(Incorporated in the Cayman Islands with limited liability) Stock code: 01165 INTERIM REPORT 2020 INTERIM REPORT 2020 中期報 告 WORLD'S LEADING CLEAN ENERGY PROVIDER LOW-CARBON & ENERGY-SAVING INTEGRATED SOLUTIONS PROVIDER 順 風 國 際 清 潔 能 源 有 限 公 司 SHUNFENG INTERNATIONAL CLEAN ENERGY LIMITED （於開曼群島註冊成立的有限公司） 股份代號：01165 中期報告 2020 全球領先 清潔能源供應商 低碳節能 綜合解決方案供應商 | --- | --- | --- | |-------|-------|------------------------------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 目錄 | | 2 | | 公司資料 | ...

Financial Performance - The total electricity generation for 2019 was 1,865,390 MWh, an increase from 1,766,414 MWh in 2018, representing a growth of approximately 5.6%[5]. - The revenue from solar power generation in China increased by RMB 60.0 million or 4.6% to RMB 1,368.4 million, driven by a 5.0% increase in electricity generation[64]. - The company reported a revenue growth of 5.4% for the fiscal year 2019, compared to 7.1% in 2018 and 10.3% in 2017[122]. - The gross profit margin improved to 42.0% in 2019, up from 37.1% in 2018[122]. - Adjusted EBITDA for 2019 was RMB 960,198 thousand, with an adjusted EBITDA margin of 55.5%[122]. - The company reported a total sales volume of 1,800,000 MW in 2019, reflecting robust operational capacity[125]. - The company’s revenue from continuing operations reached RMB 2,000,000 thousand in 2019, showing a significant increase compared to previous years[125]. Debt and Liquidity - The company faced significant liquidity challenges due to delays in receiving electricity subsidies from the Chinese government, impacting its debt obligations[32]. - The company sold its solar product manufacturing business and 11 solar power station assets in China to reduce overall debt levels and improve cash flow[36]. - The company’s overall debt situation is expected to improve following the completion of significant asset sales[36]. - The company reported a net loss of RMB 1,884,883,000 for the year ended December 31, 2019, with total liabilities exceeding current assets by RMB 4,818,353,000[114]. - The company plans to repay all overdue loans and debts before the end of the fiscal year 2020[120]. - The company is negotiating with banks and financial institutions to extend the repayment schedule for related debts[120]. - The net debt to equity ratio was 1,464.8% as of the reporting date[95]. Operational Efficiency - The company aims to balance long-term asset holdings with short-term cash flow needs while reducing management costs and expenses to improve operational efficiency[38]. - Distribution and sales expenses decreased by RMB 2.3 million or 18.9% to RMB 9.9 million from RMB 12.2 million for the year ended December 31, 2018[78]. - Administrative expenses decreased by RMB 5.6 million or 2.7% to RMB 203.9 million from RMB 209.5 million for the year ended December 31, 2018[80]. - R&D expenses increased by RMB 18.9 million or 46.0% to RMB 60.0 million from RMB 41.1 million for the year ended December 31, 2018[81]. - The company aims to streamline operations and improve efficiency by having the same individual serve as both chairman and CEO under specific circumstances[132]. Governance and Compliance - The board of directors has made appropriate adjustments to its operational strategies to safeguard ongoing operations and maximize shareholder interests[36]. - The board consists of seven members, including four executive directors and three independent non-executive directors, ensuring a balanced governance structure[135]. - The company has established an audit committee, a remuneration committee, and a nomination committee to oversee various governance aspects[148]. - The company has adopted the standard code of conduct for securities trading, ensuring all directors comply with necessary standards[136]. - The board's decisions require approval from a majority of directors, ensuring collective decision-making for the company's best interests[137]. - The company emphasizes high transparency in communications with shareholders, providing timely and accurate information through annual reports and announcements[177]. Environmental Commitment - The company reported emissions reductions of over 1,568,793 tons of CO2, 75 tons of smoke, 373 tons of sulfur dioxide, and 354 tons of nitrogen oxides[4]. - The company continues to focus on the clean energy market, which is entering a new phase despite the declining costs of solar power generation[38]. - The company provides clean energy and low-carbon energy-saving integrated solutions[200]. - The company is committed to developing new technologies in the clean energy sector[200]. - The company has a strong focus on expanding its clean energy business through strategic partnerships and acquisitions[200]. Employee and Shareholder Engagement - The company has 5,896 employees as of December 31, 2019, down from 6,330 employees a year earlier[110]. - The company is taking necessary measures to mitigate the impact of COVID-19 on its operations and employee safety[109]. - The board's attendance at shareholder meetings was 100%, reflecting commitment to shareholder engagement[180]. - The company has mechanisms in place to encourage employees to report misconduct or fraud, enhancing ethical behavior within the organization[173]. - The company provides training for directors to ensure they understand their responsibilities and stay updated on regulatory obligations[143].

