account of the risky financial market.

    If the costs of the respective fairness investments had been 10% (2019: 10%) increased/decrease:

    • – post-tax revenue for the 12 months ended 31 December 2020 would improve/lower by RMB7,856,000 (2019: RMB4,025,000) on account of the modifications in honest worth of financial property at FVTPL; and

    • – funding revaluation reserve would improve/lower by RMB30,555,000 (2019: RMB28,404,000) for the Group on account of the modifications in honest worth of fairness investments at FVTOCI.

  • (c) Rate of interest threat

    The Group is uncovered to honest worth rate of interest threat in relation to debt devices at FVTOCI, pledged financial institution deposits, financial institution balances, borrowings and long-term mortgage notice (see notes 31, 34 and 38 for particulars of those pledged financial institution deposits, financial institution balances, borrowings and long-term mortgage notice, respectively). The Group can also be uncovered to money flow rate of interest threat in relation to variable-rate financial institution balances (see notice 31 for particulars), variable-rate financial institution borrowings (see notice 34 for particulars). The administrators of the Firm monitor rate of interest exposures and can contemplate hedging significant rate of interest threat ought to the necessity come up.

    Within the opinion of the administration of the Group, the anticipated change in rate of interest won’t have significant influence on the curiosity revenue on financial institution balances and curiosity bills on financial institution and different borrowings, therefore sensitivity evaluation is just not offered.

  • (d) Credit score threat

    The Group’s most publicity to credit score threat which can trigger a financial loss to the Group is arising from the quantity of every class of financial property as disclosed within the consolidated assertion of financial place. The Group doesn’t maintain any collateral or different credit score enhancements to cowl its credit score dangers related to its financial property.

    Commerce receivables arising from contracts with prospects

    To be able to minimise the credit score threat, the administration of the Group has delegated a crew answerable for dedication of credit score limits and credit score approvals. Earlier than accepting any new buyer, the Group makes use of an inside credit score scoring system to evaluate the potential buyer’s credit score high quality and defines credit score limits by buyer. Limits and scoring attributed to prospects are reviewed twice a 12 months. Different monitoring procedures are in place to make sure that follow-up motion is taken to recuperate overdue money owed. As well as, the Group performs impairment evaluation underneath ECL mannequin upon utility of HKFRS 9 on commerce balances based mostly on provision matrix for different debtors. On this regard, the administrators of the Firm contemplate that the Group’s credit score threat is significantly lowered.

5. Monetary Threat Administration (Continued)

(d) Credit score threat (Continued)

Commerce receivables arising from contracts with prospects (Continued)

The Group’s inside credit score threat grading evaluation contains the next classes:

Inner credit standingDescription

Grade AGrade B

The counterparty has a low threat of default and doesn’t have any pastdue quantities or the counterparty is a brand new buyer as a big producer with good repute and credit standing based mostly on inside evaluation

Debtor continuously repays after due dates however often settle after due date or the counterparty is a brand new buyer apart from these grouped in grade A counterparties

The counterparty delays its fee after due dates with no settlement but or there have been significant will increase in credit score threat since preliminary recognition by way of info developed internally or exterior assets

Grade D

The counterparty has been charged by the Group or couldn’t settle the receivables in keeping with the contracts or there may be different proof indicating the asset is credit-impaired

Grade E

There’s proof indicating that the debtor is in extreme financial difficulty and the Group has no practical prospect of restoration

Commerce receivables and trade-associated quantities due from associated events

Lifetime ECL – not credit-impaired

Lifetime ECL – not credit-impaired

Lifetime ECL – not credit-impaired

Lifetime ECL – credit-impairedQuantity is written off

Different financial property

12-month ECL

12-month ECLLifetime ECL – not credit-impairedLifetime ECL – credit-impairedQuantity is written off

5. Monetary Threat Administration (Continued)

(d)

The tables beneath element the credit score threat exposures of the Group’s financial property, that are topic to ECL evaluation:

Credit score threat (Continued)

Commerce receivables arising from contracts with prospects (Continued)

Notes:

  • (i) For commerce receivables and trade-related quantities due from associated events, the Group has utilized the simplified method in accordance with HKFRS 9 to measure the loss allowance at lifetime ECL. Aside from debtors with significant excellent balances or credit-impaired, the Group determines the anticipated credit score losses on these receivables through the use of a provision matrix, grouped by inside credit standing.

