Novautek Technologies Group Limited — Annual Report 2020

Mar 30, 2021

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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KONG SUN HOLDINGS LIMITED 江山控股有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 295)

ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

The board (the “ Board ”) of directors (the “ Directors ”) of Kong Sun Holdings Limited (the “ Company ”) is pleased to announce the audited consolidated results of the Company and its subsidiaries (collectively, the “ Group ”) for the year ended 31 December 2020, together with the comparative figures for the corresponding year in 2019 as follows:

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the year ended 31 December 2020

Notes Revenue 3 Cost of sales Gross profit Other gains, net 4 Administrative expenses Losses on disposals of subsidiaries, net 18 Impairment losses on a disposal group classified as held for sale 14 Impairment losses on solar power plants under construction 11 Impairment losses on trade and other receivables, net 13 Loss on disposal of a joint venture Finance costs 7 Share of profit of a joint venture Share of loss of associates Loss before income tax 5 Income tax expense 8 Loss for the year (Loss)/Profit for the year attributable to: Owners of the Company Non-controlling interests Loss per share for the year attributable to owners of the Company 9 — Basic (RMB cents) — Diluted (RMB cents)	2020 RMB’000 1,478,209 (556,961) 921,248 18,202 (297,030) (182,220) (160,650) (84,445) (78,429) – (735,344) – (1,707) (600,375) (25,359) (625,734) (626,818) 1,084 (625,734) (4.19) (4.19)	2019 RMB’000 2,079,704 (981,965) 1,097,739 4,656 (366,869) (66,618) (327,729) (43,735) (77,113) (3,918) (892,236) 12,308 (21,928) (685,443) (13,278) (698,721) (698,629) (92) (698,721) (4.67) (4.67)

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CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

For the year ended 31 December 2020

Loss for the year Other comprehensive income, net of tax Items that will not be reclassified to profit or loss: — Fair value changes in financial assets measured at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss: — Exchange differences on translation of financial statements of foreign operations — Releases of exchange reserve upon disposals of subsidiaries Other comprehensive income for the year, net of tax Total comprehensive income for the year Total comprehensive income attributable to: Owners of the Company Non-controlling interests	2020 RMB’000 (625,734) (184,365) 16,334 – (168,031) (793,765) (794,849) 1,084 (793,765)	2019 RMB’000 (698,721) (422,893) (2,293) 431 (424,755) (1,123,476) (1,123,384) (92) (1,123,476)

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2020

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Solar power plants 11 Interests in associates Goodwill Right-of-use assets Financial assets measured at fair value through other comprehensive income 12 Deferred tax assets Current assets Financial assets measured at fair value through profit or loss Inventories Trade, bills and other receivables 13 Structured bank deposits Cash and cash equivalents Assets of disposal groups classified as held for sale 14 Total current assets	2020 RMB’000 28,199 5,358,404 227,984 29,622 274,361 1,275,156 3,695 7,197,421 16,921 3,598 3,561,766 4,230 168,947 3,755,462 3,350,435 7,105,897	2019 RMB’000 36,959 8,747,485 226,691 96,930 409,133 1,729,091 4,250
		11,250,539
		28,198 1,222 4,292,131 4,230 194,156
		4,519,937
		2,901,609
		7,421,546

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Notes Current liabilities Trade and other payables 15 Lease liabilities Loans and borrowings 16 Corporate bonds Tax payables Liabilities of disposal groups classified as held for sale 14 Total current liabilities Net current assets Total assets less current liabilities Non-current liabilities Lease liabilities Loans and borrowings 16 Corporate bonds NET ASSETS CAPITAL AND RESERVES Share capital 17 Reserves Equity attributable to the owners of the Company Non-controlling interests TOTAL EQUITY	2020 RMB’000 1,060,610 23,142 2,576,645 229,601 6,325 3,896,323 1,792,136 5,688,459 1,417,438 8,614,859 159,086 3,708,933 44,032 3,912,051 4,702,808 6,486,588 (1,865,637) 4,620,951 81,857 4,702,808	2019 RMB’000 1,669,254 23,247 1,370,428 8,063 5,278 3,076,270 1,333,322 4,409,592 3,011,954 14,262,493 191,083 8,299,649 278,462 8,769,194 5,493,299 6,486,588 (1,075,767) 5,410,821 82,478 5,493,299

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NOTES TO THE FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“ HKFRSs ”), Hong Kong Accounting Standards (“ HKASs ”) and Interpretations (hereinafter collectively referred to as the “ HKFRS ”) and the Companies Ordinance (Cap. 622) of the Laws of Hong Kong (the “ Hong Kong Companies Ordinance ”). In addition, the financial statements include applicable disclosures required by the Rules Governing the Listing of Securities (the “ Listing Rules ”) on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”).

The financial information relating to the years ended 31 December 2020 and 2019 included in this preliminary announcement of the 2020 annual results do not constitute the Company’s statutory annual consolidated financial statements for those years but is derived from those financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance is as follows:

The Company has delivered the financial statements for the year ended 31 December 2019 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance and will deliver the financial statements for the year ended 31 December 2020 in due course.

The Company’s auditor has reported on those financial statements of the Group for both years. For the year ended 31 December 2020, the auditor’s reports were unqualified; include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report as set out in sub-section under “EXTRACT OF INDEPENDENT AUDITOR’S REPORT”; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance.

The financial statements have been prepared under historical cost convention except for certain financial assets at fair value through other comprehensive income (“ FVOCI ”) and financial assets at fair value through profit or loss (“ FVTPL ”), which are stated at fair values.

In preparing the financial statements, the Directors considered the operations of the Group as a going concern notwithstanding that the Group incurred a net loss of approximately RMB625,734,000 (2019: RMB698,721,000) during the year ended 31 December 2020 and in light of economy in 2020, the settlement of the Group’s certain tariff adjustment receivables from the state-grid companies amounting to RMB1,896,598,000 as at 31 December 2020 could be longer than the management’s original expectation. These conditions indicate the existence of a material uncertainty which may cast significant doubt on the Group’s ability to continue as a going concern and hence, its ability to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, the financial statements were prepared based on the assumption that the Group can be operated as a going concern and the Directors are of the view that the Group will have sufficient working capital to finance its operations in the next twelve months from 31 December 2020, after taking into consideration of the followings:

1. the Group continues to implement measures to tighten cost controls over various operating expenses in order to improve its cash flows from its operations; and

2. the Group is actively exploring the availability of alternative source of financing (including but not limited to realisation of the Group’s solar power plants).

The Directors believe that the aforementioned financing and operational measures will be successful, based on the continuous efforts and commitment given by the management.

Should the Group be unable to continue in business as a going concern, adjustments would have to be made in the financial statements to write down the values of the assets to their recoverable amounts, to provide for any further liabilities which might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively. The effect of such adjustments has not yet been reflected in the financial statements.

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2. ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

2.1 Adoption of new/amended HKFRSs — effective 1 January 2020

The Hong Kong Institute of Certified Public Accountants has issued a number of new or amended HKFRSs that are first effective for the current accounting period of the Group:

• Amendments to HKFRS 3, Definition of a Business

• Amendments to HKAS 1 and HKAS 8, Definition of Material

• Amendments to HKAS 39, HKFRS 7 and HKFRS 9, Interest Rate Benchmark Reform

None of these new or amended HKFRSs has a material impact on the Group’s results and financial position for the current or prior period. The Group has not early applied any new or amended HKFRSs that is not yet effective for the current accounting period. Impact on the applications of these amended HKFRSs are summarised below.

2.2 New/amended HKFRSs that have been issued but are not yet effective

The following new/amended HKFRSs, potentially relevant to the Group’s financial statements, have been issued, but are not yet effective and have not been early adopted by the Group. The Group’s current intention is to apply these changes on the date they become effective.

• Amendments to HKAS 1, Classification of Liabilities as Current or Non-current[4]

• HK Interpretation 5 (2020), Presentation of Financial Statements — Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause[4]

• Amendments to HKAS 16, Proceeds before Intended Use[2]

• Amendments to HKAS 37, Onerous Contracts — Cost of Fulfilling a Contract[2]

• HKFRS 17 — Insurance Contracts[4]

• Amendments to HKFRS 3, Reference to the Conceptual Framework[3]

• Amendments to HKFRS 10 and HKAS 28, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture[5]

• Amendments to HKAS 39, HKFRS 4, HKFRS 7, HKFRS 9 and HKFRS 16, Interest Rate Benchmark Reform — Phase 2[1]

• Annual Improvements to HKFRSs 2018–2020[2]

• 1 Effective for annual periods beginning on or after 1 January 2021.

• 2 Effective for annual periods beginning on or after 1 January 2022.

• 3 Effective for business combinations for which the date of acquisition is on or after the beginning of the first annual period beginning on or after 1 January 2022.

• 4 Effective for annual periods beginning on or after 1 January 2023.

• 5 The amendments shall be applied prospectively to the sale or contribution of assets occurring in annual periods beginning on or after a date to be determined.

Amendments to HKAS 1, Classification of Liabilities as Current or Non-current and HK Interpretation 5 (2020), Presentation of Financial Statements — Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause

The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability and explain that rights are in existence if covenants are complied with at the end of the reporting period. The amendments also introduce a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

HK Int 5 (2020) was revised as a consequence of the Amendments to HKAS 1 issued in August 2020. The revision to HK Int 5 (2020) updates the wordings in the interpretation to align with the Amendments to HKAS 1 with no change in conclusion and do not change the existing requirements.

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The Directors do not anticipate that the application of the amendments and revision in the future will have an impact on the financial statements.

Amendments to HKAS 16, Proceeds before Intended Use

The amendments prohibit 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, the proceeds from selling such items, and the cost of producing those items, is recognised in profit or loss.

The Directors are currently assessing the impact that the application of the amendments will have on the Group’s consolidated financial statements.

Amendments to HKAS 37, Onerous Contracts — Cost of Fulfilling a Contract

The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (e.g. direct labour and materials) or an allocation of other costs that relate directly to fulfilling contracts (e.g. the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).

The Directors are currently assessing the impact that the application of the amendments will have on the Group’s consolidated financial statements.

HKFRS 17, Insurance Contracts

The new standard establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts and supersedes HKFRS 4, Insurance Contracts. The standard outlines a ‘General Model’, which is modified for insurance contracts with direct participation features, described as the ‘Variable Fee Approach’. The General Model is simplified if certain criteria are met by measuring the liability for remaining coverage using the Premium Allocation Approach.

The Directors do not anticipate that the application of this standard in the future will have an impact on the financial statements.

Amendments to HKFRS 3, Reference to the Conceptual Framework

The amendments update HKFRS 3 so that it refers to the revised Conceptual Framework for Financial Reporting 2018 instead of the version issued in 2010. The amendments add to HKFRS 3 a requirement that, for obligations within the scope of HKAS 37, an acquirer applies HKAS 37 to determine whether at the acquisition date a present obligation exists as a result of past events. For a levy that would be within the scope of HK(IFRIC)-Int 21 Levies, the acquirer applies HK(IFRIC)-Int 21 to determine whether the obligating event that gives rise to a liability to pay the levy has occurred by the acquisition date. The amendments also add an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination.

The Directors do not anticipate that the application of the amendments in the future will have an impact on the financial statements.

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Amendments to HKFRS 10 and HKAS 28, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments clarify with situations where there is a sale or contribution of assets between an investor and its associate or joint venture. When the transaction with an associate or joint venture that is accounted for using the equity method, any gains or losses resulting from the loss of control of a subsidiary that does not contain a business are recognised in the profit or loss only to the extent of the unrelated investors’ interests in that associate or joint venture. Similarly, any gains or losses resulting from the remeasurement of retained interest in any former subsidiary (that has become an associate or a joint venture) to fair value are recognised in the profit or loss only to the extent of the unrelated investors’ interests in the new associate or joint venture.

The Directors anticipate that the application of these amendments may have an impact on the financial statements in future periods should such transaction arise.

Annual Improvements to HKFRSs 2018-2020

The annual improvements amends a number of standards, including:

• HKFRS 1, First-time Adoption of Hong Kong Financial Reporting Standards, which permit a subsidiary that applies paragraph D16(a) of HKFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to HKFRSs.

• HKFRS 9, Financial Instruments, which clarify the fees included in the ‘10 per cent’ test in paragraph B3.3.6 of HKFRS 9 in assessing whether to derecognise a financial liability, explaining that only fees paid or received between the entity and the lender, including fees paid or received by either the entity or the lender on other’s behalf are included.

• HKFRS 16, Leases, which amend Illustrative Example 13 to remove the illustration of reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.

• HKAS 41, Agriculture, which remove the requirement to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique.

The Directors do not anticipate that the application of the amendments in the future will have an impact on the financial statements.

