中國水發興業能源集團有限公司 China Shuifa Singyes Energy Holdings Limited Stock Code 750

Transcription

1 中國水發興業能源集團有限公司 China Shuifa Singyes Energy Holdings Limited Stock Code 750

2 CONTENTS 目錄 Page CORPORATE INFORMATION 2-3 FIVE-YEAR FINANCIAL SUMMARY 4 CHAIRMAN S STATEMENT 5-7 CORPORATE GOVERNANCE REPORT 8-26 MANAGEMENT DISCUSSION AND ANALYSIS DIRECTORS AND SENIOR MANAGEMENT REPORT OF THE DIRECTORS INDEPENDENT AUDITORS REPORT AUDITED FINANCIAL STATEMENTS Consolidated: Statement of profit or loss and other comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to financial statements

3 Corporate Information 公司資料 BOARD OF DIRECTORS Executive Directors Mr. Zheng Qingtao (Chairman) Mr. Liu Hongwei (Vice-chairman) Mr. Chen Fushan Mr. Wang Dongwei Non-executive Directors Ms. Wang Suhui Mr. Zhang Jianyuan Independent Non-executive Directors Dr. Wang Ching Mr. Yick Wing Fat, Simon Dr. Tan Hongwei COMPANY SECRETARY Mr. Yu Chon Man (CPA, FCCA) AUTHORIZED REPRESENTATIVES Mr. Liu Hongwei Mr. Yu Chon Man (CPA, FCCA) AUDIT COMMITTEE Mr. Yick Wing Fat, Simon (Chairman) Dr. Wang Ching Dr. Tan Hongwei REMUNERATION COMMITTEE Dr. Tan Hongwei (Chairman) Mr. Zheng Qingtao Mr. Liu Hongwei Dr. Wang Ching Mr. Yick Wing Fat, Simon NOMINATION COMMITTEE Mr. Zheng Qingtao Mr. Liu Hongwei Dr. Wang Ching Mr. Yick Wing Fat, Simon Dr. Tan Hongwei LEGAL ADVISOR Jeffrey Mak Law Firm 6th Floor, O.T.B. Building 259 Des Voeux Road Central, Hong Kong (CPA, FCCA) (CPA, FCCA) China Shuifa Singyes Energy Holdings Limited Annual Report 2020

4 Corporate Information 公司資料 AUDITOR Ernst & Young, Registered Public Interest Entity Auditor 22nd Floor, CITIC Tower 1 Tim Mei Avenue, Central Hong Kong PRINCIPAL BANKERS Agricultural Bank of China, Zhuhai Branch Industrial and Commercial Bank of China Limited, Zhuhai Branch Ping An Bank Co., Ltd, Zhuhai Branch Bank of Communications Co., Ltd, Zhuhai Branch The Hong Kong and Shanghai Banking Corporation Limited Industrial and Commercial Bank of China (Asia) Limited Hang Seng Bank Limited REGISTERED OFFICE 4th Floor North Cedar House 41 Cedar Avenue Hamilton HM12 Bermuda HEAD OFFICE AND PRINCIPAL PLACE of BUSINESS IN HONG KONG Unit 3108, 31/F China Merchants Tower Shun Tak Centre Connaught Road Central Hong Kong PRINCIPAL SHARE REGISTRAR Butterfield Fulcrum Group (Bermuda) Limited Rosebank Centre 11 Bermudiana Road Pembroke, HM08 Bermuda HONG KONG SHARE REGISTRAR Tricor Investor Services Limited Level 54, Hopewell Centre 183 Queen s Road East Hong Kong CORPORATE WEBSITE STOCK CODE th Floor North Cedar House 41 Cedar Avenue Hamilton HM12 Bermuda Butterfield Fulcrum Group (Bermuda) Limited Rosebank Centre 11 Bermudiana Road Pembroke, HM08 Bermuda

5 Five-Year Financial Summary 五年財務摘要 (For the year ended 31 December) Five-Year Financial Summary RMB Revenue 5,239,564 5,675,386 4,416,563 3,306,519 5,400,999 Gross profit 1,134,710 1,138, ,901 28, ,691 Profit (loss) before tax 626, ,378 (562,959) (976,452) 202,965 Profit attributable to owners of the Company 501, ,797 (678,801) (995,228) 301,418 Basic earnings (loss) per share (RMB)* * (0.814) (1.004) Diluted earnings (loss) per share (RMB)* * (0.814) (1.004) Non-current assets 4,788,195 4,699,411 4,825,233 4,682,596 5,001,208 Current assets 6,206,336 7,675,517 6,571,894 7,274,664 8,329,152 Non-current liabilities 3,064,308 3,448, ,129 4,602,960 3,397,889 Current liabilities 3,725,973 4,436,268 7,460,266 3,317,564 5,448,592 Net assets 4,204,250 4,490,333 3,691,732 4,036,736 4,483,879 Revenue RMB 000 Profit Attributable to Owners of the Company RMB 000 6,000,000 5,000,000 5,675,386 5,239,564 4,416,563 5,400, , , , , , ,418 4,000,000 3,306, ,000, ,000 2,000,000 1,000, , , , , ,000, , China Shuifa Singyes Energy Holdings Limited Annual Report 2020

6 CHAIRMAN S STATEMENT 主席報告 Dear Shareholders, Year 2020 was an extraordinary year. Facing the severe impact of COVID-19 pandemic as well as the complex and volatile economic situation, under the strong leadership of Shuifa Group (), the Company persisted in being at leading position, focused on industry upgrade, strengthened its innovation drive, strived to be united and hardworking, and marched forward against adversity, thereby achieved double victory in having stable yet innovative strategy and having turnaround from loss to profit. In 2020, the Company recorded revenue (including tariff adjustment) of approximately RMB5.598 billion, representing a year-on-year increase of 60.6%. Net profit attributable to shareholders turned from a significant loss in 2019 to a profit of RMB301 million. Over the past year, the Company has adopted various measures, and the operation capacity and profitability have been significantly improved % Adhere to strategic guidelines, strive to raise our ranking in the industry The 50MW photovoltaic + 100MWh energy storage integrated energy demonstration project in Shigatse, Tibet undertaken by the Company has become the largest photovoltaic project in Tibet. The 180MW photovoltaic project in Longchang, Weining became the photovoltaic power station project which ranked top 10 in the country and the largest single ground in Guizhou. According to the comprehensive statistics of building and decoration industry (curtain wall category) in China, the Company ranked top 10 for nine consecutive years, and promoted from the ninth to the seventh position in MW 100MWh 180MW

7 CHAIRMAN S STATEMENT 主席報告 Persist in market leadership, strengthen the core businesses The Company followed closely with the new trends of energy supply development as well as created its competitive advantages in integrated energy sector. Relying on the advantages of the original photovoltaic business, the Company was able to merge its integrated energy service businesses, including wind energy, energy storage, and multiple capacities and complementary advantages. The Company completed the 50MW photovoltaic + 100MWh energy storage integrated energy demonstration project in Shigatse of Tibet, the demonstration project for comprehensive utilisation of 100MW photovoltaic agriculture and photovoltaic tourism in Luonan, and the construction of 40MW distributed wind power auxiliary energy storage project in Ji an of Jiangxi during the period. 50MW 100MWh 100MW 40MW Leveraging the technical advantages of green building construction integrated service, the Company constantly enhanced its consulting, design and construction capabilities in the new construction and renovation segments of low energy consumption building. The Company s R&D building project has obtained the only zero-energy-consumption building certificate in China at present, and Zhuhai Pilot Technology Park Phase 2 building became the first ultra-low energy consumption certified building in hot summer and warm winter regions. Shuifa Group fully utilized its internal synergy advantages, identified and acquired Shuifa Group s quality clean energy assets, rapidly expanded the Company s asset scale as well as increased the Company s profitability. During the period, the Company acquired the equity interests of Zibo Qilu Chemical Industry Zone Thermal Co., Ltd.* ( ) held by Shuifa Group, and prepared to develop its public utilities business with stable cash flows and prosperous future. 6 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

8 CHAIRMAN S STATEMENT 主席報告 Persist in technology leadership, continue to promote the increase in quality and efficiency within the industry The Company actively participated in setting industry standards and conducting cutting-edge technology research, strongly facilitated the transformation of technological achievements, and was successfully listed in the country s List of Smart Photovoltaic Pilot Demonstration Enterprises ( ). It also actively participated in the US-China Clean Energy Research Center Project ( ). In 2021, the Company s various businesses will continue to progress in an efficient and orderly manner. The clean energy sector supports the wind energy and solar energy storage and others advancing together, as well as focuses its strengths and resources to capture the development of major projects. For green building construction sector, its regional operations are optimized, which increases the market share in both the established traditional market and the national key construction market. As for new material sector, it accelerates the market application of technological achievements, and breaks through its existing bottlenecks by way of mergers and acquisitions of material-related industries Shuifa Group will continue to make full play of its effective synergy advantages, gradually inject quality heating business and photovoltaic and wind power projects, and also rapidly expand the Company s asset scale and enhance the Company s profitability. In the future, we will continue to fully demonstrate the characteristics of stateowned enterprises, utilize state-owned resources, fulfil social responsibilities, and create better business results. Zheng Qingtao Chairman 7

9 CORPORATE governance report 企業管治報告 OVERVIEW The directors of the Company (the Directors ) recognise the importance of incorporating elements of good corporate governance in the management structures and internal control procedures of the Company and its subsidiaries (the Group ) so as to achieve effective accountability. This report outlines the principles and the code provisions of the Code on Corporate Governance Practices (the Code ) contained in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ). The Directors consider that, for the year ended 31 December 2020, the Company has applied the principles and complied with all the applicable code provisions set out in the Code. In accordance with the requirements of the Listing Rules, the Company has established an audit committee in compliance with paragraph C.3 of the Code to oversee the financial reporting system and internal control procedures of the Group so as to ensure compliance with the Listing Rules. It has also established a nomination committee and a remuneration committee with defined terms of reference. C.3 The Directors are committed to upholding the corporate governance practices of the Company to ensure formal and transparent procedures are in place to protect and maximize the interests of the shareholders of the Company (the Shareholders ). Set out below is a detailed discussion of the corporate governance practices adopted and observed by the Company from the listing date up to the date of this report (the Review Period ). COMPLIANCE WITH THE MODEL CODE FOR DIRECTORS SECURITIES TRANSACTIONS The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the Model Code ) as set out in Appendix 10 of the Listing Rules as the standard for securities transactions by Directors. The Company has made specific enquiries of all the Directors and all the Directors confirmed that they have complied with the required standards set out in the Model Code and its code of conduct regarding directors securities transactions throughout the year. 8 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

10 CORPORATE governance report 企業管治報告 THE BOARD OF DIRECTORS The board of Directors (the Board ) takes responsibility to oversee all major matters of the Company, including the formulation and approval of overall business strategies, internal control and risk management systems, and supervising and monitoring the performance of the senior management who are delegated with the authority and responsibility for day-to-day management and operation of the Company. The Directors have the responsibility to act objectively in the interests of the Company. Currently, the Board comprises nine Directors, including four executive Directors, namely, Mr. Zheng Qingtao, who is also the Chairman of the Company, Mr. Liu Hongwei, who is also the Vice-chairman of the Company, Mr. Wang Dongwei and Mr. Chen Fushan, two non-executive Directors, namely, Ms. Wang Suhui and Mr. Zhang Jianyuan and three independent non- executive Directors, namely, Mr. Yick Wing Fat, Simon, Dr. Wang Ching, and Dr. Tan Hongwei. The Board has a strong independent element in its composition with over half of the board members are non-executive Directors and independent nonexecutive Directors to ensure that all decisions of the Board are made in the best interest of the Group s long-term development. The Board has delegated various responsibilities to the Board committees including the audit committee (the Audit Committee ), the remuneration committee (the Remuneration Committee ) and the nomination committee (the Nomination Committee ) (collectively, the Board Committees ). Further details of these committees are set out below on pages 15 to The composition of the Board is well balanced with each Director having sound board level experience and expertise relevant to the business operations and development of the Group. The Board is comprised of members with extensive business, government, regulatory and policy experience from a variety of backgrounds. There is diversity of nationality, ethnicity, educational background, functional expertise and experience. A Board Diversity Policy was adopted by the Board in

11 CORPORATE governance report 企業管治報告 BOARD MEETINGS The Company will adopt the practice of holding board meetings regularly for at least four times a year at approximately quarterly intervals. Adhoc meetings will also be convened if necessary to discuss the overall strategy as well as the operation and financial performance of the Group. Notice of board meeting will be sent to all Directors at least 14 days prior to a regular board meeting. Reasonable notices will also be given to the Directors for ad-hoc board meetings. 14 Directors may participate either in person or through electronic means of communications. The Company will adopt the practice to provide relevant materials to all the Directors relating to the matters brought before the meetings. All the Directors will be provided with sufficient resources to discharge their duties, and, upon reasonable request, the Directors will be able to seek independent professional advice in appropriate circumstances, at the Company s expenses. All Directors will have the opportunity to include matters in the agenda for Board meetings. Prior notice convening the Board meeting was dispatched to the Directors setting out the matters to be discussed. At the meeting, the Directors were provided with relevant documents to be discussed and approved. The company secretary of the Company is responsible for keeping minutes of the Board meetings. Should a potential conflict of interest involving a substantial shareholder of the Company or a Director arise, the matter will be discussed in a physical Board meeting, as opposed to being dealt with by a written resolution. Independent non-executive Directors with no conflict of interest will be present at meetings dealing with such conflict issues. An updated list of the Directors identifying the independent non-executive directors and the roles and functions of the Directors is maintained on the website of the Company and the website of The Stock Exchange of Hong Kong Limited (the Stock Exchange ). 10 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

12 CORPORATE governance report 企業管治報告 During the reporting period, the Board held a total of 4 Board meetings. The attendance of individual Directors at the board meetings and annual general meeting are set out below: 4 Board Meetings Attendance Annual Name of Directors General Meeting Board Meeting Executive Directors Mr. Zheng Qingtao (Chairman) 0/1 4/4 Mr. LIU Hongwei (Vice Chairman) 0/1 4/4 Mr. Chen Fushan 0/1 4/4 Mr. Wang Dongwei 0/1 4/4 Non-executive Directors Ms. Wang Suhui 0/1 4/4 Mr. Zhang Jianyuan 0/1 4/4 Independent Non-executive Directors Dr. WANG Ching 0/1 4/4 Mr. YICK Wing Fat, Simon 1/1 4/4 Dr. Tan Hongwei 0/1 4/4 11

13 CORPORATE governance report 企業管治報告 SKILLS, KNOWLEDGE, EXPERIENCE AND ATTRIBUTES OF DIRECTORS All Directors of the Board had served in office durng the period under review. Every Director commits to give sufficient time and attention to the affairs of the Company. The Directors also demonstrate their understanding and commit to high standards of corporate governance. The executive Director brings his perspectives to the Board through his deep understanding of the Group s business. The non-executive Directors and the independent nonexecutive Directors contribute their own skills and experience, understanding of local and global economies, and knowledge of capital markets to the Group s business. The Company is responsible for arranging and funding suitable continuous professional development programmes for all Directors to hone and refresh their knowledge and skills. INDUCTION AND TRAINING Each newly appointed Director, executive or non-executive, is required to undertake an induction program to ensure that he has a proper understanding of his duties and responsibilities. The induction program includes an overview of the Group s business operation and governance policies, the Board meetings procedures, matters reserved to the Board, an introduction of the Board committees, the Directors responsibilities and duties, relevant regulatory requirements, review(s) of minutes of the Board and Board committees in the past 12 months, and briefings with senior officers of the Group and site visits (if necessary). Pursuant to the Code Provision A.6.5 of the Code, all Directors should participate in continuous professional development to develop and refresh their knowledge and skills. This is to ensure their contribution to the Board remains informed and relevant. During the Year, all Directors had participated in appropriate continuous professional development activities by ways of attending training and/or reading materials relevant to the Company s business or to the Directors duties and responsibilities. A China Shuifa Singyes Energy Holdings Limited Annual Report 2020

14 CORPORATE governance report 企業管治報告 The company secretary of the Company maintains records of training attended by the Directors. The training attended by each Director during the Year is tabulated as follows: Training Records Name type of trainings Training matters (Note 1) (Note 2) 1 2 Executive Directors Mr. Zheng Qingtao (Chairman) a, b i, ii, iii, iv Mr. LIU Hongwei (Vice chairman) a, b i, ii, iii, iv Mr. Chen Fushan a, b i, ii, iii, iv Mr. Wang Dongwei a, b i, ii, iii, iv Non-Executive Directors Ms. Wang Suhui Mr. Zhang Jianyuan a, b i, ii, iii, iv Independent Non-Executive Directors Dr. WANG Ching a, b i, ii, iii, iv Mr. YICK Wing Fat, Simon a, b i, ii, iii, iv Dr. Tan Hongwei a, b i, ii, iii, iv Note 1: 1 a b attending seminar or training session self-development and updates relating to general economy, business development, director s duties and responsibilities, etc. a b Note 2: 2 i ii iii iv corporate governance regulatory compliance finance management and operation i ii iii iv 13

15 CORPORATE governance report 企業管治報告 INDEPENDENT NON-EXECUTIVE DIRECTORS All independent non-executive Directors of the Company possess a wealth of professional and industry expertise and management experience and have provided their professional advices to the Board. They have played a significant role in the Board by virtue of their independent judgment and their views carry significant weight in the Board s decision. In particular, they bring an impartial view on issues of the Company s strategy, performance and control. The Board also considers that independent non-executive Directors provide independent advice on the Company s business strategy, results and management so that all interests of Shareholders are taken into consideration, and the interests of the Company and its shareholders are taken into account in all business decisions. The Company has received the annual confirmation signed by each independent non-executive Director to acknowledge their respective independence. After prudent enquiry, the Board is of the view that each of Mr. YICK Wing Fat, Simon, Dr. WANG Ching, and Dr. Tan Hongwei maintains the independence as required by Rule 3.13 of the Listing Rules All independent non-executive Directors of the Company will review, on an annual basis, any decisions in relation to new business opportunities referred to the Company. As at the date of this report, there is no new business opportunity introduced to the Group. DIRECTORS AND OFFICERS LIABILITY INSURANCE AND INDEMNITY The Company has arranged appropriate liability insurance to indemnify its Directors and officers in respect of legal actions against the Directors. Throughout 2020, no claim had been made against the Directors and the officers of the Company. 14 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

16 CORPORATE governance report 企業管治報告 APPOINTMENTS, RE-ELECTION AND REMOVAL OF DIRECTORS The Bye-laws of the Company provide that at each annual general meeting, one-third of the directors for the time being shall retire from office by rotation and that every director shall be subject to retirement by rotation at least once every three years. All of the non-executive Director and independent non-executive Directors are appointed for a specific term but they are subject to retirement by rotation and re-election at the annual general meeting in accordance with the Articles. The term of appointment of each Independent Non- Executive Director has been set out in the section headed Directors Service Contracts of this report. Each independent non-executive Director is required to inform the Company as soon as practicable if there is any change that may affect his independence and must provide an annual confirmation of his independence to the Company. BOARD COMMITTEES Audit Committee The Company established the Audit Committee pursuant to a resolution of the Directors passed on 19 December 2008 in compliance with Rules 3.21 to 3.23 of the Listing Rules and paragraph C.3 of the Code. The primary duties of the Audit Committee are to oversee the financial reporting process and internal control procedure of the Group, to review the financial information of the Group and to consider issues relating to the external auditor. The Audit Committee consists of the three independent non-executive Directors, namely, Dr. Wang Ching, Mr. Yick Wing Fat, Simon and Dr. Tan Hongwei, Mr. Yick Wing Fat, Simon is the Chairman of the Audit Committee. The Audit Committee has reviewed the Group s consolidated financial statements for the six months ended 30 June 2020 and for the year ended 31 December 2020, the accounting principles and practices adopted by the Group and the system of internal control C.3 15

17 CORPORATE governance report 企業管治報告 The Audit Committee has considered significant issues on the financial reporting, operational and compliance controls, the effectiveness of the risk management and internal control systems and internal audit function, appointment of external auditors, engagement of non-audit services and relevant scope of works and arrangements for employees to raise concerns about possible improprieties. During the year ended 31 December 2020, the Audit Committee held 2 meetings. The Audit Committee communicate with the external auditor, internal audit consultant and also the management regularly to ensure internal control policies were properly implemented by the management; and the financial statements comply with internal accounting standards in all material aspects. The following table shows the attendance of members of the Audit Committee s meetings: Directors: no. of Audit Committee meetings attended/held: YICK Wing Fat, Simon (Chairman) 2/2 Dr. WANG Ching 2/2 Dr. Tan Hongwei 2/2 The Audit Committee is provided with sufficient resources to perform its duties. Latest terms of reference of the Audit Committee can be viewed on the website of the Company and the website of the Stock Exchange. 16 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

18 CORPORATE governance report 企業管治報告 Remuneration Committee The Company established the Remuneration Committee pursuant to a resolution of the Directors passed on 19 December 2008 in compliance with paragraph B.1 of the Code. The primary duties of the Remuneration Committee are to make recommendations to the Board on the Company s policy for remuneration of Directors and senior management and on the establishment of a formal and transparent procedure for developing policy on such remuneration and for fixing the remuneration packages for all Directors. The Remuneration Committee consists of five members, including three independent non-executive Directors and the Chairman and Vice-chairman of the Board, namely, Dr. Tan Hongwei, Mr. Zheng Qingtao, Mr. Yick Wing Fat, Simon, Dr. Wang Ching and Mr. Liu Hongwei. The Chairman of the Remuneration Committee is Dr. Tan Hongwei. B.1 During the year ended 31 December 2020, the Remuneration Committee held 1 meeting to assess individual performance of the Directors and review the remuneration packages and overall benefit of the Directors. The following table shows the attendance and members of the Remuneration Committee during the year ended 31 December 2020: Directors: no. of Remuneration Committee meetings attended/held: TAN Hongwei (Chairman) 1/1 ZHENG Qingtao 1/1 YICK Wing Fat, Simon 1/1 WANG Ching 1/1 LIU Hongwei 1/1 The Remuneration Committee is provided with sufficient resources to perform its duties. The current duties and responsibilities of the Remuneration Committee are more specifically set out in its latest terms of reference, details of which can be viewed on the website of the Company and the website of the Stock Exchange. 17

19 CORPORATE governance report 企業管治報告 Nomination Committee The Company established a Nomination Committee pursuant to a resolution of the Directors passed on 19 December 2008 in compliance with Recommended Best Practices of paragraph A.5 of the Code. The primary duties of the Nomination committee include reviewing the structure, size, composition and diversity of the Board on a regular basis and making recommendations to the Board regarding any proposed changes. The Nomination Committee consists of five members, including three independent non-executive Directors and two executive Directors, namely Mr. Zheng Qingtao, Mr. Liu Hongwei, Dr. Wang Ching, Mr. Yick Wing Fat, Simon, and Dr. Tan Hongwei. The Nomination Committee is chaired by Mr. Zheng Qingtao. A.5 Board Diversity Policy The Board has adopted the board diversity policy which sets out the approach to achieve diversity on the Board. Accordingly, selection of candidates to the Board is based on a range of measurable objectives, including but not limited to gender, age, cultural and educational background, professional experience and qualifications, skills, knowledge and length of service, having due regard to the Company s own business model and specific needs from time to time. With the existing Board members coming from a variety of business and professional background, the Company considers that the Board possesses a balance of skills, experience, expertise and diversity of perspectives appropriate to the requirements of the Company s business. 18 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

20 CORPORATE governance report 企業管治報告 Nomination procedures include identification and acknowledgement of qualified individuals by the Nomination Committee and review and approval of such nomination by the Board. The Nomination Committee will evaluate potential candidates by considering factors such as professional expertise, relevant experience, personal ethics and integrity. During the year ended 31 December 2020, the Nomination Committee held 1 meeting to review the policies on senior management appointments and promotion. The following table shows the attendance and members of the Nomination Committee during the year ended 31 December 2020: Directors: no. of Nomination Committee meetings attended/held: ZHENG Qingtao (Chairman) 1/1 LIU Hongwei 1/1 WANG Ching 1/1 YICK Wing Fat, Simon 1/1 Tan Hongwei 1/1 The Nomination Committee is provided with sufficient resources to perform its duties. The current duties and responsibilities of the Nomination Committee are more specifically set out in its latest terms of reference, details of which can be viewed on the website of the Company and the website of the Stock Exchange. 19

21 CORPORATE governance report 企業管治報告 COMPANY SECRETARY The company secretary of the Company (the Company Secretary ) is responsible for keeping detailed minutes of each meeting of the Board or the Board committees including any dissenting views expressed by the Directors, which should be available to all Directors for inspection. He is also responsible for ensuring that the Board procedures comply with all applicable laws, rules and regulations and advising the Board on corporate governance matters. All agenda, relevant materials and document are required to be sent out at least 3 days prior to the intended dates of the Board meetings or meetings of the Board committees. It is the responsibility of the Company Secretary to send the draft minutes of the meetings of the Board or the Board committees to all Directors for comments within a reasonable time after the aforesaid meetings. Final versions of minutes of meetings of the Board or the Board committees are also required to be sent to all Directors for record. All Directors have access to the advice and services of the Company Secretary to ensure that the Board procedures and all applicable laws are followed. Moreover, the Company Secretary is responsible for keeping all Directors updated on the Listing Rules, regulatory requirements, as well as internal codes of conduct of the Company. During the Year, the Company Secretary had confirmed that he had taken no less than 15 hours of relevant professional training. 15 FINANCIAL REPORTING AND INTERNAL CONTROL Financial Reporting The Board, supported by the Finance Department, is responsible for the preparation of the financial statements of the Company and the Group. In the preparation of financial statements, International Financial Reporting Standards have been adopted and the appropriate accounting policies, disclosure requirements under Hong Kong Companies Ordinance and the Listing Rules have been consistently used and applied. The Board aims to present a clear and balanced assessment of the Group s performance in the annual and interim reports to the Shareholders, and make appropriate disclosure and announcements in a timely manner. 20 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

22 CORPORATE governance report 企業管治報告 Auditor s Remuneration The audit committee of the Board is responsible for making recommendation to the Board on the appointment, re-appointment and removal of the authorized external auditors and to approve the remuneration and terms of engagement of the external auditors, and any questions of resignation or dismissal of the external auditors. The Company engaged Ernst & Young as its external auditors, and also engaged Ernst & Young in connection with the comfort letters and other assistance in respect of the issue of senior notes. Details of the fees paid/payable to Ernst & Young during the year ended 31 December 2020 are as follows: Audit service Interim review and annual audit RMB8,530,000 8,530,000 Interim review and annual RMB1,400,000 audit of China Singyes New 1,400,000 Materials Holdings Limited ( Singyes New Materials ) Non-audit services HK$144,200 Tax service 144,200 Internal control and risk management The Board acknowledges that it is the responsibility of the Board for the Group s system of internal control and risk management as well reviewing its effectiveness an on-going basis, and, in particular, considering the adequacy of resources, qualifications and experience of staff of the Group s accounting and financial reporting function, training programmes and budget. The Board will conduct periodic review, at least annually, which cover all material aspects, including financial, operational, risk management functions and is in compliance with all relevant regulations and endeavor to enhance the internal control and risk management measures of the Group. Such systems are designed to manage the risk of failure to achieve business objectives, and can only provide reasonable but not absolute assurance against material misstatement or loss. The Directors consider that the internal control systems of the Group is effective and adequate. 21

23 CORPORATE governance report 企業管治報告 There is currently no internal audit function within the Group. The Board has reviewed the need for an internal audit function and is of the view that in light of the size, nature and complexity of the business of the Group, it would be more cost effective to appoint external independent professionals to perform internal audit functions for the Group as the need arises. Nevertheless, the Board will continue to review the need for an internal audit function annually. The Group appointed external independent professional advisors to review the effectiveness of the Group s internal control system for the year ended 31 December The Group is also in the process of improving and establishing the internal control manual to further enhance its internal control and risk management system. DIRECTORS RESPONSIBILITY ON THE FINANCIAL STATEMENTS The Directors acknowledge their responsibility for preparing the financial statements of the Company and its subsidiaries for the year ended 31 December 2020, which were prepared in accordance with applicable accounting standards. The reporting responsibility of the external auditor of the Company on the consolidated financial statements of the Group are set out in the independent auditor s report on pages 78 to SHAREHOLDERS RIGHTS Communication with Shareholders The Board recognises the importance of effective and on-going communications with Shareholders and continues to act in the best interests of the Company and its shareholders. The Company keeps Shareholders and investors informed of its business performance and strategies by adopting a transparent and timely disclosure policy which complies with the Listing Rules and provides all Shareholders equal access to such information. The Company also publishes all documents on the Company s website. 22 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

24 CORPORATE governance report 企業管治報告 The annual general meeting of the Company (the AGM ) also provides a forum for the Board to dialogue and interact with the Shareholders directly. The Directors and the committee members are available to answer questions during the AGM. Notice of AGM, annual report, financial statements and related papers were posted to Shareholders for their consideration at least 20 clear business days prior to the AGM. 20 At each general meeting, the chairman of the meeting proposes individual resolutions in respect of each substantially separate matter. All matters at the Company s general meetings are resolved by poll and the procedures for conducting a poll will be explained at the meeting. Independent scrutineer will be engaged to ensure all votes at general meeting are properly counted. Poll vote results will be posted on the websites of the Company and HKEX in a timely manner. AGM proceedings and policies regarding Shareholders communication of the Company are continually reviewed in the light of corporate governance best practices. Shareholders Rights Set out below is a summary of certain rights of the shareholders of the Company as required to be disclosed pursuant to the mandatory disclosure requirements under Paragraph O of the Code which is effective from 1 April O 23

25 CORPORATE governance report 企業管治報告 (a) Convening of general meeting on requisition by shareholders (a) Members holding at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings of the Company shall at all times have the right, by written requisition to the Company s registered office in Bermuda at 4th Floor North Cedar House, 41 Cedar Avenue, Hamilton 4th Floor North Cedar House, HM12, Bermuda and its principal office in Hong Kong at Unit 3108, 41 Cedar Avenue, Hamilton HM12, 31/F, China Merchants Tower, Shun Tak Centre, Connaught Bermuda Road Central, Hong Kong for the attention of the Board or the Secretary of the Company, to require a special general meeting to be called by the Board for the transaction of any business specified in such requisition; and such meeting shall be held within three (3) months after the deposit of such requisition. If within twenty-one (21) days of such deposit the Board fails to proceed to convene such meeting the (3) requisitionists themselves may do so in accordance with the provisions (21) of Section 74(3) of the Companies Act 1981 of Bermuda. 74(3) 24 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

26 CORPORATE governance report 企業管治報告 (b) Procedures for putting forward proposals at a Shareholders meeting (b) Pursuant to the Companies Act 1981 of Bermuda, either any number of the shareholders holding not less than one-twentieth (5%) of the total voting rights of all the shareholders of the Company, or not less (5%) than one hundred of such shareholders, can request the Company in writing to (a) give to shareholders entitled to receive notice of the (a) next general meeting notice of any resolution which may properly be moved and is intended to be moved at that meeting; and (b) (b) circulate to shareholders entitled to have notice of any general meeting any statement of not more than one thousand words with respect to the matter referred to in any proposed resolution or the business to be dealt with at that meeting. The requisition signed by all the requisitionists must be deposited at the Company s registered office in Bermuda at 4th Floor North Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda and its principal office in Hong Kong at Unit 3108, 31/F, China Merchants Tower, Shun Tak Centre, th Floor Connaught Road Central, Hong Kong for the attention of the Board on North Cedar House, 41 Cedar Avenue, the secretary of the Company, with a sum reasonably sufficient to meet Hamilton HM12, Bermuda the Company s relevant expenses and not less than six weeks before 168 the meeting in case of a requisition requiring notice of a resolution and not less than one week before the meeting in the case of any other requisition. Provided that if an annual general meeting is called for a date six weeks or less after the requisition has been deposited, the requisition though not deposited within the time required shall be deemed to have been properly deposited for the purposes thereof. (c) Enquiries to the Board (c) Shareholders may put forward enquiries to the Board in writing to the principal office of the Company in Hong Kong or, in the event the Company ceases to have such a principal office, the registered office specifying the objects of the enquiries. 25

27 CORPORATE governance report 企業管治報告 INVESTOR RELATION During the period under review, there had been no significant change in the Company s constitutional documents. CORPORATE GOVERNANCE ENHANCEMENT The Company has been introducing, and continues to introduce, measures to comply with the Corporate Governance Code. Enhancing corporate governance is not simply a matter of applying and complying with the Corporate Governance Code of the Stock Exchange but about promoting and developing an ethical and healthy corporate culture. The following is a summary of the work performed by the Board in respect of corporate governance during the Year: (a) review the Company s policies and practices on corporate governance; (a) (b) review and monitor the training and continuous professional (b) development of the Directors and senior management of the Company; (c) review and monitor the Company s policies and practices on (c) compliance with legal and regulatory requirements; (d) review and monitor the code of conduct applicable to employees and (d) the Directors; and (e) review the Company s compliance with the CG Code and disclosure in (e) the Corporate Governance Report. The Board considered the Company s risk management and internal control systems for the year ended 31 December 2020 are effective and adequate. We will continue to review and, where appropriate, improve our current practices on the basis of our experience, regulatory changes and developments. Any views and suggestions from our shareholders to promote and improve our transparency are also welcome. 26 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

28 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 MANAGEMENT DISCUSSION AND ANALYSIS Business overview We are a professional renewable energy solution provider and building contractor. Our main businesses are design, fabrication and installation of curtain wall, green building and solar projects. Solar projects included Building Integrated Photovoltaic System ( BIPV ) system, roof top solar system and ground mounted solar system (collectively Solar EPC ); we also engaged in the manufacturing and sale of renewable energy goods. Our BIPV system involves (i) the integration of photovoltaic technology into the architectural design of buildings and structures and (ii) conversion of solar energy into electricity for use. Our system allows the electricity generated from solar panels to be connected to the power grid of a building and the electricity generated from sun power will be consumed simultaneously. No extra electricity storage cost is required. Apart from the above, we also provide engineering design services and engage in the sale of curtain wall materials. Leveraging on our track record and extensive experience in our curtain wall business, we will further strengthen and develop our renewable energy business in respect of BIPV systems and renewable energy products. In 2020, the Group further diversified its business into Wind Power EPC and the sale of petrochemicals, the Group recognised approximately RMB1,377.4 million and RMB925.1 million, respectively. As announced by the Company on 11 September 2020, our Group also acquired Zibo Qilu Chemical Industry Zone Thermal Co., Ltd from the controlling shareholder of the Company, after this acquisition, the Group also entered into pipeline steam supply business, total revenue during the year was approximately RMB188.7 million. Our Group will endeavour to continue our focus on solar business. In the long run, we will aspire and strive to grow into an enterprise with a focus on renewable energy business. EPC (i) (ii) EPC 1,377,400, ,100, ,700,000 27

29 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 Curtain wall and green building business In 2020, our curtain wall and green building construction business dropped slightly by RMB13.9 million or 1.2% as compared to RMB1,150.2 million in Despite the widely spread of COVID-19 inside Mainland China which brought negative impact to the Group s curtain wall business in first quarter 2020, a significant rebound of business activities from second quarter onwards were noted inside Mainland China. In addition, because of the improvement in liquidity and creditability of the Group after the debt restructuring in November 2019, the Group s revenue in curtain wall and green building business remain stable. 13,900, % 1,150,200,000 COVID-19 Solar EPC business Solar EPC business dropped from RMB1,495.8 million in 2019 to RMB1,192.0 million in 2020, representing a decrease of RMB303.8 million or 20.3%. The drop was mainly because of the impact of COVID-19, most of the Group s projects were temporary suspended in first quarter 2020, the drop was also due to the progress of certain projects of our Group were slower than our original expectation. epc EPC 1,495,800,000 1,192,000, ,800, % COVID-19 Wind power EPC In 2020, the Group involved in the EPC work on a number of Wind Power EPC projects, revenue in 2020 was approximately RMB1,377.4 million. epc EPC EPC 1,377,400, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