  • (ii) For different and mortgage receivables, the Group has utilized 12-month ECL evaluation in accordance with HKFRS 9 to measure the loss allowance aside from these balances that the administration thought-about the credit score threat has elevated considerably and/or these balances which are thought-about to be credit score impaired. The ECL on different receivables are assessed individually based mostly on historic settlement data, adjusted for components which are specific to the debtors, basic financial circumstances and an evaluation of each the present in addition to the forecast route of circumstances on the finish of reporting interval.

5. Monetary Threat Administration (Continued)

(d)

Credit score threat (Continued)

Commerce receivables arising from contracts with prospects (Continued)

Notes: (Continued)

(iii)For financial institution balances and pledged financial institution deposits, the administration thought-about the credit score threat has not elevated significantly because the preliminary recognition. Based on the historic noticed default charges of those debtors, the typical loss fee is immaterial.

For debt devices at FVTOCI, since they’re all issued by respected banks of excellent credit score high quality, the administration of the Group thought-about the credit score threat of those financial institution issued payments is insignificant and no impairment was offered on these receivables on the 12 months finish.

As a part of the Group’s credit score threat administration, the Group applies inside credit standing for its prospects. The next desk offers details about the publicity to credit score threat and loss allowance for commerce receivables that are assessed collectively based mostly on provision matrix inside lifetime ECL (not credit score impaired). As at 31 December 2020, the credit score impaired debtors with gross carrying quantities of RMB182,155,000 (2019: RMB202,506,000) had been assessed individually.

Inner credit standing

Common loss feeGross carrying quantityImpairment loss allowance

RMB’000

RMB’000

As at 31 December 2020

Grade A 0.5%

Grade B 5%

Grade C 20%

157,773 789

736,853 36,843

67,839 13,568

962,465

51,200

As at 31 December 2019 Grade A

Grade B Grade C

0.5% 5% 20%

157,068 785

469,018 23,451

32,498 6,500

658,584

30,736

The estimated loss charges are estimated based mostly on historic noticed default charges over the anticipated lifetime of the debtors and are adjusted for forward-looking info that’s accessible with out undue value or effort. The grouping is usually reviewed by administration to make sure related details about specific debtors is up to date.

In the course of the 12 months ended 31 December 2020, the Group offered RMB51,200,000 (2019: RMB30,736,000) impairment allowance for commerce receivables, based mostly on the availability matrix. Impairment allowance of RMB176,172,000 (2019: RMB188,485,000) had been made on credit score impaired debtors, which have been charged by the Group or have been included within the identify checklist of entities, which couldn’t pay again cash in keeping with their contracts, printed on the web site of the Supreme Individuals’s Courtroom of the PRC.

5. Monetary Threat Administration (Continued)

(d)

Credit score threat (Continued)

Commerce receivables arising from contracts with prospects (Continued)

The next desk reveals the motion in lifetime ECL that has been recognised for commerce receivables underneath the simplified method.

Lifetime ECL

(not credit score impaired)

  • As at 1 January 2019 – Impairment losses recognised, internet of reversal

  • As at 31 December 2019 and 1 January 2020 – Impairment losses recognised, internet of reversal – Written off

  • As at 31 December 2020

RMB’000

19,734 11,002 30,736 20,487

51,200

(23)

Lifetime ECL (credit score impaired)

RMB’000

188,485 219,221

185,766 205,500

176,172

(11,943) 8,544

2,719 13,721

(370) (393)

227,372

The next tables present reconciliation of loss allowances that has been recognised for different receivables.