Amendments to HKAS 39, HKFRS 4, HKFRS 7, HKFRS 9 and HKFRS 16, Interest Rate Benchmark Reform — Phase 2

The amendments address issues that might affect financial reporting when a company replaces the old interest rate benchmark with an alternative benchmark rate as a result of the interest rate benchmark reform (the “Reform”). The amendments complement those issued in November 2019 and relate to (a) changes to contractual cash flows in which an entity will not have to derecognise or adjust the carrying amount of financial instruments for changes required by the Reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate; (b) hedge accounting in which an entity will not have to discontinue its hedge accounting solely because it makes changes required by the Reform, if the hedge meets other hedge accounting criteria; and (c) disclosures in which an entity will be required to disclose information about new risks arising from the Reform and how it manages the transition to alternative benchmark rates.

The Directors do not anticipate that the application of the amendments in the future will have an impact on the financial statements.

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3. REVENUE

Revenue mainly represents income from sales of electricity (including renewable energy subsidies), income from provision of solar power plant operation and maintenance services, interest income generated from provision of financial services and trading of liquefied natural gas. The amount of each significant category of revenue during the year is as follows:

Sales of electricity Provision of solar power plant operation and maintenance services Interest income from provision of financial services Trading of liquefied natural gas Consolidated revenue	2020 RMB’000 1,375,490 21,038 37,304 44,377 1,478,209	2019 RMB’000 1,693,916 20,070 39,385 326,333
		2,079,704

During the year ended 31 December 2020, sales of electricity includes renewable energy subsidies from the state-grid companies in various provinces amounted to approximately RMB910,734,000 (2019: RMB1,107,980,000), of which RMB696,234,000 (2019: RMB714,110,000) have been registered in the Renewable Energy Tariff Subsidy Catalogue and remaining RMB214,500,000 (2019: RMB393,870,000) are in the registration process to the Tariff Subsidy Project List.

For the years ended 31 December 2020 and 2019, the major customers contributed over 10% of the total revenue of the Group are set out below:

	2020	2019
	RMB’000	RMB’000
Customer A in solar power plants segment	487,154	550,891
Customer B in solar power plants segment	194,663	239,704
Customer C in solar power plants segment	144,890	226,313

As at 31 December 2020, trade and bills receivables from contracts with customers amounted to RMB2,171,369,000 (2019: RMB2,733,004,000).

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4. OTHER GAINS, NET

Interest income Dividend income from financial assets measured at fair value through profit or loss Dividend income from financial assets measured at fair value through other comprehensive income Net realised losses on disposals of financial assets measured at fair value through profit or loss Net unrealised losses on fair values changes on financial assets measured at fair value through profit or loss Write off of property, plant and equipment Write-back of other payables Government grants_(note)_ Refund of value-added tax Service fee income Rental income Gain on lease modification Others	2020 RMB’000 986 1,940 8,712 (2,602) (3,883) (19) – 2,876 – 796 5,925 2,834 637 18,202	2019 RMB’000 854 2,321 8,649 (1,553) (9,239) (5) 1,112 1,155 4,227 633 – – (3,498)
		4,656

Note: These consist of subsidies given by the PRC government to certain subsidiaries of the Group in the PRC for their operating cost and enterprises development. The amounts do not have specific conditions attached to the incentives and other income is recognised upon receipt.

5. LOSS BEFORE INCOME TAX

The Group’s loss before income tax is arrived at after charging:

	2020	2019
	RMB’000	RMB’000
Auditor’s remuneration
— Audit services	3,113	3,962
— Non-audit services	1,073	1,072
Amortisation of right-of-use assets	37,194	30,371
Cost of inventories	43,998	325,275
Depreciation
— Property, plant and equipment	9,195	10,820
— Solar power plants_(note 11)_	386,354	504,705
Short-term leases expenses	6,001	8,306

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6. EMPLOYEE BENEFIT EXPENSES (INCLUDING DIRECTORS’ EMOLUMENTS)

Salaries, wages and other benefits Contributions to defined contribution retirement plan Equity-settled share-based payment expenses Total employee benefit expenses (including directors’ emoluments) 7. FINANCE COSTS Interest on loans and borrowings Imputed interest on corporate bonds Interest on lease liabilities Total interest expense on financial liabilities that are not measured at fair value through profit or loss Less: interest expense capitalised into solar power plants under construction*(note 11)	2020 RMB’000 118,493 15,325 4,864 138,682 2020 RMB’000 690,688 29,704 14,952 735,344 – 735,344	2019 RMB’000 147,822 24,828 12,947 185,597 2019 RMB’000 850,196 27,308 16,818 894,322 (2,086) 892,236

• For the year ended 31 December 2019, borrowing cost was capitalized at a rate of approximately 6.60%.

8. INCOME TAX EXPENSE

Income tax expense in the consolidated statement of profit or loss represents:

Current tax — PRC Corporate Income Tax Deferred tax	2020 RMB’000 24,804 555 25,359	2019 RMB’000 15,168 (1,890) 13,278

No provision for Hong Kong profits tax has been made as the Group has no estimated assessable profits arising in Hong Kong during the years ended 31 December 2020 and 2019.

The Group’s PRC entities are subject to corporate income tax at the statutory rate of 25% (2019: 25%), unless otherwise specified.

Pursuant to CaiShui 2008 No.46 Notice on the Execution of the Catalogue of Public Infrastructure Projects Entitled for Preferential Tax Treatment* (財政部、國家稅務總局關於執行公共基礎設施項目企業所得稅 優惠目錄有關問題的通知), certain solar power plant projects of the Group, which were approved after 1 January 2008, are entitled to a tax holiday of a 3-year full exemption followed by a 3-year 50% exemption commencing from their respective years in which their first operating income is derived.

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According to the PRC Corporate Income Tax Law and its related regulations, the Group is subject to a withholding tax at 10%, unless reduced by tax treaties or arrangements, for dividends distributed by a PRC enterprise to its immediate holding company outside the PRC or earnings generated beginning on 1 January 2008 and undistributed earnings generated prior to 1 January 2008 are exempted from such withholding tax. According to the China — HK Tax Arrangement and its relevant regulations, a qualified Hong Kong tax resident which is the “beneficial owner” of the dividends received and directly holds 25% or more of a PRC enterprise is entitled to a reduced withholding rate of 5%. Deferred withholding tax payable relating to the temporary differences arising from the undistributed profits of the Group’s PRC subsidiaries has not been recognised as the Company controls the dividend policy of the Group’s PRC subsidiaries and it has been determined that it is probable that profits will not be distributed in the foreseeable future.

9. LOSS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY FOR THE YEAR

(a) Basic loss per share

The calculation of basic loss (2019: loss) per share for the year ended 31 December 2020 is based on loss attributable to owners of the Company for the year of approximately RMB626,818,000 (2019: loss of RMB698,629,000) and approximately 14,964,442,000 (2019: 14,964,442,000) ordinary shares in issue during the years ended 31 December 2020 and 2019.

(b) Diluted loss per share

The calculation of diluted loss (2019: loss) per share for the year ended 31 December 2020 is based on loss attributable to owners of the Company for the year of approximately RMB626,818,000 (2019: RMB698,629,000) and on the weighted average number of approximately 14,964,442,000 (2019: 14,964,442,000) ordinary shares in issue during the year, after the effects of all dilutive potential ordinary shares, calculated as follows:

Diluted loss (2019: loss) per share for the year ended 31 December 2020 was the same as basic loss (2019: loss) per share because the impact of the exercise of share options was anti-dilutive.

10. DIVIDEND

No dividend was paid or proposed during the year ended 31 December 2020 nor has any dividend been proposed since the end of reporting period (2019: Nil).

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11. SOLAR POWER PLANTS

Cost At 1 January 2019 Additions Interest expense capitalised in solar power plants under construction_(note 7) Reclassifications upon completion Disposal of subsidiaries(note 18(b)) Transferred to disposal group classified as held for sale(note 14(b))# Impairment losses on solar power plants under construction At 31 December 2019 and 1 January 2020 Additions Reclassifications upon completion Disposal of subsidiaries# Transferred to disposal group classified as held for sale(note 14(a)) Impairment losses on solar power plants under construction Write-off At 31 December 2020 Accumulated depreciation At 1 January 2019 Charged for the year(note 5) Disposal of subsidiaries(note 18(b)) Transferred to disposal group classified as held for sale(note 14(b))# At 31 December 2019 and 1 January 2020 Charged for the year(note 5) Disposal of subsidiaries# Transferred to disposal group classified as held for sale(note 14(a))_ At 31 December 2020 Net carrying amount At 31 December 2019 At 31 December 2020	Solar power plants RMB’000 13,282,041 4,182 – 334,504 (1,263,844) (2,723,794) – 9,633,089 16,221 22,852 (854,737) (2,616,075) – (12,267) 6,189,083 1,121,383 504,705 (155,554) (463,660) 1,006,874 386,354 (183,448) (367,192) 842,588 8,626,215 5,346,495	Solar power plants under construction RMB’000 433,798 63,625 2,086 (334,504) – – (43,735) 121,270 9,928 (22,852) – – (84,445) (11,992) 11,909 – – – – – – – – – 121,270 11,909	Total RMB’000 13,715,839 67,807 2,086 – (1,263,844) (2,723,794) (43,735) 9,754,359 26,149 – (854,737) (2,616,075) (84,445) (24,259) 6,200,992 1,121,383 504,705 (155,554) (463,660) 1,006,874 386,354 (183,448) (367,192) 842,588 8,747,485 5,358,404

During the year ended 31 December 2020, following the completion of the disposal, certain solar power plants previously classified under disposal group with the carrying amounts of approximately RMB2,260,134,000 (note 14(b)), together with the solar power plants disposed of during the year with the carrying amounts of approximately RMB671,289,000, amounting to a total of approximately RMB2,931,423,000, were derecognised to calculate the losses on disposal of subsidiaries for the year (note 18(a)).

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Solar power plants under construction are transferred to solar power plants when the solar power plants complete their trial operations and are connected to provincial power grid and generate electricity.

Management performed impairment test on certain completed solar power plants by using their respective value-in-use calculation, which are derived from the discounted cash flow method. The discounted cash flow method uses the financial budgets approved by management covering a 5-year period and are extrapolated up to the estimated useful lives of respective completed solar power plant (ranging from 18 to 22 years) with the discount rates of 10.41% to 11.85% (2019: 9.70% to 11.98%), which are pre-tax and reflect specific risks relating to the completed solar power plants. The management determined the estimated useful lives of the completed solar power plants with reference to their feasibility studies. Key inputs to the value-in-use calculations include electricity generating capacity, feed-in-tariff, insolation hours, budget gross margin and operating expenses. As a result of the impairment test, no impairment loss on completed solar power plants was recognised for the years ended 31 December 2020 and 2019.

For the year ended 31 December 2020, impairment losses of RMB84,445,000 (2019: RMB43,735,000) on a solar power plant under construction was recognised as the approval from the relevant government authority was not granted eventually, resulting in the demolition of the solar power plant. Penalties amounting to RMB4,354,000 (2019: Nil) was paid in this respect.

As at 31 December 2020, certain solar power plants with carrying amount of approximately RMB1,514,427,000 (2019: RMB1,577,932,000) were built on lands in the PRC which the Group has not yet paid the related land premium and obtained the relevant title certificates. With reference to the legal opinion from a PRC lawyer, the Directors do not expect any legal obstacles for the Group in obtaining the relevant title certificates.

As at 31 December 2020, certain solar plants with carrying amount of approximately RMB3,324,494,000 (2019: RMB6,413,341,000) were pledged as securities for the Group’s loans and borrowings (note 16).

12. FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Financial assets measured at fair value through other comprehensive income Unlisted partnership investments_(note (a)) Unlisted equity investments(note (b))_	2020 RMB’000 779,952 495,204 1,275,156	2019 RMB’000 1,050,641 678,450
		1,729,091

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Notes:

• (a) As at 31 December 2020 and 2019, the Group’s unlisted partnership investments included the followings:

• (i) On 21 August 2018, a wholly-owned subsidiary of the Company, as a junior limited partner, and the other two partners, being independent third parties to the Group, entered into a limited partnership, namely 蘇州君盛晶石股權投資合夥企業(有限合夥) (Suzhou Junsheng Jingshi Equity Investment Partnership (Limited Partnership)*) (“Suzhou Junsheng Limited Partnership”) pursuant to the partnership agreement (“Suzhou Junsheng Partnership Agreement”) for carrying out investments in high-tech, energy sector and other high growth unlisted enterprises. Pursuant to the Suzhou Junsheng Partnership Agreement, the maximum total capital contribution of Suzhou Junsheng Limited Partnership can be up to RMB1,000,100,000, in which the Group’s capital contribution is approximately 49.995% (equivalent to approximately RMB500,000,000).