Revenue Performance - The company recorded revenue of RMB 5,274.0 million for the six months ended June 30, 2019, representing a 5.3% increase from RMB 5,010.4 million in the same period of 2018[16]. - Revenue from solar product manufacturing and sales, as well as photovoltaic system installation services, grew by 5.4% to RMB 4,326.0 million[17]. - The solar power generation segment contributed RMB 727.2 million to the company's revenue, reflecting an 8.1% increase compared to RMB 672.0 million in 2018[17]. - Revenue increased by RMB 263.6 million or 5.3% to RMB 5,274.0 million compared to RMB 5,010.4 million in the same period of 2018[32]. - Revenue from solar power generation increased by RMB 54.4 million or 8.1% to RMB 727.2 million, with total generation of 929,254 MWh[39]. - Revenue from meteocontrol's solar power station monitoring services grew by RMB 10.4 million or 16.6% to RMB 73.3 million[40]. - Revenue from electricity subsidies recognized during the six months ended June 30, 2019, amounted to RMB 509,891,000, with RMB 45,984,000 related to certain grid-connected solar power stations pending catalog registration[192]. Sales and Market Dynamics - Sales to customers in China accounted for approximately 36.2% of total revenue, down from 58.2% in 2018, while overseas sales increased to 63.8% from 41.8%[27]. - Solar product sales volume reached 2,470.9 MW, a growth of 25.5% from 1,969.2 MW in the same period of 2018[24]. - Solar product sales volume rose to 2,470.9 MW, up from 1,969.2 MW in 2018, contributing to 81.9% of total revenue[33]. Financial Performance - Gross profit increased by RMB 336.8 million or 49.0% to RMB 1,024.3 million[45]. - The company incurred a loss of RMB 73.0 million, a reduction of 88.9% from a loss of RMB 658.3 million in the same period of 2018[47]. - Loss before tax decreased by RMB 810.5 million to RMB 231.0 million from RMB 1,041.5 million in the same period of 2018[56]. - Income tax expense decreased by RMB 96.9 million or 86.1% to RMB 15.6 million from RMB 112.5 million in the same period of 2018, mainly due to a reduction in deferred tax expenses[57]. - Total loss for the period decreased by RMB 907.5 million to RMB 246.5 million from RMB 1,154.0 million in the same period of 2018[58]. - The net loss for the six months ended June 30, 2019, was RMB 246,544 thousand, a reduction from a net loss of RMB 1,153,999 thousand in the prior year, reflecting an improvement of approximately 78.6%[109]. - The company reported a basic and diluted loss per share of RMB (5.03) for the six months ended June 30, 2019, an improvement from RMB (26.78) in the same period of 2018[109]. Operational Efficiency - Distribution and selling expenses increased by RMB 180.0 million or 86.7% to RMB 387.6 million, primarily due to increased shipping costs from higher sales to overseas customers[48]. - Inventory turnover days increased to 48.3 days from 40.2 days as of December 31, 2018, primarily due to longer shipping times from China to overseas customers[59]. - Trade receivables turnover days increased to 124.3 days from 103.9 days as of December 31, 2018, mainly due to new overseas customers and delayed electricity subsidies[60]. Debt and Liquidity - Current ratio remained at 0.55 as of June 30, 2019, with a net cash deficit of RMB 13,014.9 million compared to RMB 12,889.3 million as of December 31, 2018[63]. - Net debt to equity ratio increased from 353.4% as of December 31, 2018, to 381.6% as of June 30, 2019[64]. - The company is actively seeking refinancing and/or extension of debt maturities to improve short-term liquidity and address upcoming debt obligations[130]. - The company has successfully negotiated extensions on loans totaling RMB 2,199 million and RMB 862 million, with repayment terms extended into 2020[132]. - As of June 30, 2019, the company had short-term bank and other borrowings amounting to RMB 3,352 million, with RMB 535 million due shortly thereafter, including a principal amount of RMB 490 million from an independent financial institution[136]. - The company is currently negotiating a settlement plan with the independent financial institution regarding the repayment of RMB 556.1 million, which includes principal and interest[136]. - Following the sale of certain solar power plants, the company expects to receive cash payments of RMB 1,945 million, which will be used to repay outstanding debts[141]. Strategic Initiatives - The company aims to become a global leader in clean energy and low-carbon energy-saving integrated solutions, actively seeking diversification into other clean energy-related businesses[27]. - The company is currently involved in legal proceedings regarding an outstanding loan of approximately RMB 