30 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 Development of renewable energy goods Apart from Solar EPC, we also produce different kind of renewable energy goods. Renewable energy goods include solar photovoltaic materials and solar thermal products. Solar thermal products include air-source heat pump, solar heat collectors and solar heating system. EPC In second quarter 2020, the Group started a new business line sale of petrochemicals. Total sale in 2020 was approximately RMB925.1 million. 925,100,000 As announced by the Company on 11 September 2020, our Group also acquired Zibo Qilu Chemical Industry Zone Thermal Co., from the controlling shareholder of the Company, its main business is the supply of pipeline steam inside a industrial zone. Total revenue recognized during the year was approximately RMB188.7 million. 188,700,000 Self-develop solar projects At 31 December 2020, the Group had around MW of grid connected solar projects and 35.5 MW projects awaiting for grid connection

31 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 BUSINESS AND FINANCIAL REVIEW Revenue The following table set out the breakdown of revenue: RMB million RMB million Curtain walls and green buildings Public work Commercial and industrial High-end residential , ,150.2 Solar EPC EPC Public work ,115.3 Commercial and industrial 1, , ,495.8 Wind Power EPC EPC industrial and commercial 1,377.4 Total construction contracts 3, ,646.0 Sale of goods Conventional materials Renewable energy goods New materials Petrochemicals Total sale of goods 1, Sale of electricity, including tariff adjustment Thermal supply Rendering of design and other services , , China Shuifa Singyes Energy Holdings Limited Annual Report 2020

32 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 Gross profit and gross profit margin RMB million % RMB million % Construction contracts Curtain walls and green buildings Solar EPC EPC (60.1) (4) Wind EPC EPC (54.6) (2.1) Sale of goods Conventional materials Renewable energy goods (3.4) (2.6) New materials Petrochemicals Sale of electricity, including tariff adjustment Rendering of design and other services Thermal supply Total gross profit and gross profit margin including tariff adjustment The Group s revenue (including tariff adjustment) increased by RMB2,111.2 million or 60.6%, from RMB3,486.3 million in 2019 to RMB5,597.5 million in Gross profit (including tariff adjustment) increased by RMB673.1 million or 323.4%, from RMB208.1 million in 2019 to RMB881.2 million in ,486,300,000 2,111,200, % 5,597,500, ,100, ,100, % 881,200,000 31

33 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 1) Curtain wall and green building 1) Revenue from curtain wall and green building business in 2020 amounted to approximately RMB1,136.3 million, representing a slight decrease of RMB13.9 million or 1.2% compared with The drop was mainly came from the drop in offshore curtain wall EPC businesses because of the spread of COVID-19. Meanwhile, a gross profit of RMB138.0 million was recorded in 2020 (2019: gross profit of RMB5.5 million). 1,136,300,000 13,900, % EPC COVID ,000,000 5,500,000 After the completion of debt restructuring in November 2019, the business of the Group has gradually been recovered, although the progress of some of the Group s projects were affected by the spread of COVID-19, our Group could still be able to mark a reasonable profit margin level in its curtain wall and green building EPC business. COVID-19 EPC 2) Solar EPC 2) EPC Solar EPC Revenue from Solar EPC dropped from RMB1,495.8 million to RMB1,192.0 million, representing a decrease of RMB303.8 million or 20.3%. Similar to curtain wall and green building EPC, the progress of Solar EPC was also impacted by the spread of COVID-19, in addition, certain Solar EPC s progress were slower than expectation, these were the main reason for the drop in Solar EPC revenue. EPC 1,495,800,000 1,192,000, ,800, % EPC EPC COVID-19 EPC EPC Gross profit on Solar EPC business was approximately RMB144.4 million (2019: gross loss of RMB60.1 million), as mentioned earlier, after the completion of the Restructuring, the business of our Group has gradually been recovered and the gross profit level has significantly been improved. EPC 144,400,000 60,100,000 3) Wind Power EPC 3) EPC The Group started to involve into Wind Power EPC business in second quarter 2020, revenue during the period amounted to RMB1,377.4 million, the gross profit margin of Wind Power EPC was about 18.9%. EPC 1,377,400,000 EPC 18.9% 32 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

34 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 4) Sale of products 4) (i) Sale of conventional materials accounted to RMB213.3 million, (i) dropped by RMB26.1 million or 10.9% compared with 2019, it 213,300,000 was mainly because of drop in material sale in domestic areas 26,100, % because of the spread of COVID-19, gross profit margin went up to 24.9%. COVID % (ii) Sale of renewable energy goods recorded a decrease of (ii) RMB10.7 million or 8.2%, gross profit margin of 11.5% was 10,700, % recorded during the year. 11.5% (iii) New Material business represented sale of Indium Tin Oxide (iii) ( ITO ) film and its products. ITO film can be processed into ( ITO )ITO touch-screen ITO film and switchable ITO film, while the ITO switchable ITO film can further be processed into smart light- ITO adjusting glass and smart light-adjusting projection system. As a ITO result of the COVID-19 outbreak and related measures imposed inside Mainland China, the sales volume has dropped due to COVID-19 delays or cancellations of sales orders and reduction of demand for new sales orders during the year. Moreover, the gross profit margins declined because of the lower selling prices and the higher per-unit fixed costs. (iv) During the year, the Group started the sale of petrochemicals to (iv) commercial customers, since the business segment is relatively new to the Group, and gross profit margin was around 1.3%. 1.3% (v) The Group further diversify its business, as announced by the (v) Company on 11 September 2020, our Group acquired a pipeline thermal supply company from the Controlling Shareholder of the Company, revenue during the year amounted to RMB188.7 million. 188,700,000 33

35 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 (vi) The following table sets out the Group s self-invested solar power (vi) stations as at 31 December pending grid on-grid connection In-progress Total Location mw MW MW MW Guangdong province Northwest China Golden Sun/Distributed Power Overseas The Group s accumulated on-grid capacity was megawatts ( MW ) at 31 December 2020, which comprised of MW Golden Sun or distributed power stations, and MW ground-mounted solar farms inside Mainland China and a 2.0 MW solar farm overseas. The sale of electricity, including tariff adjustment, amounted to RMB325.7 million in the year 2020 (2019: RMB312.6 million) ,700, ,600, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

36 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 Revenue and gross profit contribution from different business sectors: Revenue split (including tariff adjustment) RMB million % RMB million % Conventional business 1 1 1, , Renewable energy business 2 2 4, , New material business , , Gross profit split (including tariff adjustment) RMB million % RMB million % Conventional business Renewable energy business New material business Included curtain wall and green building construction contracts, sale of conventional materials and rendering of design and other services Included solar EPC construction contracts, sale of renewable energy goods, sale of electricity and tariff adjustment, wind power EPC, sale of petrochemicals and thermal supply. 2. EPC EPC 35

37 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 Other income and gains Other income and gains mainly represented deferred income released, gain on repurchase of senior notes, foreign exchange gain, waiver of interest on other loan, government grants and compensation income. Selling and distribution expenses Selling and distribution expenses dropped by RMB46.6 million or 37.1%, the drop in selling and distribution was mainly because of the general cost saving policies implemented by the Group. 46,600, % Administrative expenses Administrative expenses dropped by RMB19.1 million as compared with the year The drop was mainly caused by the drop in staff cost. 19,100,000 Finance costs The Group s finance costs decreased by RMB61.5 million or 14.8%. The drop in finance costs were mainly because of the drop in average interest rate and the average balance of senior notes. 61,500, % Income tax expense Income tax expense during the year included RMB116.0 million of taxation charge (2019: RMB13.8 million) and RMB234.2 million of deferred tax credit (2019: RMB2.5 million of deferred tax charge). 116,000,000 13,800, ,200,000 2,500,000 The taxation charges mainly represented the income tax provision for subsidiaries inside Mainland China. No deferred tax charges on dividend withholding tax based on 5% of the net profits in the operating subsidiaries located inside Mainland China were provided for both years. 5% 36 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

38 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 Current ratio The current ratio, being current assets over current liabilities as at 31 December 2020 was 1.53 (31 December 2019: 2.19). This is our Group s strategy to maintain a health current ratio in order to meet short term obligations of the Group Trade receivables/trade and bills payables turnover days At 31 December At 31 December Turnover days Days Days Trade receivables Trade and bills payables Trade receivables turnover days is calculated based on the average of the beginning and ending balance of trade receivables for the year divided by the revenue (excluding tariff adjustment) during the year and multiplied by the number of days during the year. Trade receivables turnover days at 31 December 2020 was 266 days. Trade and bills payables turnover days is calculated based on the average of the beginning and ending balance of trade and bills payables for the year divided by the cost of sales during the year. Trade and bills payables turnover days at 31 December 2020 was 130 days

39 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 Liquidity and financial resources The Group s primary source of funding included receives from construction contacts, product sale as well as income from electricity sale. As at 31 December 2020, the Group had outstanding bank and other loans of approximately RMB2,814.9 million and outstanding senior notes of approximately RMB1,488.1 million. Apart from that, the Group also got loans of Shuifa Group. As at 31 December 2020 the outstanding amount of the principal and interests were US$225,591,000 (equivalent to approximately RMB1,471,961,000), among which US$212,862,000 (equivalent to approximately RMB1,388,908,000) of the borrowings would be due on 31 December 2021, and the remaining US$12,729,000 (equivalent to approximately RMB83,053,000) would be due on 27 August ,814,900,000 1,488,100, ,591,000 1,471,961, ,862,000 1,388,908,000 12,729,000 83,053,000 Capital expenditures Capital expenditures of the Group amounted to RMB178.6 million for the year (2019: RMB67.8 million), these were mainly came from the acquisition and construction of self-invested solar power stations. 178,600,000 67,800,000 Borrowings and bank facilities The outstanding borrowings comprised bank and other loans of RMB2,814.9 million with effective interest rates ranging from Hong Kong Inter Bank Offered Rate ( HIBOR ) + 3.3% to 3.4% for loans in Hong Kong. Interest rates for domestic loans inside Mainland China were ranging from 4.45% to 24%. 2,814,900, % 3.4% 4.45% 24% Future plans for material investments or capital assets The Group had no other future plans for material investments or capital assets as at 31 December China Shuifa Singyes Energy Holdings Limited Annual Report 2020

40 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 Liquidity risk The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial instruments and financial assets (e.g. trade receivables) and projected cash flows from operations. The liquidity of the Group is primarily dependent on its ability to maintain a balance between continuity of funding and flexibility through the settlement from customers and the payment to vendors. Dividend The Directors of the Company recommend payment of a final dividend of HK$0.028 per share (2019: nil). The actual dividend payout ratio in each year will depend on the actual performance of the Group, the general industry and economic environment Human Resources As at 31 December 2020, the Group had about 1,400 employees. Employee salary and other benefit expenses dropped to RMB163.5 million in the year 2020 compared with RMB174.1 million in the year It was generally because of the drop in number of employees, average salary and bonus. The Group s remuneration policies are formulated on the performance of individual employees, which will be reviewed regularly every year. Apart from provident fund scheme (according to the provisions of Mandatory Provident Fund Schemes for Hong Kong employees) or the state-managed retirement pension scheme (for Mainland China employees) and medical insurance, discretionary bonus are also awarded to employees according to the assessment of individual performance. 1, ,500, ,100,000 39

41 DIRECTORS AND SENIOR MANAGEMENT 董事及高級管理層 The table below sets forth information regarding our Directors: Name Age Position Zheng Qingtao 46 Chairman and Executive Director Liu Hongwei 57 Vice-Chairman and executive Director Chen Fushan 48 Executive Director Wang Dongwei 38 Executive Director Wang Suhui 44 Non-executive Director Zhang Jianyuan 39 Non-executive Director Wang Ching 66 Independent non-executive Director Yick Wing Fat, Simon 63 Independent non-executive Director Tan Hongwei 61 Independent non-executive Director EXECUTIVE DIRECTORS Mr. Zheng Qingtao, aged 46, has been appointed as the Chairman and an executive Director of our Company on 28 November He has been the assistant to general manager of Shuifa Group Co., Ltd. () and general secretary of party branch* ( ), chairman and general manager of Shuifa Energy Group Limited ( ) since March From February 2014 to February 2017 and from November 2012 to February 2014, Mr. Zheng served as the general manager and chairman of Shandong Shuifa Tianyuan Water Group Co., Ltd. ( ), and Liangshan County Water Development Co., Ltd.* ( ) and Shandong Shengdu Water Development Co., Ltd.* (), respectively. He worked at Shandong Water Conservancy Engineering Company, First Engineering Company* ( ) as general manager and secretary of party sub-branch ( ) from January 2007 to October 2012, and Shandong Water Conservancy Engineering Company, Second Engineering Company* ( ) as deputy general manager from September 2001 to December During July 1995 to September 2001, Mr. Zheng has taken the positions of engineering technician, party secretary (), secretary of youth league () and party secretary () at Shandong Province (No. 2) Water Conservancy Bureau* ( ). Mr. Zheng obtained his bachelor s degree in political thoughts education ( ) at Qufu Normal University* ( ) in the PRC in 2003 and has approximately 20 years of experience in corporate senior management and approximately 10 years of experience in the energy industry China Shuifa Singyes Energy Holdings Limited Annual Report 2020

42 DIRECTORS AND SENIOR MANAGEMENT 董事及高級管理層 Mr. Liu Hongwei, aged 57, is the Vice-chairman and an executive Director of our Company. He joined our Group since August He is responsible for the formulation and execution of our Group s overall business strategies and policies as well as the overall management of our Group. Mr. Liu has more than 12 years experience in the glass manufacturing sector and more than 16 years experience in the curtain wall engineering sector. After obtaining a bachelor s degree in engineering in July 1986 from Wuhan Industrial University, now known as Wuhan University of Technology, majoring in inorganic materials engineering, Mr. Liu worked at a state-owned glass manufacturing enterprise, Shaanxi Glass Factory, as a technician until From 1989 to 1991, Mr. Liu was the director of production department at another glass manufacturing enterprise, Zhuhai Glass Factory. From 1991 to 1995, Mr. Liu Hongwei was the manager of the operation department of Zhuhai Singyes Safety Glass. In 1995, Zhuhai Singyes Safety Glass jointly established Zhuhai Singyes Green Building Technology Co., Ltd. ( Zhuhai Singyes, formerly known as Zhuhai Singyes Curtain Wall Engineering Co., Ltd) with Zhuhai City Township Enterprise. Since November 2003, Mr. Liu has been an executive Director of our Company. From August 1995 to October 2007, Mr. Liu was appointed as Zhuhai Singyes s general manager, taking charge of general supervising and controlling on technologies. In December 2000, Mr. Liu was certified as a Level 1 Project Manager by the Guangdong Province Construction Bureau. In January 2001, Mr. Liu was certified as a Senior Engineer in respect of construction materials by the Guangdong Province Personnel Bureau In 2003, Mr. Liu became an adjunct professor of Wuhan University of Technology. In August 2004, Mr. Liu was appointed as one of the experts to the Standardisation Technical Committee of the PRC Ministry of Construction for Curtain Walls, Doors and Windows. Mr. Liu is currently a member of the Standing Committee of the Zhuhai Municipal People s Congress of the PRC. Mr. Liu is also a director of Strong Eagle Holdings Ltd. which holds 202,038,750 shares of the Company as at the date of this report (representing approximately 8.02% of the issued share capital of the Company which would fall to be disclosed to the listed issuer under the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance. Strong Eagle Holdings Ltd. XV ,038, % 41

43 DIRECTORS AND SENIOR MANAGEMENT 董事及高級管理層 Mr. Chen Fushan, aged 48, has been appointed as an executive Director of our Company on 28 November He has been a deputy general manager of Shuifa Energy Group Limited ( ) since During August 2014 to July 2018, Mr. Chen took the positions of marketing director, member of party committee () and assistant to director of the Heze branch () and director of the Yucheng branch ( ) of Shanghai Pudong Development Bank. From June 2014 to July 2014, he served as the general manager of risk management at the Heze branch () of Laishang Bank (). Mr. Chen was the director of the Yucheng branch () and operational director of the Heze branch () from May 2011 to June 2014 and from November 2010 to May 2011, respectively, both at Laishang Bank (). He worked at China Construction Bank, as director of the Dan County branch () from January 2007 to October 2010 and as deputy director of the Yucheng branch () from February 2006 to December During August 1994 to January 2006, Mr. Chen served as an international business settlement officer, savings officer, officer and deputy manager of the credit department and customer service executive of the Heze branch () of China Construction Bank. Mr. Chen graduated from Shandong Economics College* ( ) (currently known as Shandong University of Finance and Economics) with a major in international finance in the PRC in 2001 and has approximately 25 years of experience in audit, financial management, finance and initial public offerings etc China Shuifa Singyes Energy Holdings Limited Annual Report 2020

44 DIRECTORS AND SENIOR MANAGEMENT 董事及高級管理層 Mr. Wang Dongwei, aged 38, has been appointed as an executive Director of our Company on 28 November He has been a deputy general manager of Shuifa Energy Group Limited ( ) since June From May 2018 to June 2018, Mr. Wang was the assistant to general manager at Shandong ENN Energy Development Co., Ltd.* ( ), and from November 2014 to April 2018, he was a standing deputy general manager of Jinan ENN Combustion Gas Co., Ltd.* ( ). He served as the chief accountant of Qingdao ENN Jiaocheng Combustion Gas Co., Ltd.* () from March 2011 to October Mr. Wang worked at Laiyang ENN Combustion Gas Co., Ltd.* ( ) from March 2008 to February 2011 and Qingdao ENN Jiaonan Combustion Gas Co., Ltd.* ( ) from April 2006 to February 2008, as an executive of the finance department in both companies. From August 2004 to March 2006, Mr. Wang took the position of a supervising accountant of the finance department of Chucheng ENN Gas Combustion Co., Ltd* ( ), and from July 2001 to July 2004, he was an accountant of Zibo Huaqing Fire Resistant Materials Company Limited* (). Mr. Wang obtained his master s degree in business administration at Zhongnan University of Economics and Law* () in the PRC in 2012 and his bachelor s degree in accounting at Shandong Economics College* ( ) (currently known as Shandong University of Finance and Economics) in the PRC in 2003 and has approximately 15 years of senior management experience in the energy field NON-EXECUTIVE DIRECTORS Ms. Wang Suhui, aged 44, has been appointed as a non-executive Director of our Company on 28 November She has been a deputy general manager of the energy business department of Shuifa Group Co., Ltd. ( ) since March From 2016 to 2018, she was a business manager of the asset operations division of Shuifa Group Co., Ltd. ( ). During 2004 to 2011, Ms. Wang has taken the positions of auditor, senior manager and deputy director of the management consultancy department of Xin Lian Yi Certified Public Accountants Co., Ltd* ( ). Ms. Wang obtained her master s degree at the Shandong University of Science and Technology in the PRC in 2004 and is a member of the Chinese Institute of Certified Public Accountants

45 DIRECTORS AND SENIOR MANAGEMENT 董事及高級管理層 Mr. Zhang Jianyuan, aged 39, has been appointed as a non-executive Director of our Company on 28 November He has been a manager of the investment department at Shuifa Energy Group Limited ( ) since April 2017 and is the chairman of the board of Shandong Shuifa Combustion Gas Co., Limited* ( ). From June 2016 to April 2017, he was the financial director of Shandong Yinfeng Construction Engineering Technology Co., Limited* ( ). During July 2012 to June 2016, Mr. Zhang served as a director of the financial management department, vice financial director and executive of the financial management center of Linuo Power Group Co., Ltd.* (). He took the position of financial manager at the Republic of Equatorial Guinea branch of Beijing Shengdasen International Construction Contract Co., Limited* ( ) from January 2010 to June During July 2003 to December 2009, Mr. Zhang served as an accountant and chief accountant of subsidiary at Shandong Province Construction (Group) Co., Limited* ( ). Mr. Zhang graduated from the Shandong Finance College* ( ) (currently known as Shandong University of Finance and Economics) majoring in finance in the PRC in 2003 and has approximately 16 years of experience in photovoltaics new energy, investment, mergers and acquisitions, financial management and onshore and offshore projects China Shuifa Singyes Energy Holdings Limited Annual Report 2020

46 DIRECTORS AND SENIOR MANAGEMENT 董事及高級管理層 INDEPENDENT NON-EXECUTIVE DIRECTORS Wang Ching, aged 66, was appointed as an independent non-executive director of our Company in December Dr. Wang has near 20 years managerial experience in investment banking, securities, treasury and asset management in the United States, Hong Kong, Taiwan and the PRC. He was the president of Investment and Proprietary Trading Group for Jih Sun Financial Holding Co. Ltd. in Taiwan, the managing director of JS Cresvale Securities International Limited, the managing director of SinoPac Securities Asia Ltd. in Hong Kong, SEVP of SinoPac Securities Co. Ltd. in Taiwan, the director of Investment Banking Department at Standard Chartered Bank Hong Kong and the associate director of Bear Stearns & Co. Inc., New York and Hong Kong. Dr. Wang currently is the managing director of Shanghai International Asset Management (HK) Co. Ltd., a licensed corporation registered with Honk Kong Securities and Futures Commission. He is also the executive director of Shanghai International Shanghai Growth Investment Limited, an investment fund company listed on the Stock Exchange (stock code: 770). Dr. Wang obtained his master degree in business administration from the University of Houston and Ph.D. in finance from Columbia University in the city of New York. 66 Bear Stearns & Co. Inc. 770 Yick Wing Fat, Simon, aged 63, is our independent non-executive director and chairman of the audit committee. Mr. Yick holds a Bachelor s degree in Business Administration from the Chinese University of Hong Kong, majoring in Accounting. He is a fellow of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants in England. Mr. Yick has over 30 years of experience in audit, direct investment, investment banking and corporate advisory services Mr. Yick also serves as an independent non-executive director and chairman of the audit committee of Shenzhen Neptunus Interlong Bio-technique Co., Ltd. and Shanghai International Shanghai Growth Investment Limited (both are listed on the Stock Exchange). Mr. Yick is an independent non-executive director and chairman of audit committee and remuneration committee, member of nomination committee of Modern Media Holdings Limited (listed on Stock Exchange, Stock Code: 72)

47 DIRECTORS AND SENIOR MANAGEMENT 董事及高級管理層 Tan Hongwei, aged 61, is our non-executive Director and also a member of the Audit Committee and the Nomination Committee and the chairman of the Remuneration Committee. He is a professor and a doctoral supervisor at the School of Mechanical and Energy Engineering of Tongji University, a doctoral supervisor at the School of Architecture and Urban Planning of Tongji University and the interdisciplinary double-engaged responsible professor at the United Nations Environment Programme- School of Environmental Sustainability of Tongji University. He is also the key researcher of Climate Change Key Laboratory, the core member of the first class academic peak team (building technology) of Tongji University, the deputy director of the Tongji University Green Building and New Energy Research Center, and the director of the Tongji International Green Industry Innovation Center. Dr. Tan graduated from the Department of Architecture of Tokyo University with a doctoral degree in Dr. Tan has over 18 years of experience in the teaching and research in respect of energy-saving building technologies, application technology of renewable energy in buildings, building energy efficiency supervision platform technology, urban low-carbon energy planning technology, urban construction environment technology and other fields SENIOR MANAGEMENT Zhao Feng, aged 55, is the deputy general manager of Zhuhai Singyes since August He is also a director of Zhuhai Singyes. He joined our Group as a sales and marketing manager in December He has approximately 12 years of experience in the construction sector and approximately 11 years experience in the curtain wall engineering sector. Prior to joining our Group, Mr. Zhao worked as an engineer of Hubei Province Shashi Construction Materials Scientific Research Institute from 1987 to Mr. Zhao was certified as a Senior Engineer in respect of construction materials by the Guangdong Province Personnel Bureau in December Mr. Zhao obtained a bachelor s degree in Engineering from Wuhan Industrial University, now known as Wuhan University of Technology, majoring in materials science in July Mr. Zhao became the general manager of Zhuhai Singyes Renewable Energy Co., Ltd, and responsible for managing its daily operation China Shuifa Singyes Energy Holdings Limited Annual Report 2020

48 DIRECTORS AND SENIOR MANAGEMENT 董事及高級管理層 Zhang Chao, aged 48, is the operating general manager of Zhuhai Singyes. Mr. Zhang joined our Group in December 2002 as the manager of the business department of Zhuhai Singyes. He has approximately 12 years of experience in the construction sector and approximately 11 years experience in the curtain wall engineering sector. Mr. Zhang graduated from Qiqihaer Railway Transportation Employee University majoring in industry and civil construction in July Prior to joining our Group, Mr. Zhang worked as a construction budgeteer at Heilongjiang Province Hei He City Railway (Group) Company from 1995 to In January 2006, Mr. Zhang was certified as a constructor by the Guangdong Province Personnel Bureau. Mr. Zhang was also certified as a National Construction Appraiser by the Construction Department in 2003 and construction engineer by Zhuhai Personnel Bureau in In December 2007, Mr. Zhong was registered as a constructor by the PRC Ministry of Construction Luo Duo, aged 42, is the chief engineer of Zhuhai Singyes. She joined our Group as a designer in July She has approximately 12 years of experience in the curtain wall engineering sector. Ms. Luo worked as the vice-director of design institute of Zhuhai Singyes from November 2004 to December 2006 and the director of design institute from January 2007 to January In February 2008 she was appointed as the chief engineer of Zhuhai Singyes. Ms. Luo was certified as a Class 2 Registered Structural Engineer by the PRC Ministry of Construction in January Ms. Luo was certified as a Plan-Design Engineer by the Zhuhai Personnel Bureau in February Ms. Luo obtained a bachelor s degree in Construction Engineering from Qingdao Construction Engineery College in July Liang Bingqiang, aged 43, is the deputy general manager of Zhuhai Singyes and responsible for the development of the overseas market. He has more than 13 years of experience in the curtain wall engineering sector. He joined our Group as a designer in April Mr. Liang worked as the director of design department of Zhuhai Singyes Beijing representative office from July 2004 to July 2006 and he worked for Zhongshan Shengxing Curtain Wall Company Ltd from August 2000 to March In August 2006, he was appointed as the manager of the photo-electricity business department of Zhuhai Singyes. In April 2008, he was appointed as the deputy general manager of Singyes Renewable Energy. Mr. Liang was certified as an Assistant Engineer by the Zhongshan Personnel Bureau in October Mr. Liang was certified as a Construction Design Engineer by the Zhuhai Personnel Bureau in January Mr. Liang obtained a bachelor s degree in construction engineering from Tianjin Institute of Urban Construction in July

49 DIRECTORS AND SENIOR MANAGEMENT 董事及高級管理層 Mr. Guo Yangyang, aged 37, was appointed as the co-chief financial officer of the Group in October He graduated from the accounting discipline of the China University of Mining and Technology in June 2005, and is an intermediate accountant. Since joining the Group in July 2006, he has worked as a manager in the Company s financial planning department and accounting and auditing department. He was appointed as the chief accountant and deputy financial controller of the Company in January He has over 10 years of financial and accounting experience Mr. Li Dezhu, aged 42, was appointed as the co-chief financial officer of the Group in January He graduated from China Agricultural University with a bachelor s degree in accounting in 2010 and obtained a master s degree in business administration from Southwest University in Mr. Li has served as the chief financial officer in certain large institutions in Mainland China, with nearly 20 years of experience in financing accounting and corporate finance etc.. Mr. Li is a senior accountant, senior economist, national highend accounting talent and a member of Certified Management Accountant (Certified Management Accountant) YU Chon Man, aged 43, he has been the qualified accountant and company secretary of our Company since He is responsible for financial reporting and general investor affairs of our Company. He has approximately 20 years of experience in financial accounting. Mr. Yu is a fellow members of both of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants. Prior to joining us, he had approximately seven years of working experience with international audit firms and was mainly responsible for financial auditing, internal control reporting and compliance advisory. He graduated from the Hong Kong Polytechnic University with a bachelor s degree (Hons) in accountancy in Mr. Yu also serves as an independent non-executive director and chairman of audit committee of Luxxu Group Limited (stock code: 1327) To the best knowledge of the Company, there are no financial, business or other material/relevant relationships among members of the Board and the senior management officers. 48 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

50 DIRECTORS AND SENIOR MANAGEMENT 董事及高級管理層 COMPANY SECRETARY Mr. YU Chon Man, is our company secretary. For further details regarding Mr. Yu, please see the paragraph headed Senior Management above. 49

51 report of the directors 董事會報告書 The directors (the Directors ) of China Shuifa Singyes Energy Holdings Limited (the Company ) have pleasure to present the annual report together with the audited consolidated financial statements of the Company and its subsidiaries (collectively the Group ) for the year ended 31 December PRINCIPAL PLACE OF BUSINESS The Company was incorporated in Bermuda on 24 October 2003 as an exempted company with limited liability. The registered office of the Company is located at 4th Floor, North Cedar House, 41 Cedar Avenue, Hamilton HM 12, Bermuda. The Company has established a principal place of business in Hong Kong at Unit 3108, 31st Floor, China Merchants Tower, Shun Tak Centre, Connaught Road Central, Hong Kong, and was registered with the Registrar of Companies in Hong Kong as an oversea company under Part XI of the Companies Ordinance on 29 August Mr. Yu Chon Man has been appointed as the authorised representative of the Company for the acceptance of service of process and notices on behalf of the Company in Hong Kong. 4th Floor, North Cedar House, 41 Cedar Avenue, Hamilton HM 12, Bermuda XI As the Company is incorporated in the Bermuda, the operation of the Company is subject to the Companies Law and to its constitution comprising a memorandum of association and the bye-laws. DIRECTORS AND SENIOR MANAGEMENT S BIOGRAPHIES Biographical details of the Directors and the senior management of the Group are set out on pages 40 to 49 of this report. Save as disclosed in this report, there are no other changes to the Directors information as required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules B(1) 50 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

52 report of the directors 董事會報告書 PRINCIPAL ACTIVITIES The Company acts as an investment holding company. The Group is a professional renewable energy system integrator and building contractor, it is principally engaged in the design, fabrication and installation of conventional curtain walls and solar projects. Solar projects included building integrated photovoltaic ( BIPV ) system, roof top solar system and ground mounted solar system (collectively Solar EPC ). The BIPV system involves (i) the integration of photovoltaic technology into the architectural design of buildings and structures and (ii) conversion of solar energy into electricity for use. In addition, the Group also engages in the production and sale of renewable energy goods, including smart grid system, and solar thermal system. In 2020, the Group further diversified its business into Wind Power EPC, our group completed approximately 189MW Wind Power EPC projects during the year. And as announced by the Company on 11 September 2020, our Group acquired Zibo Qilu Chemical Industry Zone Thermal Co., Ltd from the controlling shareholder of the Company, after this acquisition, the Group entered into pipeline thermal supply business. EPC (i) (ii) EPC189 EPC The Group s principal operating market is in Mainland China. Details of the principal activities of the principal subsidiaries are set out in note 1 to the financial statements. There were no significant changes in the nature of the Group s principal activities during the year. 1 MAJOR CUSTOMERS AND SUPPLIERS The Group s top five customers are the main contractors of various public or commercial BIPV or curtain wall or solar farmer wind power investors. In aggregate, the largest and top five customers contributed approximately 11.4% and 37.0% of the Group s total revenue in 2020 respectively. 11.4% 37.0% The Group currently outsources part of the construction works for various sub-contractors in the PRC, as well as sourcing PV penal, aluminium and glass from suppliers inside the PRC. In 2020, the top five suppliers include material suppliers and sub-contractors, sub-contracting fees paid or material purchase to its largest and five largest suppliers were about 8.3% and 23.7% of the Group s total cost of sale in 2020 respectively. 8.3% 23.7% 51

53 report of the directors 董事會報告書 At no time during the year have the Directors, their associates or any shareholder of the Company (which to the knowledge of the Directors owns more than 5% of the Company s share capital) had any interest in these major suppliers and/or customers. 5% SUBSIDIARIES Particulars of the Company s principal subsidiaries which principally affect the results as at 31 December 2020 are set out in note 1 to the financial statements. 1 FINANCIAL STATEMENTS AND DIVIDENDS The profits of the Group for the year ended 31 December 2020 and the Company s and the Group s financial positions as at the same date are set out in the financial statements on pages 89 to 92. The Directors recommend the payment of a final dividend for the year ended 31 December 2020 of HK$0.028 per share (2019: Nil) There was no arrangement under which a shareholder of the Company has waived or agreed to waive any dividends. RESERVES Details of movements in the reserve of the Group and the Company during the year are set out in the consolidated statement of changes in equity on pages 93 to 94 of the annual report and in note 49 to the financial statements respectively China Shuifa Singyes Energy Holdings Limited Annual Report 2020

54 report of the directors 董事會報告書 DISTRIBUTABLE RESERVES Final dividend amounting to approximately HK$70,590,000 was declared by reduction of capital reserve, as at 31 December 2020, the Company s reserve available for distribution calculated in accordance with the provisions of the applicable law of Bermuda, amount to approximately RMB11,997,000. A resolution will be submitted in the annual general meeting of the Company to transfer RMB70,000,000 from the share premium account to the contributed surplus. 70,590,000 11,997,000 70,000,000 INTEREST BEARING BANK LOANS Particulars of interest bearing bank loans of the Group as at 31 December 2020 are set out in note 30 to the financial statements. 30 PROPERTY, PLANT AND EQUIPMENT Details of acquisitions and other movements in property, plant and equipment are set out in note 13 to the financial statements. 13 SHARE CAPITAL Details of the movements in share capital of the Company during the year are set out in note 34 to the financial statements. The Company and its subsidiaries did not purchase, sell or redeem any listed securities of the Company. 34 TAX RELIEF The Company is not aware of any relief from taxation available to the shareholders of the Company by reason of their holding of the shares of the Company. FIVE-YEAR FINANCIAL SUMMARY A summary of the results and of the assets and liabilities of the Group for the last 5 financial years is set out on page 4 of the annual report. 4 53

55 report of the directors 董事會報告書 EVENTS AFTER THE END OF THE YEAR ENDED 31 DECEMBER 2020 On 5 January 2021, Zhuhai Singyes Green Construction Technology Co., Ltd.* ( ) (an indirect wholly-owned subsidiary of the Company, the Purchaser ), Zhang Jian ( ) and Zhang Yue ( ) (the Vendors ) and Beijing Guanya Weiye Civil Construction Design Co., Ltd.* () (the Target Company ) have entered into an acquisition agreement, pursuant to which the Purchaser has agreed to acquire and the Vendors have agreed to sell an aggregate of 60% equity interest in the Target Company at the total consideration of RMB19.80 million. 60% 19,800,000 On 11 January 2021, Hunan Singyes Green Energy Co., Ltd.* ( ) (an indirect wholly-owned subsidiary of the Company, the Hunan Purchaser ) has entered into an acquisition agreement with Jiangxi Xinqing Photovoltaic Power Co., Ltd.* () ( Jiangxi Xinqing ), pursuant to which the Hunan Purchaser has agreed to purchase and Jiangxi Xinqing has agreed to sell the entirety of the equity interest in Dunhuang Anjie New Energy Co., Ltd.* ( ) (which owns a photovoltaic project located at Dunhuang ( ), the PRC with an installed capacity of 20MW) at the acquisition sum of RMB9,600, ,600,000 DIRECTORS The Directors during the financial year and up to the date of this report were: Executive Directors Mr. Zheng Qingtao (Chairman) Mr. Liu Hongwei (Vice chairman) Mr. Wang Dongwei Mr. Chen Fushan Non-Executive Directors Ms. Wang Suhui Mr. Zhang Jianyuan 54 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

56 report of the directors 董事會報告書 Independent Non-Executive Directors Dr. Wang Ching Mr. Yick Wing Fat, Simon Dr. Tan Hongwei In accordance with Bye-law 87 of the Bye-laws of the Company, Mr. Liu Hongwei, Dr. Tan Hongwei and Mr. Zhang Jianyuan are required to retire by rotation at the forthcoming annual general meeting. Each of the above Directors will offer themselves for re-election at the forthcoming annual general meeting. 87 REMUNERATION POLICY The remuneration policy for the Directors and senior management members of the Group was based on their individual performance as well as market trends and practices. Details of the remuneration of the Directors are set out in note 8 to the consolidated financial statements. 8 The emoluments paid to the senior management (excluding the Directors) during the year ended 31 December 2020 were within the following bands: number of Senior Management Bands RMB100,001 to RMB1,000, ,001 1,000,000 4 RMB1,000,001 to RMB2,000,000 1,000,001 2,000,000 1 Total: 5 DIRECTORS SERVICE CONTRACTS Each of Mr. Zheng Qingtao, Mr. Wang Dongwei and Mr. Chen Fushan, the executive Directors, has signed a letter of appointment with the Company for a term of three years commencing from 28 November 2019 unless terminated in accordance with the terms therein. Under the terms of the letter of appointment, the appointment may be terminated by not less than three months prior written notice or otherwise served by either party on the other. 55