Pursuant to the Suzhou Junsheng Partnership Agreement, the Suzhou Junsheng Limited Partnership makes investments that preserve and increase the value of its assets, and may place idle funds into bank deposits, currency markets and other cash-type assets. Furthermore, it may not borrow debt or provide external guarantees, and cannot engage in high-risk investments such as gold, artwork, real estate project, futures and financial derivatives. The Suzhou Junsheng Limited Partnership also cannot invest in products or areas that may harm its reputation of its partners or in areas prohibited by law.

In order to manage investment risks, the Group, through appointing a representative to the investment decision committee comprising five members, procures that the Suzhou Junsheng Limited Partnership carefully selects investment targets and properly manages invested assets.

However, the investment decision committee has to further obtain the final consent of the investment consultation committee before resolving to decide for or against investment in a project, disposal of the partnership’s assets or interests, changes to investment interests which affect the partnership, withdrawal from an investment, as well as relevant matters that the investment consultation committee believes may affect the interests of the partnership. The investment consultation committee comprises of two representatives solely appointed by other partner of Suzhou Junsheng Limited Partnership.

Notwithstanding the Group has the equity interest of 49.99% and a representative in the investment decision committee, the Directors are of the opinion that the ultimate governing body of decision making about the relevant activities of Suzhou Junsheng Limited Partnership retains in investment consultation committee in which the Group has no representative. Given that the Group has no power to control or to exercise significant influence over the financial and operating policies of Suzhou Junsheng Limited Partnership so as to obtain benefits from its activities and does not intend to trade for short-term profit, the Directors designated the above unlisted investment as financial assets at fair value through other comprehensive income.

– 16 –

Movement in investment in Suzhou Junsheng Limited Partnership during the years ended 31 December 2020 and 2019 is as follow:

As at 1 January 2019_(note 1) _Capital injection (note 2) As at 31 December 2019 and 1 January 2020 Reduction in contribution due to disposals of subsidiaries_(note 1)_ As at 31 December 2020	Total contribution Fair value RMB’000 RMB’000 400,000 400,000 92,500 492,500 492,500 (270,000) 222,500 222,500

Note 1:

According to the first investment and repurchase agreement (the “First Investment and Repurchase Agreement”) dated 21 August 2018 entered into between the Group and Suzhou Junsheng Limited Partnership, Suzhou Junsheng Limited Partnership contributed a capital of RMB280,000,000, RMB260,000,000 and RMB260,000,000 to 阿圖什市華光能源有限公司 (Artux Huaguang Energy Limited) (“Huaguang”), 阿圖什市興光能源有限公司(Artux Xingguang Energy Limited) (“Xingguang”) and 黃驊市正陽新能源有限公司(Huanghua Zhengyang New Energy Limited*)(“Huanghua Zhengyang”) and holds approximately 98.25%, 99.62% and 96.60% equity interests of Huaguang, Xingguang and Huanghua Zhengyang, respectively, upon completion of the capital contribution while the Group retains the power to control the financial and operating policies of Huaguang, Xingguang and Huanghua Zhengyang so as to direct their relevant activities and to obtain significant economic benefits from their activities.

Pursuant to the First Investment and Repurchase Agreement, after repayment by the Group to the Suzhou Junsheng Limited Partnership of the pre-agreed price, comprising (i) the cost of equity in the amount of RMB800,000,000 to be paid at the end of the term of Suzhou Junsheng Limited Partnership (i.e. 5 years from 2018 to 2023); and (ii) premium on equity to be paid in quarterly instalments throughout the term of Suzhou Junsheng Limited Partnership (i.e. 5 years from 2018 to 2023). For the year ended 31 December 2020, the premium on equity paid/payable, in substance a finance cost, amounting to RMB22,574,000 (2019: RMB28,000,000) was recognised under “finance cost” in the consolidated statement of profit or loss and, as at 31 December 2020, the accumulated premium on equity paid/payable to Suzhou Junsheng Limited Partnership amounted to RMB38,939,000 (2019: RMB29,814,000).

In view of the Group’s power to control the financial and operating policies of Huaguang, Xingguang and Huanghua Zhengyang so as to direct their relevant activities and to obtain significant economic benefits from their activities, the Directors are of the opinion that the arrangement under the First Investment and Repurchase Agreements is in substance a financing arrangement of RMB800,000,000 in total (included under “Loans and other borrowings” (note 16(j)) with the pledge of the 98.25%, 99.62% and 96.60% equity interests of Huaguang, Xingguang and Huanghua Zhengyang, respectively, and therefore Huaguang, Xingguang and Huanghua Zhengyang are continuously treated as the wholly-owned subsidiaries of the Company.

– 17 –

During the year ended 31 December 2020, given Huaguang and Xingguang were disposed of as disclosed in note 18(a), the Group had to early repay the pre-agreed consideration to Suzhou Junsheng Limited Partnership in respect of Huaguang and Xingguang amounting to RMB280,000,000 and RMB260,000,000, respectively, in order to release the pledge of their respective equity interest of 98.25% and 99.62%. The Group received return of capital amounting to RMB270,000,000 due to disposal of Huaguang and Xingguang. As at 31 December 2020, the Group still has the borrowings of RMB260,000,000 pledged by 96.60% equity interests of Huanghua Zhengyang.

Note 2:

On 29 January 2019, the Group entered into the second investment and repurchase agreement (the “Second Investment and Repurchase Agreement”) with the Suzhou Junsheng Limited Partnership, pursuant to which, the Suzhou Junsheng Limited Partnership contributed a capital of RMB185,000,000 to 朔州市永暘新能源有限公司 (Shuozhou City Yongyang New Energy Limited*) (“Shuozhou Yongyang”), a wholly owned subsidiary of the Company which is primarily engaged in electricity power generation and development, and holds approximately 99.46% equity interests of Shuozhou Yongyang, upon completion of the capital contribution while the Group retains the power to control the financial and operating policies of Shuozhou Yongyang so as to direct its relevant activities and to obtain significant economic benefits from its activities.

Pursuant to the Second Investment and Repurchase Agreement, after repayment by the Group to Suzhou Junsheng Limited Partnership of the pre-agreed price, comprising (i) the cost of equity in the amount of RMB185,000,000 to be paid at the end of the term of Suzhou Junsheng Limited Partnership (i.e. 5 years from 2019 to 20 March 2023); and (ii) premium on equity to be paid in quarterly instalments throughout the term of Suzhou Junsheng Limited Partnership (i.e. 5 years from 2019 to 2023), Suzhou Junsheng Limited Partnership will transfer back to the Group the 99.46% equity interests of Shuozhou Yongyang. For the year ended 31 December 2020, the premium on equity paid/payable, in substance a finance cost, amounting to RMB6,492,000 (2019: RMB5,738,000) was recognised under “finance cost” in the consolidated statement of profit or loss and, as at 31 December 2020, the accumulated premium on equity paid/payable to Suzhou Junsheng Limited Partnership amounted to RMB12,230,000 (2019: RMB5,738,000).

In view of the Group’s power to control the financial and operating policies of Shuozhou Yongyang so as to direct its relevant activities and to obtain significant economic benefits from its activities, the Directors are of the opinion that the arrangement under the Second Investment and Repurchase Agreement is in substance a financing arrangement of RMB185,000,000 (included under “Loans and other borrowings” (note 16(k)) with the pledge of the 99.46% equity interests of Shuozhou Yongyang and therefore Shuozhou Yongyang is continuously treated as a wholly-owned subsidiary of the Company.

Details of the Suzhou Junsheng Limited Partnership are set out in the Company’s announcement and circular dated 21 August 2018 and 21 December 2018, respectively.

• (ii) On 13 December 2017, a wholly-owned subsidiary of the Company, as a junior limited partner, and the other two partners, being independent third parties to the Group, entered into a limited partnership, namely 台州久安股權投資合夥企業(有限合夥) (Taizhou Jiuan Equity Investment Partnership (Limited Partnership)*) (“Taizhou Jiuan Limited Partnership”) pursuant to the partnership agreement (“Taizhou Jiuan Partnership Agreement”) for carrying out investments in high-tech, new industries, energy sector and other high growth unlisted enterprises. Pursuant to the Taizhou Jiuan Partnership Agreement, the maximum total capital contribution of the Taizhou Jiuan Limited Partnership can be up to RMB2,501,000,000, in which the Group’s capital contribution is approximately 19.99% (equivalent to approximately RMB500,000,000).

– 18 –

Pursuant to the Taizhou Jiuan Partnership Agreement, the Taizhou Jiuan Limited Partnership makes investments that preserve and increase the value of its assets, and may place idle funds into bank deposits, currency markets and other cash-type assets. Furthermore, it may not borrow debts or provide external guarantees, and cannot engage in high-risk investments such as gold, artwork, real estate project, futures and financial derivatives. The Taizhou Jiuan Limited Partnership also cannot invest in products or areas that may harm its reputation of its partners or in areas prohibited by law. In order to manage investment risks, the Group will, through appointing a representative to the investment decision committee comprising five members, procures that the Taizhou Jiuan Limited Partnership carefully selects investment targets and properly manages invested assets.

However, the investment decision committee has to further obtain the final consent of the investment consultation committee before resolving to decide for or against investment in a project, disposal of the partnership’s assets or interests, changes to investment interests which affect the partnership, withdrawal from an investment, as well as relevant matters that the investment consultation committee believes may affect the interests of the partnership. The investment consultation committee comprises of two representatives solely appointed by other partner of Taizhou Jiuan Limited Partnership.

Notwithstanding the Group has the right to appoint a representative in the investment decision committee, the Directors are of the opinion that the ultimate governing body of decision making about the relevant activities of Taizhou Jiuan Limited Partnership retains in investment consultation committee in which the Group has no representative. Given that the Group has no power to control or to exercise significant influence over the financial and operating policies of Taizhou Jiuan Limited Partnership so as to obtain benefits from its activities and does not intend to trade for short-term profit, the Directors designated the above unlisted investment as financial assets at fair value through other comprehensive income.

Movement in investment in Jiaxing Shengshi Limited Partnership for the years ended 31 December 2020 and 2019 is as follow:

							Total
							contribution	Fair value
							RMB’000	RMB’000
As at	31	December	2019	and	2020	(note)	300,000	300,000

According to the cooperation agreement (“Cooperation Agreement”) entered into between the Group and Taizhou Jiuan Limited Partnership, Taizhou Jiuan Limited Partnership contributed a capital of RMB1,501,000,000 to 常熟宏略光伏電站開發有限公司(Changshu Honglu Photovoltaic Power Plants Development Co., Ltd.) (“Changshu Honglu”) and then holds 99.96% of Changshu Honglue upon completion of the capital contribution while the Group retains the power to control the financial and operating policies of Changshu Honglue so as to direct its relevant activities and to obtain significant economic benefits from its activities. Changshu Honglue holds six solar power plants project companies, namely 臨潭天朗新能源科技 有限公司(Lintan Tianlang New Energy Technology Co., Ltd.) (“Lintan Tianlang”), 六安旭强新 能源工程有限公司(Liuan Xuqiang New Energy Engineering Co., Ltd.) (“Liuan Xuqiang”), 嘉 峪關協合新能源有限公司(Jiayuguan Xiehe New Energy Co. Ltd.) (“Jiayuguan Xiehe”), 定邊 縣晶陽電力有限公司(Dingbian Jingyang Electric Co., Ltd.) (“Dingbian Jingyang”), 定邊縣智 信達新能源有限公司(Dingbian County Zhixinda New Energy Limited) (“Dingbian County Zhixinda”) and 化隆縣瑞啟達新能源有限公司(Hualong County Ruiqida New Energy Limited*) (“Hualong County Ruiqida”), which respectively own solar power plants of 20 megawatt (“MW”) in Lintan County, Gansu Province, 40 MW in Liuan County, Anhui Province, 50 MW in Jiayuguan City, Gansu Province, 30 MW in Dingbian County, Shaanxi Province, 50 MW in Dingbian County, Shaanxi Province and 20 MW in Hualong County, Qinghai Province, of the PRC.

– 19 –

Pursuant to the Cooperation Agreement, after repayment by the Group to Taizhou Jiuan Limited Partnership of the pre-agreed price, comprising (i) the cost of equity in the amount of RMB1,501,000,000 to be paid at the end of the term of Taizhou Jiuan Limited Partnership (i.e. 5 years from 2018 to 2022); and (ii) premium on equity to be paid in quarterly instalments throughout the term of Taizhou Jiuan Limited Partnership (i.e. 5 years from 2018 to 2022), Taizhou Jiuan Limited Partnership will transfer back to the Group the 99.96% equity interest of Changshu Honglue. For the year ended 31 December 2020, the premium on equity paid/payable, in substance a finance cost, amounting to RMB84,000,000 (2019: RMB84,000,000) was recognised under “finance cost” in the consolidated statement of profit or loss and, as at 31 December 2020, the accumulated premium on equity paid/payable to Taizhou Jiuan Limited Partnership amounted to RMB249,315,000 (2019: RMB165,085,000).