490 million, with related interest of about RMB 66.1 million, totaling RMB 556.1 million[75]. - The company is in preliminary discussions with potential investors regarding the sale of solar power plants with a total capacity of approximately 300 MW located in China[77]. - The proposed plans, including potential sales and refinancing, aim to enhance the company's financial stability and asset structure[77]. Compliance and Governance - The company’s audit committee reviewed the interim financial statements and confirmed compliance with relevant accounting standards and regulations[83]. - The company has adopted a standard code of conduct for securities trading, with all directors confirming compliance during the reporting period[81]. - The company has not disclosed any other interests or short positions in its shares by directors or senior management as of June 30, 2019[100]. Accounting Policies - The company applies IFRS 16 "Leases" to recognize right-of-use assets at the lease commencement date, measured at cost less any accumulated impairment losses[154]. - Lease liabilities are recognized at the present value of unpaid lease payments, using the incremental borrowing rate if the implicit rate is not readily determinable[160]. - The company has chosen to apply the modified retrospective approach for the initial application of IFRS 16, with cumulative effects recognized in retained earnings as of January 1, 2019[169]. - The company applies recognition exemptions for short-term leases and low-value asset leases, recognizing lease payments as expenses on a straight-line basis over the lease term[152]. Future Outlook - Future outlook and guidance were not explicitly provided in the documents, suggesting a need for further clarification in upcoming communications[119]. - The company continues to face significant financial challenges, as evidenced by the ongoing net losses and comprehensive losses reported[119].

Financial Performance - The company recorded revenue of RMB 10,290.6 million for the year, a 2.7% increase from RMB 10,017.4 million in 2017[16]. - Revenue from solar product sales and photovoltaic system installation services grew by 2.3% to RMB 8,434.9 million[16]. - Solar power generation revenue reached RMB 1,384.3 million, up 4.8% from RMB 1,320.7 million in 2017[16]. - The company achieved stable growth in its power station operation and service segment, with revenue of RMB 137.0 million, a 7.5% increase from RMB 127.5 million in 2017[16]. - The LED product manufacturing and sales segment also saw revenue growth of 4.5%, reaching RMB 334.5 million compared to RMB 320.0 million in 2017[16]. - The company’s revenue increased by RMB 273.2 million or 2.7% to RMB 10,290.6 million, primarily due to increased electricity generation and solar product sales[39]. - Revenue from photovoltaic system installation services increased by RMB 74.8 million or 100.7% to RMB 149.1 million for the year[46]. - Gross profit rose by RMB 271.9 million or 17.2% to RMB 1,849.0 million, with solar power revenue increasing by RMB 63.6 million or 4.8% to RMB 1,384.3 million due to a 14.7% increase in total power generation[48]. - The company reported a net profit margin of -16.6% in 2018, following a trend of negative margins in previous years, including -29.0% in 2016[89]. - Total assets reached RMB 25,403,746,000 in 2018, while total liabilities increased to RMB 21,756,524,000, resulting in a debt ratio of 77.9%[89]. Electricity Generation - The total electricity generation for 2018 was 1,766,414 MWh, an increase from 1,564,675 MWh in 2017[13]. - The total electricity generation from solar power plants reached approximately 1,766,414 MWh, an increase of 12.9% from 1,564,675 MWh in 2017[25]. - The company generated 1,766,414 MWh of electricity in 2018, marking a steady increase from 607,793 MWh in 2014[89]. - The group's solar power plants generated approximately 1,766,414 MWh of electricity in 2018, saving 551,121 tons of coal and 7,065,656 cubic meters of water compared to traditional coal-fired power plants, while reducing emissions of smoke and dust, CO2, and SO2 by 141 tons, 1,451,992 tons, and 689 tons respectively[195]. Sales and Market Performance - Solar product sales volume increased by 16.8% to 4,507.9 MW, up from 3,859.2 MW in the previous year[28]. - The revenue from solar module sales rose by 17.0% to RMB 6,923.6 million, driven by a sales volume increase of 33.4% to 3,301.1 MW[41]. - The revenue from solar cell sales decreased by 41.6% to RMB 1,174.8 million, with sales volume dropping by 12.9% to 1,172.7 MW[42]. - The revenue from solar silicon wafer sales fell by 13.2% to RMB 19.0 million, with sales volume decreasing by 9.3% to 34.1 MW[45]. - The company