山高新能源(01250) - 2019 - 中期财报

Chairman's Report Performance Review In H1 2019, the Group's revenue decreased by 13% to HKD 3.402 billion, while gross margin rose to 48%, but profit attributable to equity holders fell by 15% due to increased finance costs Key Performance Indicators for H1 2019 | Indicator | H1 2019 | H1 2018 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 3.402 billion | - | -13% | | Gross Margin | 48% | 38% | +10 p.p. | | Total Gross Profit | - | - | +10% | | Profit Attributable to Equity Holders | HKD 590 million | - | -15% | - The primary reasons for the profit decline were increased finance costs and higher profit attributable to non-controlling interests due to increased profits from some non-wholly owned subsidiaries[10] Business Review The Group steadily advanced its core photovoltaic, wind power, and clean heating businesses, achieving strong growth in installed capacity and utilization hours, while actively exploring emerging energy storage sectors - As of June 30, 2019, the Group held an accumulated installed capacity of approximately 2,233 MW for grid-connected centralized photovoltaic power stations, and a total installed capacity of over 600 MW for distributed photovoltaic power stations[11] - Photovoltaic power generation increased by 26% year-on-year, with weighted average utilization hours reaching 659 hours, exceeding the national average of 576 hours[11] - Total wind power project scale exceeded 1,400 MW, with grid-connected installed capacity of approximately 167 MW, power generation increasing by 212% year-on-year, and weighted average utilization hours reaching 1,538 hours, higher than the national average of 1,133 hours[11] - The actual operating clean heating area exceeded 25 million square meters[12] - The Group owned four energy storage projects in Beijing, Tibet, Jiangsu, and Shanxi, with a total capacity of approximately 69 MWh, and received multiple industry awards[12] Corporate Governance and Sustainable Development The Group enhances operational excellence and risk control through optimized risk assessment, cost management, and e-procurement, while fostering corporate culture and strengthening safety management - The Group comprehensively optimized its risk assessment model and COSO framework risk management system, and reorganized the supply chain management department into a cost accounting center to implement full-process cost management[13] - The Group, guided by core values of 'responsibility, value, and sharing,' continuously optimizes its talent training and employee development systems[13] Management Discussion and Analysis Business Review In H1 2019, the Group strategically shifted towards high-margin electricity sales and clean heating, reducing construction services, resulting in significant growth in clean heating revenue and progress in emerging energy businesses Financial Summary for H1 2019 | Indicator | H1 2019 | H1 2018 | Change | | :--- | :--- | :--- | :--- | | Revenue (HKD thousands) | 3,401,678 | 3,897,240 | (13)% | | Gross Profit (HKD thousands) | 1,622,592 | 1,469,018 | 10% | | Gross Margin (%) | 47.7 | 37.7 | +10 p.p. | | Profit for the Period (HKD thousands) | 694,576 | 708,009 | (2)% | | Profit Attributable to Equity Holders (HKD thousands) | 590,160 | 690,921 | (15)% | | Basic Earnings Per Share (HK cents) | 0.87 | 1.09 | (20)% | Electricity Sales and Entrusted Operation Consolidated revenue from electricity sales and entrusted operation services grew by 17% to HKD 1.724 billion, driven by a 33% increase in total electricity sales volume from expanded PV and wind power operations - Revenue from electricity sales and entrusted operation services totaled approximately HKD 1,723.5 million, representing a 17% increase compared to the same period last year[20] - Total electricity sales volume was approximately 1.76 million MWh, a 33% increase compared to the same period last year[20] Engineering, Procurement and Construction Services and Technical Consulting Services To optimize its business structure, the Group reduced lower-margin EPC services revenue by 47% to HKD 1.106 billion, decreasing its share of total revenue from 53% to 33%, while technical consulting revenue also declined - Revenue from engineering, procurement, and construction services totaled approximately HKD 1,106.4 million, a 47% decrease year-on-year, with its proportion of total revenue falling to 33%[37] - Construction revenue of approximately HKD 40.1 million was recognized during the period for clean heating projects undertaken on a BOT basis[38] - Revenue from technical consulting services was approximately HKD 72.6 million, a year-on-year decrease[38] Provision of Clean Heating Services Clean heating business revenue surged over 8 times to HKD 459 million, with 15 operational projects covering over 25 million square meters, demonstrating strong growth potential - Revenue from the provision of clean heating services was approximately HKD 459.1 million, an increase of over 8 times compared to the same period last year[39] - As of June 30, 2019, the Group held and/or managed 15 operational projects, with a total actual clean heating area exceeding 25 million square meters[39] Other Clean Energy Businesses The Group