57 report of the directors 董事會報告書 Mr. Liu Hongwei, an executive Director, has entered into a service contract with the Company for a term of three years commencing from 13 January 2012, and will be automatically renewed for another three years upon expiry. Each of the non-executive Directors, Ms. Wang Suhui and Mr. Zhang Jianyuan, has signed a letter of appointment with the Company for a term of three years commencing from 28 November Under the terms of the letter of appointment, the appointment may be terminated by not less than one month s prior written notice or otherwise served by either party on the other. Mr. Yick Wing Fat, Simon and Dr. Wang Ching, the independent nonexecutive Directors, were appointed for a term of three years from 19 December Dr. Tan Hongwei, the independent non-executive director, was appointed for a term of three years from 18 April Their service contracts will be automatically renewed for another three years upon expiry. All Directors are subject to retirement by rotation at least once every three years and in accordance with the Bye-laws of the Company. None of the Directors has a service agreement with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation. The remuneration of directors are determined by the remuneration committee of the Company and by reference to the remuneration policies of other companies in similar capacity and the experience of the directors. SHARE OPTION SCHEME On 19 December 2008, the Company adopted a share option scheme (the Share Option Scheme ). Under the Share Option Scheme, the board of Directors (the Board ) may at its discretion, offer eligible persons (being any Director or employee (whether full-time or part-time), consultant or advisors of the Group who in the sole discretion of the Board has contributed or will contribute to the Group) (the Eligible Persons ) who the Board may in its absolute discretion select to subscribe for such number of Shares as the Board may determine at a subscription price determined in accordance with the Share Option Scheme. 56 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

58 report of the directors 董事會報告書 Purpose of the Share Option Scheme The purpose of the Share Option Scheme is to provide incentive or reward to Eligible Persons for their contribution to, and continuing efforts to promote the interests of, the Group and for such other purposes as the Board may approve from time to time. Total number of Shares available under the Share Option Scheme The maximum number of shares which may be issued upon exercise of all options to be granted under the Share Option Scheme is 25,257,931 shares, representing 1.00% of the Company s issued share capital as at the date of this report. Pursuant to the terms of the Share Option Scheme, the exercise price of and/or the number of Shares subject to the outstanding Share Options are required to be adjusted as a result of a rights issue in July In accordance with the terms of the Share Option Scheme and the supplementary guidance issued by the Stock Exchange on 5 September 2005 regarding adjustment of share options under Rule 17.03(13) of the Listing Rules, the exercise price of and the number of Shares subject to the outstanding Share Options granted on 23 July 2009, 10 October 2011 and 22 May 2015 have been adjusted with effect from 20 July 2016: 25,257, % 17.03(13) Before Adjustments After Adjustments number of number of Shares Shares subject to the subject to the outstanding outstanding exercise price Share Options Exercise price Share Options per Share per Share Date of grant HK$ HK$ 10 October ,231, ,231, May ,026, ,026,332 5 April ,000,000 N/A 12,000,000 57

59 report of the directors 董事會報告書 Maximum entitlement of each Eligible Participant The total number of shares issued and which may fall to be issued upon exercise of the options granted under the Share Option Scheme and any other share option scheme(s) of the Company (including exercised, cancelled and outstanding options) to each Eligible Person in any 12-month period up to the date of grant shall not exceed 1.0% of the shares in issue as at the date of grant. Any further grant of options in excess of this 1.0% limit shall be subject to the issue of a circular by the Company and the approval of our Shareholders in general meeting with such Eligible Persons and his associate (as defined in the Listing Rules) abstaining from voting and the number and terms (including the subscription price) of such options being fixed before such general meeting and other requirements prescribed under the Listing Rules from time to time. 1.0% 1.0% Time of exercise of option There is no general requirement that an option must be held for any minimum period before it can be exercised but the Board is empowered to impose at its discretion any such minimum period at the time of grant of any particular option. The Board is currently unable to determine such minimum period. The date of grant of any particular option is the date on which the offer relating to such option is duly accepted by the grantee in accordance with the Share Option Scheme. An option may be exercised according to the terms of the Share Option Scheme and the offer in whole or in part by the grantee (or his personal representatives) before its expiry by giving notice in writing to our Company stating that the option is to be exercised and the number of Shares in respect of which it is exercised provided that the number of Shares shall be equal to the size of a board lot for dealing in Shares on the Stock Exchange or an integral multiple thereof. Such notice must be accompanied by a remittance for the full amount of the subscription price for the Shares in respect of which the notice is given. The period during which an option may be exercised will be determined by the Board at its absolute discretion, save that no option may be exercised more than 10 years from the date of grant. No option may be granted more than 10 years after the date of approval of the Share Option Scheme. Subject to earlier termination by the Company in general meeting, the Share Option Scheme shall be valid and effective for a period of 10 years from the date of adoption of the Share Option Scheme by Shareholders by resolution at a general meeting. 58 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

60 report of the directors 董事會報告書 Price of Shares The subscription price for a share in respect of any particular option granted under the Share Option Scheme (which shall be payable upon exercise of the option) shall be such price as the Board shall determine, save that such price must not be less than the highest of (i) the closing price of the shares as stated in the Stock Exchange s daily quotations sheet on the date of offer to grant option, which must be a business day; (ii) the average of the closing prices of the shares as stated in the Stock Exchange s daily quotations sheet for the five business days immediately preceding the date of offer to grant option (provided that the new issue price shall be used as the closing price for any business day falling within the period before the listing of the shares where our Company has been listed for less than five business days as at the date of offer to grant option); and (iii) the nominal value of a Share. A consideration of RMB1.00 is payable on acceptance of an offer of the grant of an option. (i) (ii) (iii) 1.00 Remaining life of the Share Option Scheme The Company, by resolution in general meeting, or the Board may at any time terminate the operation of the Share Option Scheme and in such event no further option will be offered but in all other respects the provisions of the Share Option Scheme shall remain in full force and effect and options granted prior to such termination shall continue to be valid and exercisable in accordance with the Share Option Scheme. The Company adopted a new share option scheme at its annual general meeting on 4 June No Share Option have been granted under such scheme. There was no exercise of any conversion or subscription rights under any convertible securities, options, warrants or similar rights issued or granted at any time by the Company or any of its subsidiaries during the year ended 31 December

61 report of the directors 董事會報告書 DIRECTORS RIGHTS TO ACQUIRE SHARES OR DEBENTURES None of the Directors or their respective associate (as defined under the Listing Rules) was granted by the Company, or any of its subsidiaries, any rights or options to acquire Shares or debentures during the year ended 31 December PURCHASE, SALE OR REDEMPTION OF THE COMPANY S LISTED SECURITIES The Company repurchased the 2022 Senior Notes with an aggregate nominal value of US$191,644,000 during the year, of which US$90,788,559 in principal amount of the 2022 Senior Notes was repurchased by way of a tender offer through Euroclear Bank SA/NV and/or Clearstream Banking, and approximately US$100,855,000 in principal amount of the 2022 Senior Notes was repurchased on the Singapore Exchange Securities Trading Limited. Particulars of the Company s repurchase of the 2022 Senior Notes have been set out in the Company s announcements dated 8 June 2020, 16 June 2020, 17 June 2020 and 14 December As as 31 December 2020, US$232,165,141 in aggregate principal amount of the 2022 Senior Notes remained outstanding. 191,644,000 90,788,559 Euroclear Bank SA/NV Clearstream Banking 100,855, ,165,141 Saved as disclosed above, the Company and its subsidiaries did not purchase, sell or redeem any listed securities of the Company during the year. 60 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

62 report of the directors 董事會報告書 DETAILS OF PERFORMANCE GUARANTEE UNDER RULE 14.36B As disclosed in the announcement of the Company dated 15 December 2020, pursuant to a capital injection agreement dated 15 December 2020 (the Capital Injection Agreement ) and entered into among Jiangxi Yaxing Construction Co., Ltd.* ( ) (the Target Company ), Yu Nanhui ( ), Li Peng ( ) and Chen Chen ( ) (the Target Shareholders ) and Zhuhai Singyes Green Construction Technology Co., Ltd.* (, an indirect wholly-owned subsidiary of the Company) (the Investor ) in relation to the acquisition of 51% equity interest in the Target Company by way of an injection of capital of RMB39.9 million into the Target Company by the Investor. (the Capital Injection ) ÐÐursuant to the Capital Injection Agreement, the Target Shareholders undertake and guarantee to the Investor that the audited net profit (after deducting non-recurring profit and loss) of the Target Company shall not be less than RMB30.00 million, RMB60.00 million and RMB90.00 million for the financial year ending 31 December 2021, 2022 and 2023, respectively (the Guaranteed Profit(s) ). The Company will closely monitor the abovementioned performance guarantee and disclose whether the Guaranteed Profit for the year ending 31 December 2021 in its 2021 annual report in compliance with Rule 14.36B of the Listing Rules B 39,900,000 51% 30,000,000 60,000,000 90,000, B INTEREST AND SHORT POSITIONS OF THE DIRECTORS AND THE CHIEF EXECUTIVES OF THE COMPANY IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY AND ITS ASSOCIATED CORPORATIONS As at 31 December 2020, so far as the Directors are aware, the Directors and chief executives of the Company and their associates had the following interests and short positions in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of the Securities and Futures Ordinance ( SFO )) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers ( Model Code ) to be notified to the Company and the Stock Exchange: (i) XV 7 8 (ii) 352 (iii) 61

63 report of the directors 董事會報告書 Company/name of associated corporation N number of Approximate % Name Capacity type of interest shares of shareholding Mr. Zheng Qingtao Company Beneficial interest 2 Long 1,600, % 2 Mr. Liu Hongwei Company Interest of a controlled Long 203,802, % corporation 1 1 Beneficial interest 2 Long 1,500, % 2 Sub-total 205,302, % Mr. Chen Fushan Company Beneficial interest 2 Long 1,400, % 2 Mr. Wang Dongwei Company Beneficial interest 2 Long 1,400, % 2 Note: 1. These 203,802,750 Shares are held by Strong Eagle Holdings Ltd. whose share capital is 53% owned by Mr. Liu Hongwei. Mr. Liu Hongwei is deemed to be interested in these Shares by virtue of the SFO ,802,750 Strong Eagle Holdings Ltd. Strong Eagle Holdings Ltd. 53% 2. Such interest represents the shares awards granted to the respective directors under a share award plan as announced by the Company on 29 December As at 31 December 2020, no share under the share award plan has neither been purchased by the Company nor allocated to the respective directors China Shuifa Singyes Energy Holdings Limited Annual Report 2020

64 report of the directors 董事會報告書 INTEREST AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS IN SHARES, UNDERLYING SHARES AND DEBENTURES As at 31 December 2020, so far as the Directors are aware, save as disclosed above, the persons or corporations (not being a Director or a chief executive of the Company) who have interest or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under section 336 of the SFO or have otherwise notified to the Company pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group and the amount of each of such persons interest in such securities, together with any options in respect of such capital, were as follows: 336 XV % Capacity/nature Approximate % Long/short of interest number of shareholding Shareholder position of shares Water Development (HK) Long position Beneficial owner 1,687,008, % Holding Co., Limited Long position Person having a security 180,755, % interest in shares Long position Interest of corporation 1,867,764, % controlled by you Long position Interest of corporation 1,867,764, % controlled by you 63

65 report of the directors 董事會報告書 Capacity/nature Approximate % Long/short of interest number of shareholding Shareholder position of shares Strong Eagle Holdings Ltd. 2 Long position Beneficial owner 203,802, % Beyond Steady Limited Long position Beneficial owner 67,064, % ( Beyond Steady ) 3 3 Long position Person having a security 64,004, % interest in shares Sub total 131,068, % Huarong International Financial Long position Interest in controlled 131,068, % Holdings Limited corporation ( Huarong International ) 3 3 (China Huarong Assets Long position Interest in controlled 131,068, % Management Company corporation Limited*) ( China Huarong ) Water Development (HK) Holding Co., Limited is 100% beneficially owned by and is 100% beneficially owned by % 100% 2. Strong Eagle Holdings Ltd. is owned by Mr. Liu Hongwei, Mr. Sun Jinli, Mr. Xie Wen, Mr. Xiong Shi and Mr. Zhuo Jianming as to 53%, 15%, 13%, 10%, and 9% respectively. 2. Strong Eagle Holdings Ltd. 53% 15% 13% 10% 9% 64 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

66 report of the directors 董事會報告書 3. Huarong International indirectly holds 100% equity interest in Beyond Steady through Linewear Assets Limited. Huarong International is therefore deemed to be interested in 131,068,000 Shares in which Beyond Steady is interested. China Huarong holds 100% equity interest in (Huarong Real Estate Co., Ltd.*) and Huarong Zhiyuan Investment & Management Co., Ltd. which together holds 100% equity interest in China Huarong International Holdings Limited. China Huarong International Holdings Limited holds 100% equity interest in Camellia Pacific Investment Holding Limited which holds 51% equity interest in Huarong International. China Huarong is therefore deemed to be interested in 131,068,000 Shares in which Beyond Steady is interested. According to the annual report of Huarong International for the year ended 31 December 2018, Beyond Steady should have a put option over the shares of the Company owned by it as at 31 December No notice under the SFO has been received by the Company for Beyond Steady, Huarong International and China Huarong s short position as at 31 December 2018 in relation to the put option. 3. Linewear Assets Limited 100% 131,068, % 100% Camellia Pacific Investment Holding Limited 100% Camellia Pacific Investment Holding Limited 51% 131,068, The percentage is calculated on the basis of 2,521,081,780 Shares in issue as at 31 December ,521,081,780 NON-COMPETITION The Directors confirm that they have no interest in any business (apart from the Group s business) which competes or is likely to compete, either directly or indirectly, with the Group s business. The interested Director shall abstain from the meeting where there is actual or potential conflict of interest. 65

67 report of the directors 董事會報告書 CONTRACTS OF SIGNIFICANCE No contract of significance to which the Company, its holding company, or any of its fellow subsidiaries or subsidiaries was a party subsisted at the end of the year or at any time during the year ended 31 December No contract of significance in which a Director is or was materially interested, either directly or indirectly, subsisted at the end of the year or at any time during the year ended 31 December No contract of significance for the provision of services to the Company or any of its subsidiaries by our controlling shareholder or any of its subsidiaries subsisted at the end of the year or at any time during the year ended 31 December CONNECTED TRANSACTIONS The acquisition of 47.5% equity interest in Zibo Qilu Chemical Industry Zone Thermal Co., Ltd.* ( ) (the Qilu Acquisition ) 47.5% On 11 September 2020, Hunan Singyes Green Energy Co., Ltd.* ( ) (the Purchaser ), a wholly-owned subsidiary of the Company, entered into a sale and purchase agreement (the Sale and Purchase Agreement ) with Shandong Shuifa Clean Energy Technology Co., Ltd.* ( ) (the Vendor ) and Zibo Qilu Chemical Industry Zone Thermal Co., Ltd.* ( ) (the Target Company ), pursuant to which, subject to fulfilment of certain conditions precedent, the Purchaser has agreed to purchase and the Vendor has agreed to sell 47.5% equity interest in the Target Company for an aggregate consideration of RMB190,000,000 (the Acquisition ). Upon completion of the Acquisition, the Target Company will be controlled by the Purchaser as to 51% of its voting rights and become a non wholly-owned subsidiary of the Company. 47.5% 190,000,000 51% 66 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

68 report of the directors 董事會報告書 The Vendor was a wholly owned subsidiary of Shuifa Energy Group Limited* ( ), a controlling shareholder of the Company indirectly holding 1,687,008,585 Shares, representing approximately 66.92% of the issued share capital in the Company. Therefore, the transactions contemplated under the Sale and Purchase Agreement constituted a connected transaction of the Company under Chapter 14A of the Listing Rules. 1,687,008, %14A The Acquisition and transactions contemplated under the Sale and Purchase Agreement was approved by the independent shareholders of the Company in the special general meeting of the Company held on 30 September For details of the Acquisition, please refer to the Company s announcements dated 11 September 2020 and 30 September 2020, and the circular dated 14 September Proposed disposal of certain solar assets of the Company (the Disposal of Solar Assets ) As disclosed in the announcement of the Company dated 4 September 2016, the Company entered into a sale and purchase agreement in respect of the disposal of collectively (i) 81% of the equity interest of (Xinjiang Singyes Renewable Energy Company Limited*) (the Xinjiang Operator ), and (ii) 81% of the equity interest of (Wuwei Dongrun Solar Energy Development Company Limited*) (the Wuwei Operator ) to (Excel Deal Investment Limited) (the Purchaser ). (i) 81% (ii) 81% 67

69 report of the directors 董事會報告書 As disclosed in the announcement of the Company dated 17 January 2020, the Company has been informed that (Lukong Water Group Co., Ltd.*) ( Lukong Water ), an additional investor, would participate in the transaction and become the controlling shareholder of the China Solar Energy Holdings Limited (in provisional liquidation) (the Purchaser s Holding Company ) upon completion of a share subscription after a restructuring constituting one of the conditions precedent of the transaction. The parties have amended the sale and purchase agreement by entering into an amended and restated sale and purchase agreement (the Amended and Restated Sale and Purchase Agreement ). The total consideration is a sum not exceeding HK$834,848,000 (or equivalent to RMB745,400,000), subject to adjustments. 834,848, ,400,000 On 8 May 2020, the parties have entered into a supplemental agreement to the Amended and Restated Sale and Purchase Agreement so as to implement amongst others, changes to changes to conditions precedent and adjustments to the after completion payment etc.. (the 2 nd Amended and Restated SPA ) On 12 March 2021, the parties have entered into a second supplemental agreement to the Amended and Restated Sale and Purchase Agreement to implement certain changes to the deal structure, including the return of deposit of HK$40,000,000 to a designated bank account of Happy Fountain Limited in the event the Purchaser s Holding Company fails to obtain a no further comment confirmation from the Stock Exchange in respect of its reverse takeover circular on or before 31 December 2021 and the extension of the long stop date. 40,000,000 Happy Fountain Limited Water Development (HK) Holding Co., Limited is a controlling Shareholder and it is an indirect wholly-owned subsidiary of Shuifa Group Co., Ltd.. As Lukong Water is an indirect wholly-owned subsidiary of Shuifa Group Co., Ltd., it is a connected person of the Company. Therefore, the transaction constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules (it is also a major transaction under Chapter 14 of the Company at the same time). 14A China Shuifa Singyes Energy Holdings Limited Annual Report 2020

70 report of the directors 董事會報告書 As additional time is required to prepare and finalise, among other things, the circular and necessary information to be included in the circular, the circular is expected to be despatched to the Shareholders in or around 30 June For details, please refer to the Company s announcements dated 4 September 2016, 17 January 2020, 10 May 2020 and 12 March Save as disclosed, no transactions as set out in the Related party transactions in note 45 to the financial statements constitute any connected transaction or continuing connected transaction which are subject to the reporting, announcement and/ or independent shareholders approval under Chapter 14A of the Listing Rules A SIGNIFICANT INVESTMENTS, MATERIAL ACQUISITIONS AND DISPOSALS For the year ended 31 December 2020, save as the Disposal of Solar Assets and the Qilu Acquisition we did not have material acquisitions or disposals of subsidiaries, associates and joint ventures. PRE-EMPTIVE RIGHTS There are no provisions for pre-emptive rights under the Company s Byelaws, or the law of Bermuda, being the jurisdiction in which the Company is incorporated. MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Company has adopted the Model Code for Securities Transactions by Directors of Listing Issuer as set out in Appendix 10 to the Listing Rules as the code of conduct regarding securities transactions by the Directors. Upon the enquiry made by the Company all Directors confirmed that they had complied with the Model Code for the year ended 31 December

71 report of the directors 董事會報告書 CORPORATE GOVERNANCE Principal corporate governance practices adopted by the Company are set out in the Corporate Governance Report contained in this annual report. AUDIT COMMITTEE The Company established an audit committee on 19 December 2008 with terms of references adopted on 19 December 2008 in compliance with the Code set out in Appendix 14 of the Listing Rules. The members of the audit committee are the three independent non-executive Directors, Mr. Yick Wing Fat, Simon, an independent non-executive Director, is the Chairman of the audit committee. The audit committee is to serve as a focal point for communication between other directors, the external auditor and the internal auditor (where an internal audit function exists) of the Company as regards their duties relating to financial and other reporting, internal controls, external and internal audits and such other financial and accounting matters as the Board determines from time to time. The audit committee is to assist the Board in providing an independent review of the effectiveness of the financial reporting process, internal control and risk management system of the Group, overseeing the audit process and performing other duties and responsibilities as may be assigned by the Board from time to time. The audit committee has reviewed the Group s consolidated financial statements for the year ended 31 December 2020, including the accounting principles and practices adopted by the Group. For further details of the audit committee and other committees of the Board, please refer to the section headed Corporate Governance Report from pages 8 to KEY FINANCIAL AND BUSINESS PERFORMANCE INDICATORS The key financial and business performance indicators comprise profitability trend and gearing ratio. Details of profitability analysis are shown in Management Discussion and Analysis section of this annual report. Details of gearing ratio analysis are shown in Note 47 (Financial Risk Management Objectives and Policies) to the Financial Statements in this annual report China Shuifa Singyes Energy Holdings Limited Annual Report 2020

72 report of the directors 董事會報告書 ENVIRONMENTAL, SOCIAL AND GOVERNANCE The Group is committed to contributing to the sustainability of the environment and maintaining a high standard of corporate social governance essential for creating a framework for motivating staff, and contributes to the community in which we conduct our businesses and creating a sustainable return to the Group. ENVIRONMENTAL PROTECTION The Group has implemented energy saving practices in its offices and premises where applicable. The Group also plans to upgrade its airconditioning and electricity systems to achieve the energy saving and provision of clear air to workplace where possible. RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS The Group also understands that it is important to maintain good relationship with its suppliers and customers to fulfil its long-term goals and development. To maintain its brand competitiveness and market status, the Group aims at delivering consistently high standards of quality in the service to its customers. During the year ended 31 December 2020, there was no material and significant dispute between the Group and its suppliers and/or customers. 71

73 report of the directors 董事會報告書 DISCLOSURES PURSUANT TO RULE OF THE LISTING RULES USD414,931,692 2% cash-pay and 4% pay-in-kind senior note due ,931,692 2% 4% On 19 December 2019, the Company issued USD414,931,692 2% cashpay and 4% pay-in-kind senior note due 2022 (the 2022 Senior Notes ). The 2022 Senior Notes are only offered outside the United States in compliance with Regulation S under the United States Securities Act of 1933, as amended ( Regulation S ). The 2022 Senior Notes initially were offered to eligible Scheme Creditors (as defined in the Announcement) and the Holding Period Trustee The 2022 Senior Notes have been listed on the Singapore Exchange Securities Trading Limited (the SGX ). 414,931,692 2% 4% S S The major terms and conditions of the 2022 Senior Notes are as follows: (i) Interest payment election (i) The Company may, at its discretion at any time, elect to pay interest on the principal amount of the 2022 Senior Notes on each interest (i) payment date (i) in cash (a Cash Coupon Election ) at the rate of 2.00% per annum prior to a Cash Coupon Election and thereafter 2.00% 6.00% at 6.00% per annum (the Cash Interest ) and (ii) by increasing the (ii) principal amount of the 2022 Senior Notes or by issuing any 2.00% cash-pay and 4.00% pay-in-kind guaranteed senior notes due % (the Additional Notes ) in a principal amount equal to 4.00% of the 4.00% aggregate principal amount of the note then outstanding (the PIK Interest ). The Cash Coupon Election shall be irrevocable. 4.00% 72 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

74 report of the directors 董事會報告書 (ii) Mandatory redemption of the Company (ii) On June 19, 2022 (the Initial Mandatory Redemption Date ), the Company shall redeem 40% of the 2022 Senior Notes outstanding on the Initial Mandatory Redemption Date (including, for the avoidance of doubt, any Additional Notes that have been issued as PIK Interest and added to the principal amount of the Notes) at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest thereon (at the rate of 6.00% per annum, corresponding to the aggregate of the interest ordinarily payable in cash and the interest ordinarily payable in kind) to, but excluding, the Initial Mandatory Redemption Date. 40% 6.00% (iii) Redemption at the option of the Company (iii) Upon not less than 30 nor more than 60 days notice to the Holders, the Trustee and the Paying Agent (each such date, an Optional Redemption Date ), at any time, the Company may at its option redeem the notes outstanding on the applicable Optional Redemption Date (including, for the avoidance of doubt, any Additional Notes that have been issued as PIK Interest and added to the principal amount of the notes) in whole or in part at a redemption price equal to 100% of the aggregate principal amount thereof together with accrued and unpaid interest thereon (at the rate of 6.00% per annum, corresponding to the aggregate of the interest ordinarily payable in cash and the interest ordinarily payable in kind) to, but excluding, the applicable Optional Redemption Date % The Company repurchased the 2022 Senior Notes with an aggregate nominal value of US$191,644,000 during the year, of which US$90,788,559 in principal amount of the 2022 Senior Notes was repurchased by way of a tender offer through Euroclear Bank SA/NV and/or Clearstream Banking, and approximately US$100,855,000 in principal amount of the 2022 Senior Notes was repurchased on the Singapore Exchange Securities Trading Limited. Particulars of the Company s repurchase of the 2022 Senior Notes have been set out in the Company s announcements dated 8 June 2020, 16 June 2020, 17 June 2020 and 14 December As as 31 December 2020, US$232,165,141 in aggregate principal amount of the 2022 Senior Notes remained outstanding. 191,644,000 90,788,559 Euroclear Bank SA/NV Clearstream Banking 100,855, ,165,141 73

75 report of the directors 董事會報告書 COMPLIANCE WITH LAWS AND REGULATIONS The Group has compliance and risk management policies and procedures, and members of the senior management are delegated with the continuing responsibility to monitor adherence and compliance with all significant legal and regulatory requirements. These policies and procedures are reviewed regularly. As far as the Company is aware, it has complied in material aspects with the relevant laws and regulations that have a significant impact on the business and operation of the Company and its subsidiaries. RELATIONSHIPS WITH KEY STAKEHOLDERS The Group s success also depends on the support from key stakeholders which comprises employees, customers and shareholders. Employees Employees are regarded as the most important and valuable assets of the Group. The objective of the Groups human resource management is to reward and recognize performing staff by providing a competitive remuneration package and implementing a sound performance appraisal system with appropriate incentives, and to promote career development and progression by appropriate training and providing opportunities within the Group for career advancement. Customers The Group has the mission to provide excellent and creative customer service whilst maintain our long-term profitability, business and asset growth. Various means have been established to strength the communication between the customers and the Group in the provision of quality customer service towards market penetration and expansion. Shareholders One of our corporate goals of the Group is to enhance corporate value to shareholders. The Group is poised to foster business developments for achieving the sustainability of earnings growth and rewarding shareholders by stable dividend payouts taking into account capital adequacy levels, liquidity positions and business expansion needs of the Group. 74 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

76 report of the directors 董事會報告書 USE OF PROCEEDS FROM ISSUE OF SHARES As disclosed in the circular of the Company dated 15 October 2019 (the Circular ), the Company issued 1,687,008,585 ordinary shares (the Subscription Shares ) at the Subscription Price of HK$0.92 per Subscription Share to Water Development (HK) Holding Co., Limited. The aggregate nominal value of the Subscription Shares is US$16,870, The closing price as quoted on the Stock Exchange of the shares on 29 March 2019, being the last trading day before the entering into of the Subscription Agreement, was HK$0.99. The gross proceeds from the Subscription is expected to amount to approximately HK$1,552,047,898. The net proceeds, after taking into account the estimated expenses in relation to the Subscription (including but not limited to miscellaneous expenses on issue of new Shares certificates to the Subscriber, the preparation of the circular and relevant transaction documents), would be approximately HK$1,550,000,000, representing a net price of approximately HK$0.92 per Subscription Share ,687,008,585 16,870, ,552,047,898 1,550,000, As at 31 December 2020, the use of proceeds were as follows: Actual usage at As disclosed in 31 December the Circular 2020 HK$ 000 HK$ 000 % Restructuring of existing debts of 550, , % the Group Fees and expenses related to the 85,000 85, % overall restructuring exercise Financing the Group s existing EPC EPC 500, , % business Exploring potential merger and 300, , % acquisition opportunities Providing general working capital 115, , & and normalised funding levels for the Group s ongoing operations Total 1,550,000 1,515, % 75

77 report of the directors 董事會報告書 As disclosed in the 2019 annual report, the net proceeds were expected to be fully utilised by 31 December 2020, however, it takes time for the management of the Group to source suitable merger and acquisition targets and therefore approximately HK$265,000,000 has been applied in this area as at 31 December 2020, representing approximately 88.3% of the HK$300,000,000 planned amount as disclosed in the Circular. 265,000, ,000, % The remaining balance of unutilised net proceeds of approximately HK$35,000,000 as at 31 December 2020 is expected to be utilised by 30 June The proceeds from the Subscription were used and are proposed to be used according to the intentions previously disclosed in the Circular. 35,000,000 SUFFICIENCY OF PUBLIC FLOAT As at the date of this report, the Company has maintained the prescribed public float of not less than 25% of the issued share capital of the Company pursuant to the Listing Rules and as agreed with the Stock Exchange, based on the information that is publicly available to the Company and within the knowledge of the Directors. 25% CONFIRMATION OF INDEPENDENCE The Company has received from each of the Independent Non-Executive Directors an annual confirmation of independence pursuant to Rule 3.13 of the Listing Rules and considers all the Independent Non-Executive Directors to be independent Annual Results Announcement The financial information set out in the announcement of the Company dated 25 March 2021 did not constitute the Group s audited accounts for the year ended 31 December 2020, but represents an extract from the consolidated financial statements for the year ended 31 December 2020 which have been audited by the auditor of the Company, Ernst & Young in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. The financial information has been reviewed by the Audit Committee and approved by the Board. 76 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

78 report of the directors 董事會報告書 AUDITOR The financial statements of the Company for the year have been audited by Ernst & Young. By order of the Board Zheng Qingtao Chairman Hong Kong, 25 March

79 INDEPENDENT AUDITORS REPORT 獨立核數師報告 Ernst & Young 22/F, CITIC Tower 1 Tim Mei Avenue Central, Hong Kong 1 22 Tel : Fax : ey.com To the shareholders of China Shuifa Singyes Energy Holdings Limited (Incorporated in Bermuda with limited liability) Opinion We have audited the consolidated financial statements of China Shuifa Singyes Energy Holdings Limited (the Company ) and its subsidiaries (the Group ) set out on page 89 to 304, which comprise the consolidated statement of financial position as at 31 December 2020, and the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards ( IFRSs ) issued by the International Accounting Standards Board (the IASB ) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance. Basis for our opinion We conducted our audit in accordance with Hong Kong Standards on Auditing ( HKSAs ) issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ). Our responsibilities under those standards are further described in the Auditor s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the HKICPA s Code of Ethics for Professional Accountants (the Code ), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 78 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

80 INDEPENDENT AUDITORS REPORT 獨立核數師報告 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements. 79

81 INDEPENDENT AUDITORS REPORT 獨立核數師報告 Key audit matter How our audit addressed the key audit matter Revenue recognition for construction services The Group recorded revenue from construction-type contracts amounting to approximately RMB3,705,739,000 that were accounted for by applying an input method that measured the progress towards complete satisfaction of the performance obligation of the construction services for the year ended 31 December The input method involves the use of significant management s judgement and estimates including estimates of the progress towards completion, the scope of deliveries and services required, total contract costs, remaining costs to completion and total contract revenues. In addition, revenue, cost and gross profit realised on such contracts may vary from the Group s original estimates because of changes in conditions. 3,705,739,000 The disclosures about revenue recognition for construction services are included in notes 2.4, 3 and 4 to the financial statements Our audit procedures included the following: We assessed and tested the controls over the revenue recognition, cost forecast and progress billing process of construction contracts; We reviewed the individually significant construction contracts and the progress billings accepted by corresponding customers; We checked significant costs incurred to the delivery and acceptance notes signed by corresponding customers; We compared the forecast results of each significant contract to its actual results and assessed the historical accuracy of estimate prepared by management; We discussed the progress of construction services with those in charge of the projects; We recalculated the percentage of completion of the significant construction services; We performed physical inspection of the significant constructions; and We assessed the disclosures regarding the revenue recognition of construction services in the consolidated financial statements. 80 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

82 INDEPENDENT AUDITORS REPORT 獨立核數師報告 Key audit matter How our audit addressed the key audit matter Impairment assessment of trade receivables and contract assets As at 31 December 2020, the Group had trade receivables and contract assets before impairment of RMB4,154,464,000 and RMB3,245,141,000, respectively, which were material to the Group s consolidated financial statements. 4,154,464,000 3,245,141,000 Assessing expected credit losses of those assets is a judgemental area which involved significant management s judgement and estimation on credit risk according to historical and forward-looking information. The disclosures about the impairment assessment of trade receivables and contract assets are included in notes 2.4, 3, 23, 24 and 45 to the financial statements Our audit procedures included the following: We understood the controls over the Group s estimation of loss allowance for impairment of trade receivables and contract assets and confirmed this understanding by performing walkthrough procedures; We checked the ageing analysis by customer; We checked the debtors historical payment patterns and the bank receipts for the payments received subsequent to the year end; We evaluated information such as actual or expected significant changes in the operating results of customers, actual or expected significant adverse changes in market conditions that may affect the business and customers financial position by reading public news and releases and discussed the estimated impact with management; and We assessed the disclosures about the Group s exposure to credit risk in the consolidated financial statements. 81

83 INDEPENDENT AUDITORS REPORT 獨立核數師報告 Key audit matter Impairment assessment of idle non-current assets In accordance with IFRSs, the Group assesses at the end of each reporting period whether there are any indications of impairment for its non-current assets. If such indications of impairment exist, the corresponding assets recoverable amount is estimated. As at 31 December 2020, the Group had idle non-current assets with carrying amounts before impairment of RMB552,010,000, including property, plant and equipment and right-of-use assets. 552,010,000 How our audit addressed the key audit matter Our audit procedures included the following: We evaluated the competence, capabilities and objectivity of management s external specialist; We tested the impairment model selected for each CGU or individual assets based on our understanding of the methodology and checked its mathematical accuracy; Accordingly, management performed the impairment testing based on estimated recoverable amounts of these idle noncurrent assets individually or at the related cash-generating units ( CGU ) level. A total impairment loss on these idle noncurrent assets of RMB96,471,000 was recognised during the year. The estimate of the recoverable amounts involved significant estimation uncertainty, subjective assumptions and application of significant judgement. 96,471,000 We compared significant unobservable inputs of the valuation models, including potential gross rental income, the vacancy rate, annual growth rate of net income and rate of return, against external data. We reviewed the sensitivity analysis of key assumptions and estimates underlying the calculations prepared by management; 82 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

84 INDEPENDENT AUDITORS REPORT 獨立核數師報告 Key audit matter Impairment assessment of idle non-current assets The Group s disclosures about impairment assessment for these idle non-current assets are included in notes 2.4, 3, 13 and 15 to the financial statements How our audit addressed the key audit matter We compared key operational estimates in the models to source data and publicly available information; We involved our valuation specialist to assist us in evaluating the key valuation parameters such as the quoted price for the identical assets, the cost of disposal applied and the valuation model used; and We assessed the adequacy of the related disclosures in the notes to the consolidated financial statements. 83

85 INDEPENDENT AUDITORS REPORT 獨立核數師報告 Other information included in the Annual Report The directors of the Company are responsible for the other information. The other information comprises the information included in the Annual Report, other than the consolidated financial statements and our auditor s report thereon. The Company s Annual Report is expected to be made available to us after the date of this auditor s report. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. Responsibilities of the directors for the consolidated financial statements The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRSs issued by the IASB and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. 84 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