Lifetime ECL

(not credit score impaired)

Lifetime ECL (credit score impaired)

RMB’000

RMB’000

Complete RMB’000

  • As at 1 January 2019 – Impairment losses recognised

    4,361 (4,116)

    14,849 19,210

    22,941 18,825

  • As at 31 December 2019 and 1 January 2020 – Impairment losses recognised, internet of reversal – Written off

    245 232

    37,790

    38,035

    (1)

    (552) (2,025)

    (320) (2,026)

  • As at 31 December 2020

476

35,213

35,689

5. Monetary Threat Administration (Continued)

  • (e) Liquidity threat

    The Group’s goal is to keep up a stability between the continuity of funding and the flexibility by way of using financial institution and different borrowings. As well as, banking services have been put in place for contingency functions.

    The next desk particulars the remaining contractual maturity for the Group’s monetary liabilities based mostly on the agreed reimbursement phrases. The desk has been drawn up based mostly on the undiscounted money flows of financial liabilities based mostly on the earliest date on which the Group may be required to pay. The desk consists of each curiosity and principal money flows.

    31 December 2020

    Payments, commerce and different payables Quantities resulting from associated events Borrowings

    Lower than 1 12 months RMB’000

    Between 1 and a couple of yearsBetween 2 and 5 yearsOver 5 years

    RMB’000

    RMB’000

    RMB’000

    Complete RMB’000

    7,328,643 142,308 971,770

    8,442,721

    – – 341,695 341,695

    – – 392,635 392,635

    – – 19,600 19,600

    7,328,643 142,308 1,725,700 9,196,651

    31 December 2019

    Lower than 1 12 months RMB’000

    Between 1 and a couple of yearsBetween 2 and 5 yearsOver 5 years

    RMB’000

    RMB’000

    RMB’000

    Complete RMB’000

    Payments, commerce and different payables Quantities resulting from associated events Borrowings

    6,722,843

    20,024

    1,296,521

    Lengthy-term mortgage notes Spinoff monetary devices

    431,633

    104

    – – 184,811 – –

    – – 80,172 – –

    8,471,125

    184,811

    80,172

    – – – – – –

    6,722,843

    20,024

    1,561,504

    431,633

    104

    8,736,108

  • (f) Classes of financial devices

    Monetary property at FVTPL:

    Mandatorily measured Fairness investments at FVTOCI Debt devices at FVTOCI

    Monetary property at amortised value (together with money and money equivalents)

    Monetary liabilities:

    Monetary liabilities at honest worth by way of revenue or loss:

    Spinoff monetary devices

    Monetary liabilities at amortised value

    2019 RMB’000

    572,591 854,102

    327,101 284,036

    2,069,365 1,207,570

    7,115,864 6,223,721

    104 8,654,881

  • (g) Truthful values

    The carrying quantities of the Group’s monetary property and monetary liabilities at amortised value as mirrored within the consolidated assertion of financial place approximate their respective honest values.

6. Truthful Worth Measurements

Truthful worth is the value that may be obtained to promote an asset or paid to switch a legal responsibility in an orderly transaction between market members on the measurement date. The next disclosures of honest worth measurements use a good worth hierarchy that categorises into three ranges the inputs to valuation methods used to measure honest worth:

Stage 1 inputs: quoted costs (unadjusted) in energetic markets for equivalent property or liabilities that the Group can entry on the measurement date.

Stage 2 inputs: inputs apart from quoted costs included inside degree 1 which are observable for the asset or legal responsibility, both immediately or not directly.

Stage 3 inputs: unobservable inputs for the asset or legal responsibility.

The Group’s coverage is to recognise transfers into and transfers out of any of the three ranges as of the date of the occasion or change in circumstances that brought on the switch.