In view of the Group’s power to control the financial and operating policies of Changshu Honglue so as to direct the relevant activities of Changshu Honglue and to obtain significant economic benefits from its activities, the Directors are of the opinion that the arrangement under the Cooperation Agreement is in substance a financing arrangement of RMB1,501,000,000 (included under “Loans and other borrowings” (note 16(i)) with the pledge of the 99.96% equity interests of Changshu Honglue and therefore Changshu Honglue is continuously treated as a wholly-owned subsidiary of the Company.

Details of the Taizhou Jiuan Limited Partnership are set out in the Company’s announcements dated 30 September 2017 and 13 December 2017, respectively.

• (iii) On 22 September 2017, a wholly-owned subsidiary of the Company, as a senior limited partner, and the other two partners, being independent third parties to the Group, entered into a limited partnership, namely 霍爾果斯鑫和優美股權投資合夥企業(有限合夥) (Huoerguosi Xinheyoumei Equity Investment Partnership (Limited Partnership)* (“Huoerguosi Limited Partnership”), pursuant to the partnership agreement (“Huoerguosi Partnership Agreement”) for carrying out investments primarily in elderly care, tourism and cultural industries. Pursuant to the Huoerguosi Partnership Agreement, the maximum total capital contribution of the Huoerguosi Limited Partnership can be up to RMB200,000,000, in which the Group’s capital contribution is approximately 89.55% (equivalent to approximately RMB179,100,000).

Notwithstanding the Group has the equity interest of 89.55%, pursuant to Huoerguosi Partnership Agreement, the investment manager has the exclusive right to make all decisions on the financial and operating policies. In addition, the limited partners can only remove the investment manager on the occurrence of an event of cause such as breach of contract, fraud, felony or gross negligence and therefore the kick-out right is not considered to have any substance. Based on the foregoing, the Directors are of opinion that the Group has no power to govern or participate in the financial and operating policies of Huoerguosi Limited Partnership so as to obtain benefits from its activities and does not intend to trade for short-term profit, the Directors designated the above unlisted investment as financial assets at fair value through other comprehensive income.

– 20 –

Movement in investment in Huoerguosi Limited Partnership for the years ended 31 December 2020 and 2019 are as follow:

As at 1 January 2019 Capital injection Fair value loss recognised in other comprehensive income As at 31 December 2019 and 1 January 2020 Capital injection Fair value loss recognised in other comprehensive income As at 31 December 2020	Total contribution RMB’000 86,727 12,050 – 98,777 430 – 99,207	Fair value RMB’000 86,727 12,050 (95,636)
		3,141 430 (1,119)
		2,452

• (iv) On 11 October 2016, a wholly-owned subsidiary of the Company, as a junior limited partner, and the other two partners (collectively, the “Partners”), being independent third parties to the Group, entered into a partnership agreement (the “Jiaxing Shengshi Partnership Agreement”), pursuant to which all parties agreed to establish a limited partnership, namely 嘉興盛世神州永贏投資合 夥企業(有限合夥) (Jiaxing Shengshi Shenzhou Yongying Investment Partnership (Limited Partnership)*) (“Jiaxing Shengshi Limited Partnership”) for carrying out investments primarily in the high-tech and emerging industries, the energy industry and other high-growth unlisted enterprises. Pursuant to the Jiaxing Shengshi Partnership Agreement, the maximum total capital contribution of the Jiaxing Shengshi Limited Partnership can be up to RMB3,001,000,000, in which the Group’s capital contribution is approximately 15% (equivalent to approximately RMB450,000,000). On 19 December 2016, the Partners entered into a supplemental agreement to the Jiaxing Shengshi Partnership Agreement, pursuant to which the Partners agreed to reduce the size of the maximum total capital contribution from RMB3,001,000,000 to RMB1,701,000,000, in which the Group’s capital contribution is approximately 15% (equivalent to approximately RMB255,000,000).

Given that the Group has no power to govern or participate in the financial and operating policies of Jiaxing Shengshi Limited Partnership so as to obtain benefits from its activities and does not intend to trade for short-term profit, the Directors designated the above unlisted investment as financial assets at fair value through other comprehensive income.

Movement in investment in Jiaxing Shengshi Limited Partnership for the years ended 31 December 2020 and 2019 are as follow:

As at 31 December 2019 and 2020 — Cooperation Agreements #1_(note 1) — Cooperation Agreement #2(note 2)_	Total contribution Fair value RMB’000 RMB’000 75,000 180,000 255,000 255,000

– 21 –

Note 1:

According to cooperation agreement (“Cooperation Agreement #1”) entered into between the Group and Jiaxing Shengshi Limited Partnership, Jiaxing Shengshi Limited Partnership contributed a capital of RMB500,000,000 to 敦煌萬發新能源有限公司(Dunhuang Wanfa New Energy Limited Company*) (“Dunhuang Wanfa”) and holds 86.207% equity interest of Dunhuang Wanfa upon completion of the capital contribution while the Group retains the power to control the financial and operating policies of Dunhuang Wanfa so as to direct its relevant activities and to obtain significant economic benefits from its activities. Dunhuang Wanfa holds a solar power plant of 60 MW in Dunhuang, Gansu Province of the PRC.

Pursuant to the Cooperation Agreement #1, after repayment by the Group to Jiaxing Shengshi Limited Partnership of the pre-agreed price, comprising (i) the cost of equity in the amount of RMB500,000,000 to be paid at the end of the term of Jiaxing Shengshi Limited Partnership (i.e. 5 years from 2017 to 2021); and (ii) premium on equity to be paid in quarterly instalments throughout the term of Jiaxing Shengshi Limited Partnership (i.e. 5 years from 2017 to 2021), Jiaxing Shengshi Limited Partnership will transfer back the 86.207% equity interest of Dunhuang Wanfa to the Group. For the year ended 31 December 2020, the premium on equity paid/payable, in substance a finance cost, amounting to RMB38,250,000 (2019: RMB38,250,000) was recognised under “finance cost” in the consolidated statement of profit or loss and, as at 31 December 2020, the accumulated premium on equity paid/payable to Jiaxing Shengshi Limited Partnership amounted to RMB164,947,000 (2019: RMB126,697,000).

In view of the Group’s power to control the financial and operating policies of Dunhuang Wanfa so as to direct the relevant activities of Dunhuang Wanfa and to obtain significant economic benefits from its activities, the Directors are of the opinion that the arrangement under the Cooperation Agreements #1 is in substance a financing arrangement of RMB500,000,000 (included under “Loans and other borrowings” (note 16(a))) with the pledge of the 86.207% equity interests of Dunhuang Wanfa and therefore Dunhuang Wanfa is continuously treated as a wholly-owned subsidiary of the Company.

Note 2:

According to the cooperation agreement (“Cooperation Agreement #2”) entered into between the Group and Jiaxing Shengshi Limited Partnership, Jiaxing Shengshi Limited Partnership contributed a capital of RMB1,200,000,000 to 江山豐融投資有限公司(Jiangshan Fengrong Investment Company Limited*) (“Jiangshan Fengrong”) and holds 99.99% equity interest of Jiangshan Fengrong upon completion of the capital contribution while the Group retains the power to control the financial and operating policies of Jiangshan Fengrong so as to direct its relevant activities and to obtain significant economic benefits from its activities. Jiangshan Fengrong holds a solar power plants project company, namely 榆林市江山永宸新能源有限公司 Yulin City Jiangshan Yongchen New Energy Limited (“Yongchen”) which owns a solar power plant of 300 MW in Yulin City, Shaanxi Province of the PRC.

Pursuant to the Cooperation Agreement #2, after repayment by the Group to Jiaxing Shengshi Limited Partnership of the pre-agreed price, comprising (i) the cost of equity in the amount of RMB1,200,000,000 to be paid at the end of the term of Jiaxing Shengshi Limited Partnership (i.e. 5 years from 2017 to 2021); and (ii) premium on equity to be paid at the end of the term of the term of Jiaxing Shengshi Limited Partnership (i.e. 5 years from 2017 to 2021), Jiaxing Shengshi Limited Partnership will transfer back to the Group the 99.99% equity interest of Jiangshan Fengrong. For the year ended 31 December 2020, the premium on equity paid/payable, in substance a finance cost, amounting to RMB91,800,000 (2019: RMB91,800,000) was recognised under “finance cost” in the consolidated statement of profit or loss and, as at 31 December 2020, the accumulated premium on equity paid/payable to Jiaxing Shengshi Limited Partnership amounted to RMB382,039,000 (2019: RMB290,239,000).

– 22 –

In view of the Group’s power to control the financial and operating policies of Jiangshan Fengrong so as to direct the relevant activities of Jiangshan Fengrong and to obtain significant economic benefits from its activities, the Directors are of the opinion that the arrangement under the Cooperation Agreement #2 is in substance a financing arrangement of RMB1,200,000,000 (included under “Loans and other borrowings” (note 16(b))) with the pledge of the 99.99% equity interests of Jiangshan Fengrong and therefore Jiangshan Fengrong is continuously treated as a wholly-owned subsidiary of the Company.

Details of the Jiaxing Shengshi Limited Partnership are set out in the Company’s announcements dated 11 October 2016, 18 October 2016 and 19 December 2016, respectively.

• (b) As at 31 December 2020 and 2019, included in the Group’s unlisted equity investments, included the followings:

• (i) On 30 December 2016 and 27 February 2017, the Group entered into two subscription agreements with 內蒙古呼和浩特金谷農村商業銀行股份有限公司 (Inner Mongolia Hohhot Jingu Rural Commercial Bank Limited Company*) (“Hohhot Jingu Bank”), a joint stock company incorporated in the PRC, being an independent third party to the Group, to subscribe for 6,600,000 shares and 57,124,844 shares of Hohhot Jingu Bank respectively at RMB3 per subscription share (the “Subscription A” and the “Subscription B”, respectively). On 14 December 2017, the Group entered into another subscription agreement with Hohhot Jingu Bank to subscribe for 24,875,156 subscription shares at RMB3 per subscription share at a total consideration of approximately RMB74,625,000 (the “Subscription C”). On 12 June 2018, the Group entered into a termination agreement (the “Termination Agreement”) with Hohhot Jingu Bank to terminate the Subscription C and therefore the Group did not subscribe for any shares under the Subscription C.

Total consideration of the Subscription A and Subscription B was approximately RMB191,174,000. In 2018, the Group received bonus issue of 8,875,316 shares of Hohhot Jingu Bank. Upon the receipt of bonus issue and as at 31 December 2018, the Group held an aggregate of 72,600,160 shares of Hohhot Jingu Bank, representing approximately 4.89% of the issued share capital of Hohhot Jingu Bank. As at 31 December 2020, this unlisted equity investment, at fair value, represents approximately 4.89% (2019: 4.89%) the total number of shares of Hohhot Jingu Bank.

Details of the subscription agreements and the Termination Agreement with Hohhot Jingu Bank are set out in the Company’s announcements dated 27 February 2017, 14 December 2017 and 22 June 2018, respectively.

Unlisted equity investment in Hohhot Jingu Bank is measured at fair value. For the year ended 31 December 2020, a fair value loss of approximately RMB39,847,000 (2019: gain of RMB47,061,000) was recognised in other comprehensive income. The fair value of this investment in Hohhot Jingu Bank as at 31 December 2020 of approximately RMB199,763,000 (2019: RMB239,610,000) was determined with reference to the valuation report prepared by an independent professional qualified valuer.

– 23 –

• (ii) As at 31 December 2020, this unlisted equity investment, at fair value, represents approximately 1.03% (2019: 2.52%) and approximately 0.77% (2019: 1.38%) of the total number of domestic shares and the total number of shares (including domestic shares and H-shares) of Bank of Jinzhou Co., Ltd. (“Jinzhou Bank”), respectively. On 30 March 2017, a wholly-owned subsidiary of the Company entered into two share transfer agreements with two venders, being an independent third party to the Group, to acquire 107,500,000 domestic shares of Jinzhou Bank, a bank based in the PRC, at the price of RMB7.9161 per domestic share. Total consideration of the acquisition of the shares of Jinzhou Bank was approximately RMB850,981,000. Details of the acquisitions are set out in the Company’s announcements dated 30 March 2017 and 31 March 2017, respectively.

Unlisted equity investment in Jinzhou Bank is measured at fair value. For the year ended 31 December 2020, a fair value loss of approximately RMB143,399,000 (2019: RMB374,318,000) was recognised in other comprehensive income. The fair value of this unlisted equity investment of Jinzhou Bank as at 31 December 2020 of approximately RMB295,441,000 (2019: RMB438,840,000) was determined with reference to the valuation report prepared by an independent professional qualified valuer.