86 INDEPENDENT AUDITORS REPORT 獨立核數師報告 In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the Group s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors of the Company either intend to liquidate the Group or to cease operations or have no realistic alternative but to do so. The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group s financial reporting process. Auditor s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Our report is made solely to you, as a body, in accordance with section 90 of the Bermuda Companies Act 1981, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. 90 Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. 85

87 INDEPENDENT AUDITORS REPORT 獨立核數師報告 As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. 86 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

88 INDEPENDENT AUDITORS REPORT 獨立核數師報告 Conclude on the appropriateness of the directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 87

89 INDEPENDENT AUDITORS REPORT 獨立核數師報告 We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor s report is Siu Fung Terence Ho. Ernst & Young Certified Public Accountants Hong Kong 25 March China Shuifa Singyes Energy Holdings Limited Annual Report 2020

90 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 綜合損益及其他全面收益表 Year ended 31 December Notes RMB 000 RMB 000 Revenue 4 5,400,999 3,306,519 Cost of sales (4,716,308) (3,278,249) Gross profit 684,691 28,270 Tariff adjustment 4 196, ,857 Other income and gains 5 462, ,563 Selling and distribution expenses (78,926) (125,575) Administrative expenses (313,456) (332,509) Impairment losses on: Financial and contract assets, net (262,955) (440,590) Inventories, net (4,236) Property, plant and equipment, net (94,889) Investment properties, net (4,201) Right-of-use assets, net (1,582) Other expenses (18,808) (12,381) Finance costs 6 (353,000) (414,488) Share of profits and losses of associates 19 (12,620) (16,363) PROFIT/(LOSS) BEFORE TAX 7 202,965 (976,452) Income tax credit/(expense) ,181 (11,358) PROFIT/(LOSS) FOR THE YEAR 321,146 (987,810) OTHER COMPREHENSIVE INCOME/(LOSS): Other comprehensive income/(loss) that will not be reclassified to profit or loss in subsequent years: Change in fair value of equity instruments at fair value through other comprehensive income (519) 639 Exchange differences on translation of financial statements 81,616 (63,552) 89

91 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 綜合損益及其他全面收益表 Year ended 31 December Notes RMB 000 RMB 000 OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR 81,097 (62,913) TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR 402,243 (1,050,723) Profit/(loss) attributable to: Owners of the Company 301,418 (995,228) Non-controlling interests 19,728 7, ,146 (987,810) Total comprehensive income/(loss) attributable to: Owners of the Company 383,830 (1,058,636) Non-controlling interests 18,413 7, ,243 (1,050,723) EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO ORDINARY equity HOLDERS OF THE COMPANY Basic and diluted 12 RMB RMB (1.004) 90 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

92 Consolidated statement of financial position 綜合財務狀況表 31 December Notes RMB 000 RMB 000 NON-CURRENT ASSETS Property, plant and equipment 13 4,068,355 4,122,090 Investment properties , ,247 Right-of-use assets 15(a) 222, ,088 Other intangible assets 17 91,161 1,605 Payments in advance 18 21,725 17,684 Investments in associates 19 1,973 17,825 Deferred tax assets ,047 3,195 Equity investments designated at fair value through other comprehensive income 20 10,530 11,414 Goodwill 16 10,542 6,448 Total non-current assets 5,001,208 4,682,596 CURRENT ASSETS Inventories 22 55, ,799 Contract assets 23 2,903,957 2,007,873 Trade and bills receivables 24 3,570,404 3,136,464 Prepayments, other receivables and other assets , ,826 Financial assets at fair value through profit or loss 21 5,000 Pledged deposits 26 47,169 54,867 Cash and cash equivalents ,789 1,082,835 Total current assets 8,329,152 7,274,664 CURRENT LIABILITIES Trade and bills payables 27 1,921,875 1,438,054 Other payables and accruals 28 2,107, ,425 Contract liabilities ,361 58,307 Bank advances for discounted bills 38,889 Interest-bearing bank and other loans 30 1,181,190 1,374,689 Tax payable 102,010 22,245 Lease liabilities 15(b) 3, Provision 737 Total current liabilities 5,448,592 3,317,564 91

93 Consolidated statement of financial position 綜合財務狀況表 31 December Notes RMB 000 RMB 000 NET CURRENT ASSETS 2,880,560 3,957,100 TOTAL ASSETS LESS CURRENT LIABILITIES 7,881,768 8,639,696 NON-CURRENT LIABILITIES Senior notes 31 1,488,096 2,815,135 Interest-bearing bank and other loans 30 1,633,685 1,537,620 Lease liabilities 15(b) 22,694 7,502 Deferred tax liabilities ,381 86,860 Deferred income , ,843 Total non-current liabilities 3,397,889 4,602,960 Net assets 4,483,879 4,036,736 EQUITY Equity attributable to owners of the Company Issued capital , ,333 Reserves 36 4,040,224 3,754,333 4,214,557 3,928,666 Non-controlling interests 269, ,070 Total equity 4,483,879 4,036,736 mr. Zheng Qingtao Director mr. Liu Hongwei Director 92 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

94 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 綜合權益變動表 Year ended 31 December 2020 Attributable to owners of the Company Fair value reserve of financial assets at Difference fair value arising from through Safety change Share other com- Statutory Enterprise Share fund Exchange of non- Non- Issued premium Contributed prehensive reserve expansion option surplus fluctuation Retained controlling controlling Total capital account* surplus* income* fund* fund* reserve* reserve* reserve* profits* interests* Total interests equity * * * * * * * * * * RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 (note 34) (note 36(a)) (note 36(b)) (note 36(c)) (note 36(d)) 34 36(a) 36(b) 36(c) 36(d) At 1 January , ,818 11,997 (7,915) 284, ,909 68,366 (138,628) 2,348,657 56,350 3,590, ,841 3,691,732 Loss for the year (995,228) (995,228) 7,418 (987,810) Other comprehensive income/(loss) for the year: Changes in fair value of equity instruments at fair value through other comprehensive income, net of tax Exchange differences on translation of financial statements (64,047) (64,047) 495 (63,552) Total comprehensive income/(loss) for the year 639 (64,047) (995,228) (1,058,636) 7,913 (1,050,723) Issue of new shares (note 34) ,548 1,274,617 1,393,165 1,393,165 Transfer from retained profits 5,817 1,060 (6,877) Transfer of share option reserve upon the expiry of share options (16,924) 16,924 Equity-settled share option arrangements (note 35) 35 3,246 3,246 1,340 4,586 Dividend paid to non-controlling shareholders by a subsidiary (2,024) (2,024) Establishment for safety fund surplus reserve 33,908 (33,908) Utilisation of safety fund surplus reserve (33,908) 33,908 At 31 December ,333 2,071,435 11,997 (7,276) 290, ,969 54,688 (202,675) 1,363,476 56,350 3,928, ,070 4,036,736 93

95 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 綜合權益變動表 Year ended 31 December 2020 Attributable to owners of the Company fair value reserve of financial assets at Difference fair value arising from through Safety change Share other com- Statutory Enterprise Share fund Exchange of non- non- Issued premium Merger Contributed prehensive reserve expansion option surplus fluctuation Retained controlling controlling Total capital account* deficit* surplus* income* fund* fund* reserve* reserve* reserve* profits* interests* Total interests equity * * * * * * * * * * RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 (note 34) (note 38(2)) (note 36(a)) (note 36(b)) (note 36(c)) (note 36(d)) 34 38(2) 36(a) 36(b) 36(c) 36(d) At 1 January ,333 2,071,435 11,997 (7,276) 290, ,969 54,688 (202,675) 1,363,476 56,350 3,928, ,070 4,036,736 Profit for the year 301, ,418 19, ,146 Other comprehensive income/(loss) for the year: Changes in fair value of equity instruments at fair value through other comprehensive income, net of tax (519) (519) (519) Exchange differences on translation of financial statements 82,931 82,931 (1,315) 81,616 Total comprehensive income/(loss) for the year (519) 82, , ,830 18, ,243 Acquisition of non-controlling interests (1,710) (1,710) (8,290) (10,000) Capital injection by a non-controlling shareholder 4,900 4,900 Acquisition of a subsidiary (note 38(2)) 38(2) (96,863) (96,863) 148,305 51,442 Transfer from retained profits 30,048 (30,048) Equity-settled share option arrangements (note 35) (286) 348 Dividend paid to non-controlling shareholders by a subsidiary (1,790) (1,790) Establishment for safety fund surplus reserve 69,719 (69,719) Utilisation of safety fund surplus reserve (69,719) 69,719 At 31 December ,333 2,071,435 (96,863) 11,997 (7,795) 320, ,969 55,322 (119,744) 1,634,846 54,640 4,214, ,322 4,483,879 * These reserve accounts comprise the consolidated reserves of RMB4,040,224,000 (2019 RMB3,754,333,000) in the consolidated statement of financial position. * 4,040,224,000 3,754,333, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

96 CONSOLIDATED STATEMENT OF CASH FLOWS 綜合現金流量表 Year ended 31 December Notes RMB 000 RMB 000 CASH FLOWS FROM operating ACTIVITIES Profit/(loss) before tax 202,965 (976,452) Adjustments for: Depreciation of property, plant and equipment , ,696 Depreciation of investment properties 14 9,453 4,560 Depreciation of right-of-use assets 15(a) 7,618 10,089 Amortisation of other intangible assets 17 5, Provision for impairment losses on financial and contract assets, net 7 262, ,590 Provision for impairment losses on property, plant and equipment 13 94,889 Provision for impairment losses on investment properties 14 4,201 Provision for impairment losses on right-of-use assets 15(a) 1,582 Write-down of inventories to net realisable value 7 4,236 Gain on bargain purchase 7 (7,445) Share of profits and losses of associates 19 12,620 16,363 Gain on settlement of financial assets at fair value through profit or loss 7 (1,003) Gain on disposal of associates 5 (31,768) (36,274) Gain on repurchase of senior notes 5 (209,444) Equity-settled share option expense ,586 Loss on disposal of items of property, plant and equipment 4,187 Foreign exchange gain, net (144,716) (11,825) Interest income 5 (3,006) (999) Deferred income released to profit or loss 5 (13,856) (13,373) Reversal of compensation for breach of contracts, net 5 (67,251) Provision for litigation 737 Gain on cancellation of senior notes 5 (1,655) Gain on debt restructuring 5 (1,780) Remission of interest on an other loan 5 (13,087) Covid-19-related rent COVID-19 concessions from lessors 15(b) (52) Compensation for performance commitment 5 (8,983) Finance costs 6 353, , ,420 (15,399) Decrease/(increase) in inventories 116,034 (106,443) Decrease/(increase) in contract assets (1,016,667) 55,755 Increase in trade and bills receivables (338,397) (121,593) Increase in prepayments, other receivables and other assets (143,721) (209,280) Increase in trade and bills payables 410, ,534 Increase/(decrease) in other payables and accruals 198,247 (9,256) Increase/(decrease) in contract liabilities 73,054 (46,760) Income tax paid (40,713) (20,740) Net cash flows from/(used in) operating activities (29,390) 62,818 95

97 CONSOLIDATED STATEMENT OF CASH FLOWS 綜合現金流量表 Year ended 31 December Notes RMB 000 RMB 000 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of items of property, plant and equipment (173,456) (68,620) Purchase of other intangible assets (527) Payment for leasehold land (513) (3,605) Acquisition of subsidiaries 38 (215,724) Disposal of a joint venture 6,370 Purchase of financial assets at fair value through profit or loss 21 (5,000) Purchase of equity investments designated at fair value through other comprehensive income (5,000) investments in associates 19 (35,000) Disposal of associates 76, Redemption of financial assets at fair value through profit or loss 21 5,000 Advance to related parties 40(b)(i) (50,000) Proceeds from advance to related parties 40(b)(i) 30,000 Disposal of financial assets at fair value through profit or loss 21 25,268 Proceeds from disposal of items of property, plant and equipment 56,262 34,287 Repayment of advance from third parties Receipt of maturity of pledged deposits 388, ,953 Placement of pledged deposits (398,137) (92,701) Interest received 2, Receipt of government grants for property, plant and equipment 1,046 11,767 Net cash flows from/(used in) investing activities (278,827) 65,484 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from subscription of shares 1,393,165 Payment for acquisition of non-controlling interests of a subsidiary (10,000) Capital injection by a non-controlling shareholder 4,900 Payment for redemption of convertible bonds (10,324) Repurchase of senior notes (1,111,621) (312,719) Payment of transaction costs related to issuance of senior notes (83,137) Dividend paid to non-controlling shareholders by a subsidiary (2,115) (2,024) Proceeds from bank and other loans 1,934, ,746 Repayment of bank and other loans (2,028,726) (916,856) Repayment of bank advances for discounted bills (38,889) Proceeds from bank advances for discounted bills 38,889 Proceeds from a loan from related parties 2,183,920 10,000 Repayment of loans from related parties (635,000) Principal portion of lease payments (8,160) (2,872) Interest portion of lease liabilities (726) (510) Payment of other financing costs (54) (2,199) Interest paid (179,940) (229,040) 96 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

98 CONSOLIDATED STATEMENT OF CASH FLOWS 綜合現金流量表 Year ended 31 December Notes RMB 000 RMB 000 Net cash flows from financing activities 108, ,119 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (200,009) 844,421 Cash and cash equivalents at beginning of year 1,100, ,559 Effect of foreign exchange rate changes, net (759) 792 CASH AND CASH EQUIVALENTS AT END OF YEAR 900,004 1,100,772 ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances ,789 1,082,835 Non-pledged time deposits with original maturity of less than three months when acquired Cash and cash equivalents as stated in the statement of financial position ,789 1,082,835 Time deposits with original maturity of less than three months ,937 Cash and cash equivalents as stated in the statement of cash flows 900,004 1,100,772 97

99 31 December CORPORATE AND GROUP INFORMATION 1. China Shuifa Singyes Energy Holdings Limited (the Company ) was incorporated as an exempted company with limited liability in Bermuda on 24 October The registered office of the Company is located at 4th Floor, North Cedar House, 41 Cedar Avenue, Hamilton, HM12, Bermuda. The principal place of business of the Company is located at Unit 3108, 31st Floor, China Merchants Tower, Shun Tak Centre, Connaught Road Central, Hong Kong. 4th Floor, North Cedar House, 41 Cedar Avenue, Hamilton, HM12, Bermuda During the year, the Company and its subsidiaries (collectively referred to as the Group ) were principally engaged in the design, manufacture, supply and installation of conventional curtain walls and building integrated solar photovoltaic systems, as well as the manufacture and sale of solar power products. There were no significant changes in the nature of the Group s principal activities during the year. In the opinion of the directors of the Company (the Directors ), the holding company, the intermediate holding company and the ultimate holding company of the Company are Water Development (HK) Holding Co., Ltd., which is incorporated in Hong Kong, Shuifa Energy Group Limited (, Shuifa Energy ) and Shuifa Group Co., Ltd (, Shuifa Group ), respectively, which are incorporated in the People s Republic of China (the PRC ). Water Development (HK) Holding Co., Ltd. 98 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

100 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries 1. Particulars of the Company s principal subsidiaries are as follows: percentage place of nominal of equity incorporation/ value of interests registration and paid-up attributable to Principal Company name business share capital the Company activities % Directly held: Singyes Engineering Hong Kong HK$1 100% Design, (H.K.) Co., Ltd. 1 supply and ( Singyes Engineering ) installation of curtain walls Zibo Qilu Chemical PRC/ RMB 47.5% Research and Industrial Zone Mainland China 100,000,000 development of Thermal Power Co., Ltd. (f) 100,000,000 Energy-saving ( Zibo Qilu ) thermal power (f) supply Jiangxi Yaxing PRC/ RMB 51.0% Construction and Construction Co., Ltd (f) Mainland China 50,000,000 decoration ( Jiangxi Yaxing ) 50,000,000 (f) 99

101 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued) 1. Particulars of the Company s principal subsidiaries are as follows: (Continued) percentage place of nominal of equity incorporation/ value of interests registration and paid-up attributable to Principal Company name business share capital the Company activities % Directly held: (Continued) Foshan Xinye Renewable Energy PRC/ 100% Investment and Technology Co., Ltd. (f) Mainland China technology ( Foshan Xinye ) development of (f) solar photovoltaic power stations Foshan Keliyuan New PRC/ RMB 100% Design, Energy Technology Co., Ltd. (f) Mainland China 30,000,000 manufacture, ( Foshan Keliyuan ) 30,000,000 supply and installation of (f) solar photovoltaic power stations Singyes MRW Joint Venture Hong Kong HK$10, % Design, Co., Ltd. 10,000 supply and ( MRW ) installation of Singyes MRW Joint Venture Co., Ltd. curtain walls MRW 100 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

102 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued) 1. Particulars of the Company s principal subsidiaries are as follows: (Continued) percentage place of nominal of equity incorporation/ value of interests registration and paid-up attributable to Principal Company name business share capital the Company activities % Indirectly held: Macao Singyes Renewable Energy Macau 100% Design, supply Technology Co., Ltd. and installation of ( Macao Singyes ) curtain walls China Singyes New Materials Bermuda US$ 62.4% Investment Holdings. Co., Ltd. (c) (e) 5,200,000 holding ( Singyes New Materials ) 5,200,000 (c) (e) Zhuhai Singyes Green Building PRC/ US$ 100% Design, Technology Co., Ltd. (a) (c) Mainland China 48,960,806 manufacture, ( Zhuhai Singyes ) 48,960,806 supply and installation of (a) (c) curtain walls and solar photovoltaic power stations 101

103 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued) 1. Particulars of the Company s principal subsidiaries are as follows: (Continued) percentage place of nominal of equity incorporation/ value of interests registration and paid-up attributable to Principal Company name business share capital the Company activities % Indirectly held: (Continued) Shuifa Singyes Energy PRC/ US$ 100% Design, (Zhuhai) Co., Ltd. (a) (c) Mainland China 47,868,500 manufacture, ( Shuifa Singyes Energy ) 47,868,500 supply and (formerly known as installation of Zhuhai Singyes Renewable solar photovoltaic Energy Co., Ltd.) power stations (a) (c) Zhuhai Singyes Xinye Electricity PRC/ RMB 100% Development of Technology Co., Ltd. (b) (c) Mainland China 20,000,000 new energy ( Singyes Xinye ) 20,000,000 materials, and (b) (c) development of marine biology technology 102 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

104 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued) 1. Particulars of the Company s principal subsidiaries are as follows: (Continued) percentage place of nominal of equity incorporation/ value of interests registration and paid-up attributable to Principal Company name business share capital the Company activities % Indirectly held: (Continued) Zhuhai Singyes New PRC/ RMB 62.4% Research, Materials Co., Ltd. (b) (e) Mainland China 62,500,000 manufacture ( Zhuhai Singyes New Materials ) 62,500,000 and sale of photovoltaic film (b) (e) Yan an Singyes New PRC/ RMB 46.8% Research, Materials. Co., Ltd. (a) (e) Mainland China 10,000,000 manufacture ( Yan an New Materials ) 10,000,000 and sale of (a) (e) new materials 103

105 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued) 1. Particulars of the Company s principal subsidiaries are as follows: (Continued) percentage place of nominal of equity incorporation/ value of interests registration and paid-up attributable to Principal Company name business share capital the Company activities % Indirectly held: (Continued) Hunan Singyes Solar PRC/ RMB 100% Research, Technology Co., Ltd. (c) Mainland China 410,143,300 development, ( Hunan Singyes ) 410,143,300 manufacture and (c) sale of solar products Zhuhai Singyes Energy-saving PRC/ US$ 100% Research and Technologies Co., Ltd. (b) (c) Mainland China 65,000,000 development of ( Singyes Energy-saving ) 65,000,000 energy-saving (b) (c) products Xinjiang Singyes Renewable Energy PRC/ RMB 100% Research and Technology Co., Ltd. (c) (d) Mainland China 438,270,000 design of and ( Xinjiang Singyes ) 438,270,000 investment in (c) (d) solar power projects 104 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

106 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued) 1. Particulars of the Company s principal subsidiaries are as follows: (Continued) percentage place of nominal of equity incorporation/ value of interests registration and paid-up attributable to Principal Company name business share capital the Company activities % Indirectly held: (Continued) Hunan Singyes Green PRC/ RMB 100% Research Energy Co., Ltd. (a) Mainland China 912,000,000 and development ( Hunan Green Energy ) 912,000,000 of electricity and (a) new energy Gansu Singyes Green Energy PRC/ RMB 100% Research, Technology Co., Ltd. (a) (c) Mainland China 74,000,000 construction and ( Gansu Singyes ) 74,000,000 operation of solar (a)(c) power stations 105

107 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued) 1. Particulars of the Company s principal subsidiaries are as follows: (Continued) percentage place of nominal of equity incorporation/ value of interests registration and paid-up attributable to Principal Company name business share capital the Company activities % Indirectly held: (Continued) Wuwei Dongrun Solar Energy PRC/ RMB 100% Research, Development Co., Ltd. (c) (d) Mainland China 5,000,000 construction and ( Wuwei Dongrun ) 5,000,000 operation of solar (c) (d) power stations Gansu Singyes Solar PRC/ RMB 100% Research, Technologies Co., Ltd. (c) Mainland China 20,000,000 development, ( Gansu Technologies ) 20,000,000 manufacture (c) and sale of solar products 106 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

108 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued) 1. Particulars of the Company s principal subsidiaries are as follows: (Continued) percentage place of nominal of equity incorporation/ value of interests registration and paid-up attributable to Principal Company name business share capital the Company activities % Indirectly held: (Continued) Yangjiang Singyes Green Energy PRC/ RMB 100% Research and Technology Co., Ltd. (c) Mainland China 184,080,000 design of and ( Yangjiang Singyes ) 184,080,000 investment in (c) solar power projects Yangjiang Huazhi Green Energy PRC/ US$ 100% Research and Technology Co., Ltd. (a) (c) Mainland China 28,261,862 design of and ( Yangjiang Huazhi ) 28,261,862 investment in (a) (c) solar power projects 107

109 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued) 1. Particulars of the Company s principal subsidiaries are as follows: (Continued) percentage place of nominal of equity incorporation/ value of interests registration and paid-up attributable to Principal Company name business share capital the Company activities % Indirectly held: (Continued) Yangjiang Huayu Green Energy PRC/ US$ 100% Research and Technology Co., Ltd. (a) (c) Mainland China 10,170,741 design of and ( Yangjiang Huayu ) 10,170,741 investment in (a) (c) solar power projects Suixi Xinye Photovoltaic PRC/ 100% Research and Electricity Co., Ltd. (c) Mainland China design of and ( Suixi Xinye ) investment in (c) solar power projects 108 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

110 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued) 1. Particulars of the Company s principal subsidiaries are as follows: (Continued) percentage place of nominal of equity incorporation/ value of interests registration and paid-up attributable to Principal Company name business share capital the Company activities % Indirectly held: (Continued) Zhuhai Gangxing PRC/ 100% Research and Technology Co., Ltd. (b) Mainland China development of ( Zhuhai Gangxing ) energy-saving (b) raw materials Huabei Limited (e) Hong Kong HK$ 62.4% Investment ( Huabei ) 10,000 holding (e) 10,000 Shenzhen Kangsheng PRC/ RMB 46.8% Research, Photoelectric Technology Mainland China 16,000,000 manufacture and Co., Ltd. (a) (e) 16,000,000 sale of solar ( Shenzhen Kangsheng ) products (a) (e) 109

111 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued) 1. Particulars of the Company s principal subsidiaries are as follows: (Continued) Notes: (a) These subsidiaries were registered as Sino-foreign equity joint venture (a) enterprises under PRC law. (b) These subsidiaries were registered as wholly-foreign-owned enterprises (b) under PRC law. (c) As at 31 December 2020, the Group s equity interests in these (c) companies were pledged as collateral for the Group s bank and other loans of RMB2,295,044,030. 2,295,044,030 (d) The Group entered into a sale and purchase agreement in 2016 and a (d) supplemental agreement in 2017,2018 and 2019 respectively with Excel Deal Investment Limited (the Purchaser ) to sell 81% equity interests in Xinjiang Singyes and Wuwei Dongrun (together referred to as the Target Subsidiaries ). 81% On 11 January 2020 and 8 May 2020, a written agreement and supplemental agreement were signed between the Company and the Purchaser to extend the long stop date of the transaction to 31 December As at 31 December 2020, the Group has received deposits in relation to the sale of equity interests in the Target Subsidiaries amounting to RMB38,974,000 while the transaction has not been fulfilled. 38,974,000 Subsequent to 31 December 2020, a written agreement was signed between the Company and the Purchaser to extend the long stop date of the transaction to 31 December China Shuifa Singyes Energy Holdings Limited Annual Report 2020

112 31 December CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued) 1. Particulars of the Company s principal subsidiaries are as follows: (Continued) Notes: (Continued) (e) 75% equity interests in Yan an New Materials and Shenzhen Kangsheng (e) 75% were indirectly held by Singyes New Materials, a subsidiary of the Company. (f) The Group completed the acquisition of 100% equity interests in Foshan (f) Xinye with nil consideration and 100% equity interests in Foshan Keliyuan at a consideration of RMB26,500,000 on 5 June 2020 and % June 2020, respectively (note 38). 26,500, % 38 The Group completed the acquisition of 47.5% equity interests in Zibo Qilu at a consideration of RMB190,000,000 and 51% equity interests in Jiangxi Yaxin at a consideration of RMB39,900,000 on 30 September 190,000, and 22 December 2020, respectively (note 38). 47.5% 39,900,000 51% 38 The above table lists the subsidiaries of the Company which, in the opinion of the Directors, principally affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would, in the opinion of the Directors, result in particulars of excessive length. None of the subsidiaries has material non-controlling interests. 111

113 31 December BASIS OF PREPARATION 2.1 These financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRSs ), which comprise standards and interpretations approved by the International Accounting Standards Board (the IASB ) and International Accounting Standards ( IASs ) and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee that remain in effect and the disclosure requirements of the Hong Kong companies Ordinance. They have been prepared under the historical cost convention, except for derivative financial instruments, conversion rights of convertible bonds, and certain financial assets and equity investments which have been measured at fair value. These financial statements are presented in Renminbi ( RMB ) and all values are rounded to the nearest thousand except when otherwise indicated. Basis of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year ended 31 December A subsidiary is an entity, directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee). 112 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

114 31 December BASIS OF PREPARATION (Continued) Basis of consolidation (Continued) 2.1 When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: (a) the contractual arrangement with the other vote holders of the (a) investee; (b) rights arising from other contractual arrangements; and (b) (c) the Group s voting rights and potential voting rights. (c) The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent of the Group and to the noncontrolling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. 113

115 31 December BASIS OF PREPARATION (Continued) Basis of consolidation (Continued) 2.1 The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group s share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities. (i) (ii) (iii) (i) (ii) (iii) 2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES 2.2 The Group has adopted the Conceptual Framework for Financial Reporting 2018 and the following revised IFRSs for the first time for the current year s financial statements. Amendments to IFRS 3 Amendments to IFRS 9, IAS 39 and IFRS 7 Amendments to IFRS 16 Amendments to IAS 1 and IAS 8 Definition of a Business Interest Rate Benchmark Reform Covid-19-Related Rent Concessions (early adopted) Definition of Material COVID China Shuifa Singyes Energy Holdings Limited Annual Report 2020

116 31 December CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued) 2.2 The nature and the impact of the Conceptual Framework for Financial Reporting 2018 and the revised IFRSs are described below: (a) Conceptual Framework for Financial Reporting 2018 (the (a) Conceptual Framework ) sets out a comprehensive set of concepts for financial reporting and standard setting, and provides guidance for preparers of financial statements in developing consistent accounting policies and assistance to all parties to understand and interpret the standards. The Conceptual Framework includes new chapters on measurement and reporting financial performance, new guidance on derecognition of assets and liabilities, and updated definitions and recognition criteria for assets and liabilities. It also clarifies the roles of stewardship, prudence and measurement uncertainty in financial reporting. The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The Conceptual Framework did not have any significant impact on the financial position and performance of the Group. 115

117 31 December CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued) 2.2 (b) Amendments to IFRS 3 clarify and provide additional guidance (b) 3 on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. A business can exist without including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group has applied the amendments prospectively to transactions or other events that occurred on or after 1 January The amendments did not have any impact on the financial position and performance of the Group. 116 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

118 31 December CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued) 2.2 (c) Amendments to IFRS 9, IAS 39 and IFRS 7 address issues (c) 9 affecting financial reporting in the period before the replacement 39 of an existing interest rate benchmark with alternative risk- 7 free rate ( RFR ). The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the introduction of alternative RFR. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments did not have any impact on the financial position and performance of the Group as the Group does not have any interest rate hedging relationships. (d) Amendments to IFRS 16 provides a practical expedient for (d) 16 lessees to elect not to apply lease modification accounting for rent concessions arising as a direct consequence of the Covid-19 Covid-19 Covid-19 pandemic ( Covid-19 ). The practical expedient applies only to rent concessions occurring as a direct consequence of the pandemic and only if (i) the change in lease payments results in revised consideration for the lease that is substantially the same (i) as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before 30 June 2021; and (iii) there is no substantive change to other terms (ii) and conditions of the lease. The amendment is effective for annual periods beginning on or after 1 January 2020 with earlier application permitted and shall be applied retrospectively. (iii) 117

119 31 December CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued) 2.2 (d) (Continued) (d) During the year ended 31 December 2020, certain monthly lease payments for the leases of the Group s plant and machinery have been reduced or waived by the lessors upon reducing the scale of production as a result of the pandemic and there are no other changes to the terms of the leases. The Group has early adopted the amendment on 1 January 2020 and elected not to apply lease modification accounting for all rent concessions granted by the lessors as a result of the pandemic during the year ended 31 December Accordingly, a reduction in the lease payments arising from the rent concessions of RMB52,000 has been accounted for as a variable payment by derecognising part of the lease liabilities and crediting to profit or loss for the year ended 31 December ,000 (e) Amendments to IAS 1 and IAS 8 provide a new definition of (e) 1 material. The new definition states that information is material 8 if omitting, misstating or obscuring it could reasonably be expected to influence decisions that primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information, or both. The amendments did not have any significant impact on the financial position and performance of the Group. 118 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

120 31 December ISSUED BUT NOT YET EFFECTIVE IFRSs 2.3 The Group has not applied the following new and revised IFRSs, that have been issued but are not yet effective, in these financial statements. Amendments to IFRS 3 Reference to the Conceptual Framework 2 Amendments to IFRS 9, Interest Rate Benchmark IAS 39, IFRS 7, IFRS 4 Reform Phase 2 1 and IFRS 16 Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 4 IFRS 17 Insurance Contracts 3 Amendments to IFRS 17 Insurance Contracts 3, 5 Amendments to IAS 1 Classification of Liabilities as Current or Non-current 3 Amendments to IAS 1 Disclosure of Accounting Policies 3 Amendments to IAS 8 Definition of Accounting Eestimates 3 Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use 2 Amendments to IAS 37 Onerous Contracts Cost of Fulfilling a Contract 2 Annual Improvements to Amendments to IFRS 1, IFRSs IFRS 9, Illustrative Examples accompanying IFRS 16, and IAS

121 31 December ISSUED BUT NOT YET EFFECTIVE IFRSs (Continued) Effective for annual periods beginning on or after 1 January Effective for annual periods beginning on or after 1 January Effective for annual periods beginning on or after 1 January No mandatory effective date yet determined but available for adoption As a consequence of the amendments to IFRS 17 issued in June 2020, IFRS 4 was amended to extend the temporary exemption that permits insurers to apply IAS 39 rather than IFRS 9 for annual periods beginning before 1 January Further information about those IFRSs that are expected to be applicable to the Group is described below. Amendments to IFRS 3 are intended to replace a reference to the previous Framework for the Preparation and Presentation of Financial Statements with a reference to the Conceptual Framework for Financial Reporting issued in March 2018 without significantly changing its requirements. The amendments also add to IFRS 3 an exception to its recognition principle for an entity to refer to the Conceptual Framework to determine what constitutes an asset or a liability. The exception specifies that, for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21 if they were incurred separately rather than assumed in a business combination, an entity applying IFRS 3 should refer to IAS 37 or IFRIC 21 respectively instead of the Conceptual Framework. Furthermore, the amendments clarify that contingent assets do not qualify for recognition at the acquisition date. The Group expects to adopt the amendments prospectively from 1 January Since the amendments apply prospectively to business combination for which the acquisition date is on or after the date of first application, the Group will not be affected by these amendments on the date of transition China Shuifa Singyes Energy Holdings Limited Annual Report 2020

122 31 December ISSUED BUT NOT YET EFFECTIVE IFRSs (Continued) 2.3 Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 address issues not dealt with in the previous amendments which affect financial reporting when an existing interest benchmark is replaced with an alternative RFR. The Phase 2 amendments provide a practical expedient to allow the effective interest rate to be updated without adjusting the carrying amount when accounting for changes in the basis for determining the contractual cash flows of financial assets and liabilities, if the change is a direct consequence of the interest benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis immediately preceding the change. In addition, the amendments permit changes required by the interest rate benchmark reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued. Any gains or losses that could arise on transition are dealt with through the normal requirements of IFRS 9 to measure and recognise hedge ineffectiveness. The amendments also provide a temporary relief to entities from having to meet the separately identifiable requirement when an RFR is designated as a risk component. The relief allows an entity, upon designation of the hedge, to assume that the separately identifiable requirement is met, provided the entity reasonably expects the RFR risk component to become separately identifiable within the next 24 months. Furthermore, the amendments require an entity to discloses additional information to enable users of financial statements to understand the effect of interest rate benchmark reform on an entity s financial instruments and risk management strategy. The amendments are effective for annual periods beginning on or after 1 January 2021 and shall be applied retrospectively, but entities are not required to restate the comparative information

123 31 December ISSUED BUT NOT YET EFFECTIVE IFRSs (Continued) 2.3 The Group had certain interest-bearing bank loans denominated in RMB based on the China Loan Prime Rate as at 31 December If the interest rates of these borrowings are replaced by RFRs in a future period, the Group will apply this practical expedient upon the modification of these borrowings when the economically equivalent criterion is met and expects that no significant modification gain or loss will arise as a result of applying the amendments to these changes. Amendments to IFRS 10 and IAS 28 address an inconsistency between the requirements in IFRS 10 and in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss when the sale or contribution of assets between an investor and its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognised in the investor s profit or loss only to the extent of the unrelated investor s interest in that associate or joint venture. The amendments are to be applied prospectively. The previous mandatory effective date of amendments to IFRS 10 and IAS 28 was removed by the IASB in December 2015 and a new mandatory effective date will be determined after the completion of a broader review of accounting for associates and joint ventures. However, the amendments are available for adoption now China Shuifa Singyes Energy Holdings Limited Annual Report 2020

124 31 December ISSUED BUT NOT YET EFFECTIVE IFRSs (Continued) 2.3 Amendments to IAS 1 clarify the requirements for classifying liabilities as current or non-current. The amendments specify that if an entity s right to defer settlement of a liability is subject to the entity complying with specified conditions, the entity has a right to defer settlement of the liability at the end of the reporting period if it complies with those conditions at that date. Classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement of the liability. The amendments also clarify the situations that are considered a settlement of a liability. The amendments are effective for annual periods beginning on or after 1 January 2023 and shall be applied retrospectively. Earlier application is permitted. The amendments are not expected to have any significant impact on the Group s financial statements. 1 Amendments to IAS 16 prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling any such items, and the cost of those items, in profit or loss. The amendments are effective for annual periods beginning on or after 1 January 2022 and shall be applied retrospectively only to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments. Earlier application is permitted. The amendments are not expected to have any significant impact on the Group s financial statements

125 31 December ISSUED BUT NOT YET EFFECTIVE IFRSs (Continued) 2.3 Amendments to IAS 37 clarify that for the purpose of assessing whether a contract is onerous under IAS 37, the cost of fulfilling the contract comprises the costs that relate directly to the contract. Costs that relate directly to a contract include both the incremental costs of fulfilling that contract (e.g., direct labour and materials) and an allocation of other costs that relate directly to fulfilling that contract (e.g., an allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract as well as contract management and supervision costs). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. The amendments are effective for annual periods beginning on or after 1 January 2022 and shall be applied to contracts for which an entity has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments. Earlier application is permitted. Any cumulative effect of initially applying the amendments shall be recognised as an adjustment to the opening equity at the date of initial application without restating the comparative information. The amendments are not expected to have any significant impact on the Group s financial statements China Shuifa Singyes Energy Holdings Limited Annual Report 2020