(a)

Disclosures of degree in honest worth hierarchy at 31 December 2020:

Recurring honest worth measurements:

Property:

Fairness investments at FVTOCI Debt devices at FVTOCI Monetary property at FVTPL

Complete recurring honest worth measurements

Truthful worth measurements utilizingStage 1:

Stage 2:

Stage 3:

RMB’000

RMB’000

RMB’000

Complete RMB’000

305,549 – 87,806

– 2,069,365 1,685

393,355

2,071,050

– – 483,100 483,100

305,549 2,069,365 572,591

2,947,505

Disclosures of degree in honest worth hierarchy at 31 December 2019:

Truthful worth measurements utilizingStage 1:

Stage 2:

Stage 3:

RMB’000

RMB’000

RMB’000

Complete RMB’000

Recurring honest worth measurements:

Property:

Spinoff monetary devices

Fairness investments at FVTOCI Debt devices at FVTOCI Monetary property at FVTPL Liabilities:

284,036 – 49,470

– 1,207,570 32

– – 804,600

284,036 1,207,570 854,102

(104)

(104)

Complete recurring honest worth measurements

333,506

1,207,498

804,600

2,345,604

6. Truthful Worth Measurements (Continued)

(b)

Reconciliation of property measured at honest worth based mostly on degree 3:

Monetary property at

FVTPL

RMB’000

At 1 January 2019

1,074,380

Addition

9,310,730

Settlement

(9,656,637)

Truthful worth achieve recognised in revenue or loss (#)

76,127

At 31 December 2019 and 1 January 2020

804,600

Addition

9,439,420

Settlement

(9,815,134)

Truthful worth achieve recognised in revenue or loss (#)

54,214

At 31 December 2020

483,100

(#) Embody good points or losses for property held at 2020

(#) Embody good points or losses for property held at 2019

There have been no transfers amongst degree 1, degree 2 and degree 3 throughout each years.

(c)

Disclosure of valuation course of utilized by the Group and valuation methods and inputs utilized in honest worth measurements:

Stage 2 honest worth measurements

The Group’s financial controller is answerable for the honest worth measurements of property and liabilities required for financial reporting functions, together with degree 3 honest worth measurements. The monetary controller reviews on to the Board of Administrators for these honest worth measurements. Discussions of valuation processes and outcomes are held between the financial controller and the Board of Administrators not less than twice a 12 months.

7. Income

Income represents the quantities obtained and receivable for items bought excluding worth added taxes, much less returns and allowances and providers offered by the Group to outdoors prospects in the course of the 12 months.

Gross sales of batteries and battery associated equipment

Lead-acid battery merchandise

Electrical bicycle (tricycle) battery (notice i) Micro electrical car battery Particular-purpose battery (notice ii)

Renewable assets product Lithium battery merchandise Others

Buying and selling of recent vitality supplies

2020 RMB’000

21,613,693 53,525,039

2019 RMB’000

25,560,588 25,684,597

2,070,322 2,057,863

706,574 477,726

1,207,542 940,806

1,059,440 626,788

1,306,880 818,072

10,007,703 40,613,555

Word:

  • i. It consists of battery merchandise primarily for electrical bicycle and electrical tricycle.

  • ii. It consists of battery merchandise primarily for tubular battery, lead-acid starter battery, vitality storage battery and standby battery.

7. Income (Continued)

Disaggregation of income from contracts with prospects:

Gross sales of batteries and battery associated

Buying and selling of recent

For the 12 months ended 31 December 2020

equipment

vitality supplies

Complete

RMB’000

RMB’000

RMB’000

Geographical markets

PRC

31,778,649

21,613,693

53,392,342

Others

132,697

132,697

31,911,346

21,613,693

53,525,039

Gross sales of

batteries and

battery associated

Buying and selling of recent

For the 12 months ended 31 December 2019

equipment

vitality supplies

Complete

RMB’000

RMB’000

RMB’000

Geographical markets

PRC

30,502,601

10,007,703

40,510,304

Others

103,251

103,251

30,605,852

10,007,703

40,613,555

For the years ended 31 December 2020 and 2019, all revenues had been recognised at a time limit.

Gross sales of batteries and battery associated equipment

The Group sells lead-acid battery merchandise, recycled lead merchandise, lithium battery merchandise and different merchandise to the wholesale market. Mounted worth contracts are entered into between the Group and prospects. The anticipated length of the contracts are lower than one 12 months. Income is recognised when management of the products has transferred, being when the products have been shipped to the wholesaler’s specific location for a lot of the prospects. For the remaining, management of the products has transferred when the products have been loaded into shipper’s vehicles (supply). Following supply, the wholesaler has full discretion over the way of distribution and worth to promote the products, has the first accountability when on promoting the products and bears the dangers of obsolescence and loss in relation to the products. For gross sales to distributors, they’re usually required to make full prepayment earlier than items supply. The conventional credit score time period for purchasers apart from distributors is generally 45 days upon supply.