anticipates continued growth in annual solar photovoltaic installations and a reduction in reliance on subsidy policies[19]. - The company has strengthened its overseas sales strategy, resulting in a significant increase in shipments of solar components to international markets[15]. Operational Efficiency - Inventory turnover days increased to 40.2 days from 31.1 days, attributed to longer shipping times to overseas customers[70]. - Trade receivables turnover days increased to 103.9 days from 92.2 days, remaining within the credit terms granted to customers[71]. - The company plans to focus on expanding its solar energy production capacity and enhancing its product offerings in the coming years[90]. - New product development initiatives are underway, particularly in the solar energy sector, to improve market competitiveness[90]. Governance and Management - The company has established a clear separation of roles between the Chairman and the CEO, with Mr. Zhang Fubo as Chairman and Mr. Wang Yu as CEO, in compliance with corporate governance codes[105]. - The board consists of three independent non-executive directors, ensuring independent judgment and oversight of the group's performance, with Mr. Kwong Wai Sun possessing appropriate professional accounting qualifications[106]. - The board held a total of 5 meetings during the year, with attendance rates for executive directors ranging from 80% to 100%[112]. - The Audit Committee, established in May 2011, held 2 meetings during the year to review the financial statements and ensure compliance with applicable standards[118]. - The Remuneration Committee, also established in May 2011, held 1 meeting to discuss the remuneration policies for directors and senior management[122]. - All directors received training on their roles and responsibilities, ensuring compliance with ongoing professional development requirements[111]. - The company has a structured process for appointing, re-electing, and removing directors, with terms set at a minimum of three years[116]. - Independent non-executive directors provide impartial opinions on the group's strategy and performance, safeguarding the interests of shareholders[106]. - The company ensures that all directors have access to independent professional advice at the company's expense when needed[115]. - The board's procedures comply with the company's articles of association and relevant rules and regulations, ensuring proper governance practices[115]. Risk Management - The board is responsible for maintaining an effective risk management and internal control system to protect the interests of the company and its shareholders[132]. - The risk management framework consists of two main components: risk management structure and risk management procedures[133]. - The audit committee is responsible for overseeing the execution of the group's risk management procedures and reviewing the risk register[136]. - Management is tasked with identifying and continuously monitoring strategic, operational, financial, reporting, and compliance risks[137]. - The company has established clear internal control policies and procedures to define responsibilities and accountability across departments[142]. - The management has established a risk management framework and policy, regularly assessing key risks and their potential impacts on the group[143]. - An independent internal control consultant was hired to evaluate the effectiveness of risk management and internal control systems for subsidiaries during the period from January 1, 2018, to December 31, 2018[146]. - The board emphasizes maintaining clear and timely communication with shareholders, ensuring high transparency through annual reports and announcements[147]. - The board and audit committee reviewed the risk management structure and submitted a risk assessment report along with a three-year internal control review plan[143]. - All recommendations from the internal control consultant will be closely followed up to ensure timely implementation[146]. Environmental and Social Responsibility - The group received a green (excellent) rating in environmental credit rating from the Wuxi New District Construction Environmental Protection Bureau for its outstanding performance in environmental protection in 2014[192]. - The group emphasizes the importance of maintaining good relationships with business partners, including customers and suppliers, to enhance service and product offerings[188]. - The group encourages employee participation in volunteer activities to maintain high levels of corporate social governance and community contribution[197]. - The group will regularly review its environmental practices for further improvements[196].