126 31 December ISSUED BUT NOT YET EFFECTIVE IFRSs (Continued) 2.3 Annual improvements to IFRSs sets out amendments to IFRS 1, IFRS 9, Illustrative Examples accompanying IFRS 16, and IAS 41. Details of the amendments that are expected to be applicable to the Group are as follows: IFRS 9 Financial Instruments: clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendment is effective for annual periods beginning on or after 1 January Earlier application is permitted. The amendment is not expected to have a significant impact on the Group s financial statements. 9 IFRS 16 Leases: removes the illustration of payments from the lessor relating to leasehold improvements in Illustrative Example 13 accompanying IFRS 16. This removes potential confusion regarding the treatment of lease incentives when applying IFRS

127 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Investments in associates 2.4 An associate is an entity in which the Group has a long term interest of generally not less than 20% of the equity voting rights and over which it is in a position to exercise significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies. 20% The Group s investments in associates are stated in the consolidated statement of financial position at the Group s share of net assets under the equity method of accounting, less any impairment losses. The Group s share of the post-acquisition results and other comprehensive income of associates is included in profit or loss and consolidated other comprehensive income, respectively. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of any changes, when applicable, in the consolidated statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and its associates or joint venture are eliminated to the extent of the Group s investments in the associates or joint venture, except where unrealised losses provide evidence of an impairment of the assets transferred. Goodwill arising from the acquisition of associates or joint venture is included as part of the Group s investments in associates or joint venture. If an investment in an associate becomes an investment in a joint venture or vice versa, the retained interest is not remeasured. Instead, the investment continues to be accounted for under the equity method. In all other cases, upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss. 126 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

128 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Business combinations and goodwill 2.4 Business combinations are accounted for using the acquisition method. The consideration transferred is measured at the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation at fair value or at the proportionate share of the acquiree s identifiable net assets. All other components of non-controlling interests are measured at fair value. Acquisition-related costs are expensed as incurred. The Group determines that it has acquired a business when the acquired set of activities and assets includes an input and a substantive process that together significantly contribute to the ability to create outputs. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts of the acquiree. If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. 127

129 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Business combinations and goodwill (Continued) 2.4 Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability is measured at fair value with changes in fair value recognised in profit or loss. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount recognised for noncontrolling interests and any fair value of the Group s previously held equity interests in the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognised in profit or loss as a gain on bargain purchase. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at 31 December. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. 128 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

130 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Business combinations and goodwill (Continued) 2.4 Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period. Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on the disposal. Goodwill disposed of in these circumstances is measured based on the relative value of the operation disposed of and the portion of the cash-generating unit retained. Merger accounting for business combinations under common control The acquisition of subsidiaries under common control has been accounted for using the principles of merger accounting. The merger method of accounting involves incorporating the financial statement items of the combining entities or businesses in which the common control combination occurs as if they had been consolidated from the date when the combining entities or businesses first came under the control of the controlling party. 129

131 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair value measurement 2.4 The Group measures its derivative financial instruments, financial assets at fair value through profit or loss, equity investments designated at fair value through other comprehensive income and conversion rights of convertible bonds at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. 130 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

132 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair value measurement (Continued) 2.4 All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 based on quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly Level 3 based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. 131

133 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Impairment of non-financial assets 2.4 Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, contract assets, deferred tax assets, financial assets, investment properties and noncurrent assets), the asset s recoverable amount is estimated. An asset s recoverable amount is the higher of the asset s or cash-generating unit s value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset. An assessment is made at the end of each reporting period as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to profit or loss in the period in which it arises. 132 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

134 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Related parties 2.4 A party is considered to be related to the Group if: (a) the party is a person or a close member of that person s family (a) and that person (i) has control or joint control over the Group; (i) (ii) has significant influence over the Group; or (ii) (iii) is a member of the key management personnel of the (iii) Group or of a parent of the Group; or (b) the party is an entity where any of the following conditions (b) applies: (i) the entity and the Group are members of the same group; (i) (ii) one entity is an associate or joint venture of the other (ii) entity (or of a parent, subsidiary or fellow subsidiary of the other entity); (iii) the entity and the Group are joint ventures of the same (iii) third party; (iv) one entity is a joint venture of a third entity and the other (iv) entity is an associate of the third entity; (v) the entity is a post-employment benefit plan for the benefit (v) of employees of either the Group or an entity related to the Group; 133

135 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Related parties (Continued) 2.4 (b) the party is an entity where any of the following conditions (b) applies: (Continued) (vi) the entity is controlled or jointly controlled by a person (vi) (a) identified in (a); (vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and (vii) (a)(i) (viii) the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group. (viii) Property, plant and equipment and depreciation Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced as intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly. 134 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

136 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property, plant and equipment and depreciation (Continued) 2.4 Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value (nil to 5% of cost) over its estimated useful life. The estimated useful lives of property, plant and equipment are as follows: 5% Land and buildings years Plant and machinery 5-10 years 5-10 Motor vehicles 5 years 5 Office equipment and furniture 3-5 years 3-5 Solar photovoltaic power stations year Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end. An item of property, plant and equipment including any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset. 135

137 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property, plant and equipment and depreciation (Continued) 2.4 Construction in progress represents property, plant and equipment under construction, which is stated at cost less any impairment losses, and is not depreciated. Cost comprises the direct costs of construction and capitalised borrowing costs on related borrowing funds during the period of construction. Construction in progress is reclassified to the appropriate category of property, plant and equipment when completed and ready for use. Investment properties Investment properties are interests in land and buildings held to earn rental income and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes; or for sale in the ordinary course of business. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at historical cost less accumulated depreciation and provision for any impairment in value. Depreciation is calculated on the straight-line basis to write off the cost of investment property to its residual value over its estimated useful life of 50 years. 50 Subsequent expenditure is charged to the asset s carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the costs of the item can be measured reliably; otherwise, the expenditures are recognised in profit or loss in the year in which they are incurred. 136 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

138 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investment properties (Continued) 2.4 If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its carrying amount at the date of reclassification becomes its cost for accounting purposes. If an item of property, plant and equipment becomes an investment property because its use has changed, the transfer does not change the carrying amount of the property transferred, nor does it change the cost of that property for measurement or disclosure purposes. Intangible assets (other than goodwill) Intangible assets acquired separately are measured on initial recognition at cost. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are subsequently amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. Software purchased is stated at cost less any impairment losses and is amortised on the straight-line basis over its estimated useful life of five years. 137

139 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Intangible assets (other than goodwill) (Continued) 2.4 Research and development costs All research costs are charged to profit or loss as incurred. Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditure which does not meet these criteria is expensed when incurred. Leases The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Group as a lessee The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. 138 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

140 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Leases (Continued) 2.4 Group as a lessee (Continued) (a) Right-of-use assets (a) Right-of-use assets are recognised at the commencement date of the lease (that is the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease terms and the estimated useful lives of the assets as follows: Plant and office premises 2-5 years 2-5 Leasehold land years If ownership of the leased asset transfers to the Group by the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. 139

141 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Leases (Continued) 2.4 Group as a lessee (Continued) (b) Lease liabilities (b) Lease liabilities are recognised at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for termination of a lease, if the lease term reflects the Group exercising the option to terminate the lease. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying asset. 140 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

142 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Leases (Continued) 2.4 Group as a lessee (Continued) (c) Short-term leases and leases of low-value assets (c) The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (that is those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the recognition exemption for leases of low-value assets to leases of office equipment that is considered to be of low value. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term. Group as a lessor When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each of its leases as either an operating lease or a finance lease. Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. When a contract contains lease and non-lease components, the Group allocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rental income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss and other comprehensive income due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. 141

143 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Leases (Continued) 2.4 Group as a lessor (Continued) Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee, are accounted for as finance leases. Investments and other financial assets Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income. The classification of financial assets at initial recognition depends on the financial asset s contractual cash flow characteristics and the Group s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15 in accordance with the policies set out for Revenue recognition below China Shuifa Singyes Energy Holdings Limited Annual Report 2020

144 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments and other financial assets (Continued) 2.4 In order for a financial asset to be classified and measured at amortised cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest ( SPPI ) on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model. The Group s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss. All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace. Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows: 143

145 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments and other financial assets (Continued) 2.4 Financial assets at amortised cost (debt instruments) Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. Financial assets designated at fair value through other comprehensive income (equity investments) Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity investments designated at fair value through other comprehensive income when they meet the definition of equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-byinstrument basis. 32 Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss and other comprehensive income when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other comprehensive income. Equity investments designated at fair value through other comprehensive income are not subject to impairment assessment. 144 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

146 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Derecognition of financial assets 2.4 A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised (i.e., removed from the Group s consolidated statement of financial position) when: the rights to receive cash flows from the asset have expired; or the Group has transferred its rights to receive cash flows from the asset, or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a passthrough arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. (a) (b) When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the assets. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group s continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. 145

147 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Impairment of financial assets 2.4 The Group recognises an allowance for expected credit losses ( ECLs ) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. General approach ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information. 146 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

148 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Impairment of financial assets (Continued) 2.4 General approach (Continued) The Group considers a financial asset in default when contractual payments are 180 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. 180 Debt investments at fair value through other comprehensive income and financial assets at amortised cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables and contract assets which apply the simplified approach as detailed below. Stage 1 Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs Stage 2 Financial instruments for which credit risk has increased significantly since initial recognition but that are not creditimpaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs Stage 3 Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs 147

149 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Impairment of financial assets (Continued) 2.4 Simplified approach For trade receivables and contract assets that do not contain a significant financing component or when the Group applies the practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. For trade receivables and contract assets that contain a significant financing component, the Group chooses as its accounting policy to adopt the simplified approach in calculating ECLs with policies as described above. Financial liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group s financial liabilities include trade and bills payables, other payables, bank advances for discounted bills, convertible bonds, senior notes and interest-bearing bank and other loans. 148 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

150 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial liabilities (Continued) 2.4 Subsequent measurement The subsequent measurement of financial liabilities depends on their classification as follows: Financial liabilities at amortised cost (loans and borrowings) After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised as well as through the effective interest rate amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in the statement of profit or loss and other comprehensive income. Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in profit or loss. 149

151 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Offsetting of financial instruments 2.4 Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis and, in the case of work in progress and finished goods, comprises direct materials, direct labour and an appropriate proportion of overheads. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal. Cash and cash equivalents For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group s cash management. For the purpose of the consolidated statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, which are not restricted as to use. 150 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

152 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Provisions 2.4 A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation. When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in profit or loss. Income tax Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity. Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the Group operates. Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. 151

153 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income tax (Continued) 2.4 Deferred tax liabilities are recognised for all taxable temporary differences, except: when the deferred tax liability arises from the initial recognition of goodwill on an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries and associates, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, and the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised, except: when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. 152 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

154 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income tax (Continued) 2.4 The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. 153

155 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Government grants 2.4 Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the costs, for which it is intended to compensate, are expensed. Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to profit or loss over the expected useful life of the relevant asset by equal annual instalments. Revenue recognition Revenue from contracts with customers Revenue from contracts with customers is recognised when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. 154 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

156 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue recognition (Continued) 2.4 Revenue from contracts with customers (Continued) When the contract contains a financing component which provides the customer with a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Group and the customer at contract inception. When the contract contains a financing component which provides the Group with a significant financial benefit for more than one year, revenue recognised under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in IFRS (a) Sale of products (a) Revenue from the sale of products is recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of the goods. (b) Sale of electricity (b) Revenue from the sale of electricity is recognised in the accounting period when electricity is generated and transmitted. 155

157 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue recognition (Continued) 2.4 Revenue from contracts with customers (Continued) (c) Tariff adjustment (c) Revenue from the tariff adjustment represents subsidies received and receivable from the government authorities in respect of the Group s solar power plant business. Tariff adjustment is recognised at its fair value where there is a reasonable assurance that the additional tariff will be received and the Group will comply with all attached conditions, if any. (d) Rendering of services (d) Revenue from the rendering of services is recognised, when the services are rendered. (e) Construction services (e) Revenue from the provision of construction services is recognised over time, using an input method to measure progress towards complete satisfaction of the service, because the Group s performance creates or enhances an asset that the customer controls as the asset is created or enhanced. The input method recognises revenue based on the proportion of the actual costs incurred relative to the estimated total costs for satisfaction of the construction services. 156 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

158 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue recognition (Continued) 2.4 Revenue from contracts with customers (Continued) (e) (Continued) (e) Claims to customers are amounts that the Group seeks to collect from the customers as reimbursement of costs and margins for scope of works not included in the original construction contract. Claims are accounted for as variable consideration and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. The Group uses the expected value method to estimate the amounts of claims because this method best predicts the amount of variable consideration to which the Group will be entitled. Revenue from other sources Rental income is recognised on a time proportion basis over the lease terms. Other income Interest income is recognised on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset. Dividend income is recognised when the shareholders right to receive payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably. 157

159 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Contract assets 2.4 A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. Contract assets are subject to impairment assessment, details of which are included in the accounting policies for impairment of financial assets. Contract liabilities A contract liability is recognised when a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer). Share-based payments The Company operates a share option scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group s operations. Employees (including directors) of the Group receive remuneration in the form of sharebased payments, whereby employees render services as consideration for equity instruments ( equity-settled transactions ). The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer using a binomial model. 158 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

160 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Share-based payments (Continued) 2.4 The cost of equity-settled transactions is recognised in employee benefit expense, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and the Group s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in the cumulative expense recognised as at the beginning and end of that period. Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be nonvesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions. For awards that do not ultimately vest because non-market performance and/or service conditions have not been met, no expense is recognised. Where awards include a market or nonvesting condition, the transactions are treated as vesting irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. 159

161 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Share-based payments (Continued) 2.4 Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified, if the original terms of the award are met. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payments, or is otherwise beneficial to the employee as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the Group or the employee are not met. However, if a new award is substituted for the cancelled award, and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings/loss per share. 160 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

162 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Other employee benefits 2.4 Pension schemes The employees of the Group s subsidiaries in Mainland China are required to participate in a central pension scheme operated by the local government. These subsidiaries and their employees are required to make monthly contributions calculated as a percentage of the employees wages and salaries, subject to certain ceilings and local practices set by the relevant local governments, to the central pension scheme. Other than the central pension scheme, the Group s subsidiaries in Mainland China have no legal obligation for retirement benefits beyond the contributions made. Contributions to these plans are charged to profit or loss as they become payable in accordance with the rules of the central pension scheme. In addition to the above, the Group also participates in a defined contribution Mandatory Provident Fund retirement benefit scheme (the MPF Scheme ) under the Mandatory Provident Fund Schemes Ordinance for its employees in Hong Kong. Contributions are made based on a percentage of the employees basic salaries and are charged to profit or loss as they become payable in accordance with the rules of the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an independently administered fund. Contributions to an accommodation fund administered by the Public Accumulation Funds Administration Centre are charged to profit or loss as incurred. 161

163 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Borrowing costs 2.4 Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Dividends Final dividends are recognised as a liability when they are approved by the shareholders in a general meeting. Proposed final dividends are disclosed in note 11 to the financial statements. 11 Foreign currencies The financial statements are presented in RMB. The functional currency of the Company is HK$. The Company s presentation currency is RMB because the Group s principal operations are carried out in Mainland China. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rates of exchange ruling at the end of the reporting period. Differences arising on settlement or translation of monetary items are recognised in profit or loss. 162 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

164 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Foreign currencies (Continued) 2.4 Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively). In determining the exchange rate on initial recognition of the related asset, expense or income on the derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration, the date of initial transaction is the date on which the Group initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group determines the transaction date for each payment or receipt of the advance consideration. The functional currencies of certain companies within the Group are currencies other than the RMB. As at the end of the reporting period, the assets and liabilities of these entities are translated into RMB at the exchange rates prevailing at the end of the reporting period and their profits or losses are translated into RMB at the weighted average exchange rates for the year. The resulting exchange differences are recognised in other comprehensive income and accumulated in the exchange fluctuation reserve. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss. 163

165 31 December SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES 3. The preparation of the Group s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future. Judgements In the process of applying the Group s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements: Property lease classification Group as lessor The Group has entered into commercial property leases. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the commercial property and the present value of the minimum lease payments not amounting to substantially all the fair value of the commercial property, that it retains substantially all the significant risks and rewards incidental to ownership of these properties which are leased out and accounts for the contracts as operating leases. 164 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

166 31 December SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued) Judgements (Continued) 3. Significant judgement in determining the lease term of contracts with renewal options The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate the lease (e.g., construction of significant leasehold improvements or significant customisation to the leased asset). Classification between investment properties and owner-occupied properties The Group determines whether a property qualifies as an investment property, and has developed criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independently of the other assets held by the Group. Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately or leased out separately under a finance lease, the Group accounts for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as an investment property. 165

167 31 December SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued) Judgements (Continued) 3. Revenue recognition The Group applies judgements in determining whether it is principally involved in the trading of goods. The Group concludes that it acts as a principal and recognises revenue in the gross amount when the Group has the ability to direct the use of goods and obtain substantially all of the remaining benefits from goods before transferring to the customers and has discretion in establishing the price for goods. Otherwise, the Group acts as an agent and recognises revenue in the net amount that it retains for its agency services. Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. 166 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

168 31 December SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued) Estimation uncertainty (Continued) 3. Construction services The Group s revenue from the provision of construction services is recognised over time, using an input method to measure progress towards complete satisfaction of the services, which requires estimation to be made by management. The stage of completion is estimated by reference to the actual costs incurred over the total budgeted costs, and the corresponding contract revenue is also estimated by management. Due to the nature of the activity undertaken in construction service, the date at which the activity is entered into and the date at which the activity is completed usually fall into different accounting periods. Hence, the Group reviews and revises the estimates of both contract revenue and contract costs in the budget prepared for each contract as the contract progresses. Where the actual contract revenue is less than expected or actual contract costs are more than expected, an expected loss may arise. No expected loss was recognised during the year ended 31 December 2020 (2019: nil). Impairment of goodwill The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating units and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill at 31 December 2020 was RMB10,542,000 (2019: RMB6,448,000). Further details are given in note 16 to the financial statements. 10,542,000 6,448,

169 31 December SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued) Estimation uncertainty (Continued) 3. Provision for ECLs on receivables and contract assets The Group uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns (i.e., by customer type). The provision matrix is initially based on the Group s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions are expected to deteriorate over the next year which can lead to an increased number of defaults, the historical default rates are adjusted. At each reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. The assessment of the correlation among historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and forecast economic conditions. The Group s historical credit loss experience and forecast of economic conditions may also not be representative of a customer s actual default in the future. The information about the ECLs on the Group s receivables and contract assets is disclosed in notes 24, 25 and 23 to the financial statements, respectively China Shuifa Singyes Energy Holdings Limited Annual Report 2020

170 31 December SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued) Estimation uncertainty (Continued) 3. Leases Estimating the IBR The Group cannot readily determine the interest rate implicit in a lease, and therefore, it uses an IBR to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group would have to pay, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when it needs to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary s functional currency). The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary s stand-alone credit rating). Corporate income tax ( CIT ) The Group s subsidiaries operating in Mainland China are subject to the PRC CIT. As a result of the fact that certain matters relating to PRC CIT have not been confirmed by the relevant local tax authorities, objective estimates based on currently enacted tax laws, regulations and other related policies are required in determining the provision for PRC CIT to be made. Where the final tax outcome of these matters is different from the amounts originally recorded, the differences will impact the income tax and tax provision in the period in which the final outcome is determined. The carrying amount of PRC CIT payable at 31 December 2020 was RMB102,010,000 (31 December 2019: RMB22,245,000). 102,010,000 22,245,

171 31 December SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued) Estimation uncertainty (Continued) 3. Useful lives and residual values of property, plant, equipment and investment properties In determining the useful lives and residual values of items of property, plant, equipment and investment properties, the Group has to consider various factors, such as technical or commercial obsolescence arising from changes or improvements in production, or from a change in the market demand for the product or service output of the asset, expected usage of the asset, expected physical wear and tear, the care and maintenance of the asset, and legal or similar limits on the use of the asset. The estimation of the useful life of the asset is based on the experience of the Group with similar assets that are used in a similar way. The depreciation amount will be adjusted if the estimated useful lives and/or the residual values of items of property, plant and equipment are different from the previous estimation. Useful lives and residual values are reviewed at each financial year end date taking into account changes in circumstances. 170 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

172 31 December SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued) Estimation uncertainty (Continued) Impairment of non-financial assets (other than goodwill) The Group assesses whether there are any indicators of impairment for all non-financial assets (including the right-of-use assets) at the end of each reporting period. Non-financial assets with definite lives are tested for impairment when there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of sell and its value in use. The calculation of the fair value less costs of sell is based on available data from binding sales transactions in an arm s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. The impairment of property, plant and equipment, investment properties and right-of-use assets as at 31 December 2020 was RMB94,889,000 (31 December 2019: nil), RMB4,201,000 (31 December 2019: nil) and RMB1,582,000 (31 December 2019: nil), respectively. Further details are contained in notes 13, 14 and 15 to the financial statements. Net realisable value of inventories Net realisable value of inventories is the estimated selling price in the ordinary course of business, less estimated costs to be incurred to completion and disposal. These estimates are based on the current market condition and the historical experience of selling products of a similar nature. It could change significantly as a result of changes in customers interests or competitor actions. Management reassesses these estimates at the end of each reporting period. The impairment provision for inventories as at 31 December 2020 was RMB3,519,000 (2019: 4,236,000) (note 22) ,889,000 4,201,000 1,582, ,519,000 4,236,

173 31 December SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued) Estimation uncertainty (Continued) 3. Deferred tax assets Deferred tax assets should be recognised when it is probable that taxable profits will be available against which the deferred tax assets can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The carrying value of deferred tax assets at 31 December 2020 was RMB241,047,000 (31 December 2019: RMB3,195,000). Further details are given in note 32 to the financial statements. 241,047,000 3,195, Deferred tax liabilities Deferred tax liabilities should be recognised for all taxable differences associated with investments in subsidiaries and associates except (a) when the Company is able to control the timing of the reversal of such temporary differences and it is probable that such temporary differences will not reverse in the foreseeable future. Significant management estimation is required to determine the amount of deferred tax liabilities associated with the Company s investments in subsidiaries, based upon the likely timing of the reversal of such temporary differences. The carrying value of deferred tax liabilities associated with investments in subsidiaries at 31 December 2020 was RMB86,860,000 (31 December 2019: RMB86,860,000). The carrying value of deferred tax liabilities associated with right-of-use assets and acquisition of subsidiaries at 31 December 2020 were RMB947,000 (31 December 2019: nil) and RMB22,574,000 (31 December 2019: nil), respectively. Further details are given in note 32 to the financial statements. (a) 86,860,000 86,860, ,000 22,574, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

174 31 December SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued) Estimation uncertainty (Continued) 3. Fair value of unlisted equity investments The unlisted equity investments have been valued based on a marketbased valuation technique as detailed in note 44 to the financial statements. The valuation requires the Group to determine the comparable public companies (peers) and select the price multiple. In addition, the Group makes estimates about the discount for illiquidity and size differences. The Group classifies the fair value of these investments as Level OPERATING SEGMENT INFORMATION AND REVENUE 4. Revenue represents an appropriate proportion of contract revenue from construction contracts, net of government surcharges; and the invoiced value of goods and electricity sold, and net of value-added tax and government surcharges. The Group s revenue and contribution to profit for the year were mainly derived from the construction and installation of curtain walls (including solar power products), and operation and management of solar photovoltaic power stations, which are regarded as a single reportable segment in a manner consistent with the way in which information is reported internally to the Group s senior management for the purpose of resource allocation and performance assessment. In addition, the principal assets employed by the Group are located in Mainland China. Accordingly, no segment analysis is presented other than entity-wide disclosures. 173

175 31 December OPERATING SEGMENT INFORMATION AND REVENUE (Continued) 4. (a) Revenue from contracts with customers (a) (i) Disaggregated revenue information (i) RMB 000 % RMB 000 % % % Revenue from contracts with customers Construction contracts 3,705, ,646, Sale of products 1,357, , Sale of electricity 129, , Thermal supply 188, Rendering of design and consultation services 19, , Revenue 5,400, ,306, Tariff adjustment* * 196, ,857 5,597,551 3,486,376 * Tariff adjustment represents compensation receivable from the State Grid Corporation of China ( State Grid ) in respect of the Group s solar photovoltaic power station operation business, which will be settled subsequent to State Grid s receipt of fund from the relevant government authorities. * 174 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

176 31 December OPERATING SEGMENT INFORMATION AND REVENUE (Continued) 4. (a) Revenue from contracts with customers (Continued) (a) (i) Disaggregated revenue information (Continued) (i) Geographical markets RMB 000 % RMB 000 % % % Domestic Mainland China* * 5,140, ,077, Oceania 187, , Hong Kong 47, , Malaysia 23, , Macau 1,941 6, ,400, ,306, * The place of domicile of the Group s principal operating subsidiaries is Mainland China. The principal revenues of the Group are generated in Mainland China. * 175

177 31 December OPERATING SEGMENT INFORMATION AND REVENUE (Continued) 4. (a) Revenue from contracts with customers (Continued) (a) (i) Disaggregated revenue information (Continued) (i) RMB 000 RMB 000 Timing of revenue recognition Products transferred at a point in time 1,675, ,866 Services transferred over time 3,725,731 2,655,653 Total revenue from contracts with customers 5,400,999 3,306,519 The following table shows the amounts of revenue recognised in the current reporting period that were included in the contract liabilities at the beginning of the reporting period and recognised from performance obligations satisfied in previous periods: RMB 000 RMB 000 Revenue recognised that was included in 29 contract liabilities at the beginning of the reporting period (note 29): Construction contracts 32,118 56,137 Sale of products 13,976 42,667 46,094 98, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

178 31 December OPERATING SEGMENT INFORMATION AND REVENUE (Continued) 4. (a) Revenue from contracts with customers (Continued) (a) (ii) Performance obligations (ii) Information about the Group s performance obligations is summarised below: Sale of products The performance obligation is satisfied upon delivery of the products and payment is generally due within 90 to 180 days from delivery, except for small and new customers, where payment is normally expected to be settled shortly after delivery of goods. No credit period is set by the Group for small and new customers. Sale of electricity The performance obligation is satisfied at the point in time upon transmission of electricity to purchasing companies or grid companies. The payment is generally due within 30 days from billing. 30 Thermal supply The performance obligation is satisfied at the point in time upon transmission of steam to companies in Qilu Chemical Industrial Park in Zibo City, Shandong Province. The payment is generally due within 30 days from the 30 date of billing. 177

179 31 December OPERATING SEGMENT INFORMATION AND REVENUE (Continued) 4. (a) Revenue from contracts with customers (Continued) (a) (ii) Performance obligations (Continued) (ii) Rendering of services The performance obligation is satisfied over time as services are rendered and payment is generally due upon service rendered. Construction services The performance obligation is satisfied over time as services are rendered and payment is generally due within 30 to 180 days from the date of billing. A certain 30 percentage of payment is retained by customers until the 180 end of the retention period as the Group s entitlement to the final payment is conditional on the satisfaction of the service quality by the customers over a certain period as stipulated in the contracts. As at 31 December 2020, the aggregate amount of the transaction price allocated to the remaining performance obligations under the Group s existing contracts was approximately RMB1,396,756,000 (31 December 2019: RMB1,297,045,000). This amount represents the revenue 1,396,756,000 expected to be recognised in the future from contracts for construction services and sale of products entered 1,297,045,000 into by the customers with the Group. The Group will recognise the expected revenue in future when or as the construction work and sale of products are completed, which is expected to occur within 2 years. 178 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

180 31 December OPERATING SEGMENT INFORMATION AND REVENUE (Continued) (b) Non-current assets 4. (b) RMB 000 % RMB 000 % % % Mainland China 4,719, ,618, Hong Kong 14, , Oceania 13, , Others ,747, ,650, The non-current asset information above is based on the locations of the assets and excludes investments in associates, deferred tax assets and equity investments designated at fair value through other comprehensive income. Information about major customers Revenue derived from sales to a single customer including sales to a group of entities which are known to be under common control of that customer, which amounted to 10% or more of the total revenue is set out below: 10% RMB 000 RMB 000 Customer A A * 386,491 Customer B B * 380,828 Customer C C 615,709 * * Less than 10% * 10% 179

181 31 December OTHER INCOME AND GAINS An analysis of other income and gains is as follows: RMB 000 RMB 000 Deferred income released to profit or loss over the expected useful lives of the related assets 33 (note 33) 13,856 13,373 Bank interest income 2, Gain on bargain purchase (note 38) 38 7,445 Interest income on amounts due 40(b) from related parties (note 40(b)) 646 Government grants* * 9,815 24,840 Gain on disposal of 19 associates (note 19) 31,768 36,274 Gain on repurchase of 31 senior notes (note 31) 209,444 Gain on cancellation of 31 senior notes (note 31) 1,655 Waiver of interest on an other loan 13,087 Foreign exchange gain, net (note 7) 7 143,160 12,070 Operating lease 15 rental income (note 15) 13,891 4,965 Compensation for a performance 38 commitment (note 38) 8,983 Gain on debt restructuring 1,780 Gain on settlement of financial assets 7 at fair value through profit or loss (note 7) 1,003 Reversal of provision for compensation for breach of contracts 67,251 Others 4, , ,563 * There were no unfulfilled conditions or contingencies relating to these grants. * 180 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

182 31 December FINANCE COSTS 6. An analysis of finance costs is as follows: Notes RMB 000 RMB 000 Interest on bank and other loans , ,626 Interest on discounted bills receivable 41, 42 2,200 2,067 Interest on senior notes 31, , ,754 Interest on amounts due to related parties 40(a), 42 38,903 Acceleration of unwinding interest 31, 42 8,856 Interest on lease liabilities 15(b), Interest on convertible bonds 5,332 Others 54 2, , ,488 Less: interest capitalised 42 (20,041) 353, ,

183 31 December PROFIT/(LOSS) BEFORE TAX The Group s profit/(loss) before tax is arrived at after charging/ (crediting): Notes RMB 000 RMB 000 Cost of construction services and design services 3,175,223 2,704,899 Cost of inventories sold 1,254, ,829 Cost of electricity sold 149, ,521 Cost of steam sold 136,645 Depreciation of property, plant and equipment , ,696 Depreciation of investment properties 14 9,453 4,560 Depreciation of right-of-use assets 15(a) 7,618 10,089 Amortisation of other intangible assets 17 5, Total depreciation and amortisation 214, ,328 Employee benefit expense (including directors and chief 8 executive s remuneration (note 8): Wages and salaries and relevant benefits 159, ,496 Pension scheme contributions 3,769 6,983 Equity-settled share option expense , , ,065 Lease payments not included in the measurement of lease liabilities 15(c) 3,832 6,316 Research costs 37,746 17,726 Auditors remuneration 9,930 9,550 Impairment of financial and contract assets, net: Trade receivables 24 31, ,605 Contract assets ,811 55,889 Financial assets included in prepayments, other receivables and other assets 25 82,138 10, , , China Shuifa Singyes Energy Holdings Limited Annual Report 2020

184 31 December PROFIT/(LOSS) BEFORE TAX (Continued) Notes RMB 000 RMB 000 Write-down of inventories to net realisable value 4,236 Impairment of property, plant and equipment 13 94,889 Impairment of investment properties 14 4,201 Impairment of right-of-use assets 15(a) 1,582 Gain on bargain purchase 5 (7,445) Gain on disposal of associates 5 (31,768) (36,274) Operating lease rental income 5 (13,891) (4,965) Exchange gain, net 5 (143,160) (12,070) Gain on settlement of financial assets at fair value through profit or loss 5 (1,003) Loss on disposal of items of property, plant and equipment 4,

185 31 December DIRECTORS AND CHIEF EXECUTIVE S REMUNERATION 8. Directors and chief executive s remuneration for the year, disclosed pursuant to the Listing Rules, section 383(1) (a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part 2 of the Companies (Disclosure of Information about Benefits of Directors) Regulation, is as follows: 383(1) (a) (b) (c) (f) RMB 000 RMB 000 Fees 1,683 4,007 Other emoluments: Salaries, allowances and benefits in kind 1,381 2,294 Pension scheme contributions ,147 6, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

186 31 December DIRECTORS AND CHIEF EXECUTIVE S REMUNERATION (Continued) 8. Salaries, allowances Pension and benefits scheme Total fees in kind contributions remuneration RMB 000 RMB 000 RMB 000 RMB Executive directors: Mr. Liu Hongwei (a) (a) ,058 Mr. Wang Dongwei (c) (c) Mr. Chen Fushan (c) (c) Mr. Zheng Qingtao (c) (c) 1,111 1, ,575 Non-executive directors: Ms. Wang Suhui (c) (c) Mr. Zhang Jianyuan (c) (c) Independent non-executive directors: Dr. Wang Ching Mr. Yick Wing Fat, Simon Dr. Tan Hongwei ,683 1, ,

187 31 December DIRECTORS AND CHIEF EXECUTIVE S REMUNERATION (Continued) 8. Salaries, allowances Pension and benefits scheme Total Fees in kind contributions remuneration RMB 000 RMB 000 RMB 000 RMB Executive directors: Mr. Liu Hongwei (a) (a) 1, ,523 Mr. Xiong Shi (b) (b) Mr. Xie Wen (b) (b) 1, ,939 Mr. Zheng Qingtao (c) (c) Mr. Wang Dongwei (c) (c) Mr. Chen Fushan (c) (c) 3,152 1, ,082 Non-executive directors: Mr. Zhuo Jianming (b) (b) Mr. Li Hong (b) (b) Ms. Wang Suhui (c) (c) Mr. Zhang Jianyuan (c) (c) Independent non-executive directors: Dr. Wang Ching Mr. Yick Wing Fat, Simon Dr. Tan Hongwei ,007 2, , China Shuifa Singyes Energy Holdings Limited Annual Report 2020

188 31 December DIRECTORS AND CHIEF EXECUTIVE S REMUNERATION (Continued) 8. Notes: (a) Mr. Liu Hongwei resigned as the chief executive officer of the Company (a) on 28 November 2019 while remained as an executive director of the Company. (b) Mr. Xiong Shi and Mr. Xie Wen resigned as the Company s executive (b) directors on 28 November Mr. Zhuo Jianming and Mr. Li Hong resigned as the Company s non-executive directors on 28 November (c) Mr Zheng Qingtao, Mr. Wang Dongwei, and Mr. Chen Fushan were (c) appointed as the Company s executive directors on 28 November Ms. Wang Suhui and Mr. Zhang Jianyuan were appointed as the Company s non-executive directors on 28 November Except Mr Zheng Qingtao, these directors have been entitled to remuneration since 1 January Mr Zheng Qingtao is not entitled to any remuneration from the Company as he is also a senior executive of Shuifa Group. In the opinion of the Directors, it is not practical to apportion his services as a director of the Company and as a senior executive of Shuifa Group. There was no arrangement under which a director or the chief executive officer waived or agreed to waive any remuneration during the year (2019: nil). 187

189 31 December FIVE HIGHEST PAID EMPLOYEES 9. The five highest paid employees during the year included three directors (2019: two directors), details of whose remuneration are set out in note 8 above. Details of the remuneration for the year of the remaining two (2019: three) highest paid employees who are neither a director nor chief executive of the Company are as follows: RMB 000 RMB 000 Salaries, allowances and benefits in kind 2,528 4,077 Pension scheme contributions ,560 4,131 The number of non-director and non-chief executive highest paid employees whose remuneration fell within the following bands is as follows: Number of employees HK$1,000,001 to HK$1,500,000 1,000,001 1,500, HK$1,500,001 to HK$2,500,000 1,500,001 2,500, HK$2,500,001 to HK$3,500,000 2,500,001 3,500, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