Gross sales-related warranties related to lead-acid battery merchandise and lithium battery merchandise can’t be bought individually and so they function an assurance kind of guarantee that the merchandise bought adjust to agreed-upon specifications. Accordingly, the Group accounts for warranties in accordance with HKAS 37 Provisions, Contingent Liabilities and Contingent Property per its earlier accounting remedy.

Buying and selling of recent vitality supplies

The Group recognises income from buying and selling of recent vitality supplies when the management of recent vitality supplies has transferred, being when prospects accumulate the brand new vitality supplies on the warehouse. The Group has full discretion over the way of distribution and worth to promote the products, has the first accountability when on promoting the products and bears the dangers of obsolescence and loss in relation to the products. Prospects are usually required to make full prepayment earlier than items supply. Mounted worth contracts are entered into between the Group and prospects. The anticipated length of the contracts are lower than one 12 months.

8. Phase Info

The Group’s working and reportable segments are based mostly on info ready and reported to the chief working choice makers (“CODM”), being the board of administrators of the Firm, for the needs of useful resource allocation and efficiency evaluation. For the gross sales of batteries and battery associated equipment operation, there have been no additional discrete monetary info because the financial info offered to the CODM doesn’t include profit or loss info of every product line or every market phase and the CODM overview the working outcomes of the gross sales of batteries and battery associated equipment operation on a consolidated foundation. Due to this fact, the operation of the Group constitutes two single working and reportable segments, (1) gross sales of batteries and battery associated equipment, (2) buying and selling of recent vitality supplies.

These segments are the premise on which the Group reviews its phase info.

The CODM makes selections in keeping with working results of every phase. No evaluation of phase property and phase liabilities offered is because the CODM doesn’t usually overview such info for the aim of assets allocation and efficiency evaluation. Due to this fact, solely phase income and phase outcomes are offered. The accounting insurance policies of the working and reportable phase are the identical because the Group’s accounting insurance policies described in notice 3. Phase outcomes signify the profits earned by every phase and exclude sure different good points and losses, company administrative bills and finance prices. Intersegment gross sales are charged at value plus profit method.

Phase income and outcomes

For the 12 months ended 31 December 2020

8. Phase Info (Continued)

Phase income and outcomes (Continued)

For the 12 months ended 31 December 2019

Gross sales of batteries and battery associated equipment

Buying and selling of recent vitality supplies

RMB’000

RMB’000

Complete RMB’000

Reportable phase income derived from the Group’s exterior buyer Inter-segment gross sales

30,605,852 –

10,007,703 985,423

40,613,555 985,423

Reportable phase income

30,605,852

10,993,126

41,598,978

Phase revenue

1,707,772

16,342

Different good points and losses

1,724,114

13,679

Company administrative bills (7,220)

Finance prices (4,623)Revenue for the 12 months

Different phase info

For the 12 months ended 31 December 2020

1,725,950

Depreciation of property, plant and gear Amortisation of right-of-used property

Loss on disposal/written off of property, plant and gear

Curiosity income Revenue tax expense Write-down of inventories

Gross sales of batteries and battery associated equipment

RMB’000

Buying and selling of recent vitality supplies RMB’000

Unallocated

RMB’000

Complete RMB’000

510,116

112 – 510,228

19,011 – – 19,011

51,234 – – 51,234

122,831 433,279 4,831

14,931

168 137,930

11,874 – 445,153

– – 4,831

For the 12 months ended 31 December 2019

Gross sales of batteries and battery associated equipment

Buying and selling of recent vitality

RMB’000

supplies RMB’000

Unallocated

RMB’000

Complete RMB’000

Depreciation of property, plant and gear Amortisation of pay as you go lease funds

Loss on disposal/written off of property, plant and gear

Curiosity income Revenue tax expense Write-down of inventories

460,256

157 – 460,413

20,728 – – 20,728

84,814 – – 84,814

80,264 388,007 23,082

12,822 5 93,091

12,084 – 400,091

  • 8. Phase Info (Continued)

    Details about main prospects

    In the course of the 12 months ended 31 December 2020 and 2019, not one of the Group’s particular person buyer contributed greater than 10% to the overall income of the Group.