As at 31 December 2020, unlisted equity investments measured at fair value with the carrying value of approximately RMB295,441,000 (2019: RMB438,840,000) were pledged as securities for the Group’s loans and borrowings (note 16).

13. TRADE, BILLS AND OTHER RECEIVABLES

Trade receivables — Receivable from sale of electricity_(note (i)) — Tariff adjustment receivables(note (i)) — Loan receivables(note (ii)) — Others Bills receivables(note (i)) Impairment provision for trade receivables Trade and bills receivables, net Other receivables, prepayments and deposits — Prepaid expenses — Value-added tax (“VAT”) receivables(note (iii)) — Consideration receivables in respect of disposal of subsidiaries(note (iv)) — Amounts due from disposed subsidiaries(note (iv)) — Security deposits(note (v)) — Amounts due from independent third parties(note (vi))_ Impairment provision for other receivables Other receivables, prepayments and deposits, net	2020 RMB’000 34,644 1,896,598 208,153 67,649 2,207,044 2,564 (38,239) 2,171,369 75,886 378,398 181,168 454,767 173,267 259,185 1,522,671 (132,274) 1,390,397 3,561,766	2019 RMB’000 27,832 2,253,557 293,336 58,075 2,632,800 124,822 (24,618) 2,733,004 233,785 686,366 19,861 110,998 316,514 262,278 1,629,802 (70,675) 1,559,127 4,292,131

– 24 –

Ageing analysis of trade receivables (net of impairment), based on invoice dates, are as follows:

Less than 3 months Over 3 months but less than 6 months Over 6 months but less than 12 months Over 12 months but less than 24 months Over 24 months	2020 RMB’000 363,724 155,673 300,938 594,676 753,794 2,168,805	2019 RMB’000 526,903 260,427 430,105 808,365 582,382
		2,608,182

Ageing analysis of trade receivables (net of impairment), based on due dates, are as follows:

Neither past due nor impaired Less than 3 months past due Over 3 months but less than 6 months past due Over 6 months but less than 12 months past due Over 12 months but less than 24 months past due Over 24 months past due	2020 RMB’000 255,655 159,319 158,625 284,117 602,065 709,024 2,168,805	2019 RMB’000 343,454 275,557 256,785 416,253 808,139 507,994
		2,608,182

Movements in provision for impairment of trade and other receivables for the years ended 31 December 2020 and 2019 are as follows:

At 1 January 2019 Impairment made during the year Recovery of impairment loss Exchange realignment At 31 December 2019 and 1 January 2020 Impairment made during the year Write-off Disposal of subsidiaries At 31 December 2020	Trade receivables RMB’000 10,752 14,427 (561) – 24,618 13,621 – – 38,239	Other receivables RMB’000 7,400 63,247 – 28 70,675 64,808 (1,504) (1,705) 132,274	Total RMB’000 18,152 77,674 (561 28
			95,293 78,429 (1,504 (1,705
			170,513

– 25 –

Notes:

• (i) Trade receivables from sales of electricity whilst bills receivables represented outstanding commercial acceptance bills. Generally, these receivables are due within 30 to 180 days (2019: 30 to 180 days) from the date of billing, except for the renewable energy subsidy receivables.

Tariff adjustment receivables represent the PRC government subsidies on solar power plants to be received from the state-grid companies based on the respective electricity sale and purchase agreements for each of the solar power plants and the prevailing nationwide government policies.

As at 31 December 2020, certain trade receivables arising from the sales of electricity amounting to approximately RMB1,190,157,000 (2019: RMB2,029,478,000) were pledged as securities for the Group’s loans and borrowings (note 16).

• (ii) The types of loans receivable are as follows:

	2020	2019
	RMB’000	RMB’000
Credit loans	146,474	226,771
Guaranteed loans	36,112	20,998
Collateral-backed loans	25,567	45,567
	208,153	293,336

The credit loans, guaranteed loan and collateral-backed loans receivables ranges from 2 months to 36 months, 2 months to 36 months and 6 months to 36 months (2019: 1 month to 24 months, 3 months to 36 months and 6 months to 48 months), respectively, and are denominated in RMB. Credit loan receivables of RMB277,000 (2019: RMB2,539,000), guaranteed loan receivables of RMB290,000 (2019: RMB2,034,000) and collateral-backed loan receivables of RMB2,958,000 (2019: RMB4,046,000) were received after 12 months after the end of reporting period while the remaining amounts were received within 12 months of reporting period. The credit loans, guaranteed loan and collateral-backed loans receivables carry effective interest ranging from 6.0% to 24.0% p.a., 8.0% to 25.5% p.a. and 9.0% to 15.0% p.a. (2019: 5.0% to 18.0% p.a., 8.0% to 25.5% p.a. and 9.0% to 15.0% p.a.), respectively.

• (iii) The amount represented the VAT paid by the Group in relation to the construction of solar power plants which will be utilised and offset against the VAT payables for the sale of electricity.

• (iv) The amounts represented the consideration receivables and outstanding balances due from former subsidiaries in relation to the disposals occurred during the years 2019 and 2020. These amounts were unsecured, interest free and repayable according to the conditions of settlement set out in respective equity transfer agreement which is due within one year from the completion of disposals. The Group expects these amounts would be settled within the next 12 months after the end of the reporting period.

• (v) The amount represented deposits placed by the Group in the security deposits account opened in the independent leasing companies. Pursuant to the leasing agreements, offsetting rights have been granted by the Group to the independent leasing companies, allowing them to offset the entire security deposits against the Group’s outstanding borrowings from these leasing companies.

• (vi) The amounts were unsecured, interest free and repayable on demand.

– 26 –

14. DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE

(a) 2020 disposal group

As at 31 December 2020, assets and liabilities relating to 平山縣天匯能源科技有限公司 Pingshan Tianhui Energy Technology Co., Ltd. (“Pingshan”), 德州市陵城區乾超兄弟能源科技有限公司 Dezhou City Lingcheng District Qianchao Brothers Energy Technology Co., Ltd. (“Qianchao Brothers”), Yongchen and 玉門市永聯科技新能源有限公司 Yumen Yonglian Technology New Energy Development Co., Ltd. (“Yumen”), were presented as disposal group held for sale following the sale and purchase agreements dated 22 October 2020, 4 December 2020 and 14 December 2020 entered into between the Group and the purchasers, independent third parties. The principal activities of these subsidiaries were engaged in generating and sales of electricity. These subsidiaries are collectively referred to as the 2020 disposal group.

Management assessed that each of entities within the 2020 disposal group are available for immediate sale in its present condition and the sale is expected to be highly probable and would be completed within twelve months after the end of the reporting period. Subsequent to the reporting period, the disposal of Yongchen was approved by the shareholders in an extraordinary general meeting held on 15 March 2021.

In accordance with HKFRS 5, assets and liabilities relating to these subsidiaries were disposal group classified as held for sale in the consolidated statement of financial position as at 31 December 2020. The disposal did not constitute a discontinued operation as it did not represent a major line of business or geographical area of operation.

The Directors regard the sale proceeds less directly attributable costs which amounted to approximately RMB1,271,585,000 as the fair value less cost of disposal for the disposal of these subsidiaries.

Property, plant and equipment Solar power plants_(note 11)_ Goodwill Right-of-use assets Inventories Trade and other receivables Amounts due from group companies Cash and cash equivalents Less: Amounts due from group companies Impairment losses on disposal group classified as held for sale Total assets classified as held for sale Trade and other payables Amounts due to group companies Loans and borrowings Tax payable Lease liabilities Less: Amounts due to group companies Total liabilities classified as held for sale

RMB’000 1,360 2,248,883 11,064 113,022 35 1,057,105 194,601 79,616 3,705,686 (194,601) (160,650) 3,350,435 87,207 481,315 1,694,728 2,672 7,529 2,273,451 (481,315) 1,792,136

– 27 –

(b) 2019 disposal group

As at 31 December 2019, assets and liabilities relating to 千陽縣寶源光伏電力開發有限公司 Qianyang Baoyuan Photovoltaic Power Development Limited (“Baoyuan”), Huaguang, 巨鹿縣明暉太 陽能發電有限公司 Julu Minghui Photovoltaic Power Limited (“Minghui”), 蘭州太科光伏電力有限公 司 Lanzhou Taike Photovoltaic Power Limited (“Taike”), Xingguang, 溧陽新暉光伏發電有限公司 Liyang Xinhui Photovoltaic Power Generation Limited (“Xinhui”), 和靜旭雙太陽能科技有限公司 Hejing Xushuang Photovoltaic Technology Limited (“Xushuang”), 宿州市雲陽新能源發電有限公司 Suzhou Yunyang New Energy Electricity Co., Ltd. (“Yunyang”), 哈密朝翔新能源科技有限公司 Hami Zhaoxiang New Energy Technology Limited (“Zhaoxiang”) (together the “Nine Project Companies”) and 定邊縣昂立光伏科技有限公司 Dingbian Angli Solar Power Technology Co., Ltd. (“Angli”) were presented as disposal group held for sale following the sale and purchase agreements dated 15 November 2019 and 5 December 2019 entered into between the Group and the purchasers, independent third parties. The principal activities of these subsidiaries were engaged in solar power generation. These subsidiaries are collectively referred to as the 2019 disposal group. Details have been set out in the announcements of the Company dated 26 November 2019 and 5 December 2019, respectively, and the circular of the Company dated 6 January 2020.

The transactions were approved by the shareholders in an extraordinary general meeting held on 20 January 2020 and the disposals were completed on 5 June 2020. In accordance with HKFRS 5, the disposal did not constitute a discontinued operation as it did not represent a major line of business or geographical area of operation.

Sale proceeds less directly attributable costs which amounted to approximately RMB819,313,000 as the fair value less cost of disposal for the disposal of these subsidiaries.

Property, plant and equipment Solar power plants_(note 11)_ Goodwill Right-of-use assets Inventories Trade and other receivables Amounts due from group companies Cash and cash equivalents Less: Amounts due from group companies Impairment losses on disposal group classified as held for sale Total assets classified as held for sale Trade and other payables Amounts due to group companies Loans and borrowings Tax payable Lease liabilities Less: Amounts due to group companies Total liabilities classified as held for sale

2019 RMB’000 2,150 2,260,134 52,221 56,948 21 798,264 213,737 59,600 3,443,075 (213,737) (327,729) 2,901,609 100,382 984,608 1,205,295 3,118 24,527 2,317,930 (984,608) 1,333,322

The disposals were completed on 5 June 2020.

– 28 –

15. TRADE AND OTHER PAYABLES

2020 RMB’000 Trade payables 289,306 Other payables and accruals 771,304 1,060,610 Ageing analysis of trade payables, based on the invoice dates, are as follows: 2020 RMB’000 Current or less than 3 months 19,476 Over 3 months but less than 6 months 5,439 Over 6 months but less than 12 months 77,283 Over 12 months 187,108 289,306	2019 RMB’000 1,042,309 626,945
	1,669,254
	2019 RMB’000 347,799 11,669 117,111 565,730
	1,042,309

Retentions payable amounting to approximately RMB139,460,000 (2019: RMB311,768,000), which are included in other payables and accruals, will be settled or recognised as income after more than one year. All other trade and other payables are expected to be settled within one year or are repayable on demand.