190 31 December INCOME TAX 10. The Group is subject to income tax on an entity basis on profits arising in or derived from the respective countries or jurisdictions in which members of the Group are domiciled and operate. Pursuant to the rules and regulations of Bermuda, Samoa and the British Virgin Islands, the Group is not subject to any income tax in Bermuda, Samoa and the British Virgin Islands. No provision for Macau, Malaysia, Singapore and Nigeria profits tax has been made as the Group had no assessable profits derived from or earned in Macau, Malaysia, Singapore and Nigeria during the year. Mainland China profits tax has been provided at the respective CIT rates applicable to the subsidiaries located in Mainland China as determined in accordance with the relevant income tax rules and regulations of the PRC for the year. The major components of income tax charge/(credit) for the year are as follows: RMB 000 RMB 000 Current Charge for the year: Mainland China 113,503 13,775 Hong Kong 2, Deferred (234,158) (2,458) (118,181) 11,

191 31 December INCOME TAX (Continued) 10. A reconciliation of the tax charge/(credit) applicable to profit/(loss) before tax at the applicable tax rates for the countries or jurisdictions in which companies within the Group are domiciled to the tax charge/ (credit) at the Group s effective tax rate is as follows: Notes RMB 000 RMB 000 Profit/(loss) before tax 202,965 (976,452) At the applicable tax rates (a) 33,866 (159,649) Effect of tax holiday (a) (328) Losses attributable to associates (1,577) (2,045) Income not subject to tax (b) (58,966) (16,376) Expenses not deductible for tax (c) 42,260 47,882 Tax effect of additional tax deduction for research costs incurred (1,131) (674) motor vehicles purchased 14 (187) Recognition of deferred tax previously not recognised (142,724) Deductible temporary differences not recognised in current year 15,964 97,262 Tax losses utilised from previous years which were not recognised before (18,763) (2,045) Tax losses not recognised 12,876 47,518 Tax charge/(credit) at the Group s effective tax rate (118,181) 11, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

192 31 December INCOME TAX (Continued) 10. (a) The applicable CIT rate for Mainland China subsidiaries is 25% except for certain subsidiaries that are entitled to preferential tax rates as discussed below: (a) 25% For Mainland China subsidiaries which are qualified as High and New Technology Enterprises, they are entitled to a preferential tax rate of 15%. For subsidiaries engaging in encouraged industries in Western China, they are entitled to a preferential tax rate of 15% for the period from 1 January 2011 to 31 December For subsidiaries engaging in the approved projects of solar power station construction, they are exempted from CIT for the first three years and are entitled to a 50% tax reduction for the subsequent three years since their respective first revenue-generating years. Thereafter, they are subject to CIT at a rate of 25% or 15%. 15% 15% 25% 15% (b) Income not subject to tax mainly consists of unrealised foreign (b) exchange gains and the reversal of provision for compensation for breach of contracts. (c) Expenses not deductible for tax mainly consist of equity-settled (c) share option expenses, finance costs incurred in offshore companies and the fair value losses on derivative financial instruments (if any). 191

193 31 December DIVIDENDS 11. The Directors recommended a final dividend of HK$0.028 per ordinary share for the year ended 31 December 2020 (2019 final dividend: nil). The proposed dividend is subject to approval by the shareholders of the Company at the forthcoming annual general meeting earnings/(loss) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY 12. The calculation of the basic earnings (2019: loss) per share amount is based on the profit (2019: loss) for the year attributable to ordinary equity holders of the Company, and the weighted average number of ordinary shares of 2,521,081,780 (2019: 991,219,200) in issue during the year. 2,521,081, ,291,200 No adjustment has been made to the basic earnings/(loss) per share amounts presented for the years ended 31 December 2020 and 2019 in respect of a dilution as the exercise prices of the Company s outstanding share options were higher than the average market prices for the Company s shares during the current and prior years. 192 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

194 31 December PROPERTY, PLANT AND EQUIPMENT 13. O office Solar Land and plant and motor equipment photovoltaic Construction buildings machinery vehicles and furniture power stations in progress total 31 December 2020 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Cost At 1 January ,301, ,962 15,494 46,668 3,159, ,296 5,100,571 Additions 1,713 11, , , ,667 Transfers 6,626 11, ,006 (42,432) Acquisition 38 of subsidiaries (note 38) 104, ,454 20, ,493 Disposals (90) (249) (689) (7) (1,035) Transfers to investment properties (note 14) 14 (58,753) (58,753) Exchange realignment (1,196) (73) (290) (951) (59) (2,569) At 31 December ,249, ,747 15,790 59,908 3,202, ,410 5,334,374 Accumulated depreciation and impairment At 1 January , ,392 14,822 35, , ,481 Depreciation provided 7 for the year (note 7) 23,545 37, , , ,572 Acquisition of subsidiaries (note 38) 38 3, ,495 10,416 Disposals (176) (655) (192) (1,023) Impairment provided for the year (note 7) 7 41,019 4, ,042 94,889 Transfers to investment properties (note 14) 14 (8,716) (8,716) Exchange realignment (281) (66) (125) (128) (600) At 31 December , ,584 15,105 40, ,916 1,266,019 Net carrying amount At 1 January ,140, , ,984 2,657, ,296 4,122,090 At 31 December ,033, , ,778 2,519, ,410 4,068,

195 31 December PROPERTY, PLANT AND EQUIPMENT (Continued) 13. Office Solar Land and Plant and Motor equipment photovoltaic Construction buildings machinery vehicles and furniture power stations in progress Total 31 December 2019 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Cost At 1 January ,554, ,362 17,760 49,225 3,129, ,175 5,315,456 Additions 693 8, ,729 46,999 62,303 Transfers 3,638 15,596 24,088 (43,322) Disposals (3,516) (8,850) (2,309) (2,816) (108) (17,599) Transfers to investment properties (254,065) (5,314) (259,379) Other transfer-out (1,255) (1,255) Exchange realignment ,045 At 31 December ,301, ,962 15,494 46,668 3,159, ,296 5,100,571 Accumulated depreciation and impairment At 1 January , ,884 15,975 32, , ,277 Depreciation provided 7 for the year (note 7) 29,483 32, , , ,696 Disposals (38) (5,241) (2,138) (1,665) (43) (9,125) Transfers to investment properties (44,649) (44,649) Exchange realignment At 31 December , ,392 14,822 35, , ,481 Net carrying amount At 1 January ,378, ,478 1,785 16,835 2,751, ,175 4,475,179 At 31 December ,140, , ,984 2,657, ,296 4,122, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

196 31 December PROPERTY, PLANT AND EQUIPMENT (Continued) 13. Notes: (a) At 31 December 2020, certain of the Group s buildings, machinery and (a) motor vehicles with an aggregate net carrying amount of approximately 631,617,000 RMB631,617,000 (31 December 2019: RMB972,450,000) were pledged to secure bank and other loans granted to the Group (note 30(a)). 972,450,000 30(a) (b) As at 31 December 2020, certain of the Group s solar photovoltaic power (b) stations with a net carrying amount of approximately RMB1,908,665,000 1,908,665,000 (31 December 2019: RMB1,280,636,000) were pledged to secure bank and other loans granted to the Group (note 30(b)). 1,280,636,000 30(b) (c) As at 31 December 2020, the Group s solar photovoltaic power plant (c) under construction with a net carrying amount of approximately 272,874,000 RMB272,874,000 (31 December 2019: nil) has been used as collateral for the Group s bank and other loans (note 30(c)). 30(c) (d) As at 31 December 2020, the application for the property ownership (d) certificates of certain buildings with a net carrying amount of 215,415,000 RMB215,415,000 (31 December 2019: RMB253,152,000) was in progress. Those buildings can only be sold, transferred or mortgaged 253,152,000 when their relevant ownership certificates have been obtained. In the opinion of the Directors, there are no major obstacles for the Group to obtain these building ownership certificates. (e) As at 31 December 2019, the right on the annual return generated from a solar photovoltaic power station with a net carrying amount of RMB26,089,000 was pledged to secure an other loan obtained by the Group from an independent third party for twenty years. (e) 26,089,000 (f) As at 31 December 2019, the right on the annual return generated from a solar photovoltaic power station with a net carrying amount of RMB572,497,000 was pledged to secure other loans granted to the Group. (f) 572,497,

197 31 December PROPERTY, PLANT AND EQUIPMENT (Continued) Notes: (Continued) 13. (g) During the year ended 31 December 2020, in light of loss incurred by (g) Hunan Singyes and Singyes Xinye and the adverse change of market conditions, management had performed impairment testing on their idle non-financial assets. For the purpose of impairment testing, the Hunan Industrial Park cash-generating unit ( Hunan Industrial Park CGU, comprising lands and buildings and right-of-use assets) and the Singyes Xinye Park cash-generating unit ( Singyes Xinye Park CGU ) were treated as separate CGUs and other assets were treated as individual assets. The recoverable amounts were determined based on fair value less costs of disposal calculations (Level 3 of fair value hierarchy). The valuation was performed by Zhuhai Dewei Real Estate and Land Appraisal Company Limited ( Zhuhai Dewei ), an independent professionally qualified valuer. Selection criteria of the external valuer include market knowledge, reputation, independence and whether professional standards are maintained. (h) Fair value hierarchy disclosure (h) The fair value of Hunan Industrial Park CGU, Singyes Xinye Park CGU and the Group s investment properties were measured using significant unobservable inputs (Level 3 of fair value hierarchy). A reconciliation of impairment provisions while fair value categorised within Level 3 of the fair value hierarchy is as follows: Recoverable Carrying Impairment amounts amounts provision RMB 000 RMB 000 RMB 000 Hunan Industrial Park CGU Land and buildings 300, ,890 32,313 Right-of-use assets (note 15(a)) 15(a) 14,713 16,295 1,582 Singyes Xinye Park CGU Land and buildings 2,126 10,832 8,706 Investment properties (note 14) 14 23,809 28,010 4, , ,027 46, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

198 31 December PROPERTY, PLANT AND EQUIPMENT (Continued) 13. Notes: (Continued) (h) Fair value hierarchy disclosure (Continued) (h) Set out below is an illustration of the valuation techniques used and the key inputs to the valuation of the Group s non-financial properties: Significant Weighted Valuation technique unobservable inputs average inputs Potential gross rental income (per square/month) Plant: RMB19.5~22 Office: RMB Discounted cash flow Vacancy rate 5% projections Annual growth rate 3% of net income Rate of return 5.5% (i) According to the latest guidance of generated-electricity price issued (i) by the National Development and Reform Commission, in the opinion of the Directors, the recoverable amount of two idle solar photovoltaic power stations pending grid connection were estimated to be less than their carrying amounts, and the carrying amounts of the relevant solar photovoltaic power stations were reduced to the extent of their recoverable amounts with an impairment loss of RMB49,042,000 (2019: 49,042,000 nil). 197

199 31 December PROPERTY, PLANT AND EQUIPMENT (Continued) 13. Notes: (Continued) (i) (Continued) (h) The recoverable amounts are determined based on value in use calculations. Those calculations use cash flow projections based on financial budgets approved by management in the remaining useful life and assuming pre-tax discount rates ranging between 9.14% and 9.14% 9.16% per annum. The period used to extrapolate the cash flows of two 9.16% idle solar photovoltaic power stations was nineteen-year and twenty-year, respectively, which represent the remaining useful lives of the relevant solar photovoltaic power stations. (j) At 31 December 2020, due to the adverse change of market conditions, (j) in the opinion of the Directors, the carrying amounts of idle machinery manufacturing solar products were reduced to the extent of their recoverable amounts with an impairment loss of RMB4,828,000 (2019: nil) based on quoted prices in active markets for identical assets (Level 1). 4,828, INVESTMENT PROPERTIES RMB 000 RMB 000 Carrying amount at 1 January 293,247 74,344 Additions 1,538 Transfers from owner-occupied 13 properties (note 13) 50, ,730 Transfers from right-of-use assets (note 15(a)) 15(a) 3,511 7,195 Depreciation provided for the year 7 (note 7) (9,453) (4,560) Impairment (notes 7, 13(h)) 7 13(h) (4,201) Carrying amount at 31 December 333, , China Shuifa Singyes Energy Holdings Limited Annual Report 2020

200 31 December INVESTMENT PROPERTIES (Continued) 14. Notes: (a) As at 31 December 2020, the fair values of the investment properties (a) were estimated to be approximately RMB420,845,000 (31 December 2019: RMB328,291,000). The valuation was performed by Zhuhai 420,845,000 Dewei. The valuation was estimated using discounted cash flow 328,291,000 projections based on reliable estimates of future rental income or market rents for similar properties in the same location and condition, where appropriate. The fair value measurement hierarchy of the investment properties requires certain significant unobservable inputs (Level 3). (b) As at 31 December 2020, the investment properties were leased to (b) the third parties, except for certain investment properties with an 23,020,000 aggregate net carrying amount of RMB23,020,000 (31 December 2019: RMB23,921,000) which were leased to an associate under operating 23,921,000 leases. (c) As at 31 December 2020, the application for the property ownership (c) certificates of certain of the Group s investment properties with a net 63,161,000 carrying amount of approximately RMB63,161,000 (31 December 2019: RMB64,481,000) was in progress. These investment properties can be 64,481,000 sold, transferred or mortgaged when their relevant ownership certificates have been obtained. In the opinion of the Directors, there are no major obstacles for the Group to obtain these investment properties ownership certificates. (d) As at 31 December 2020, certain of the Group s investment properties (d) with a net carrying amount of approximately RMB84,918,000 (31 84,918,000 December 2019: RMB7,537,000) were pledged to secure the bank loan granted to the Group (note 30(d)). 7,537,000 30(d) 199

201 31 December LEASES The Group as a lessee 15. The Group has lease contracts for plant and office premises used in its operations. Lump sum payments were made upfront to acquire certain of the Group s leasehold land from the owners with lease periods of 25 to 50 years, and no ongoing payments will be made under the terms of these leases. Leases of plant and office premises have lease terms between 2 and 5 years. Generally, the Group is restricted from assigning and subleasing the leased assets outside the Group (a) Right-of-use assets (a) The carrying amounts of the Group s right-of-use assets and the movements during the year are as follows: plant and office premises Leasehold Total land RMB 000 RMB 000 RMB 000 As at 1 January , , ,088 Additions 1,727 23,892 25,619 Acquisition of subsidiaries 38(2) (note 38(2)) 1, ,399 Terminations (339) (339) Lease modification (313) (313) Transfers to investment 14 properties (note 14) (3,511) (3,511) Depreciation charged (note 7) 7 (2,134) (5,484) (7,618) Exchange realignment (9) (9) Impairment (notes 7, 13(h)) 7 13(h) (1,582) (1,582) As at 31 December , , , China Shuifa Singyes Energy Holdings Limited Annual Report 2020

202 31 December LEASES (Continued) The Group as a lessee (Continued) 15. (a) Right-of-use assets (Continued) (a) Plant and office premises Leasehold Total land RMB 000 RMB 000 RMB 000 As at 1 January , , ,135 Additions 1,296 3,605 4,901 Terminations (679) (679) Transfers to investment properties (note 14) (7,195) (7,195) Depreciation charged (note 7) 7 (2,360) (7,729) (10,089) Exchange realignment As at 31 December , , ,

203 31 December LEASES (Continued) The Group as a lessee (Continued) 15. (a) Right-of-use assets (Continued) (a) At 31 December 2020, certain of the Group s leasehold land with a net carrying amount of approximately RMB50,122,000 (31 December 2019: RMB78,087,000) were pledged to secure bank and other loans granted to the Group (note 30(e)). 50,122,000 78,087,000 30(e At 31 December 2020, certain of the Group s leasehold land with a net carrying amount of approximately RMB125,023,000 (31 December 2019: RMB104,392,000) were sub-leased from certain grantees of the land use rights and therefore the relevant land use rights were not registered under the name of the Group and they cannot be sold, transferred or mortgaged by the Group. 125,023, ,392,000 As at 31 December 2020, certain of the Group s leasehold land with a net carrying amount of RMB22,429,000 (31 December 2019: RMB22,345,000) was pledged to guarantee the project deposit of RMB41,000,000 paid by an independent third party to the Hunan Jiuhua Government on behalf of Hunan Singyes (note 28). 22,429,000 22,345,000 41,000, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

204 31 December LEASES (Continued) The Group as a lessee (Continued) 15. (b) Lease labilities (b) The carrying amount of lease liabilities and the movements during the year are as follows: RMB 000 RMB 000 Carrying amount at 1 January 8,457 10,722 New leases 25,106 1,296 Acquisition of subsidiaries 38(2 (note 38(2)) 1,489 Accretion of interest recognised 6 during the year (note 6) Payments (8,886) (3,382) Termination (282) (702) Lease modification (313) Derecognition as a result of COVID-19 Covid-19-related rent concessions (52) Exchange realignment (45) 13 Carrying amount at 31 December 26,200 8,457 Analysed into: Current portion 3, Non-current portion 22,694 7,502 The maturity analysis of lease liabilities is disclosed in note 45 to the financial statements

205 31 December LEASES (Continued) The Group as a lessee (Continued) 15. (c) The amounts recognised in profit or loss in relation to leases are (c) as follows: RMB 000 RMB 000 Interest on lease liabilities 6 (note 6) Depreciation charge of right-of-use assets 7,618 10,089 Expense relating to short-term leases (included in selling and distribution expenses and 7 administrative expenses) (note 7) 3,832 6,316 Total amount recognised in profit or loss 12,176 16, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

206 31 December LEASES (Continued) The Group as a lessee (Continued) 15. (d) The total cash outflow for leases is disclosed in note 42(c) to the (d) financial statements. 42(c) The Group as a lessor The Group leases its investment properties consisting of certain of its buildings under operating lease arrangements. The terms of the leases generally require the tenants to pay security deposits and provide for periodic rent adjustments according to the then prevailing market conditions. Rental income recognised by the Group during the year was RMB13,891,000 (2019: RMB4,965,000) (note 5). 13,891,000 4,965,000 5 At 31 December 2020, the undiscounted lease payments receivables by the Group in future periods under non-cancellable operating leases with its tenants are as follows: RMB 000 RMB 000 Within one year 17,206 8,309 After one year but within two years 10,764 7,957 After two years but within three years 4,032 3,943 After three years 1,050 33,052 20,

207 31 December GOODWILL RMB 000 RMB 000 Cost and net carrying amount: Shenzhen Kangsheng 6,448 6,448 Foshan Xinye (note 38) 38 1,826 Foshan Keliyuan (note 38) 38 2,160 Zibo Qilu (note 38) ,542 6,448 Impairment testing of goodwill Goodwill acquired through business combinations is allocated to each relevant cash-generating unit for impairment testing: The recoverable amount of each cash-generating unit has been determined based on a value in use calculation using cash flow projections based on financial budgets covering an projection period approved by management. The pre-tax discount rates applied to the cash flow projections ranged from 10.26% to 19.8% (31 December 2019: 19.8%). Among them, the growth rates used to extrapolate the cash flows of Shenzhen Kangsheng CGU was 3% based on a five-year period (31 December 2019: 3%), and the period used to extrapolate the cash flows of Foshan Xinye and Foshan Keliyuan CGUs was based on twenty-year and twenty one-year, respectively, which represent the remaining useful lives of their non-current assets % 19.8% 19.8% 3% 3% 206 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

208 31 December GOODWILL (Continued) Impairment testing of goodwill (Continued) 16. Key assumptions used in the value in use calculations: Budgeted revenue The budgeted revenue is based on the historical data and management s expectation on the future market. Budgeted gross margins The basis used to determine the value assigned to the budgeted gross margins is the average gross margins achieved in the year immediately before the budget year, increased for expected efficiency improvements, and expected market development. Pre-tax discount rates The discount rates used are before tax and reflect specific risks relating to each cash-generating unit. The values assigned to the key assumptions on market development of the cash-generating unit and discount rate are consistent with external information sources. The Directors had estimated the reasonably possible changes in those factors and acknowledged that, even if the most unfavourable possible values were assigned to those factors, the recoverable amount then calculated, after incorporating any consequential effects of such assignments on the other variables used to measure the recoverable amount of each cash-generating unit, would still exceed its carrying amount. 207

209 31 December OTHER INTANGIBLE ASSETS 17. Supplier 2020 relationship Software Total RMB 000 RMB 000 RMB 000 Cost At 1 January 7,158 7,158 Acquisition of 38 subsidiaries (note 38) 94,833 94,833 Exchange realignment (7) (7) At 31 December 94,833 7, ,984 Accumulated amortisation At 1 January 5,553 5,553 Amortisation provided 7 during the year (note 7) 4, ,272 Exchange realignment (2) (2) At 31 December 4,535 6,288 10,823 Net carrying amount At 31 December 90, ,161 At 1 January 1,605 1, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

210 31 December OTHER INTANGIBLE ASSETS (Continued) Software Total RMB 000 RMB 000 Cost At 1 January 6,626 6,626 Additions Exchange realignment 5 5 At 31 December 7,158 7,158 Accumulated amortisation At 1 January 4,568 4,568 Amortisation provided 7 during the year (note 7) Exchange realignment 2 2 At 31 December 5,553 5,553 Net carrying amount At 31 December 1,605 1,605 At 1 January 2,058 2,

211 31 December PAYMENTS IN ADVANCE Note RMB 000 RMB 000 Advance payments in respect of: Purchase of machinery 1,843 16,974 Purchase of office properties (a) 17,555 Others 2, ,725 17,684 (a) The balance generated from the purchase of office properties was (a) an advance made to Shandong Herun Properties Limited ( Herun Properties ), a fellow subsidiary under control of Shuifa Group (note 40(c)). 40(c) 19. INVESTMENTS IN ASSOCIATES RMB 000 RMB 000 Unlisted investments, at cost 1,200 36,200 Share of profits/(losses) of associates 773 (18,375) Aggregate carrying amount of the Group s investments in the associates 1,973 17,825 The Group s balances of trade receivables, contract assets, other payables and accruals and contract liabilities with the associates are disclosed in note 40(e) to the financial statements. 40(e) In the opinion of the Directors, there were no material associates of the Group during the year. 210 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

212 31 December INVESTMENTS IN ASSOCIATES (Continued) 19. The Group s shareholdings in the associates are held through subsidiaries of the Company. The movements of unlisted investments are as follows: RMB 000 RMB 000 At beginning of year 36,200 40,820 Additions 35,000 Disposals (35,000) (39,620) At end of year 1,200 36,200 The movements of share of profits/(losses) of associates are as follows: RMB 000 RMB 000 At beginning of year (18,375) (36,391) Share of losses for the year (12,620) (16,363) Disposals 31,768 34,379 At end of year 773 (18,375) During the year ended 31 December 2020, the Group disposed of its equity interests in two associates for a total consideration of RMB35,000,000 to an independent third party, which resulted in gains of RMB31,768,000 (2019: RMB36,274,000) (note 5). The considerations have been settled during the year. 35,000,000 31,768,000 36,274,

213 31 December EQUITY INVESTMENTS DESIGNATED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME RMB 000 RMB 000 Equity investments designated at fair value through other comprehensive income Unlisted equity investments, at fair value Weihai China Glass Solar Co., Ltd. 5,392 5,911 Jiuhua New Energy Management Co., Ltd Xi an Singyes Metro Media Co., Ltd. 5,000 5,000 Others 5 5 Exchange realignment (247) ,530 11,414 The above equity investments were irrevocably designated at fair value through other comprehensive income as the Group considered these investments to be strategic in nature. The fair value measurement of the equity investments at fair value through other comprehensive income is categorised within Level 3 of the fair value hierarchy. 212 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

214 31 December FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS RMB 000 RMB 000 Structured deposits 5,000 The structured deposits as at 31 December 2019 were issued by banks in Mainland China. They were mandatorily classified as financial assets at fair value through profit or loss as their contractual cash flows are not solely payments of principal and interest. The structured deposits are with expected rates of return (not guaranteed) at rate linked to 3-month London Interbank Offered Rate ( LIBOR ). During this year, the structured deposits were redeemed by the Group. 22. INVENTORIES RMB 000 RMB 000 Raw materials 38,313 48,300 Finished goods 20, ,735 59, ,035 Inventory provision (3,519) (4,236) 55, ,

215 31 December CONTRACT ASSETS December 31 December 1 January RMB 000 RMB 000 RMB 000 Contract assets arising from: Construction services (1) (1) 3,150,602 2,078,223 1,801,000 Retention money receivables (2) (2) 94, , ,001 3,245,141 2,199,246 2,255,001 Impairment (341,184) (191,373) (135,484) 2,903,957 2,007,873 2,119,517 (1) Contract assets are initially recognised for revenue earned from construction services as the receipt of consideration is conditional on successful completion of construction. Upon completion of construction and acceptance by the customer, the amounts recognised as contract assets are reclassified to trade receivables. (1) (2) As at 31 December 2020, the retention money receivables from the contract customers amounting to RMB94,539,000 (31 December 2019: RMB121,023,000, 1 January 2019: RMB454,001,000) were still in the warranty period. Retention money receivables are normally collected within two to five years after the completion of the relevant construction work. (2) 94,539, ,023, ,001, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

216 31 December CONTRACT ASSETS (Continued) 23. As at 31 December 2020, the Group had no contract assets generated from the Group s associates (31 December 2019: RMB142,474,000) (note 40(e)). 142,474,000) 40(e) The Group s contract assets included net carrying amounts generated from the Group s related parties of RMB2,156,000 (31 December 2019: nil) (note 40(e)). 2,156,000 40(e) Management expected that the majority of the above disclosed contract assets as at 31 December 2020 will be recovered or settled in two to five years. During the year ended 31 December 2020, RMB149,811,000 (2019: RMB55,889,000) (note 7) was recognised as an allowance for ECLs on contract assets. The Group s trading terms and credit policy with customers are disclosed in note 4 to the financial statements. 149,811,000 55,889, The movements in the loss allowance for impairment of contract assets are as follows: RMB 000 RMB 000 At beginning of year 191, ,484 Impairment losses, net (note 7) 7 149,811 55,889 At end of year 341, ,

217 31 December CONTRACT ASSETS (Continued) 23. An impairment analysis is performed at each reporting date using a provision matrix to measure ECLs. The provision rates for the measurement of the ECLs of the contract assets are based on those of the trade receivables as the contract assets and the trade receivables are from the same customer bases. The provision rates of contract assets are based on days past due of trade receivables for groupings of various customer segments with similar loss patterns (i.e., by customer type). The calculation reflects the probability weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Set out below is the information about the credit risk exposure on the Group s contract assets using a provision matrix: 31 December 31 December ECL rate 10.5% 8.70% RMB 000 RMB 000 Gross carrying amount 3,245,141 2,199,246 ECLs (341,184) (191,373) 2,903,957 2,007, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

218 31 December TRADE AND BILLS RECEIVABLES RMB 000 RMB 000 Trade receivables 4,154,464 3,706,413 Bills receivable 49,244 32,349 Impairment (633,304) (602,298) 3,570,404 3,136,464 The Group s trade receivables included net carrying amounts due from the Group s associates of RMB378,000 (31 December 2019: RMB36,391,000), which were repayable on credit terms similar to those offered to the major customers of the Group (note 40(e)). 378,000 36,391,000 40(e) The Group has pledged trade receivables of approximately RMB2,164,205,000 (31 December 2019: RMB2,169,056,000) to secure bank and other loans granted to the Group (note 30(f)). 2,164,205,000 2,169,056,000 30(f) The Group s trading terms and credit policy with customers are disclosed in note 4 to the financial statements

219 31 December TRADE AND BILLS RECEIVABLES (Continued) 24. An ageing analysis of the trade and bills receivables as at the end of the reporting period, based on the billing date and net of loss allowance, is as follows: RMB 000 RMB 000 Within 3 months 1,167, ,555 3 to 6 months 264, ,123 6 to 12 months 430, ,007 1 to 2 years 922, ,528 2 to 3 years 517, ,769 Over 3 years 267,953 47,482 3,570,404 3,136,464 The movements in the loss allowance for impairment of trade receivables are as follows: RMB 000 RMB 000 At beginning of year 602, ,693 Impairment losses, net (note 7) 7 31, ,605 At end of year 633, ,298 An impairment analysis is performed at each reporting date using a provision matrix to measure ECLs. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by customer type). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. 218 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

220 31 December TRADE AND BILLS RECEIVABLES (Continued) 24. Set out below is the information about the credit risk exposure on the Group s trade receivables using a provision matrix: As at 31 December 2020 past due Less than Less than Over Current 6 months 12 months 12 months Total ECL rate 2.30% 5.01% 17.77% 30.46% 15.24% Gross carrying amount (RMB 000) 1,426, , ,914 1,355,170 4,154,464 ECLs (RMB 000) 32,853 22, , , ,304 As at 31 December 2019 Past due Less than Less than Over Current 6 months 12 months 12 months Total ECL rate 5.30% 15.25% 12.25% 27.62% 16.25% Gross carrying amount (RMB 000) 1,379, , ,406 1,527,853 3,706,413 ECLs (RMB 000) 73,169 47,170 59, , ,

221 31 December PREPAYMENTS, OTHER RECEIVABLES AND OTHER ASSETS RMB 000 RMB 000 Prepayments to subcontractors and suppliers 173, ,504 Deposits 99,797 47,491 Tariff adjustment receivables* * 497, ,830 Amounts due from related parties 40(e) (note 40(e)) 29,270 Compensation for performance 5 commitment (note 5) 8,983 Other receivables 152, , , ,166 Impairment (109,478) (27,340) 852, ,826 * The Group s tariff adjustment receivables from the sale of electricity are receivables from the State Grid. Tariff adjustment receivables represented the government subsidies on renewable energy for ground projects to be received from the State Grid based on the prevailing government policies. * The Group has pledged tariff adjustment receivables of approximately RMB490,982,000 (31 December 2019: RMB322,290,000) to secure bank and other loans granted to the Group (note 30(h)). 490,982, ,290,000 30(h) 220 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

222 31 December PREPAYMENTS, OTHER RECEIVABLES AND OTHER ASSETS (Continued) 25. The movements in the loss allowance for impairment of financial assets in prepayments, other receivables and other assets are as follows: RMB 000 RMB 000 At beginning of year 27,340 19,730 Impairment losses (note 7) 7 82,138 10,096 Amount written off as uncollectible (2,486) At end of year 109,478 27,340 An impairment analysis is performed at each reporting date by considering ECLs, which are estimated by applying a loss rate approach with reference to the historical loss record of the Group. The loss rate is adjusted to reflect the current conditions and forecasts of future economic conditions, as appropriate. In determining ECLs for the financial assets included in prepayments, other receivables and other assets, the Directors have taken into account the historical default experience and the future prospects of the industries and/or considering various external sources of actual and forecast economic information, as appropriate, in estimating the probability of default of each of prepayments, other receivables and other assets occurring within their respective loss assessment period as well as the loss upon default in each case. 221

223 31 December CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS RMB 000 RMB 000 Cash and bank balances 899,789 1,082,835 Time deposits 47,169 54, ,958 1,137,702 Less: pledged time deposits for: Bidding guarantee 500 Long term performance guarantee 2,957 Short term performance guarantee 534 4,574 letters of credit 38 Bills payable (note 27) 27 10,200 11,811 Frozen deposits* * 27,553 37,982 Bank loan (note 30(g)) 30(g) 5,887 47,169 54,867 Cash and cash equivalents 899,789 1,082,835 * As at 31 December 2020, deposits amounting to RMB17,553,000 (31 December 2019: RMB25,464,000) were frozen by courts to secure the Group s payables to certain suppliers (note 27). As at 31 December 2020, RMB10,000,000 (31 December 2019: 12,518,000) (note 37) was sealed by a court as Singyes New Materials has been named as a defendant in a lawsuit in a product quality dispute arising in the ordinary course of business. Further details of the lawsuit are included in note 37 to the financial statements. * 17,533,000 25,464, ,000,000 12,518, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

224 31 December CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS (Continued) 26. The Group s cash and bank balances and time deposits were denominated in the following currencies: RMB 000 RMB 000 RMB equivalent amount: RMB 916,010 1,083,814 US$ 14,645 2,227 HK$ 11,999 45,162 MOP 1,188 1,307 EUR 28 9 TOP MYR 2,771 4,789 SG$ ,958 1,137,702 The RMB is not freely convertible into other currencies. However, under Mainland China s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business. Cash at banks earns interest at floating rates based on daily bank deposit rates. Time deposits are made for varying periods from one day to one year, among which RMB215,000 (31 December 2019: RMB17,937,000) are within three months and earn interest at the respective short term time deposit rates. The bank balances and pledged deposits are deposited with creditworthy banks with no recent history of default. 215,000 17,937,

225 31 December TRADE AND BILLS PAYABLES 27. An ageing analysis of the trade and bills payables as at the end of the reporting period, based on the invoice date or issuance date, where appropriate, is as follows: RMB 000 RMB 000 Within 3 months 1,205, ,387 3 to 6 months 131, ,124 6 to 12 months 292, ,644 1 to 2 years 203, ,537 2 to 3 years 39,503 32,708 Over 3 years 49,696 21,654 1,921,875 1,438,054 The trade and bills payables are non-interest-bearing and are normally settled within one to six months. As at 31 December 2020, the frozen deposits of RMB17,553,000 (note 26) were frozen by courts according to the civil ruling to secure the Group s trade payables of RMB19,103,000 to certain suppliers. As at 31 December 2019, the machinery and frozen deposits of RMB7,408,000 and RMB25,464,000 (note 26), respectively, were restricted by courts according to the civil ruling to secure the Groups trade payables of RMB101,507,000 to certain suppliers. 17,553, ,103,000 7,408,000 25,464, ,507,000 As at 31 December 2020, the Group s bills payable were secured by the pledged deposits amounting to RMB10,200,000 (31 December 2019: RMB11,811,000) (note 26). 10,200,000 11,811, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

226 31 December OTHER PAYABLES AND ACCRUALS RMB 000 RMB 000 Tax and surcharge payables 362, ,769 Advances from tenants 4,497 Accrued expenses 33,210 31,523 Interest payables 6,027 38,680 Amounts due to related parties 1,491,961 10,000 Other payables 210, ,453 2,107, ,425 The Group s other payables and accruals included net carrying amounts of RMB1,000,000 (31 December 2019: nil) (note 40(e)) received from the Group s associates. 1,000,000 40(e) As at 31 December 2020, the Group has received deposits in relation to the sale of equity interests in the Target Subsidiaries amounting to RMB38,974,000 (2019: RMB38,974,000) while the transaction has not yet been fulfilled. Subsequent to 31 December 2020, a written agreement was signed between the Company and the Purchaser to extend the long stop date of the transaction to 31 December ,974,000 38,974,000 As at 31 December 2020, the Group s leasehold land with a net carrying amount of RMB22,429,000 (31 December 2019: RMB 22,345,000) was pledged to an independent third party to guarantee the Group s other payables of RMB41,000,000 (note 15(a)). 22,429,000 22,345,000 41,000,000 15(a) 225

227 31 December CONTRACT LIABILITIES December 31 December 1 January RMB 000 RMB 000 RMB 000 Advances received from customers Construction services 87,743 35,835 60,040 Sale of products 43,618 18,236 45,027 Rental services 4, ,361 58, ,067 Contract liabilities consisted of short-term advances received from customers in relation to the sale of products and the provision of construction services. Changes in contract liabilities during the year are as follows: RMB 000 RMB 000 At beginning of year 58, ,067 Revenue and other income recognised that was included 4 in the contract liabilities at the beginning of the year (note 4) (46,094) (98,804) Net increase due to cash received, excluding amounts recognised as revenue and other income during the year 119,148 52,044 At end of year 131,361 58,307 As at 31 December 2020, the Group had no contract liabilities received from the Group s associates (31 December 2019: RMB11,411,000) (note 40(e)). 11,411,000 40(e) 226 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

228 31 December INTEREST-BEARING BANK AND OTHER LOANS December December 2019 Effective Effective interest interest rate (%) Maturity RMB 000 rate (%) Maturity RMB 000 (%) (%) Current Bank loans secured HIBOR+ HIBOR ~ , ~ ,444 secured , secured 4.45~ , ~ ,071,730 Other loans secured (1) (1) , ,713 secured (2) (2) , ,616 secured (3) (3) , secured ,000 Other loans unsecured (4) (4) , ,000 1,181,190 1,374,

229 31 December INTEREST-BEARING BANK AND OTHER LOANS (Continued) December December 2019 Effective Effective interest interest rate (%) Maturity RMB 000 rate (%) Maturity RMB 000 (%) (%) Non-current Bank loans secured HIBOR+ HIBOR ~ ~ ,402 secured , ~ ,065,328 secured ,183 Other loans secured (1) (1) ,898 secured (2) (2) , ,705 secured (3) (3) , ,185 1,633,685 1,537,620 2,814,875 2,912, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