  • 9. Different Revenue

Authorities grants (notice) Gross sales of scrapped supplies Dividend revenue

Others

Word: The federal government grants primarily signify unconditional subsidies from the related growth zone administrative committees and the native governments of the PRC to encourage the operations of sure subsidiaries. The federal government grants are accounted for as fast financial assist with no future associated prices anticipated to be incurred and will not be associated to any property.

2019 RMB’000

405,728 285,461

21,986 28,093

10,007 13,705

92,770 41,906

369,165

10. Different Beneficial properties and Losses

2020

2019

RMB’000

RMB’000

Web good points (losses) on monetary property at FVTPL

– structured financial institution deposits

54,214

76,127

– held-for-trading investments (notice i)

32,664

12,735

– commodity spinoff contracts (notice ii)

(26,300)

(2,304)

Write off/loss on disposal of property, plant and gear

(51,234)

(84,814)

Web overseas alternate good points (losses)

27,064

(8,055)

36,408

(6,311)

Notes:

  • i) Web good points on held-for-trading investments included good points arising on modifications in honest worth of RMB32,664,000 (2019: RMB12,735,000), which had been earned on these investments in listed fairness securities in the course of the 12 months ended 31 December 2020. Such good points (2019: good points) included unrealised good points of RMB32,664,000 (2019: RMB12,735,000) and no realised good points (2019: no realised good points).

  • ii) Web losses on commodity spinoff contracts represented realised losses of RMB28,057,000 (2019: RMB2,081,000) and unrealised good points of RMB1,757,000 (2019: losses of RMB223,000) arising on modifications in honest worth of commodity spinoff contracts.

11. Impairment Losses, Web of Reversal

Impairment losses, internet of reversal, recognised on

  • – Commerce receivables

  • – Different receivables

  • – Mortgage receivables

2019 RMB’000

8,544 13,721

(320) 18,825

– 32,546

12. Finance Prices

Curiosity on borrowings

Efficient curiosity on long-term mortgage notice Curiosity on factorised payments

Lease liabilities curiosity Others

2019 RMB’000

130,902 124,721

24,217 37,540

47,472 86,529

1,358 1,231

8,182 5,014

255,035

13. Taxation

The Firm was integrated within the Cayman Islands and is exempted from revenue tax.

Hong Kong Income Tax: – Present tax

PRC Enterprise Revenue Tax (“EIT”):

– Present tax – (Over) underprovision in prior years Deferred tax (notice 23):

2020 RMB’000

(9,651)

445,153

2019 RMB’000

479,880 428,438

(25,076) 4,594

(32,941)

400,091

13. Taxation (Continued)

For the 12 months ended 31 December 2020 and 2019, Hong Kong Profits Tax is calculated underneath two-tier profits tax system the place the first HK$2 million of estimated assessable profits is taxed at a lowered fee of 8.25% and the remaining of estimated assessable profits is taxed at 16.5%.