actively explores diverse clean energy businesses, notably completing energy storage projects totaling 69 MWh and earning industry awards, showcasing its potential in integrated energy services - The Group steadily developed its energy storage business, completing project construction with a total capacity of approximately 69 MWh in Beijing, Tibet, Jiangsu, and Shanxi, China[41] - During the period, the Group received multiple awards, including '2019 China Energy Storage Industry Best Integrated Energy Service Provider' and '2019 China Top Ten Energy Storage Project Operators'[41][42] Financial Performance In H1 2019, revenue decreased by 13% to HKD 3.402 billion, but gross margin improved to 47.7% due to business mix shift, while finance costs rose, and total assets increased to HKD 50.075 billion with a 66% net debt-to-equity ratio Gross Profit Performance by Business Segment (For the Six Months Ended June 30) | Business Segment | 2019 Revenue (HKD millions) | 2019 Gross Margin (%) | 2018 Revenue (HKD millions) | 2018 Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Electricity Sales (PV) | 1,478.2 | 68.3 | 1,276.8 | 66.3 | | Electricity Sales (Wind) | 111.5 | 61.6 | 42.7 | 66.5 | | Construction Services | 1,146.5 | 20.3 | 2,247.3 | 14.9 | | Technical Consulting Services | 72.6 | 84.4 | 128.5 | 86.7 | | Entrusted Operation Services | 133.8 | 84.0 | 154.1 | 87.0 | | Provision of Clean Heating Services | 459.1 | 30.0 | 47.8 | 29.5 | | Total | 3,401.7 | 47.7 | 3,897.2 | 37.7 | - Due to changes in revenue mix, the overall gross margin increased from 37.7% in the same period last year to 47.7% in the current period[45] - Administrative expenses decreased to HKD 254 million due to the implementation of cost controls[47] - Finance costs increased to HKD 584 million, primarily due to an increase in the average borrowing balance[49] - As of June 30, 2019, the net debt-to-equity ratio was 66%, a slight increase from 64% at the end of 2018[66] Liquidity and Financial Resources As of June 30, 2019, the Group maintained a sound financial position with HKD 4.283 billion in cash, HKD 26.160 billion in total borrowings (82% long-term), HKD 3.501 billion in net current assets, and HKD 2.584 billion in unutilized bank facilities Financial Resources Status (June 30, 2019) | Indicator | Amount (HKD millions) | | :--- | :--- | | Cash and Cash Equivalents | 4,283.3 | | Total Borrowings | 26,159.9 | | - Bank and Other Borrowings | 11,558.1 | | - Finance Lease Liabilities | 14,601.8 | | Net Current Assets | 3,501.1 | | Unutilized Bank Facilities | 2,583.5 | - In November 2018, the Group issued perpetual capital instruments with a principal amount of RMB 1 billion, classified as equity instruments, to supplement working capital[65] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss For H1 2019, the Group reported HKD 3.402 billion in revenue and HKD 1.623 billion in gross profit, with profit for the period at HKD 695 million (down 2%) and profit attributable to equity holders at HKD 590 million (down 15%) Condensed Consolidated Statement of Profit or Loss Summary (For the Six Months Ended June 30) | Item (HKD thousands) | 2019 (Unaudited) | 2018 (Unaudited) | | :--- | :--- | :--- | | Revenue | 3,401,678 | 3,897,240 | | Gross Profit | 1,622,592 | 1,469,018 | | Finance Costs | (584,319) | (424,502) | | Profit Before Tax | 842,694 | 770,852 | | Income Tax Expense | (148,118) | (62,843) | | Profit for the Period | 694,576 | 708,009 | | Profit Attributable to Equity Holders of the Company | 590,160 | 690,921 | Condensed Consolidated Statement of Financial Position As of June 30, 2019, total assets increased by 15% to HKD 50.075 billion, total liabilities reached HKD 38.577 billion, and total equity was HKD 11.498 billion, driven by growth in property, plant, equipment, and borrowings Condensed Consolidated Statement of Financial Position Summary | Item (HKD thousands) | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :--- | :--- | :--- | | Non-current Assets | 31,041,181 | 28,738,651 | | Current Assets | 19,033,846 | 14,669,499 | | Total Assets | 50,075,027 | 43,408,150 | | Current Liabilities | 15,532,702 | 12,594,257 | | Non-current Liabilities | 23,044,104 | 19,938,486 | | Total Liabilities | 38,576,806 | 32,532,743 | | Total Equity | 11,498,221 | 10,875,407 | Condensed Consolidated Statement of Cash Flows For H1 2019, operating activities generated HKD 1.196 billion in net cash, while investing activities used HKD 3.057 billion, and financing activities provided HKD 3.420 billion, leading to a period-end cash balance of HKD 4.283 billion Condensed Consolidated Statement of Cash Flows Summary (For the Six Months Ended June 30) | Item (HKD thousands) | 2019 (Unaudited) | 2018 (Unaudited) | | :--- | :--- | :--- | | Net Cash from/(used in) Operating Activities | 1,196,277 | (1,064,692) | | Net Cash used in Investing Activities | (3,057,143) | (1,316,150) | | Net Cash from Financing Activities | 3,419,914 | 977,568 | | Net Increase/(Decrease) in Cash and Cash Equivalents | 1,559,048 | (1,403,274) | | Cash and Cash Equivalents at End of Period | 4,103,636 | 3,288,204 | Notes to the Condensed Consolidated Financial Statements Changes in Accounting Policies and Disclosures The