16. LOANS AND BORROWINGS

Current Secured — bank loans — other borrowings from independent leasing companies Non-current Secured — bank loans — other borrowings from independent leasing companies Total loans and borrowings	2020 RMB’000 38,000 2,538,645 2,576,645 273,500 3,435,433 3,708,933 6,285,578	2019 RMB’000 320,500 1,049,928
		1,370,428
		29,000 8,270,649
		8,299,649
		9,670,077

– 29 –

The Group’s loans and borrowings are repayable as follows:

Within 1 year After 1 year but within 2 years After 2 years but within 5 years Over 5 years	2020 RMB’000 2,576,645 324,094 1,005,223 2,379,616 6,285,578	2019 RMB’000 1,370,428 649,767 3,424,667 4,225,215
		9,670,077

Loans and other borrowings bear interest ranging from 4.9% to 10.25% (2019: 4.9% to 14.56%) per annum. Analysis of the Group’s fixed-rate and floating-rate borrowings are as follows:

Fixed-rate borrowings Floating-rate borrowings The loans and borrowings were secured by the following assets: Solar power plants_(note 11) Trade receivables(note 13) Right-of-use assets Unlisted equity investments, at fair value(note 12)_	2020 RMB’000 4,407,500 1,878,078 6,285,578 2020 RMB’000 3,324,494 1,190,157 719 295,441 4,810,811	2019 RMB’000 5,033,500 4,636,577
		9,670,077
		2019 RMB’000 6,413,341 2,029,478 756 438,840
		8,882,415

– 30 –

As at 31 December 2020, other borrowings that are secured by the equity interest of certain subsidiaries of the Company are summarised as follows:

• (a) other borrowings of approximately RMB500,000,000 (2019: RMB500,000,000) were pledged by 86.21% equity interests of Dunhuang Wanfa;

• (b) other borrowings of approximately RMB1,200,000,000 (2019: RMB1,200,000,000) were pledged by 99.99% equity interests of Jiangshan Fengrong;

• (c) other borrowings of approximately RMB275,649,000 (2019: RMB275,649,000) were pledged by 99.96% equity interests of Liuan Xuqiang;

• (d) other borrowings of approximately RMB300,000,000 (2019: RMB300,000,000) were pledged by 99.96% equity interests of Jiayuguan Xiehe;

• (e) other borrowings of approximately RMB180,000,000 (2019: RMB180,000,000) were pledged by 99.96% equity interests of Lintan Tianlang;

• (f) other borrowings of approximately RMB244,351,000 (2019: RMB244,351,000) were pledged by 99.96% equity interests of Dingbian Jingyang;

• (g) other borrowings of approximately RMB369,366,000 (2019: RMB369,366,000) were pledged by 99.96% equity interests of Dingbian County Zhixinda;

• (h) other borrowings of approximately RMB130,634,000 (2019: RMB130,634,000) were pledged by 99.96% equity interests of Hualong County Ruiqida;

• (i) other borrowings of approximately RMB1,500,000,000 (2019: RMB1,500,000,000) were pledged by 99.96% equity interests of Changshu Honglu;

• (j) other borrowings of approximately RMB260,000,000 (2019: RMB260,000,000) were pledged by 96.60% equity interests of Huanghua Zhengyang;

• (k) other borrowings of approximately RMB185,000,000 (2019: RMB185,000,000) were pledged by 99.46% equity interests of Shuozhou Yongyang.

In addition, an independent third party had provided unlimited corporate guarantees to certain of the Group’s other borrowings amounting to approximately RMB101,231,000 (2019: RMB441,865,000). During the year ended 31 December 2020, the Group repaid other borrowings amounting to approximately RMB42,716,000 and disposed of certain subsidiaries with other borrowings amounting to approximately RMB297,918,000, all of such are under unlimited corporate guarantees provided by this independent third party.

– 31 –

17. SHARE CAPITAL

		2020		2019	2019
		Number of		Number of
		shares		shares
		’000	RMB’000	’000	RMB’000
Issued and fully paid
At	beginning and end of the year	14,964,442	6,486,588	14,964,442	6,486,588
DISPOSALS OF SUBSIDIARIES
(a)	During the year ended 31 December 2020, the Group disposed of the			entire equity interests in certain
	subsidiaries at a total cash consideration of approximately RMB924,445,000				(adjusted after
	negotiations with certain purchasers in respect of outstanding rectification works				of certain solar
	power plants). The subsidiaries are set out below:
	Name of entities				Disposal date
	Yunyang_(note (i))_				20 May 2020
	Xinhui_(note (i))_				10 March 2020
	Minghui_(note (i))_				22 April 2020
	Taike_(note (i))_				13 April 2020
	Angli_(note (i))_				23 January 2020
	Baoyuan_(note (i))_				5 June 2020
	Zhaoxiang_(note (i))_				17 March 2020
	Huaguang_(note (i))_				10 April 2020
	Xingguang_(note (i))_				10 April 2020
	Xushuang_(note (i))_				27 March 2020
	靖邊縣智光新能源開發有限公司				12 October 2020
	(Jingbian Zhiguang New Energy Development Limited)(note (i))
	威縣天海光伏發電有限公司			17 December 2020
	(Weixian Tianhai Photovoltaic Energy Limited)(note (i))
	山東新泰樓德佳陽光伏發電有限公司			15 December 2020
	(Shandong Xintailou Dejia Solar Power Co., Ltd.)(note (i))
	江山金投控股有限公司				10 January 2020
	(Kong Sun Financial Investment Holdings Company Ltd.)(note (ii))

18. DISPOSALS OF SUBSIDIARIES

• (a) During the year ended 31 December 2020, the Group disposed of the entire equity interests in certain subsidiaries at a total cash consideration of approximately RMB924,445,000 (adjusted after negotiations with certain purchasers in respect of outstanding rectification works of certain solar power plants). The subsidiaries are set out below:

– 32 –

Notes:

• (i) These subsidiaries are principally engaged in the operation of solar power plants and electricity generation. Details have been set out in the Company’s announcement dated 26 November 2019, 5 December 2019, 21 September 2020 and 22 October 2020, respectively.

• (ii) The principal activity of Kong Sun Financial Investment Holdings Company Ltd. is an investment holding company.

The combined net assets of these entities as at the disposal dates are as follows:

	RMB’000
Net assets disposed of:
Property, plant and equipment	2,178
Solar power plants_(note 11)_	2,931,423
Goodwill	108,465
Right-of-use assets	82,908
Inventories	21
Trade and other receivables	1,347,263
Cash and cash equivalents	37,607
Trade and other payables	(1,448,978)
Tax payables	(2,328)
Lease liabilities	(35,749)
Bank and other borrowings	(1,588,416)
	1,434,394
Impairment losses on disposal group held for sale recognised in prior year	(327,729)
Net losses on disposal of subsidiaries	(182,220)
Total cash consideration	924,445
An analysis of net inflow of cash and cash equivalents in respect of disposal of these subsidiaries are
as follows:
	RMB’000
Net cash inflows arising from disposal of subsidiaries:
Total consideration	924,445
Cash and cash equivalents disposed of (including cash and
cash equivalents in disposal group held for sale)	(37,607)
	886,838

– 33 –

• (b) In 2019, the Group disposed of the entire equity interests in its subsidiaries at a total cash consideration of approximately RMB233,004,000. These subsidiaries are set out below:

Name of entities	Disposal date
麗新進出口有限公司	30 September 2019
(Lisun Trading Limited)(note (i))
湖州祥暉光伏發電有限公司	05 August 2019
(Huzhou Xianghui Solar Power Co., Ltd.)(note (ii))
樟樹市中利騰暉光伏有限公司	17 April 2019
(Zhangshu Zhongli Tenghui Solar Co., Ltd.)(note (ii))
霍林郭勒競日能源有限公司	29 March 2019
(Huolin Guole Jingri Energy Limited)(note (ii))

Notes:

• (i) The principal activity of Lisun Trading is properties investment.

• (ii) These entities are principally engaged in the operation of solar power plants and electricity generation. Details had been set out in the announcement of the Company dated 21 March 2019, 28 March 2019 and 7 May 2019, respectively.

The combined net assets of these entities as at the disposal dates are as follows:

Net assets disposed of: Property, plant and equipment Solar power plants_(note 11)_ Goodwill Right of use assets Trade, bills and other receivables Cash and cash equivalents Trade and other payables Tax payables Deferred tax liabilities Lease liabilities Bank and other borrowings Release of exchange reserve upon disposal Net losses on disposal of subsidiaries Total cash consideration	RMB’000 2,515 1,108,290 46 56,425 403,134 1,549 (548,123) (578) (1,294) (38,734) (684,039)
	299,191 431 (66,618)
	233,004

– 34 –

An analysis of net inflow of cash and cash equivalents in respect of disposal of these subsidiaries are as follows:

Net cash inflows arising from disposal of subsidiaries: Total consideration Cash consideration receivable Cash and cash equivalents disposed of (including cash and cash equivalents in disposal group classified as held for sale)	RMB’000 233,004 (19,861) (1,549) 211,594

19. EVENTS AFTER THE REPORTING DATE

On 14 December 2020, the Group entered into a sale and purchase agreement with an independent third party to dispose the entire equity interest in Yumen for an equity consideration of approximately RMB33,580,000. As at the date of this announcement, the transfer of entire equity interest in Yumen to the purchaser has been completed, Yumen ceased to be a wholly-owned subsidiary of the Company.

Save as disclosed above, there are no other material events affecting the Group which have occurred after 31 December 2020 and up to the date of this announcement.

– 35 –

EXTRACT OF INDEPENDENT AUDITOR’S REPORT

The following is the extract of the independent auditor’s report from the external auditor of the Company:

Opinion

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 Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

Emphasis of Matter

We draw attention to note 1 in the consolidated financial statements, which indicates that the Group incurred a net loss of approximately RMB625,734,000 during the year ended 31 December 2020 and in light of economy in 2020, the settlement of the Group’s certain tariff adjustment receivables from the state-grid companies could be longer than the management’s original expectation. These conditions indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

The Company is an investment holding company with its subsidiaries mainly engaged in investment in and the operation of solar power plants, provision of solar power plant operation and maintenance services, provision of financial services, trading of liquefied natural gas (“LNG”) and asset management.

SOLAR POWER PLANTS BUSINESS

During the year ended 31 December 2020, the Group continued its investment in and development of solar power plants in the People’s Republic of China (the “PRC”). As at 31 December 2020, the Group had a total of 1,178.8 megawatt (“MW”) completed solar power plants as follows:

– 36 –

Completed solar power plants

PRC Province Xinjiang Gansu Shaanxi Inner Mongolia Shanxi Hebei Henan Shandong Anhui Zhejiang Hubei Qinghai Total	Number of solar power plants as at 31 December 2020 7 6 5 1 1 2 2 1 4 1 1 1 32	Capacity of solar power plants 140.0 MW 189.0 MW 440.0 MW 10.0 MW 20.0 MW 50.0 MW 120.0 MW 20.0 MW 120.0 MW 19.8 MW 30.0 MW 20.0 MW 1,178.8 MW

As at 31 December 2020, the Group had the following wholly-owned, ground-mounted solar power plants under construction:

Solar power plant under construction

	Number of
	solar power
	plant as at	Capacity of
	31 December	solar power
PRC Province	2020	plants
Anhui	1	20.0 MW

PROVISION OF FINANCIAL SERVICES

The revenue arising from the provision of financial services decreased by approximately 5.3% from approximately RMB39,385,000 for the year ended 31 December 2019 to approximately RMB37,304,000 for the year ended 31 December 2020.

– 37 –

TRADING OF LIQUEFIED NATURAL GAS

The revenue arising from the trading of LNG decreased by approximately 86.4% from approximately RMB326,330,000 for the year ended 31 December 2019 to approximately RMB44,377,000 for the year ended 31 December 2020. The decrease is mainly due to city lockdowns and suspension of work, production and transportation in most regions in the PRC due to the outbreak of the novel coronavirus pneumonia starting in the first half of 2020. With the decrease in business in trading of LNG, the Group plans to allocate the resources to other segments.

SECURITIES INVESTMENT

As at 31 December 2020, the Group managed a portfolio of investments in capital markets with fair value of approximately RMB16,921,000 (2019: RMB28,198,000). The portfolio of investments managed by the Group consists of investment in one (2019: one) listed equity in Hong Kong. The Group will remain watchful on market developments and will continue to be prudent in managing its investment portfolio with a continuing focus on improving overall assets quality. For the year ended 31 December 2020, the Group had recorded unrealised losses on fair value changes of financial assets measured at fair value through profit or loss which amounted to approximately RMB3,883,000 (2019: RMB9,239,000). During the year ended 31 December 2020, the Group disposed of approximately 16.7% of its listed equity investment at a cash consideration of approximately RMB3,630,000 (2019: RMB43,034,000) and resulting in net realised losses on disposal of financial assets measured at fair value through profit or loss amounted to approximately RMB2,602,000 (2019: RMB1,553,000). For further details, please refer to the paragraph headed “Results of Operations — Financial Assets Measured at Fair Value through Profit or Loss” in this announcement.

RESULTS OF OPERATIONS

Revenue

The revenue of the Group decreased by approximately 28.9% from approximately RMB2,079,704,000 for the year ended 31 December 2019 to approximately RMB1,478,209,000 for the year ended 31 December 2020. The decrease was primarily due to the decrease in revenue from sales of electricity and trading of LNG.

Revenue from sales of electricity and provision of solar power plant operation and maintenance services

The Group’s revenue from sales of electricity decreased by approximately 18.8% from approximately RMB1,693,916,000 for the year ended 31 December 2019 to approximately RMB1,375,490,000 for the year ended 31 December 2020 due to the decrease in aggregate volume of electricity generated by the Group’s grid-connected solar power plants with the disposal of subsidiaries. The solar power plants owned by the Group have generated electricity in an aggregate volume of 1,815,522 megawatt-hours (“MWh”) for the year ended 31 December 2020, representing a decrease of approximately 17.3% as compared to 2,195,435 MWh for year ended 31 December 2019.