Beneath the Legislation of the Individuals’s Republic of China on Enterprise Revenue Tax (the “EIT Legislation”) and Implementation Regulation of the EIT Legislation, the relevant tax fee of PRC subsidiaries is 25% in the course of the 12 months ended 31 December 2020 besides that, Tianneng Battery Group Co., Ltd. (“Tianneng Battery”), Tianneng Battery Group (Anhui) Co., Ltd. (“Tianneng Battery Anhui”), Zhejiang Tianneng Power Know-how Co., Ltd. (“Zhejiang Tianneng Power”), Zhejiang Tianneng Energy Power Co., Ltd. (“Zhejiang Tianneng Energy”), Tianneng Battery (Wuhu) Co., Ltd. (“Tianneng Battery Wuhu”), Anhui Zhongneng Energy Provide Co., Ltd. (“Anhui Zhongneng”), Tianneng Group (Henan) Power Know-how Co., Ltd. (“Tianneng Henan”), Jiyuan Wanyang Inexperienced Power Co., Ltd. (“Jiyuan Wanyang”), Tianneng Battery Group Jiangsu Know-how Co., Ltd. (“Tianneng Jiangsu Know-how”), Zhejiang Tianneng Battery (Jiangsu) New Power Co., Ltd., Zhejiang Hercules Power Co., Ltd., ˂ঐණྠϪᘽ߅ҦϞࠢʮ̡, Anhui Hongda Energy Provide Co., Ltd. (“Anhui Hongda”), ˂ঐ܏၅੻ঐ๕ٰ΅Ϟࠢʮ̡ , एϪ؀เอঐ๕߅ҦϞࠢʮ̡ and एϪ࿫ஷঐ๕Ϟࠢʮ̡ which had been recognised as Excessive-Tech firms and loved a tax fee of 15% for the 12 months ended 31 December 2020 (1.1.2019 to 31.12.2019: 15% relevant for Tianneng Battery, Tianneng Battery Anhui, Zhejiang Tianneng Power, Zhejiang Tianneng Energy, Tianneng Battery Wuhu, Anhui Zhongneng, Tianneng Henan, Jiyuan Wanyang, Tianneng Jiangsu Know-how, Zhejiang Tianneng Battery (Jiangsu) New Engergy Co., Ltd., Zhejiang Hercules Power Co., Ltd and ˂ঐණྠϪᘽ߅ҦϞࠢʮ̡ ).

The taxation cost for the 12 months may be reconciled to the profit earlier than taxation per consolidated assertion of profit or loss and different complete revenue as follows:

2020

2019

RMB’000

RMB’000

Revenue earlier than taxation

2,949,728

2,126,041

Tax on the relevant revenue tax fee of 25% (2019: 25%)

737,432

531,510

Tax impact of revenue not taxable and bills not deductible for tax functions

(3,931)

19,457

Tax impact of tax losses not recognised

17,976

6,015

Utilisation of tax losses beforehand not recognised

(23,222)

(11,203)

Revenue tax at concessionary charges

(122,719)

(83,444)

(Over) underneath provision in prior years

(25,076)

4,594

Tax impact of extra deduction associated to analysis and

growth prices and sure employees prices

(132,372)

(112,257)

Withholding tax on undistributed income of PRC subsidiaries

(2,935)

45,419

445,153

400,091

14. Profit for the 12 months

The Group’s profit for the 12 months is acknowledged after charging the next:

Auditor’s remuneration Price of inventories bought

Write-down of inventories (included in value of gross sales) Depreciation of property, plant and gear Amortisation of right-of-use property

Bills associated to short-term lease

Bills associated to variable lease funds not included in lease liabilities

Administrators’ remuneration (notice 15)

Different employees prices

Retirement advantages scheme contributions, excluding administrators Share-based funds

Complete employees prices

2020 RMB’000

1,720 48,032,934

2,263,210

2019 RMB’000

1,470 35,925,798

4,831 23,082

510,228 460,413

19,011 20,728

10,548 10,500

9,140 6,505

4,489 4,310

2,111,060 1,845,090

134,577 97,325

13,084 7,590

1,954,315

15. Administrators’ and Chief Govt’s Emoluments

For the 12 months ended 31 December 2020

Govt Director

Zhang Tianren (i) Zhang Aogen Zhang Kaihong Shi Borong Zhou Jianzhong

Unbiased Non-Govt Director

Huang Dongliang

Complete

Wu Feng

Zhang Yong

Charges RMB’000

Salaries and different advantages

Contributions to retirement profit schemes

RMB’000

RMB’000

Complete RMB’000

– – – – –

1,514

43 1,557

690 – 690

667 – 667

226 – 226

735 14 749

200 – – 200

200 – – 200

200 – – 200

600

3,832

57

4,489

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