230 31 December INTEREST-BEARING BANK AND OTHER LOANS (Continued) (1) It represented an other loan with a principal of RMB43,425,000 borrowed from an independent third party, by way of equipment sale-leaseback arrangements, which bears interest at an effective rate of 7.01% per annum with quarterly instalment payments up to the maturity date on 15 August Shuifa Energy provided a guarantee for this other loan. 30. (1) 43,425, % (2) It represented seven other loans borrowed from independent third party leasing companies by Zhuhai Singyes, Hunan Singyes, Guangzhou Dajixin New Energy Technology Co., Ltd( Guangzhou Dajixin ), Huarong Haofeng Green Energy Technology Co., Ltd( Huarong Haofeng ), Zibo Qilu, Foshan Xinye, and Foshan Keliyuan, subsidiaries of the Group, by way of equipment sale-leaseback arrangements, with the principal of RMB317,100,000, which bear interest at an effective rate of 6.17%~6.97% per annum with quarterly or monthly instalment payments up to the maturity date at the end of (2) 317,100, % 6.97% (3) It represented two other loans borrowed from one independent third party leasing company, with the principal of RMB213,616,000 in 2020 by Yangjiang Huayu, a subsidiary of the Group. Both of the two other loans were obtained by way of equipment sale-leaseback arrangements, which bear interest at effective rates of 5.09% and 6.32%, respectively. Yangjiang Huayu pledged the right on the annual return of its solar photovoltaic power station and the Group pledged the equity interests in it as the security to the other loan in substance. (3) 213,616, % 6.32% 229

231 31 December INTEREST-BEARING BANK AND OTHER LOANS (Continued) (4) These represented other loans of RMB4,000,000 borrowed from independent third parties by Jiangxi Yaxing before the acquisition, which were repaid on 8 February (4) 4,000, December 31 December RMB 000 RMB 000 Analysed into: Bank loans repayable: Within one year 1,080,046 1,208,174 In the second year 146, ,032 In the third to fifth years, inclusive 444, ,248 Beyond five years 599, ,450 2,270,729 2,405,904 Other loans repayable: Within one year 101, ,515 In the second year 113,284 24,304 In the third to fifth years, inclusive 192, ,290 Beyond five years 137, , , ,405 2,814,875 2,912,309 As of 31 December, 2020, except for bank loans denominated in Hong Kong dollars which were HK$125,665,000, all bank and other loans were denominated in RMB. 125,665, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

232 31 December INTEREST-BEARING BANK AND OTHER LOANS (Continued) 30. Certain of the Group s bank and other loans are secured by: (a) mortgages over the Group s buildings, machinery and motor (a) vehicles with an aggregate carrying amount at 31 December 2020 of approximately RMB631,617,000 (31 December 2019: 631,617,000 RMB972,450,000) (note 13(a)); 972,450,000 13(a) (b) mortgages over the Group s solar photovoltaic power stations (b) and their respective rights on the annual return thereof, which had an aggregate carrying amount at 31 December 2020 of approximately RMB1,908,665,000 (31 December 2019: 1,908,665,000 RMB1,280,636,000) (note 13(b)); 1,280,636,000 13(b) (c) mortgages over the Group s a solar photovoltaic power plant (c) under construction with a net carrying amount of approximately RMB272,874,000 at 31 December (note 13(c)); 272,874,00013(c) (d) mortgages over the Group s investment properties with a (d) net carrying amount at 31 December 2020 of approximately RMB84,918,000 (31 December 2019: RMB7,537,000) (note 84,918,000 14(d)); 7,537,000 14(d) (e) mortgages over certain of the Group s leasehold land, which (e) had a carrying amount at 31 December 2020 of approximately RMB50,122,000 (31 December 2019: RMB78,087,000) (note 50,122,000 15(a)); 78,087,000 15(a) 231

233 31 December INTEREST-BEARING BANK AND OTHER LOANS (Continued) 30. Certain of the Group s bank and other loans are secured by: (continued) (f) the pledge of certain of the Group s trade receivables of (f) approximately RMB2,164,205,000 at 31 December 2020 (31 December 2019: RMB2,169,056,000) (note 24); 2,164,205,000 2,169,056, (g) the pledge of certain of the Group s bank deposits of (g) approximately RMB5,887,000 at 31 December 2020 (31 December 2019: nil) (note 26); 5,887, (h) the pledge of certain of the Group s tariff adjustment receivables (h) of approximately RMB490,982,000 at 31 December 2020 (31 December 2019: RMB322,290,000) (note 25); 490,982, ,290, (i) As at 31 December 2019, the right on the annual return (i) generated from a solar photovoltaic power station with a net 26,089,000 carrying amount of RMB26,089,000 was pledged to secure an other loan obtained by the Group from an independent third party for twenty years; (j) As at 31 December 2019, the right on the annual return (j) generated from a solar photovoltaic power station with a net 572,497,000 carrying amount of RMB572,497,000 was pledged to secure other loans granted to the Group; (k) guarantees provided by Shuifa Group, Shuifa Energy and (k) Shangdong Shuifa Holding Group Co., Ltd. ( Shandong Shuifa Holdings ); 232 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

234 31 December INTEREST-BEARING BANK AND OTHER LOANS (Continued) 30. Certain of the Group s bank and other loans are secured by: (continued) (l) the pledge of equity interests in the following subsidiaries of the (l) Group: i. 100% equity interests in Xinjiang Singyes; i. 100% ii. 100% equity interests in Wuwei Dongrun; ii. 100% iii. 20% equity interests in Suixi Xinye; iii. 20% iv. 100% equity interests in Yangjiang Huayu; iv. 100% v. 100% equity interests in Yangjiang Huazhi; v. 100% vi. 100% equity interests in Yangjiang Singyes; vi. 100% vii % equity interests in Zhuhai Singyes; vii % viii % equity interests in Shuifa Singyes Energy; viii % ix % equity interests in Hunan Singyes; ix % x % equity interests in Singyes Energy-saving; x % xi % equity interests in Singyes Xinye; xi % xii % equity interests in Gansu Technologies; xii % 233

235 31 December INTEREST-BEARING BANK AND OTHER LOANS (Continued) 30. Certain of the Group s bank and other loans are secured by: (continued) (l) the pledge of equity interests in the following subsidiaries of the (l) Group: (continued) xiii % equity interests in Zhuhai Singyes Ecological xiii. Agriculture Technology Co., Ltd; 45.71% xiv. 100% equity interests in Gansu Singyes; xiv. 100% xv. 47.5% equity interests in Zibo Qilu; xv. 47.5% xvi. 100% equity interests in Guangzhou Dajixin; xvi. 100% xvii. 100% equity interests in Huarong Haofeng; xvii. 100% xviii. 100% equity interests in Foshan Xinye; and xviii. 100% xix. 100% equity interests in Foshan Keliyuan. xix. 100% In addition, the Company s directors have guaranteed certain of the Group s bank and other loans for nil consideration (note 40(d)), details of which are as follows: 40(d) (i) the Company s director, Mr. Liu Hongwei, has guaranteed (i) the Group s bank and other loans of RMB216,169,000 (31 December 2019: RMB706,690,000); 216,169, ,690,000 (ii) the Company s director, Mr. Liu Hongwei and the Company s (ii) former director, Mr. Sun Jinli, have jointly guaranteed the Group s bank loans of RMB513,995,000 as at 31 December 2019; 513,995, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

236 31 December INTEREST-BEARING BANK AND OTHER LOANS (Continued) 30. (iii) the Company s director, Mr. Liu Hongwei and the Company s (iii) former director, Mr. Xie Wen, have jointly guaranteed the Group s bank loans of RMB120,000,000 (31 December 2019: 120,000,000 RMB120,000,000); 120,000,000 (iv) the Company s director, Mr. Liu Hongwei and the Company s (iv) former directors, Mr. Xie Wen and Mr. Sun Jinli, have jointly guaranteed the Group s bank loans of RMB414,494,000 (31 December 2019: RMB414,494,000); 414,494, ,494,000 (v) the Company s director, Mr. Liu Hongwei, has guaranteed (v) the Group s bank loans of HK$149,310,000 (equivalent 149,310,000 to approximately RMB125,665,000) (31 December 125,665, : HK$198,825,000, equivalent to approximately RMB178,103,000); 198,825, ,103,000 (vi) the Company s director, Mr. Liu Hongwei has guaranteed the (vi) Group s other loans of US$12,000,000 as at 31 December ,000, SENIOR NOTES RMB 000 RMB Senior Notes 1,488,096 2,815,

237 31 December SENIOR NOTES (Continued) 31. On 19 December 2019, the Company issued guaranteed senior notes with an aggregate nominal value of US$414,932,000, initially offered to eligible Scheme Creditors and the Holding Period Trustee (as defined in the Announcement dated 19 December 2019), and the senior notes will mature on 19 December 2022 (the 2022 Senior Notes ). The 2022 Senior Notes are only offered outside the United States in compliance with Regulation S under the United States Securities Act of 1933, as amended. The 2022 Senior Notes have been listed on the Singapore Exchange Securities Trading Limited (the SGX ). 414,932,000 S The major terms and conditions of the 2022 Senior Notes are as follows: (i) Interest payment election (i) The Company may, at its discretion at any time, elect to pay interest on the principal amount of the 2022 Senior Notes on each interest payment date (i) in cash (a Cash Coupon (i) Election ) at the rate of 2.00% per annum prior to a Cash Coupon Election and thereafter at 6.00% per annum and (ii) by 2.00% increasing the principal amount of the 2022 Senior Notes or by 6.00% (ii) issuing any 2.00% cash-pay and 4.00% pay-in-kind guaranteed senior notes due 2022 (the Additional Notes ) in a principal amount equal to 4.00% of the aggregate principal amount of the 2.00% 4.00% note then outstanding (the PIK Interest ). The Cash Coupon Election shall be irrevocable. 4.00% 236 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

238 31 December SENIOR NOTES (Continued) (ii) Mandatory redemption of the Company 31. (ii) On 19 June 2022 (the Initial Mandatory Redemption Date ), the Company shall redeem 40% of the 2022 Senior Notes outstanding on the Initial Mandatory Redemption Date (including, for the avoidance of doubt, any Additional Notes that have been issued as PIK Interest and added to the principal amount of the Notes) at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest thereon (at the rate of 6.00% per annum, corresponding to the aggregate of the interest ordinarily payable in cash and the interest ordinarily payable in kind) to, but excluding, the Initial Mandatory Redemption Date. 100% 6.00% 40% (iii) Redemption at the option of the Company (iii) Upon not less than 30 nor more than 60 days notice to the Holders, the Trustee and the Paying Agent (each such date, an Optional Redemption Date ), at any time, the Company may at its option redeem the notes outstanding on the applicable Optional Redemption Date (including, for the avoidance of doubt, any Additional Notes that have been issued as PIK Interest and added to the principal amount of the notes) in whole or in part at a redemption price equal to 100% of the aggregate principal amount thereof together with accrued and unpaid interest thereon (at the rate of 6.00% per annum, corresponding to the aggregate of the interest ordinarily payable in cash and the interest ordinarily payable in kind) to, but excluding, the applicable Optional Redemption Date % 6.00% 237

239 31 December SENIOR NOTES (Continued) 31. As the estimated fair value of the early redemption right is insignificant at initial recognition, the embedded derivative is not separately accounted for. The effective interest rate is approximately 7.23% per annum after the adjustment for transaction costs. 7.23% The 2022 Senior Notes recognised in the consolidated statement of financial position are calculated as follows: 2020 RMB 000 Carrying amount at 1 January ,815,135 Effective interest recognised for the year 6 (note 6) 146,660 Interest payable during the year (40,031) Repurchase of senior notes* * (1,321,065) Acceleration of unwinding interest 6 (note 6) 8,856 Cancellation of senior notes (note 5) 5 (1,655) Exchange realignment (119,804) Carrying amount at 31 December ,488,096 Fair value of the 2022 Senior Notes** ** 1,431,125 * The Company repurchased the 2022 Senior Notes with an aggregate nominal value of US$191,644,000 during the year. Particulars of the Company s repurchase of the 2022 Senior Notes have been set out in the Company s announcements dated 8 June 2020, 16 June 2020, 17 June 2020 and 14 December A net gain of RMB200,588,000, which can be further analysed as a gross gain of RMB209,444,000 (note 5) after netting a loss on acceleration of unwinding interest of RMB8,856,000 (note 6), was recognised for the repurchase of the 2022 Senior Notes. * 191,644, ,588, ,444, ,856,0006 ** The fair value of the 2022 Senior Notes was determined based on the price quoted on the SGX on 31 December ** 238 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

240 31 December DEFERRED TAX 32. The movements in deferred tax assets and liabilities during the year are as follows: Deferred tax assets F fair value Unrealized adjustments Cost profit arising from incurred from acquisition of Government without intra-group Lease a subsidiary grants invoice transactions liabilities Impairment Others total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 At 1 January ,065 (733) 1,557 Deferred tax credited/ (charged) to profit or loss during the year (1) 1,638 At 31 December ,017 2,912 (734) 3,195 At 1 January ,017 2,912 (734) 3,195 Deferred tax credited/ (charged) to profit or loss during the year (87) 16,561 62,360 10,319 1, ,429 1, ,971 Acquisition of Subsidiaries (note 38) 38 3,881 3,881 At 31 December ,794 17,578 62,360 10,319 1, , ,

241 31 December DEFERRED TAX (Continued) Deferred tax assets (Continued) 32. As at 31 December 2020, the Group has total tax losses arising in Malaysia, Singapore, Macau and Hong Kong of RMB105,999,000 (2019: RMB99,273,000) that are available indefinitely for offsetting against future taxable profits of the companies in which the losses arose, and tax losses arising in Mainland China of RMB400,809,000 (2019: RMB485,381,000) that will expire in one to ten years for offsetting against future taxable profits of the companies in which the losses arose, as well as other deductible temporary differences of RMB226,606,000 (2019: RMB1,031,794,000) that were available for offsetting against future taxable profits, for which deferred tax assets have not been recognised as it is not considered probable that taxable profit will be available against which they can be utilised. 105,999,000 99,273, ,809, ,381, ,606,000 1,031,794, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

242 31 December DEFERRED TAX (Continued) Deferred tax liabilities 32. fair value adjustments Accelerated arising from depreciation acquisition of for tax Right-of-use Withholding a subsidiary purpose assets taxes Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 At 1 January ,860 87,680 Deferred tax credited to profit or loss during the year (820) (820) At 31 December ,860 86,860 At 1 January ,860 86,860 Deferred tax credited to during profit or loss during the year (1,134) 947 (187) Acquisition of during a subsidiary (note 38) 38 23,708 23,708 At 31 December , , ,

243 31 December DEFERRED TAX (Continued) Deferred tax liabilities (Continued) 32. Under the CIT Law of the PRC, a 10% withholding tax is levied on dividends declared to foreign investors from foreign investment enterprises established in Mainland China effective from 1 January Under the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, the withholding tax rate for dividends paid by a Mainland resident enterprise to a Hong Kong resident enterprise is 5% if the Hong Kong enterprise owns at least 25% of the Mainland enterprise. 10% 25% 5% Deferred taxation has not been provided for in the consolidated statement of financial position in respect of temporary differences attributable to the profits of the PRC subsidiaries during the year, as the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. The aggregate amount of temporary differences associated with investments in subsidiaries in Mainland China for which deferred tax liabilities have not been recognised totalled approximately RMB933,432,000 as at 31 December 2020 (2019: RMB903,576,000). 933,432, ,576,000 There are no income tax consequences attaching to the payment of dividends by the Company to its shareholders. 242 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

244 31 December DEFERRED INCOME RMB 000 RMB 000 Government grants At beginning of year 155, ,449 Government grants related to assets received during the year 1,046 11,767 Released to profit or loss: Over the expected useful lives 5 of the related assets (note 5) (13,856) (13,373) At end of year 143, ,843 Deferred income represented government grants received by the Group in respect of the construction of roof top solar power stations under the Golden Sun Demonstration Project, and other items of property, plant and equipment. The deferred income is released to profit or loss by equal annual instalments to match with the expected useful lives of the relevant assets. 243

245 31 December SHARE CAPITAL Shares US$ 000 US$ 000 Authorised: 3,200,000,000 (31 December 2019: 3,200,000,000 2,600,000,000) ordinary shares 2,600,000,000 of US$0.01 each ,000 26,000 Issued and fully paid: 2,521,081,780 (2019: 2,521,081,780 2,521,081,780) ordinary shares 2,521,081,780 of US$0.01 each ,211 25,211 Equivalent to RMB , ,333 There was no movement in the Company s issued share capital during the Year. 35. SHARE OPTION SCHEME 35. (a) The share option scheme of the Company (a) The Company adopted a new share option scheme (the New Scheme ) to replace the former share option scheme (the Former Scheme ) which was terminated on 19 December 2018 for the purpose of providing incentives and rewards to eligible persons who contribute to the success of the Group s operations. Eligible persons of the New Scheme include directors, employees, consultants and suppliers of the Group. The New Scheme was approved by the Company s shareholders on 4 June 2018 and, unless otherwise cancelled or amended, will remain in force for 10 years from that date. 244 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

246 31 December SHARE OPTION SCHEME (Continued) 35. (a) The share option scheme of the Company (continued) (a) The maximum aggregate number of shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Scheme and any other share option schemes of the Company, must not, in aggregate, exceed 30% of the total number of shares in issue from time to time. No 30% options may be granted under the New Scheme and any other share option schemes of the Company if this will result in such limit being exceeded. The maximum number of shares issued and to be issued upon the exercise of the share options granted under the New Scheme and any other share option schemes of the Company to any eligible person(s) (including cancelled, exercised and outstanding share options), in any 12-month period up to the date of grant shall not exceed 1% of the number of shares in issue, unless (i) such grant has been duly approved, in the manner prescribed by the relevant provisions of Chapter 17 of 1% (i) the Listing Rules, by ordinary resolution of the Shareholders in 17 general meeting, at which the relevant Eligible Person and his/ her close associates (or his/her associate if the grantee is a Listco Connected Person) abstained from voting; (ii) a circular regarding the grant has been despatched to the Shareholders in a manner complying with, and containing the information (ii) specified in, the relevant provisions of Chapter 17 of the Listing 17 Rules; and (iii) the number and terms (including the subscription price) of such options are fixed before the general meeting of the (iii) Company at which the same are approved. 245

247 31 December SHARE OPTION SCHEME (Continued) 35. (a) The share option scheme of the Company (continued) (a) At the time of adoption by the Company of the New Scheme or any new share option scheme, the aggregate number of shares which may be issued upon exercise of all options to be granted under the New Scheme and all schemes existing at such time of the Company must not in aggregate exceed 10% of the total number of shares in issue as at the date of scheme adoption, 10% which is expected to be 83,407,319 shares for the New Scheme. 83,407,319 Where an option is to be granted to a substantial shareholder or an independent non-executive director (or any of their respective associates), and the grant will, in the 12-month period up to and including the offer date, result in the number and value of the relevant shares exceeding the following: 0.1% of the total number of shares in issue at the relevant time of grant; and an aggregate value (based on the closing price of the shares as 0.1% stated in the daily quotation sheets issued by the Stock Exchange on the date of each grant) in excess of HK$5 million, such grant shall not be valid unless: (a) a circular containing the details of 5,000,000 the grant has been dispatched to the shareholders in a manner (a) complying with, and containing the matters specified in, the 17 relevant provisions of Chapter 17 of the Listing Rules (including in particular, a recommendation from the independent non- executive directors (excluding the independent non-executive director who is the prospective grantee) to the independent shareholders as to voting); and (b) the grant has been approved (b) by the shareholders in general meeting (taken on a poll), at which such grantee, his/her associates and all core connected persons of the Company have abstained from voting in favour at such meeting. 246 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

248 31 December SHARE OPTION SCHEME (Continued) 35. (a) The share option scheme of the Company (continued) (a) The offer of a grant of share options must be accepted within 28 days inclusive of the day on which such offer was made. 28 The amount payable by the Grantee of a share option to the Company on acceptance of the offer for the grant of a share 1.00 option is HK$1.00. The subscription price of the New Scheme shall be a price solely determined by the board and notified to an eligible person and shall be at least the highest of (i) the Hong Kong Stock Exchange ( HKSE ) closing price of the Company s shares on the date of (i) offer of the share options; (ii) the average HKSE closing price of the Company s shares for the five trading days immediately (ii) preceding the date of offer; and (iii) the nominal value of shares. (iii) Share options do not confer rights on the holders to dividends or to vote at shareholders meetings. No options have been granted under the New Scheme during the year. 247

249 31 December SHARE OPTION SCHEME (Continued) 35. (a) The share option scheme of the Company (continued) (a) The following share options were outstanding under the Former Scheme during the year: Weighted Weighted average number average Number exercise price of options exercise price of options HK$ HK$ per share 000 per share 000 At 1 January , ,500 Expired during the year 3.56 (11,242) At 31 December , , China Shuifa Singyes Energy Holdings Limited Annual Report 2020

250 31 December SHARE OPTION SCHEME (Continued) 35. (a) The share option scheme of the Company (continued) (a) The exercise prices and exercise periods of the share options outstanding as at the end of the reporting period are as follows: number of share Exercise price exercise period HK$ per share 1,447 1, /10/12-10/10/21 1,447 1, /10/13-10/10/21 1,446 1, /10/14-10/10/21 1,446 1, /10/15-10/10/21 1,446 1, /10/16-10/10/21 2,008 2, /5/16-21/5/25 2,009 2, /5/17-21/5/25 2,009 2, /5/18-21/5/25 4,000 4, /4/18-21/5/27 4,000 4, /4/19-21/5/27 4,000 4, /4/20-21/5/27 25,258 25,258 The Group recognised a share option expense of HK$700,000 (equivalent to approximately RMB634,000) during the year (2019: HK$3,686,000, equivalent to approximately RMB3,246,000). 700, ,000 3,686,000 3,246,

251 31 December SHARE OPTION SCHEME (Continued) 35. (a) The share option scheme of the Company (continued) (a) At the end of the reporting period, the Company had 25,258,000 share options outstanding under the Scheme. The exercise 25,258,000 in full of the outstanding share options would, under the present capital structure of the Company, result in the issue of 25,258,000 additional ordinary shares of the Company and additional share capital of US$252,580 (equivalent 25,258,000 to approximately HK$1,958,000) and share premium of 252,580 approximately HK$130,154,000 (before issue expenses and 1,958,000 after the amount to be transferred from share option reserve to 130,154,000 share premium upon the exercise of the related share options). As at the date of approval of the financial statements, the Company had 25,258,000 share options outstanding under 25,258,000 the Scheme, which represented approximately 1.00% of the Company s shares in issue as at that date. 1.00% (b) Share option scheme of Singyes New Materials (b) A subsidiary of the Company, Singyes New Materials, operates a share option scheme (the Singyes New Materials Scheme ). The Singyes New Materials Scheme was adopted for the primary purposes of providing incentives and rewards to eligible persons for their contribution or potential contribution to the growth and development of Singyes New Materials and its subsidiaries ( Eligible Persons ). Eligible Persons of the Scheme include: 250 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

252 31 December SHARE OPTION SCHEME (Continued) 35. (b) Share option scheme of Singyes New Materials (Continued) (b) (i) (a) any director or proposed director (whether executive (i) (a) or non-executive, including any independent non- executive director), employee or proposed employee (whether full time or part time) of, or (b) any individual for the time being seconded to work (b) for, any member of the Group or any substantial shareholder or any company controlled by a substantial shareholder; (ii) any person or entity that provides research, development (ii) or other technological support or any advisory, consultancy, professional or other services to any member of the Group; and (iii) for the purposes of the Singyes New Materials Scheme, (iii) shall include any company controlled by one or more persons belonging to any of the above classes of participants. The Singyes New Materials Scheme was approved by its shareholders on 17 October 2017 and, unless otherwise cancelled or amended, will remain in force for 10 years from that date. 251

253 31 December SHARE OPTION SCHEME (Continued) 35. (b) Share option scheme of Singyes New Materials (continued) (b) The total number of shares which may be issued upon the exercise of all share options to be granted under Singyes New Materials Scheme and any other share option schemes of the Singyes New Materials must not in aggregate exceed 10% of the total issued share capital of Singyes New Materials as at the date on which the Singyes New Materials Scheme is adopted 10% unless Singyes New Materials obtains a fresh approval from shareholders to refresh the 10% limit on the basis that the 10% maximum number of shares in respect of which share options may be granted under the Singyes New Materials Scheme together with any share options outstanding and yet to be exercised under the Singyes New Materials Scheme and any other share option schemes shall not exceed 30% of the issued share capital of Singyes New Materials from time to time. 30% The maximum number of shares issued and to be issued upon the exercise of the share options granted under the Singyes New Materials Scheme and any other share option schemes of Singyes New Materials to any Eligible Persons (including cancelled, exercised and outstanding share options), in any 12-month period up to the date of grant shall not exceed 1% of the number of shares in issue, unless (i) a circular is dispatched to the shareholders; and (ii) the shareholders approve the grant 1% (i) of the share options in excess of the 1% limit referred to in (ii) this paragraph; and (iii) the relevant Eligible Persons and his 1% associates shall abstain from voting. The number and terms (iii) (including the exercise price) of share options to be granted to such Eligible Persons must be fixed before shareholders approval. 252 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

254 31 December SHARE OPTION SCHEME (Continued) 35. (b) Share option scheme of Singyes New Materials (continued) (b) Any grant of a share option to a director, chief executive of Singyes New Materials or substantial shareholder (or any of their respective associates) must be approved by the independent non-executive directors (excluding any independent non- executive director who is the grantee of the share options). Where any grant of share options to a substantial shareholder or an independent non-executive director (or any of their respective associates) will result in the total number of shares issued and to be issued upon the exercise of the share options already granted and to be granted to such person under the Singyes New Materials Scheme and any other share option schemes of the Singyes New Materials (including share options exercised, cancelled and outstanding) in any 12-month period up to and including the date of grant: (i) representing in aggregate over 0.1% of the shares in issue; and (ii) having an aggregate value, (i) based on the closing price of the shares at each date of grant, 0.1% (ii) in excess of HK$5 million, such further grant of share options is required to be approved by shareholders in a general meeting 5,000,000 in accordance with the Rules Governing the Listing of Securities GEM on Growth Enterprise Market of the HKSE. Any change in the terms of a share option granted to a substantial shareholder or an independent non-executive director or any of their respective associates is also required to be approved by shareholders. The offer of a grant of share options may be accepted within 30 days from the date of offer, upon payment of a nominal 30 consideration of HK$1 in total by the grantee

255 31 December SHARE OPTION SCHEME (Continued) 35. (b) Share option scheme of Singyes New Materials (continued) (b) The exercise price of share options is determinable by the Directors, but may not be less than the higher of (i) the HKSE (i) closing price of Singyes New Materials shares on the date of offer of the share options; and (ii) the average HKSE closing (ii) price of Singyes New Materials shares for the five trading days immediately preceding the date of offer. The following share options were outstanding under the Singyes New Materials Scheme during the year: Exercise Number Exercise Number price of options price of options HK$ HK$ per share 000 per share 000 At beginning of year , ,000 Forfeited during the year 1.16 (6,410) 1.16 (5,300) Surrendered during the year 1.16 (700) 1.16 At end of year 8, , China Shuifa Singyes Energy Holdings Limited Annual Report 2020

256 31 December SHARE OPTION SCHEME (Continued) 35. (b) Share option scheme of Singyes New Materials (continued) (b) The exercise prices and exercise periods of the share options outstanding as at the end of the reporting period are as follows: number of shares Exercise price exercise period HK$ per share 2,863 5, /1/21-30/1/28 2,863 5, /1/22-30/1/28 2,864 5, /1/23-30/1/28 8,590 15,700 During the year ended 31 December 2020, a total of 6,410,000 options (2019: 5,300,000) were forfeited due to the resignation of grantees and a total of 700,000 options (2019: nil) were surrendered by a grantee. 6,410,000 5,300, ,000 Singyes New Materials recognised share option expenses of HK$1,466,185 (equivalent to approximately RMB1,234,000) and reversed share option expenses of HK$1,805,998 (equivalent to approximately RMB1,520,000) due to the forfeiture of share options, resulting in the net reversal of share option expenses of RMB286,000 during the year (2019: HK$1,522,000, equivalent to approximately RMB1,340,000). 1,466,185 1,234,000 1,805,998 1,520, ,000 1,522,000 1,340,

257 31 December SHARE OPTION SCHEME (Continued) 35. (b) Share option scheme of Singyes New Materials (continued) (b) At the end of the reporting period, Singyes New Materials had 8,590,000 share options outstanding under the Scheme. The 8,590,000 exercise in full of the outstanding share options would, under the present capital structure of Singyes New Materials, result in the issue of 8,590,000 additional ordinary shares of Singyes New 8,590,000 Materials and additional share capital of US$85,900 (equivalent 85,900 to approximately HK$665,948, before issue expenses). 665,948 As at the date of approval of these financial statements, Singyes New Materials had 8,590,000 share options outstanding under 8,590,000 the Scheme, which represented approximately 1.65% of shares of Singyes New Materials in issue as at that date. 1.65% 36. RESERVES 36. The amounts of the Group s reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity on pages 93 to 94 of the financial statements (a) Statutory reserves of the PRC subsidiaries (a) In accordance with the Law of the PRC on Joint Ventures Using Chinese and Foreign Investment and the respective articles of association of the Group s subsidiaries in Mainland China, appropriations from net profit, as determined in accordance with PRC generally accepted accounting principles ( PRC GAAP ) and after offsetting accumulated losses from prior years, should be made to the statutory reserve fund and the enterprise expansion fund, and before profit distributions to the investors. The reserve fund can be used to offset accumulated losses or to increase capital. 256 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

258 31 December RESERVES (Continued) (b) Enterprise expansion fund 36. (b) The enterprise expansion fund can be used for business development or to increase capital. The percentages to be appropriated to the reserve fund and the enterprise expansion fund in the foreign investment subsidiaries are determined by the board of directors. In addition, the wholly-foreign-owned subsidiaries are not required to appropriate the enterprise expansion fund, and the percentages to be appropriated to the reserve fund shall be no less than 10%. When the cumulative reserve fund reaches one-half of the registered capital, the appropriation is no longer mandatory. 10% (c) Share option reserve (c) The share option reserve comprises the fair value of share options granted which are yet to be exercised, as further explained in the accounting policy for share-based payments 2.4 in note 2.4 to the financial statements. The amount will either be transferred to the share premium account when the related options are exercised, or be transferred to retained profits should the related options expire or be forfeited. As at 31 December 2020, no share options were forfeited (31 December 2019: RMB16,924,000). 16,924,

259 31 December RESERVES (Continued) (d) Merger deficit 36. (d) It represents the difference of RMB96,862,745 between the consideration paid by Shandong Shuifa Clean Energy Technology Co., Ltd. ( Shuifa Clean Energy, a wholly-owned subsidiary of Shuifa Group) to acquire 47.5% equity interests in Zibo Qilu of RMB93,137,255 and the distribution paid by Hunan Green Energy to Shuifa Clean Energy on the acquisition of 47.5% equity interests in Zibo Qilu of RMB190,000,000 (note 38). 47.5% 93,137, % 190,000,000 96,862,74538 (e) Safety fund surplus reserve (e) Pursuant to Notice regarding Safety Production Expenditure jointly issued by the Ministry of Finance and the State Administration of Work Safety of the PRC in February 2012, the Group is required to establish a safety fund surplus reserve. The safety fund can only be transferred to retained profits to offset safety related expenses as and when they are incurred, including expenses related to safety protection facilities and equipment improvement and maintenance as well as safety production inspection, appraisal, consultation and training. 37. CONTINGENT LIABILITIES 37. As at 31 December 2020, Singyes New Materials was involved in a product quality dispute arising from the ordinary course of business where a customer initiated a proceeding against Singyes New Materials to claim a compensation relating to a product quality dispute. As a result of this lawsuit, cash at bank of Singyes New Materials amounted to RMB10,000,000 (31 December 2019: RMB 12,518,000) (note 26) has been set aside and sealed by a court in the PRC. The Directors, based on the advice from the Group s legal counsel, believe that Singyes New Materials has a valid defence against the lawsuit and, accordingly, have not provided for any loss arising from the litigation, other than the related legal costs. 10,000,000 12,518, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

260 31 December BUSINESS COMBINATIONS (1) Acquisition of 100% equity interests in Foshan Xinye and Foshan Keliyuan 38. (1) 100% On 5 June 2020, Hunan Green Energy completed the acquisition of 100% equity interests in Foshan Xinye with nil consideration. Foshan Xinye is engaged in the operation of a solar photovoltaic power station. 100% On 29 June 2020, Hunan Green Energy completed the acquisition of 100% equity interests in Foshan Keliyuan. Foshan Keliyuan is engaged in the operation of a solar photovoltaic power station. The purchase consideration for the acquisition of RMB26,500,000 was paid on cash at the acquisition date. 100% 26,500,000 The following table summarises the consideration paid for the acquisition and the fair values of the identifiable assets acquired and liabilities assumed at the respective acquisition dates: foshan Keliyuan Foshan Xinye total RMB 000 RMB 000 RMB 000 Property, plant and equipment (note 13) 13 9,819 4,699 14,518 Deferred tax assets (note 32) 32 1, ,007 Trade and bills receivables 3, ,882 Prepayments, other receivables and other assets 9, ,279 Cash and cash equivalents Trade payables (375) (165) (540) Other payables and accruals (8,634) (8,634) Total identifiable net assets/ (liabilities) at fair value 24,340 (1,826) 22,514 Goodwill on acquisition 16 (note 16) 2,160 1,826 3,986 Satisfied by cash 26,500 26,

261 31 December BUSINESS COMBINATIONS (Continued) (1) Acquisition of 100% equity interests in Foshan Xinye and Foshan Keliyuan (Continued) 38. (1) 100% An analysis of the cash flows in respect of the acquisition of the above subsidiaries is as follows: RMB 000 Cash and cash equivalents acquired 2 Net outflow of cash and cash equivalents Included in cash flows from investing activities 26,498 (2) Acquisition of 47.5% equity interests in Zibo Qilu (2) 47.5% On 30 September 2020, Hunan Green Energy completed the acquisition of 47.5% equity interests in Zibo Qilu from Shuifa Clean Energy with a cash consideration of RMB190,000,000 settled during the year. Refer to the announcement of the Company dated 14 September 2020 for more details. At the same date, Jinan Linhua Investment Partnership (Limited Partnership) ( Jinan Linhua, a 3.5% shareholder of Zibo Qilu) entrusted irrevocably Hunan Green Energy at its sole discretion from time to time to exercise on behalf of the 3.5% voting rights attached to the equity interests held by itself. As such, Hunan Green Energy controls 51% voting rights of Zibo Qilu and Zibo Qilu became a subsidiary of Hunan Green Energy. 47.5% 190,000, % 3.5% 51% 260 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

262 31 December BUSINESS COMBINATIONS (Continued) (2) Acquisition of 47.5% equity interests in Zibo Qilu (Continued) 38. (2) 47.5% Zibo Qilu is principally engaged in the distribution of industrialuse pipeline steam for heating purposes to companies located inside the Qilu Chemical Industrial Park in Zibo City, Shandong Province. This acquisition is in line with the Group s strategy to strengthen its financial performance while the Group seeks to expand its portfolio of energy projects going forward. As Hunan Green Energy and Zibo Qilu are under common control of Shuifa Group before and after the acquisition, the business combination has been accounted for in the consolidated financial statements of the Group as a business combination under common control based on the principles of merger accounting as if the acquisition had occurred when Zibo Qilu first came under the control of Shuifa Clean Energy on 20 January 2020, when Shuifa Clean Energy acquired the 47.5% equity interests in Zibo Qilu from independent third parties at a cash consideration of RMB93,137,255. Upon the completion of the business combination under common control on 30 September 2020, Qilu Zibo had been accounted for as a subsidiary of the Group since 20 January ,137, % Under the principles of merger accounting, the assets and liabilities of Zibo Qilu are consolidated in the Group s financial statements using the existing book values as stated in the financial statements of Qilu Zibo immediately prior to the combination. The difference between the consideration paid by Shuifa Clean Energy to acquire 47.5% equity interests in Zibo Qilu of RMB93,137,255 and the cash consideration paid by Hunan Green Energy to Shuifa Clean Energy of RMB190,000,000 amounting to RMB96,862,745 was recognised in the merger deficit account (note 36(d)). Refer to the announcement of the Company dated 11 September 2020 for more details. 47.5% 93,137, ,000,000 96,862,745 36(d) 261