Group adopted HKFRS 16 Leases on January 1, 2019, recognizing right-of-use assets and lease liabilities for prior operating leases, significantly impacting the financial position and adjusting retained earnings - The Group first adopted HKFRS 16 Leases and applied the modified retrospective approach, recognizing the cumulative effect of initial adoption on January 1, 2019[87][88] Impact of HKFRS 16 Adoption on Financial Position as of January 1, 2019 (HKD thousands) | Item | Increase/(Decrease) | | :--- | :--- | | Assets | | | Property, Plant and Equipment | 851,809 | | Prepaid Land Lease Payments | (254,742) | | Prepayments, Deposits and Other Receivables | (47,185) | | Liabilities | | | Lease Liabilities | 15,260,167 | | Amounts Due Under Finance Leases | (14,692,353) | | Equity | | | Retained Earnings | (51,579) | Contract Assets As of June 30, 2019, total contract assets were HKD 5.160 billion, mainly comprising HKD 3.260 billion in electricity price subsidy receivables and construction contract amounts Composition of Contract Assets (HKD thousands) | Item | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Receivables from Electricity Price Subsidies | 3,260,157 | 2,491,836 | | Construction Contracts | 1,346,208 | 1,693,796 | | Retention Money | 585,389 | 339,917 | | Total (Before Impairment) | 5,191,754 | 4,525,549 | Trade and Bills Receivables As of June 30, 2019, total trade and bills receivables were HKD 4.302 billion, including HKD 919 million in electricity price subsidies, with HKD 937 million in non-subsidy receivables over one year Composition of Trade and Bills Receivables (HKD thousands) | Item | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Trade Receivables | 2,748,893 | 1,971,260 | | Bills Receivables | 671,841 | 625,804 | | Receivables from Electricity Price Subsidies | 919,057 | 711,821 | | Total (Before Impairment) | 4,339,791 | 3,308,885 | Commitments As of June 30, 2019, the Group's total contracted but unprovided capital commitments were HKD 1.807 billion, mainly for clean energy project construction and joint venture capital injections Capital Commitments (HKD thousands) | Item | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Construction, Material and Equipment Costs for Clean Energy Projects | 1,200,478 | 1,839,241 | | Capital Injection into Joint Ventures | 606,915 | 606,364 | | Total | 1,807,393 | 2,445,605 | Disclosures Disclosure of Interests This section discloses interests of directors, chief executives, and substantial shareholders, including Beijing Enterprises Water Group Limited (31.88%), Funds managed by CITIC Private Equity Funds Management Co., Ltd. (23.91%), and TusHoldings Co., Ltd. (6.37%) Major Shareholder Holdings (June 30, 2019) | Shareholder Name | Shareholding Percentage | | :--- | :--- | | Beijing Enterprises Water Group Limited (Indirect) | 31.88% | | Funds managed by CITIC Private Equity Funds Management Co., Ltd. (Indirect) | 23.91% | | TusHoldings Co., Ltd. (Indirect) | 6.37% | Share Option Scheme The Company's share option scheme had 1.46 billion outstanding options as of June 30, 2019, with an exercise price of HKD 0.199, vesting in tranches from 2020 to 2024 - As of June 30, 2019, the total number of outstanding share options was 1,460,000,000[163] - All outstanding share options were granted on September 18, 2017, with an exercise price of HKD 0.199, and an exercise period from September 18, 2020, to September 17, 2027[164] Specific Performance Obligations of Controlling Shareholder The Group's financing agreements include specific performance obligations requiring controlling shareholders to maintain minimum shareholding or largest shareholder status, with potential for immediate repayment upon breach - Multiple borrowing and finance lease agreements, totaling billions of HKD and hundreds of millions of USD, are subject to specific performance obligations of the controlling shareholder[169] - Performance obligations primarily include: Beijing Enterprises Water Group must maintain at least 25% or 27% beneficial equity interest in the Company and remain the single largest shareholder; Beijing Enterprises Holdings and BE Group must also maintain corresponding shareholding percentages and control over their respective subsidiaries[170] Corporate Governance Compliance with Corporate Governance Code The Board confirms the Company's consistent compliance with all applicable code provisions of the Corporate Governance Code during the six months ended June 30, 2019 - The Board believes that the Company has consistently complied with all applicable code provisions of the Corporate Governance Code during the period[173] Audit Committee The Audit Committee, comprising three independent non-executive directors, reviews and monitors financial reporting, risk management, and internal controls, having deemed the interim results properly prepared and sufficiently disclosed - The Audit Committee is composed of three independent non-executive directors, with Mr. Li Fujun serving as Chairman[175] - The Audit Committee has reviewed the Group's interim results for the six months ended June 30, 2019, and believes they were prepared using appropriate accounting policies and provided sufficient disclosures[175]