The Group’s revenue from provision of solar power plant operation and maintenance services increased by approximately 4.8% from approximately RMB20,070,000 for the year ended 31 December 2019 to approximately RMB21,038,000 for the year ended 31 December 2020 mainly due to the start of certain solar power plant operation and maintenance services contracts.

– 38 –

Revenue from provision of financial services

The Groups’ revenue arising from the provision of financial services decreased by approximately 5.3% from approximately RMB39,385,000 for the year ended 31 December 2019 to approximately RMB37,304,000 for the year ended 31 December 2020.

Revenue from trading of liquefied natural gas

The Group’s revenue arising from trading of LNG decreased by approximately 86.4% from approximately RMB326,330,000 for the year ended 31 December 2019 to approximately RMB44,377,000 for the year ended 31 December 2020. The decrease is mainly due to city lockdowns and suspension of work, production and transportation in most regions in the PRC due to the outbreak of the novel coronavirus pneumonia starting in the first half of 2020. With the decrease in business in trading of LNG, the Group plans to allocate the resources to other segments.

Gross profit and gross profit margin

The gross profit of the Group decreased by approximately 16.1% from approximately RMB1,097,739,000 for the year ended 31 December 2019 to approximately RMB921,248,000 for the year ended 31 December 2020. The gross profit margin of the Group increased from approximately 52.8% for the year ended 31 December 2019 to approximately 62.3% for the year ended 31 December 2020 mainly due to decrease in revenue from trading of liquefied natural gas, which has a lower gross profit margin than the business segment of solar power plants.

Other gains, net

The other gains, net of the Group increased by approximately 290.9% from approximately RMB4,656,000 for the year ended 31 December 2019 to approximately RMB18,202,000 for the year ended 31 December 2020. The increase are mainly due to (i) the decrease in net unrealised losses on fair values changes on financial assets measured at fair value through profit or loss of approximately RMB5,356,000; (ii) the increase in rental income of approximately RMB5,925,000; and (iii) the increase in gain on lease modification of approximately RMB2,834,000.

Administrative expenses

Administrative expenses of the Group decreased by approximately 19.0% from approximately RMB366,869,000 for the year ended 31 December 2019 to approximately RMB297,030,000 for the year ended 31 December 2020. The decrease was mainly attributable to a decrease in total employee benefit expenses of approximately RMB50,570,000 during the year ended 31 December 2020.

Losses on disposal of subsidiaries, net

During the year ended 31 December 2020, the Group disposed certain subsidiaries and recorded net losses on disposal of subsidiaries of approximately of RMB182,220,000 (2019: RMB66,618,000). For details, please refer to note 18 to the financial statements in this announcement.

– 39 –

Impairment losses on a disposal group classified as held for sale

On 22 October 2020, the Group entered into sale and purchase agreements with an independent third party to dispose the entire equity interests in 平山縣天匯能源科技有限公司 (Pingshan Tianhui Energy Technology Co., Ltd.) (“Tianhui”) and 德州市陵城區乾超兄弟能 源科技有限公司 (Dezhou City Lingcheng District Qianchao Brothers Energy Technology Co., Ltd.) (“Qianchao Brothers”) for a total equity consideration of approximately RMB60,176,000.

On 4 December 2020, the Group entered into a sale and purchase agreement with the same independent third party to dispose the entire equity interest in 榆林市江山永宸新能源有限公 司 (Yulin City Jiangshan Yongchen New Energy Limited*) (“Yongchen”) for an equity consideration of approximately RMB1,177,829,000.

On 14 December 2020, the Group entered into a sale and purchase agreement with another independent third party to dispose the entire equity interest in 玉門市永聯科技新能源開發有 限公司 (Yumen Yonglian Technology New Energy Development Co., Ltd.*) (“Yumen”) for an equity consideration of approximately RMB33,580,000.

Impairment losses of approximately RMB160,650,000, representing the sale proceeds less the carrying amount of the net assets of Tianhui, Qianchao Brothers, Yongchen and Yumen as at 31 December 2020, was charged to profit or loss during the year ended 31 December 2020.

Impairment losses on solar power plants under construction

During the year ended 31 December 2020, impairment losses of approximately RMB84,445,000 (2019: RMB43,735,000) on a solar power plant under construction was recognised as the approval from the relevant government authority was not granted eventually, resulting in the demolition of the solar power plant.

Impairment losses on trade and other receivables, net

During the year ended 31 December 2020, impairment losses of approximately RMB78,429,000 (2019: RMB77,113,000) on trade and other receivables, net was recorded based on the lifetime expected credit losses.

Finance costs

Finance costs of the Group decreased by approximately 17.6% from approximately RMB892,236,000 for the year ended 31 December 2019 to approximately RMB735,344,000 for the year ended 31 December 2020. As the Group’s loans and borrowings decreased during the year ended 31 December 2020, the finance costs related to the borrowings also decreased.

Solar power plants

As at 31 December 2020, the Group had a net carrying amount of approximately RMB5,346,495,000 (2019: RMB8,626,215,000) and approximately RMB11,909,000 (2019: RMB121,270,000) in completed solar power plants and solar power plants under construction, respectively. As at 31 December 2020, the Group had a total of 1,178.8 MW (2019: 1,629.3 MW) installed capacity of completed solar power plants.

– 40 –

Interest in associates

As at 31 December 2020, the net carrying amount of associates was approximately RMB227,984,000 (2019: RMB226,691,000).

As at 31 December 2019, the Group executed guarantees with respect to loans of approximately RMB24,925,000 granted by independent third parties to Kong Sun Baoyuan, under which the Group was liable to pay the proportionate share if independent third parties are unable to recover the loan from Kong Sun Baoyuan. As at 31 December 2020, Kong Sun Baoyuan fully repaid such loans to independent third parties and the guarantees were released accordingly.

Goodwill

As at 31 December 2020, the Group had a total amount of approximately RMB29,622,000 (2019: RMB96,930,000) in respect of goodwill on the acquisition of subsidiaries in previous years. The decrease is mainly contributed by the disposals of subsidiaries during the year ended 31 December 2020.

Right-of-use Assets

As at 31 December 2020, the right-of-use assets amounted to approximately RMB274,361,000 (2019: RMB409,133,000). The decrease is mainly contributed by the disposals of subsidiaries during the year ended 31 December 2020.

Financial assets measured of fair value through other comprehensive income

Financial assets measured of fair value through other comprehensive income decreased by approximately 26.3% from approximately RMB1,729,091,000 as at 31 December 2019 to approximately RMB1,275,156,000 as at 31 December 2020. The decrease is mainly due to (i) the fair value loss amounted to approximately RMB184,365,000; and (ii) return of capital from 蘇州君盛晶石股權投資合夥企業(有限合夥) (Suzhou Junsheng Jingshi Equity Investment Partnership (Limited Partnership)*) amounted to RMB270,000,000 during the year ended 31 December 2020. The investments are held for long-term investment purpose and hence are classified as financial assets measured at fair value through other comprehensive income in the consolidated statement of financial position. For details, please refer to note 12 to the financial statements in this announcement.

Financial assets measured of fair value through profit or loss

As at 31 December 2020, the Group had financial assets measured at fair value through profit or loss with market value of approximately RMB16,921,000 (2019: RMB28,198,000), representing approximately 0.1% (2019: 0.2%) of the total assets of the Group as at 31 December 2020. The portfolio of investments managed by the Group consists of investment in one (2019: one) listed equity in Hong Kong. The Group held approximately 0.1% (2019: 0.1%) shareholding in the listed equity as at 31 December 2020. During the year ended 31 December 2020, the Group had recorded unrealised losses on fair value changes of financial assets measured at fair value through profit or loss which amounted to approximately RMB3,883,000 (2019: RMB9,239,000). During the year ended 31 December 2020, the Group disposed of approximately 16.7% of its listed equity investment at cash consideration of approximately RMB3,630,000 (2019: RMB43,034,000) and resulting in net realised losses on disposal of financial assets measured at fair value through profit or loss amounted to approximately RMB2,602,000 (2019: RMB1,553,000).

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Trade, bills and other receivables

Trade, bills and other receivables decreased by approximately 17.0% from approximately RMB4,292,131,000 as at 31 December 2019 to approximately RMB3,561,766,000 as at 31 December 2020. The decrease was mainly due to the reclassification of approximately RMB1,057,105,000 to disposal group classified as held for sale upon the entering into the sale and purchase agreements with independent third parties for the disposals of the subsidiaries on 22 October 2020, 4 December 2020 and 14 December 2020, respectively.

Structured bank deposits

As at 31 December 2020, the Group placed approximately RMB4,230,000 (2019: RMB4,230,000) structured bank deposits with a bank in the PRC to earn a guaranteed and capital-protected return by making good use of the idle cash of the Group.

Trade and Other Payables

Trade and other payables decreased by approximately 36.5% from approximately RMB1,669,254,000 as at 31 December 2019 to approximately RMB1,060,610,000 as at 31 December 2020. The balance mainly comprised payables to suppliers of solar modules and equipment and Engineering Procurement Construction contractors for purchase of solar modules and equipment and construction costs of solar power plants. Due to the settlement of construction costs after the completion of substantial solar power plants construction work in recent years, trade payables, which was mainly related to construction costs of solar power plants, have decreased by approximately 72.2% from approximately RMB1,042,309,000 as at 31 December 2019 to approximately RMB289,306,000 as at 31 December 2020.

Liquidity and Capital Resources

As at 31 December 2020, cash and cash equivalents of the Group was approximately RMB168,947,000 (2019: RMB194,156,000), which included an amount of bank balances of approximately RMB167,743,000 (2019: RMB190,959,000) denominated in RMB placed with banks in the PRC. The remaining balance of the Group’s cash and cash equivalents consisted primarily of cash on hand and bank balances which were primarily denominated in Hong Kong dollar and placed with banks in Hong Kong.

As at 31 December 2020, the Group’s net debt ratio, which was calculated by the total loans and borrowings and corporate bonds minus total cash and cash equivalents and structured bank deposits, over total equity, was approximately 1.38 (2019: 1.78).

Capital Expenditure

During the year ended 31 December 2020, the Group’s total expenditure in respect of property, plant and equipment and solar power plants amounted to approximately RMB1,869,000 (2019: RMB19,333,000) and approximately RMB26,149,000 (2019: RMB67,807,000), respectively.

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Loans and Borrowings

As at 31 December 2020, the Group’s total loans and borrowings was approximately RMB6,285,578,000 representing a decrease of approximately 35.0% compared to approximately RMB9,670,077,000 as at 31 December 2019. The decrease in the Group’s total loans and borrowings was mainly due to disposal of subsidiaries, in which the loans and borrowings of these subsidiaries will be excluded from the Group upon their disposals. All the loans and borrowings of the Group were denominated in RMB, the functional currency of the Company’s major subsidiaries in the PRC. As at 31 December 2020, loans and borrowings of approximately RMB4,407,500,000 (2019: RMB5,033,500,000) and approximately RMB1,878,078,000 (2019: RMB4,636,577,000) bear fixed interest rate and floating interest rate, respectively.

As at 31 December 2020, out of the total borrowings, approximately RMB2,576,645,000 (2019: RMB1,370,428,000) was repayable within one year and approximately RMB3,708,933,000 (2019: RMB8,299,649,000) was repayable after one year. For details, please refer to note 16 to the financial statements in this announcement.

Corporate bonds

As at 31 December 2020, corporate bonds denominated in Hong Kong dollar with an aggregate principal amount of HK$336,500,000 (equivalent to approximately RMB283,212,000) (2019: HK$343,500,000 (equivalent to approximately RMB307,700,000)) remained outstanding with certain independent third parties. The corporate bonds bear interest rates ranging from 3% to 7% (2019: 3% to 7%) per annum, and will mature on the date immediately following 3 to 96 months (2019: 6 to 96 months) after their issuance.

During the year ended 31 December 2020, the Group issued corporate bonds with an aggregate principal amount of HK$13,500,000 (equivalent to approximately RMB12,005,000) (2019: HK$64,000,000 (equivalent to approximately RMB56,353,000)) to certain independent third parties, the net proceeds of the issued corporate bonds received by the Company were approximately HK$12,492,000 (equivalent to approximately RMB11,110,000) (2019: HK$57,761,000 (equivalent to approximately RMB50,860,000)), with total issue cost amounting to approximately HK$1,008,000 (equivalent to approximately RMB895,000) (2019: HK$6,239,000 (equivalent to approximately RMB5,493,000)).

During the year ended 31 December 2020, the Group repaid HK$20,500,000 (equivalent to approximately RMB18,231,000) (2019: HK$64,500,000 (equivalent to approximately RMB56,794,000)) in aggregate principal amount of the corporate bonds.