263 31 December BUSINESS COMBINATIONS (Continued) (2) Acquisition of 47.5% equity interests in Zibo Qilu (Continued) 38. (2) 47.5% The following table summarises the consideration paid for the acquisition and the fair values of the identifiable assets acquired and liabilities assumed at the acquisition dates: Total RMB 000 Property, plant and equipment 13 (note 13) 98,036 Deferred tax assets (note 32) 32 1,874 Trade and bills receivables 18,804 Other intangible asset 17 (note 17) 94,833 Right-of-use assets 15(a) (note 15(a)) 1,399 Prepayments, other receivables and other assets 9,940 Lease liabilities (note 15(b)) 15(b) (1,489) Deferred tax liabilities (note 32) 32 (23,708) Trade payables (453) Tax payables (2,292) Other payables and accruals (1,093) Total identifiable net assets at fair value 195,851 Non-controlling interests (102,822) Goodwill on acquisition 16 (note 16) 108 The consideration paid by Shuifa Clean Energy for the acquisition of the 47.5% 47.5% equity interests in Zibo Qilu 93,137 Merger deficit 96,863 Satisfied by cash 190, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

264 31 December BUSINESS COMBINATIONS (Continued) (2) Acquisition of 47.5% equity interests in Zibo Qilu (Continued) 38. (2) 47.5% An analysis of the cash flows in respect of the acquisition of the above subsidiaries is as follows: RMB 000 Cash and cash equivalents acquired Net outflow of cash and cash equivalents Included in cash flows from investing activities 190,000 As part of the acquisition agreement, If the audited net profit (after extraordinary items) of Zibo Qilu for any given financial year during the period from 1 January 2020 to 31 December 2044 is less than RMB63,000,000, Zibo Linre New Energy Co., Ltd., which disposed of its 47.5% equity interests in Zibo Qilu to Shuifa Clean Energy, agreed to compensate the shortfall multiplied by the shareholding percentage held by Hunan Green Energy. During the year ended 31 December 2020, the compensation of RMB8,983,000 was recorded as other income and gain. Contingent consideration was recognised as nil at the acquisition date and no fair value change was recognised in profit or loss during the year based on the financial budgets covering from 1 January 2021 to 31 December 2044 approved by management. 63,000, % 8,983,

265 31 December BUSINESS COMBINATIONS (Continued) (3) Acquisition of 51% equity interests in Jiangxi Yaxing On 22 December 2020, Zhuhai Singyes completed the acquisition of 51% equity interests in Jiangxi Yaxing by capital injection at a price of RMB39,900,000. RMB20,000,000 was injected on 22 December 2020 and RMB19,900,000 was injected in February The following table summarises the consideration paid for the acquisition and the fair values of the identifiable assets acquired and liabilities assumed at the acquisition date: 38. (3) 51% 39,900,000 51% 20,000,000 19,900,000 Total RMB 000 Property, plant and 13 equipment (note 13) 3,523 Contract assets 29,228 Trade and bills receivables 102,863 Prepayments, other receivables and other assets 45,382 Cash and cash equivalents 20,774 Interest-bearing bank and other loans (4,000) Tax payables (5,408) Trade payables (74,255) Other payables and accruals (25,279) Total identifiable net assets at fair value 92,828 Non-controlling interests (45,483) Gain on bargain purchase recognised in other income 5 * and gains (note 5)* (7,445) Satisfied by cash and other ** payables and accruals** 39, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

266 31 December BUSINESS COMBINATIONS (Continued) (3) Acquisition of 51% equity interests in Jiangxi Yaxing (Continued) 38. (3) 51% * The gain on a bargain purchase of approximately RMB7,445,000 arose from the immediate need of Jiangxi Yaxing to solve the lack of liquidity. * 7,445,000 ** RMB20,000,000 was injected on 22 December 2020 and RMB19,900,000 was recorded as other payables and accruals by Zhuhai Singyes as at the date of 31 December ** 20,000,000 19,900,000 An analysis of the cash flows in respect of the acquisition of the above subsidiaries is as follows: RMB 000 Cash and cash equivalents acquired 20,774 Net inflow of cash and cash equivalents Included in cash flows from investing activities

267 31 December BUSINESS COMBINATIONS (Continued) (3) Acquisition of 51% equity interests in Jiangxi Yaxing (Continued) The amounts of contribution to the Group s revenue and consolidated profit for the year ended 31 December 2020 since the respective acquisition dates are as follows: 38. (3) 51% foshan Foshan Jiangxi Keliyuan Xinye Zibo Qilu Yaxing RMB 000 RMB 000 RMB 000 RMB 000 Revenue ,060 Consolidated profit ,340 Had the combination taken place at the beginning of the year, the revenue of the Group and the total comprehensive income of the Group for the year ended 31 December 2020 would be increased/(decreased) by: foshan Foshan Jiangxi Keliyuan Xinye Zibo Qilu Yaxing RMB 000 RMB 000 RMB 000 RMB 000 Revenue , ,282 Consolidated profit (57) ,088 18, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

268 31 December COMMITMENTS 39. The Group had the following capital commitments at the end of the reporting period: RMB 000 RMB 000 Contracted, but not provided for: Construction of buildings and solar photovoltaic power stations 93, ,403 Purchase of machinery 9,120 Capital contributions to be injected into associates 26,500 4,500 Purchase of office properties 16, , ,

269 31 December RELATED PARTY TRANSACTIONS AND BALANCES 40. (a) Borrowings with Shuifa Group (a) (i) During the year, the Group borrowed loans with (i) a principal of US$281,252,000 (equivalent to 281,252,000 approximately RMB1,938,920,000) (2019: nil) from Shuifa Group, with an interest rate of 6% per annum 1,938,920,000 and US$61,304,000 (equivalent to approximately RMB400,000,000) was repaid before the year end. 6% A finance cost of US$5,643,000 (equivalent to 61,304,000 approximately RMB38,903,000) (note 6) was recognised. 400,000,000 As at 31 December 2020 the outstanding amount of the principal and interests were US$225,591,000 5,643,000 (equivalent to approximately RMB1,471,961,000), among 38,903,000 which US$212,862,000 (equivalent to approximately 6 RMB1,388,908,000) of the borrowings would be due on 31 December 2021, and the remaining US$12,729,000 (equivalent to approximately RMB83,053,000) would be 225,591,000 due on 27 August ,471,961, ,862,000 1,388,908,000 12,729,000 83,053,000 (ii) During the year, an interest-free loan with a principal of (ii) RMB50,000,000 (2019: nil) was borrowed from Shuifa Group by the Group and RMB35,000,000 was repaid 50,000,000 before the year end. As at 31 December 2020, the outstanding amount of the loan was RMB15,000, ,000,000 15,000, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

270 31 December RELATED PARTY TRANSACTIONS AND BALANCES (Continued) (b) Lendings and borrowings with fellow subsidiaries under control of Shuifa Group 40. (b) (i) During the year, a loan with a principal of RMB50,000,000 (i) (2019: nil) was borrowed by Shuifa Clean Energy from the Group, with an interest rate of 9.5% per annum. An 50,000,000 amount of the principal of RMB30,000,000 was paid by Shuifa Clean Energy before the year end. Interest income 9.5% of RMB646,000 (note 5) was recognised during the year. As at 31 December 2020, the outstanding amount of the 30,000,000 loan was RMB20,646, , ,646,000 (ii) During the year, an interest free loan with a principal of (ii) RMB5,000,000 (2019: nil) was borrowed from Shuifa Energy by the Group. As at 31 December 2020, the 5,000,000 outstanding amount of the loan was RMB5,000,000. 5,000,000 (iii) During the year, an interest free loan with a principal of (iii) RMB10,000,000 borrowed in 2019 from Shuifa Energy was repaid by the Group. As at 31 December 2020, the 10,000,000 outstanding amount was nil (2019: RMB10,000,000). 10,000,

271 31 December RELATED PARTY TRANSACTIONS AND BALANCES (Continued) 40. (c) other significant transactions with fellow subsidiaries under control of Shuifa Group and associates (c) RMB 000 RMB 000 Fellow subsidiaries: Acquisition of a subsidiary 38 (note 38) 190,000 Purchase of office properties 18 (note 18) 17,555 Construction services 8,624 Associates: Construction services 443,574 Operating leases (d) Guarantees obtained from related parties (note 30) (d) 30 Details of bank and other loans guarantees provided by related parties of the Group for nil consideration are as follows: (i) as at 31 December 2020, the Group s bank (i) loans of RMB216,169,000 (31 December 2019: RMB706,690,000) were guaranteed by Mr. Liu Hongwei; 216,169, ,690,000 (ii) as at 31 December 2019, the Group s bank loans of (ii) RMB513,995,000 were jointly guaranteed by Mr. Liu Hongwei and the Company s former director, Mr. Sun Jinli; 513,995, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

272 31 December RELATED PARTY TRANSACTIONS AND BALANCES (Continued) (d) Guarantees obtained from related parties (note 30) (Continued) 40. (d) 30 (iii) as at 31 December 2020, the Group s bank (iii) loans of RMB120,000,000 (31 December 2019: RMB120,000,000) were jointly guaranteed by Mr. Liu 120,000,000 Hongwei and the Company s former director, Mr. Xie Wen; 120,000,000 (iv) as at 31 December 2020, the Group s bank (iv) loans of RMB414,494,000 (31 December 2019: RMB414,494,000) were jointly guaranteed by Mr. Liu 414,494,000 Hongwei and the Company s former directors, Mr. Sun Jinli and Mr. Xie Wen; 414,494,000 (v) as at 31 December 2020, the Group s bank loans (v) of HK$149,310,000 (equivalent to approximately RMB125,665,000) (31 December 2019: 149,310,000 HK$198,825,000, equivalent to approximately 125,665,000 RMB178,103,000) were guaranteed by Mr. Liu Hongwei; 198,825, ,103,000 (vi) as at 31 December 2019, the Group s other loans of (vi) US$12,000,000 were guaranteed by Mr. Liu Hongwei. 12,000,

273 31 December RELATED PARTY TRANSACTIONS AND BALANCES (Continued) (d) Guarantees obtained from related parties (note 30) (Continued) 40. (d) 30 (vii) as at 31 December 2020, the Group s bank and other loans of RMB378,450,000 (31 December 2019: nil) were guaranteed by Shuifa Group; (vii) 378,450,000 (viii) as at 31 December 2020, the Group s bank and other loans with a principal of RMB272,221,000 (31 December 2019: nil) were guaranteed by Shuifa Energy; (viii) 272,221,000 (ix) as at 31 December 2020, the Group s bank and other (ix) loans of RMB886,741,000 (31 December 2019: nil) were guaranteed by Shandong Shuifa Holdings; and 886,741,000 (x) as at 31 December 2020, the Group s bank loans of (x) RMB149,994,000 (31 December 2019: nil) were jointly guaranteed by Shuifa Energy and Shandong Shuifa 149,994,000 Holdings. 272 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

274 31 December RELATED PARTY TRANSACTIONS AND BALANCES (Continued) 40. (e) Outstanding balances with related parties (e) RMB 000 RMB 000 Due from associates: Trade receivables (note 24) ,391 Contract assets (note 23) , ,865 Due from fellow subsidiaries under control of Shuifa Group: Prepayments, other receivables and 25 other assets (note 25) 29,270 Payments in advance 18 (note 18) 17,555 Contract assets 23 (note 23) 2,156 48,981 Due to the ultimate holding company: Other payables and accruals 1,486,961 Due to fellow subsidiaries under control of Shuifa Group: Other payables and accruals 5,000 10,000 Due to associates: Other payables and and accruals (note 28) 28 1,000 Contract liabilities (note 29) 29 11,411 1,000 11,

275 31 December RELATED PARTY TRANSACTIONS AND BALANCES (Continued) 40. (f) Compensation of key management personnel of the Group (f) RMB 000 RMB 000 Salaries, allowances and benefits in kind 4,225 7,742 Pension scheme contributions ,329 7,940 Further details of directors and the chief executive s emoluments are included in note 8 to the financial statements TRANSFERS OF FINANCIAL ASSETS Transferred financial assets that are not derecognised in their entirety Note RMB 000 RMB 000 Gross amounts of assets continued to be recognised: Discounted Bills 39,370 Endorsed Bills (a) 14,870 26,959 14,870 66, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

276 31 December TRANSFERS OF FINANCIAL ASSETS (Continued) Transferred financial assets that are not derecognised in their entirety (Continued) 41. Note: (a) Endorsed Bills (a) At 31 December 2020, the Group endorsed certain bills receivable accepted by certain local banks in the PRC (the Endorsed Bills ) with a total carrying amount of RMB14,870,000 (31 December 2019: RMB26,959,000) to certain of its suppliers in order to settle the trade payables due to those suppliers. The Endorsed Bills had a maturity of one to eleven months at 31 December In accordance with the Law of Negotiable Instruments in the PRC, the holders of the Endorsed Bills have a right of recourse against the Group if the PRC banks default. In the opinion of the Directors, the Group has retained the substantial risks and rewards, which include default risks relating to the Endorsed Bills, and accordingly, it continued to recognise the full carrying amounts of the Endorsed Bills and the associated trade payables settled. Subsequent to the endorsement, the Group did not retain any rights on the use of the Endorsed Bills, including sale, transfer or pledge of the Endorsed Bills to any other third parties. The aggregate carrying amount of the trade payables settled by the Endorsed Bills during the year to which the suppliers have recourse was RMB14,870,000 as at 31 December 2020 (2019: RMB26,959,000). 14,870,000 26,959,000 14,870,000 26,959,

277 31 December TRANSFERS OF FINANCIAL ASSETS (Continued) Transferred financial assets that are not derecognised in their entirety (Continued) 41. As at 31 December 2020, the Group discounted certain bills receivable accepted by certain reputable banks in the PRC, with a carrying amount in aggregate of RMB27,082,000 (referred to as the Derecognised Bills ) (31 December 2019: RMB10,840,000). The Derecognised Bills had a maturity from one to ten months at 31 December In accordance with the Law of Negotiable Instruments in the PRC, the holders of the Derecognised Bills have a right of recourse against the Group if the PRC banks default (the Continuing Involvement ). In the opinion of the Directors, the Group has transferred substantially all risks and rewards relating to the Derecognised Bills. Accordingly, it has derecognised the full carrying amount of the Derecognised Bills. The maximum exposure to loss from the Group s Continuing Involvement in the Derecognised Bills and the undiscounted cash flows to repurchase these Derecognised Bills is equal to their carrying amounts. In the opinion of the Directors, the fair values of the Group s Continuing Involvement in the Derecognised Bills are not significant. 27,082,000 10,840,000 During the year, the Group has recognised interest expense of RMB2,200,000 (2019: RMB2,067,000) (note 6) on discounted bills receivable. No gains or losses were recognised from the Continuing Involvement, both during the year or cumulatively. 2,200,000 2,067, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

278 31 December NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS (1) Major non-cash transactions 42. (1) 1) During the year, the Group s own-occupied properties of RMB50,037,000 (2019: RMB214,730,000) and rightof-use assets of RMB3,511,000 (2019: RMB7,195,000) were transferred to investment properties (note 14). 1) 50,037, ,730,000 3,511,000 7,195, ) During the year, the Group s other loan of RMB41,000,000 (2019: nil) was transferred to other payables and accruals as a project deposit. 2) 41,000,000 3) During the year, the Group had non-cash additions to right-of-use assets and lease liabilities of RMB25,106,000 (2019: RMB4,901,000) and RMB25,106,000 (2019: RMB1,296,000), respectively, in respect of lease arrangements for plant and office premises and land. 3) 25,106,000 4,901,000 25,106,000 1,296,

279 31 December NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS (Continued) (2) Changes in liabilities arising from financing activities 42. (2) Amount Bank due to the advances for Intermediate Bank and discounted Lease Senior Interest holding other loans bills liabilities notes payables company RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 At 31 December ,912,309 38,889 8,457 2,815,135 38,680 10,000 At 1 January ,912,309 38,889 8,457 2,815,135 38,680 10,000 Changes from financing cash flows (94,107) (38,889) (8,886) (1,111,621) (179,940) 1,548,920 New leases 25,106 Termination (282) Decrease as a result of COVID-19 Covid-19-related rent concessions (52) Lease modification (313) Interest payables (138,184) (2,200) (40,031) 180,415 Interest expense (note 6) 6 175,642 2, ,660 (20,041) 38,903 Accelerated amortisation of financing transaction cost (note 6) 6 8,856 Foreign exchange 5,222 (46,391) Exchange realignment (9,007) (45) (119,804) (59,471) Acquisition of subsidiaries 4,000 1,489 Gain on repurchase and cancellation of senior notes (211,099) Other non-cash * movements* (41,000) (13,087) At 31 December ,814,875 26,200 1,488,096 6,027 1,491,961 * During the year, the Group s other loan of RMB41,000,000 was transferred to other payables and accruals. * During the year, interest on an other loan of RMB13,087,000 was waived by the creditor. * 41,000,000 * 13,087, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

280 31 December NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS (Continued) (2) Changes in liabilities arising from financing activities (Continued) 42. (2) Amount Bank due to the advances for intermediate Bank and discounted Lease Convertible Senior Interest holding other loans bills liabilities bonds notes payables company RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 At 31 December ,956,804 96,000 2,850, ,433 Effect of adoption of IFRS ,722 At 1 January ,956,804 10,722 96,000 2,850, ,433 Changes from financing cash flows (83,110) 38,889 (3,382) (10,324) (312,719) (229,040) 10,000 New leases 1,296 Termination (702) Issue expenses (83,137) Interest payables (157,368) (2,067) (5,332) (211,264) 376,031 Interest expense 6 (note 6) 188,626 2, , ,754 Foreign exchange loss, net 1,952 Exchange realignment 5, ,069 Other non-cash movements (85,676) 310,420 (224,744) At 31 December ,912,309 38,889 8,457 2,815,135 38,680 10,

281 31 December NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS (Continued) (3) Changes in liabilities arising from financing activities 42. (3) The total cash outflow for leases included in the statement of cash flows is as follows: 2020 RMB 000 Within operating activities 3,832 Within financing activities 8,886 12, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

282 31 December FINANCIAL INSTRUMENTS BY CATEGORY 43. The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows: 2020 Financial assets financial financial assets assets at fair value Financial at fair value through other assets at through comprehensive amortised profit or loss income cost total RMB 000 RMB 000 RMB 000 RMB 000 Equity investments designated at fair value through other comprehensive income 10,530 10,530 Trade and bills receivables 49,244 3,521,160 3,570,404 Financial assets included in prepayments, other receivables and other assets 678, ,485 Pledged deposits 47,169 47,169 Cash and cash equivalents 899, ,789 49,244 10,530 5,146,603 5,206,

283 31 December FINANCIAL INSTRUMENTS BY CATEGORY (Continued) 43. The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows: (Continued) Financial liabilities financial liabilities at amortised cost RMB 000 Trade and bills payables 1,921,875 Financial liabilities included in other payables and accruals 1,708,163 Senior notes 1,488,096 Interest-bearing bank and other loans 2,814,875 Lease liabilities 26,200 7,959, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

284 31 December FINANCIAL INSTRUMENTS BY CATEGORY (Continued) 43. The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows: (Continued) 2019 Financial assets Financial Financial assets assets at fair value Financial at fair value through other assets at through comprehensive amortised profit or loss income cost Total RMB 000 RMB 000 RMB 000 RMB 000 Equity investments designated at fair value through other comprehensive income 11,414 11,414 Trade and bills receivables 32,349 3,104,115 3,136,464 Financial assets included in prepayments, deposits and other receivables 702, ,322 Financial assets at fair value through profit or loss 5,000 5,000 Pledged deposits 54,867 54,867 Cash and cash equivalents 1,082,835 1,082,835 37,349 11,414 4,944,139 4,992,

285 31 December FINANCIAL INSTRUMENTS BY CATEGORY (Continued) 43. The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows: (Continued) Financial liabilities Financial liabilities at amortised cost RMB 000 Trade and bills payables 1,438,054 Financial liabilities included in other payables and accruals 186,133 Senior notes 2,815,135 Bank advances for discounted bills 38,889 Interest-bearing bank and other loans 2,912,309 Lease liabilities 8,457 7,398, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

286 31 December FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS 44. The carrying amounts and fair values of the Group s financial instruments, other than those with carrying amounts that reasonably approximate to fair values due to short term to maturity, are as follows: Carrying amounts fair values RMB 000 RMB 000 RMB 000 RMB 000 Financial asset Equity investments designated at fair value through other comprehensive income 10,530 11,414 10,530 11,414 Financial assets at fair value through profit or loss 5,000 5,000 10,530 16,414 10,530 16,414 Financial liabilities 2022 Senior Notes 1,488,096 2,815,135 1,431,125 2,523,987 Non-current portion of interest-bearing bank and other loans: Bank loans 1,190,683 1,197,730 1,166,077 1,161,186 Other loans 443, , , ,228 3,121,781 4,352,755 3,038,024 3,981,

287 31 December FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued) 44. Management has assessed that the fair values of cash and cash equivalents, short term pledged deposits, trade and bills receivables, trade and bills payables, financial assets included in prepayments, other receivables and other assets and financial liabilities included in other payables and accruals and provision approximate to their carrying amounts largely due to the short term maturities of these instruments. The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values: The fair values of unlisted equity investments designated at fair value through other comprehensive income have been estimated using a market-based valuation technique based on assumptions that are not supported by observable market prices or rates. The valuation requires the Directors to determine comparable public companies (peers) based on industry, size, leverage and strategy, and to calculate an appropriate price-to-book ( P/B ) multiple, for each comparable company identified. The multiple is calculated by dividing the enterprise value of the comparable company by an earnings measure. The trading multiple is then discounted for considerations such as illiquidity and size differences between the comparable companies based on company-specific facts and circumstances. The discounted multiple is applied to the corresponding earnings measure of the unlisted equity investments to measure the fair value. The Directors believe that the estimated fair values resulting from the valuation technique, which are recorded in the consolidated statement of financial position, and the related changes in fair values, which are recorded in other comprehensive income, are reasonable, and that they were the most appropriate values at the end of the reporting period. 286 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

288 31 December FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued) For the fair value of the unlisted equity investments at fair value through other comprehensive income, management has estimated the potential effect of using reasonably possible alternatives as inputs to the valuation model. 44. Fair value hierarchy The following tables illustrate the fair value measurement hierarchy of the Group s financial instruments: Assets measured at fair value: fair value measurement using quoted prices Significant Significant in active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total RMB 000 RMB 000 RMB 000 RMB 000 As at 31 December 2020 Bills receivable 49,244 49,244 Equity investments designated at fair value through other comprehensive income 10,530 10,530 49,244 10,530 59,774 As at 31 December 2019 Financial assets at fair value through profit or loss 5,000 5,000 Bills receivable 32,349 32,349 Equity investments designated at fair value through other comprehensive income 11,414 11,414 37,349 11,414 48,

289 31 December FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued) Fair value hierarchy (Continued) 44. The movements in fair value measurements within Level 3 during the year are as follows: RMB 000 RMB 000 Equity investments at fair value through other comprehensive income: At 1 January 11,414 5,657 Total income/(losses) recognised in other comprehensive income (519) 639 Purchases 5,000 Exchange realignment (365) 118 At 31 December 10,530 11,414 The Group did not have any financial liabilities measured at fair value as at 31 December 2020(31 December 2019: nil). During the year ended 31 December 2020, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 for both financial assets and financial liabilities (2019: nil). The Group did not have any financial assets for which fair values are disclosed as at 31 December 2020 (31 December 2019: nil). 288 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

290 31 December FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued) Fair value hierarchy (Continued) 44. Liabilities for which fair values are disclosed: fair value measurement using quoted prices Significant Significant in active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total RMB 000 RMB 000 RMB 000 RMB 000 As at 31 December Senior Notes (note 31) 31) 1,431,125 1,431,125 Interest-bearing bank and other loans, non-current portion 1,606,899 1,606,899 1,431,125 1,606,899 3,038,024 As at 31 December Senior Notes (note 31) 31) 2,523,987 2,523,987 Interest-bearing bank and other loans, non-current portion 1,457,414 1,457,414 2,523,987 1,457,414 3,981,

291 31 December FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES 45. The Group s principal financial instruments comprise interest-bearing bank and other loans, senior notes and cash and cash equivalents. The main purpose of these financial instruments is to raise finance for the Group s operations. The Group has various other financial assets and liabilities such as trade and bills receivables, prepayments, other receivables and other assets, trade and bills payables, other payables and accruals and bank advances for discounted bills, which arise directly from its operations. The main risks arising from the Group s financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. The board of directors reviews and agrees policies for managing each of these risks and they are summarised below. Interest rate risk The interest rates and terms of repayment of interest-bearing bank and other loans are disclosed in note The Group s exposure to the risk of changes in the market interest rates relates primarily to the Group s long-term debt obligations with floating interest rates. The Group s policy is to manage its interest cost using a mix of fixed and variable rate debts. At 31 December 2020, approximately 39.6% (2019: 54.2%) of the Group s interest-bearing bank and other loans bore interest at fixed rates. 39.6% 54.2% 290 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

292 31 December FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) 45. The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Group s profit/loss before tax (through the impact on floating rate loans). Increase/ Increase/ (decrease) in (decrease) in profit/loss basis points before tax RMB Hong Kong dollar 100 1,257 Hong Kong dollar (100) (1,257) 2019 Hong Kong dollar 100 2,688 Hong Kong dollar (100) (2,688) Foreign currency risk The Group s principal businesses are located in Mainland China and most of the transactions are conducted in RMB. Most of the Group s assets and liabilities are denominated in RMB, except for those of the overseas subsidiaries which functional currencies are currencies other than RMB and certain items of cash and cash equivalents that are denominated in HK$, US$ and other currencies. 291

293 31 December FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Foreign currency risk (Continued) 45. If RMB strengthens/weakens against HK$ as a reasonable possible change of 5%, the profit before tax of the Group will decrease/increase by approximately RMB184,994,000 (2019: the loss before tax of the Group will increase/decrease by approximately RMB82,189,000), due to changes in fair values of monetary assets and liabilities. The Group does not consider that it has any significant exposure to the risk of fluctuation in the exchange rate between US$ and RMB as a reasonable possible change of 5% in RMB against US$ would have no significant financial impact on the Group s profit. 5% 184,994,000 82,189,000 5% Credit risk The Group trades only with recognised and creditworthy third parties and its associates. It is the Group s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and the Group s exposure to bad debts is not significant. Maximum exposure and year-end staging The tables below show the credit quality and the maximum exposure to credit risk based on the Group s credit policy, which is mainly based on past due information unless other information is available without undue cost or effort, and year-end staging classification as at 31 December. The amounts presented are gross carrying amounts for financial assets and the exposure to credit risk. 292 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

294 31 December FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Maximum exposure and year-end staging (Continued) 45. As at 31 December month ECLs Lifetime ECLs Simplified Stage 1 Stage 2 Stage 3 approach Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Contract assets* * 3,245,141 3,245,141 Trade receivables* * 4,154,464 4,154,464 Bills receivable 49,244 49,244 Financial assets included in prepayments, other receivables and other assets Normal** ** 677, ,558 Doubtful** ** 110, ,405 Pledged deposits Not yet past due 47,169 47,169 Cash and cash equivalents Not yet past due 899, ,789 1,673, ,405 7,399,605 9,183,

295 31 December FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Maximum exposure and year-end staging (Continued) 45. As at 31 December month ECLs Lifetime ECLs Simplified Stage 1 Stage 2 Stage 3 approach Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Contract assets* * 2,199,246 2,199,246 Trade receivables* * 3,706,413 3,706,413 Bills receivable 32,349 32,349 Financial assets included in prepayments, other receivables and other assets Normal** ** 576, ,215 Doubtful** ** 211, ,748 Pledged deposits Not yet past due 54,867 54,867 Cash and cash equivalents Not yet past due 1,082,835 1,082,835 1,746, ,748 5,905,659 7,863,673 * For trade receivables and contract assets to which the Group applies the simplified approach for impairment, information based on the provision matrix is disclosed in notes 24 and 23 to the financial statements, respectively. * ** The credit quality of the financial assets included in prepayments, other receivables and other assets is considered to be normal when they are not past due and there is no information indicating that the financial assets had a significant increase in credit risk since initial recognition. Otherwise, the credit quality of the financial assets is considered to be doubtful. ** 294 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

296 31 December FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Maximum exposure and year-end staging (Continued) 45. At the end of the reporting period, the Group had certain concentrations of credit risk as 6.50% and 21.44% of the Group s trade receivables were due from the Group s largest customer and the five largest customers, respectively. All of these customers have good credit quality, taking into account their credit history, and the longterm business relationship established between the customers and the Group. The Group has delegated a team responsible for determination of credit limits and monitoring procedures to ensure that there will be follow-up action to recover overdue debts. 6.50% 21.44% Liquidity risk The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial instruments and financial assets (e.g., trade receivables) and projected cash flows from operations. The liquidity of the Group is primarily dependent on its ability to maintain a balance between continuity of funding and flexibility through the settlement from customers and the payment to vendors. 295

297 31 December FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Liquidity risk (Continued) 45. The maturity profile of the Group s financial liabilities as at the end of the reporting period, based on the contractual undiscounted payments, is as follows: 3 to less than 12 Less than months 1 to 5 Beyond On demand 3 months years 5 years total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB Senior notes 30,586 1,651,517 1,682,103 Interest-bearing bank and other loans 586, ,885 1,061, ,377 3,112,038 Trade and bills payables 584, ,147 1,205,757 1,921,875 Financial liabilities included in other payables and accruals 1,708,163 1,708,163 Lease liabilities 399 1,971 10,149 31,018 43,537 2,293, ,552 1,911,199 2,723, ,395 8,467, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

298 31 December FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Liquidity risk (Continued) to less Less than than 12 1 to 5 Beyond On demand 3 months months years 5 years Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB Convertible bonds * * Senior notes 58,472 3,345,617 3,404,089 Interest-bearing bank and other loans 723, ,089 1,114, ,586 3,283,016 Trade and bills payables 430, , ,387 1,438,054 Financial liabilities included in other payables and accruals 186, ,133 Lease liabilities 524 1,752 5,188 4,377 11, ,676 1,016,143 1,523,700 4,465, ,963 8,323,133 * Conversion rights of the convertible bonds are not included in the table above as they will be settled through issuance of own shares. * 297

299 31 December FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Capital management 45. The Group s objectives of its capital management are to safeguard the Group s ability to continue as a going concern, so that it can continue to provide returns for the shareholders and benefits for other stakeholders, and to provide an adequate return to shareholders by pricing services and products commensurately with the level of risk. The Group sets the amount of capital in proportion to risk. The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Net debt comprises trade and bills payables, bank advances for discounted bills, interest-bearing bank and other loans, lease liabilities, other payables and accruals, senior notes and tax payable, less cash and cash equivalents and pledged deposits. Adjusted capital includes the liability component of convertible bonds and equity attributable to owners of the Company. 298 China Shuifa Singyes Energy Holdings Limited Annual Report 2020

300 31 December FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Capital management (Continued) 45. The Group s strategy is to maintain the gearing ratio at a healthy capital level in order to support its businesses. The principal strategies adopted by the Group include, but are not limited to, reviewing future cash flow requirements and the ability to meet debt repayment schedules when they fall due, maintaining a reasonable level of available banking facilities and adjusting investment plans and financing plans, if necessary, to ensure that the Group has a reasonable level of capital to support its business. The gearing ratios as at the end of the reporting periods were as follows: RMB 000 RMB 000 Trade and bills payables 1,921,875 1,438,054 Bank advances for discounted bills 38,889 Interest-bearing bank and other loans 2,814,875 2,912,309 Lease liabilities 26,200 8,457 Other payables and accruals 2,107, ,425 Senior notes 1,488,096 2,815,135 Tax payable 102,010 22,245 Less: cash and cash equivalents (899,789) (1,082,835) Less: pledged deposits (47,169) (54,867) Net debt (A) (A) 7,513,649 6,481,812 Equity attributable to owners of the Company 4,214,557 3,928,666 Adjusted capital 4,214,557 3,928,666 Capital and net debt (B) (B) 11,728,206 10,410,478 Gearing ratio (A/B) (A/B) 64% 62% 299

301 31 December STATEMENT OF FINANCIAL POSITION OF THE COMPANY 46. Information about the statement of financial position of the Company at the end of the reporting period is as follows: RMB 000 RMB 000 NON-CURRENT ASSETS Property, plant and equipment 13,475 14,813 Amounts due from subsidiaries 3,990,728 3,868,985 Investments in subsidiaries 44,890 44,388 Equity investment designed at fair value through other comprehensive income 5,151 6,029 Total non-current assets 4,054,244 3,934,215 CURRENT ASSETS Prepayments, deposits and other receivables 25 Cash and cash equivalents 9,672 63,348 Total current assets 9,697 63, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

302 31 December STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Continued) 46. Information about the statement of financial position of the Company at the end of the reporting period is as follows: (Continued) RMB 000 RMB 000 CURRENT LIABILITIES Other payables and accruals 1,479,265 23,738 Provision Interest-bearing bank and other loans 125, ,415 Amounts due to subsidiaries 10,747 9,093 Total current liabilities 1,615, ,246 NET CURRENT LIABILITIES (1,605,980) (98,898) TOTAL ASSETS LESS CURRENT LIABILITIES 2,448,264 3,835,317 NON-CURRENT LIABILITIES Interest-bearing bank and other loans 132,402 Senior notes 1,488,096 2,815,135 Total non-current liabilities 1,488,096 2,947,537 Net assets 960, ,780 EQUITY Issued capital 174, ,333 Reserves (note 36) , ,447 Total equity 960, ,

303 31 December STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Continued) 46. Note: A summary of the Company s reserves is as follows: Fair value reserve of financial assets at fair value through Share other com- Share Exchange premium prehensive Contributed option fluctuation Accumulated account income surplus reserve reserve losses Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 At 1 January ,818 (7,915) 11,997 68,366 8,578 (1,268,788) (390,944) Loss for the year (160,175) (160,175) Change in fair value of equity instruments at fair value through other comprehensive income, net of tax Other comprehensive income (13,936) (13,936) Total comprehensive income for the year 639 (13,936) (160,175) (173,472) Issue of new shares 1,274,617 1,274,617 Transfer of share option reserve upon the expiry of share options (16,924) 16,924 Equity-settled share option arrangements 3,246 3, final dividend declared At 31 December ,071,435 (7,276) 11,997 54,688 (5,358) (1,412,039) 713, China Shuifa Singyes Energy Holdings Limited Annual Report 2020

304 31 December STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Continued) 46. Note: (Continued) A summary of the Company s reserves is as follows: (Continued) fair value reserve of financial assets at fair value through Share other com- Share Exchange premium prehensive Contributed option fluctuation Accumulated account income surplus reserve reserve losses Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 At 1 January ,071,435 (7,276) 11,997 54,688 (5,358) (1,412,039) 713,447 Profit for the year 130, ,592 Change in fair value of equity instruments at fair value through other comprehensive income, net of tax (519) (519) Other comprehensive income (58,319) (58,319) Total comprehensive income for the year (519) (58,319) 130,592 71,754 Issue of new shares Transfer of share option reserve upon the expiry of share options Equity-settled share option arrangements final dividend declared At 31 December ,071,435 (7,795) 11,997 55,322 (63,677) (1,281,447) 785,

305 31 December STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Continued) 46. The share option reserve comprises the fair value of share options granted which are yet to be exercised, as further explained in the accounting policy for share-based payments in note 2.4 to the financial statements. The amount will either be transferred to the share premium account when the related options are exercised, or transferred to retained profits should the related options expire or be forfeited APPROVAL OF THE FINANCIAL STATEMENTS 47. The financial statements were approved and authorised for issue by the board of directors on 25 March China Shuifa Singyes Energy Holdings Limited Annual Report 2020

306 中國水發興業能源集團有限公司 China Shuifa Singyes Energy Holdings Limited