The corporate bonds are measured at amortised cost using effective interest method by applying an effective interest rate ranging from 10.40% to 14.56% (2019: 10.40% to 14.56%) per annum. Imputed interest of approximately HK$33,401,000 (equivalent to approximately RMB29,704,000) (2019: HK$31,013,000 (equivalent to approximately RMB27,308,000)) (note 7 to the financial statements in this announcement) in respect of the corporate bonds was recognised in profit or loss during the year ended 31 December 2020.

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Lease Liabilities

As at 31 December 2020, the lease liabilities amounted to approximately RMB182,228,000 (2019: RMB214,330,000). The decrease is mainly contributed by the disposals of subsidiaries during the year ended 31 December 2020.

Foreign Exchange Risk

The Group primarily operates its business in the PRC and during the year ended 31 December 2020, the Group’s revenue were primarily denominated in RMB, being the functional currency of the Group’s major operating subsidiaries. Accordingly, the Directors expect any future exchange rate fluctuation will not have any material effect on the Group’s business. The Group did not use any financial instruments for hedging purpose, but will continue to monitor foreign exchange changes to best preserve the Group’s cash value.

Charge on Assets

As at 31 December 2020, the Group had charged solar power plants, trade receivables, rightof-use assets and unlisted equity investments with net book value of approximately RMB3,324,494,000 (2019: RMB6,413,341,000), approximately RMB1,190,157,000 (2019: RMB2,029,478,000), approximately RMB719,000 (2019: RMB756,000) and approximately RMB295,441,000 (2019: RMB438,840,000), respectively, to secure bank loans and other loans facilities granted to the Group.

Save as disclosed above and in note 16 to the financial statements in this announcement, during the year ended 31 December 2020, the Group has no other charges on assets.

Contingent Liabilities

The Group acquired equity interests of certain subsidiaries principally engaged in the development of solar power plant projects and the applications for the development of these solar power plant projects were actually made by their former shareholders. According to certain notices (the “Notices”) issued by the State Energy Administration (國家能源局), the Notices prohibit the original applicants who have obtained the approval documents from the government authorities for the solar power plants projects from transferring the equity interests of solar power plant projects before such solar power plants were connected to the power grid. Taking into consideration the legal opinion obtained from the Company’s legal adviser as to PRC law, and given that the Group has obtained the preliminary approval from respective relevant government authorities to continue with the development of the solar power plants, the Company’s legal adviser as to PRC law is of the view that the possibility for these subsidiaries to be fined or to face other adverse consequences imposed by the relevant government authorities is remote. Accordingly, the Directors consider there is no significant impact on the Group’s control over these subsidiaries and the development of these solar power plants.

As at 31 December 2020, the Group had executed a guarantee with respect to a loan of approximately RMB205,168,000 granted by independent third parties to 靖邊縣智光新能源開 發有限公司 (Jingbian Zhiguang New Energy Development Co., Ltd.), an indirect whollyowned subsidiary of the Company before its disposal on 12 October 2020.

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Save as disclosed above, during the year ended 31 December 2020, the Group has no other significant contingent liabilities.

Employees and Remuneration Policy

As at 31 December 2020, the Group had approximately 622 (2019: 614) employees in Hong Kong and the PRC. Compensation for the employees includes basic wages, variable wages, bonuses and other staff benefits. For the year ended 31 December 2020, the total employee benefit expenses (including directors’ emoluments) were approximately RMB138,682,000 (2019: RMB185,597,000). For details, please refer to note 6 to the financial statements in this announcement. The remuneration policy of the Group is to provide remuneration packages, including basic salary and short-term bonuses, so as to attract and retain top quality staff. The remuneration committee of the Company reviews such packages annually, or when occasion requires.

The Company has also adopted a share option scheme on 22 July 2009 (the “Share Option Scheme”) for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. The Share Option Scheme expired on 21 July 2019 and no further options could thereafter be granted. Notwithstanding the expiry of the Share Option Scheme, the share options which had been granted during the life of the scheme shall continue to be valid and exercisable in accordance with their terms of issue and in all other respects its provisions shall remain in full force and effect.

SIGNIFICANT INVESTMENTS AND MATERIAL ACQUISITION AND DISPOSAL

Save as disclosed in this announcement, the Group did not have any other significant investments, did not hold any significant investments in an investee company with a value of 5% more of the Company’s total assets, other material acquisition or disposal during the year ended 31 December 2020, and there was no plan authorised by the Board for other material investments or additions of capital assets up to the date of this announcement.

PROSPECT

In September 2020, the leaders of China announced the ambitious goal of “striving to peak carbon dioxide emissions by 2030 and achieving carbon neutrality by 2060”, and further announced in December that by 2030, China’s non-fossil fuel energy will account for about 25% of primary energy consumption, while the total installed capacity of wind power and solar power will reach over 1,200 million KW. This will lay a solid foundation for the sustainable development of various clean energy industries in China, including the solar power industry.

The rapid growth of installed capacity of renewable energy power generation also provides an opportunity for the development of the business of providing operation and maintenance services at renewable energy power plants. As at the end of 2020, the installed capacity of renewable energy in China has reached 934 million KW, including 253 million KW of solar power installed capacity and 281 million KW of wind power installed capacity. The market for operation and maintenance services is promising.

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Looking forward, grasping the historic opportunities in the clean energy industry, the Group will continue the strategies on the operation of solar power plants, optimise asset allocation efficiency, safeguard the Group’s cash flow, and step up to improve the efficiency of the equipment at the power stations. We will continue to promote the development of green finance and inclusive finance businesses, and further explore other investment opportunities in the clean energy industry, so as to maximise the return of the assets and value for the shareholders.

COMPLIANCE WITH CORPORATE GOVERNANCE CODE

The Company is committed to the establishment of good corporate governance practices and procedures with a view to enhancing investors’ confidence to the Company and the Company’s accountability. The Company has adopted the Corporate Governance Code (the “CG Code”) contained in Appendix 14 to the Listing Rules for its corporate governance practices during the year under review. In the opinion of the Board, save for the deviation as disclosed below, the Company has complied with the applicable code provisions as set out in the CG Code throughout the year ended 31 December 2020.

Code Provision A.4.1

Under code provision A.4.1 of the CG Code, non-executive directors should be appointed for a specific term and subject to re-election. However, none of the existing non-executive Directors and independent non-executive Directors is appointed for specific terms but they are subject to retirement by rotation and re-election at the annual general meetings of the Company in accordance with the articles of association of the Company, which stipulates that one-third of the directors for the time being, or, if their number is not a multiple of three, then the number nearest to but not less than one-third shall retire from the office by rotation at each annual general meeting. As such, the Company considers that sufficient measures have been taken to ensure that the Company’s corporate governance practices are no less exacting than those in the CG Code in this respect.

Code Provision A.2.1

Code provision A.2.1 of the CG Code stipulates that the roles of chairman of the Board (“Chairman”) and Chief Executive Officer (“CEO”) should be separate and should not be performed by the same individual. During the year ended 31 December 2020, the Company does not have a separate Chairman and CEO. Mr. Jin Yanbing currently performs these two roles. The Board believes that vesting the roles of both Chairman and CEO has the benefit of ensuring consistent leadership within the Group and enables more effective and efficient overall strategic planning for the Group. The Board considers that the balance of power and authority will not be impaired by the present arrangement and this structure will enable the Company to make and implement decisions promptly and effectively. The Board will review the management structure regularly and consider separating the roles of the Chairman and CEO if and when appropriate.

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CHANGES OF INFORMATION OF DIRECTORS

The changes in the information of the Directors since the publication of the annual report of the Company for the financial year ended 31 December 2019 required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules is set out below:

Name of Directors Details of Changes Executive Directors

Mr. Qin Hongfu (“Mr. Qin“) Appointed as an executive Director on 4 June 2020. Mr. Deng Chengli Resigned as an executive Director on 4 June 2020. Non-executive Directors Mr. Wang Ke Resigned as a non-executive Director on 4 June 2020. Mr. Wu Tak Kong Resigned as a non-executive Director on 4 June 2020. Independent non-executive Directors

Ms. Wu Wennan Appointed as chairman of Audit Committee on 14 May 2020 and member of Nomination Committee and Remuneration Committee on 4 June 2020. Mr. Lang Wangkai Appointed as an independent non-executive Director, (“Mr. Lang“) chairman of Nomination Committee, member of Audit Committee and Remuneration Committee on 4 June 2020. Mr. Xu Xiang (“Mr. Xu”) Appointed as an independent non-executive Director, chairman of Remuneration Committee, member of Audit Committee and Nomination Committee on 1 March 2021. Mr. Miu Hon Kit Resigned as an independent non-executive Director, chairman of Audit Committee, member of Nomination Committee and Remuneration Committee on 14 May 2020. Mr. Chen Kin Shing Resigned as an independent non-executive Director, chairman of Nomination Committee, member of Audit Committee and Remuneration Committee on 4 June 2020. Mr. Wang Fang Resigned as an independent non-executive Director, chairman of Remuneration Committee, member of Audit Committee and Nomination Committee on 1 March 2021.

Save as disclosed above, there is no other information required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules. The biographical details of Mr. Qin, Mr. Lang and Mr. Xu are set out in the announcement of the Company dated 4 June 2020 and 1 March 2021, respectively.

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FINAL DIVIDEND

The Board does not recommend the payment of a dividend for the year ended 31 December 2020 (2019: Nil).

EVENTS AFTER THE REPORTING DATE

For details of events after the reporting date, please refer to note 19 to the financial statements in this announcement.

COMPLIANCE WITH MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules (the “ Model Code ”) as the code for dealing in securities of the Company by the Directors during the year ended 31 December 2020. The Board confirms that, having made specific enquiries with all Directors, all Directors have complied with the required standards of the Model Code for the year ended 31 December 2020.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

During the year ended 31 December 2020, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the listed securities of the Company and its subsidiaries.

AUDIT COMMITTEE

The audit committee of the Company (the “ Audit Committee ”) has been established in compliance with Rule 3.21 and Rule 3.22 of the Listing Rules and with written terms of reference in compliance with the CG Code. The primary responsibilities of the Audit Committee are to review and monitor the financial reporting and internal control principles of the Company and to assist the Board to fulfill its responsibilities over audit.

The Audit Committee has reviewed the Group’s consolidated financial statements for the year ended 31 December 2020 and has also reviewed and confirmed the accounting principles and practices adopted by the Group and discussed the auditing, internal control and financial reporting matters.

The Audit Committee currently consisted of three independent non-executive Directors: Ms. Wu Wennan, Mr. Lang Wangkai and Mr. Xu Xiang. Ms. Wu Wennan serves as the chairman of the Audit Committee.

ANNUAL GENERAL MEETING

The annual general meeting of the Company (the “ AGM ”) to approve and adopt the audited consolidated financial statements of the Company for the year ended 31 December 2020 will be held on Friday, 21 May 2021. A notice convening the AGM will be published and dispatched to the shareholders of the Company in accordance with the requirements of the Listing Rules in due course.

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CLOSURE OF REGISTER OF MEMBERS TO ASCERTAIN SHAREHOLDERS’ ENTITLEMENT TO ATTEND AND VOTE AT THE AGM

The Company’s register of members will be closed from Monday, 17 May 2021 to Friday, 21 May 2021 (both days inclusive), during which no transfer of shares of the Company will be effected. In order to qualify to attend and vote at the AGM, all completed transfer documents accompanied by the relevant share certificates must be lodged with the Company’s share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Friday, 14 May 2021.

PUBLICATION OF FINAL RESULTS ANNOUNCEMENT AND ANNUAL REPORT

This final results announcement is published on the website of the Stock Exchange at http://www.hkexnews.hk and on the Company’s website at www.kongsun.com. The annual report for the year ended 31 December 2020 of the Group containing all the information required by the Listing Rules will also be published on the same websites and dispatched to the shareholders of the Company in due course.

SCOPE OF WORK PERFORMED BY AUDITOR

The financial information has been reviewed by the Audit Committee and approved by the Board. The figures in respect of the Group’s consolidated statement of financial position, consolidated statement of profit or loss, consolidated statement of other comprehensive income and the related notes thereto for the year ended 31 December 2020 as set out in this announcement have been agreed by the Company’s auditor, BDO Limited, to the amounts set out in the Group’s audited consolidated financial statements for the year. The work performed by BDO Limited in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by BDO Limited on this preliminary results announcement.

By Order of the Board Kong Sun Holdings Limited Mr. Jin Yanbing Executive Director

Hong Kong, 30 March 2021

As of the date of this announcement, the Board comprises two executive Directors, Mr. Jin Yanbing and Mr. Qin Hongfu, one non-executive Director, Mr. Jiang Hengwen, and three independent non-executive Directors, Mr. Lang Wangkai, Ms. Wu Wennan and Mr. Xu Xiang.

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