同景新能源(08326) - 2020 - 年度财报

Chairman's Statement Chairman's Statement The Group's revenue and profit declined significantly due to adjustments in national photovoltaic policies | Metric | FY2020 | FY2019 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | HK$284.9 million | HK$542.3 million | -47% | | Profit attributable to owners of the Company | HK$6.3 million | HK$23.4 million | -73% | - During the year, the Group signed new contracts with a total installed capacity of 412.0357MW[11] - The Group's future strategic priorities include increasing R&D investment in photovoltaic tracking systems, promoting "Top Runner" and poverty alleviation projects, and expanding its international market share, particularly along the "Belt and Road" initiative[12] Management Discussion and Analysis Business Review The renewable energy business generated revenue of HK$285 million and secured 23 new contracts totaling 412MW | Business Segment | FY2020 Revenue | FY2019 Revenue | | :--- | :--- | :--- | | Renewable Energy Business | HK$284.887 million | HK$542.314 million | - During the reporting period, the Group signed 23 new contracts with a total installed capacity of 412.0357MW, with major partners including Sungrow Power Supply and State Power Investment Corporation[16][17][20] - The Group achieved technological breakthroughs by launching a multi-point linkage tracking system and a herringbone tracking system with high land utilization to enhance product safety, stability, and efficiency[29] - The Group obtained several key qualifications and certifications, including EU RoHS for floating pontoons, 3C for tracker distribution cabinets, UL for tracking systems, and a Grade B engineering design qualification for the power industry[30] Financial Review Revenue decreased by 47% to HK$285 million, and profit attributable to owners fell sharply to HK$6.3 million | Financial Metric | FY2020 (HK$ '000) | FY2019 (HK$ '000) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 284,887 | 542,314 | -47% | | Contract costs | 245,191 | 468,504 | -48% | | Staff costs | 13,611 | 20,156 | -32% | | Administrative and other operating expenses | 17,349 | 14,985 | +16% | | Profit attributable to owners of the Company | 6,329 | 23,424 | -73% | Future Prospects The Group will focus on R&D for photovoltaic tracking systems and expand into overseas markets - National policies are promoting grid parity for wind and solar power without subsidies and regulating competitive allocation for subsidized projects, significantly impacting the photovoltaic industry[42][43][49] - The Group's strategy is to increase R&D investment to capture domestic market share while leveraging international certifications like UL to expand into overseas markets such as Africa, India, and Southeast Asia[49] Liquidity, Financial and Capital Resources The Group maintained a sound financial position with cash increasing by 50% and the gearing ratio improving to 25% | Metric | 31 March 2020 | 31 March 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | HK$118.2 million | HK$78.66 million | | Bank borrowings (short-term) | HK$62.11 million | HK$103.2 million | | Gearing ratio | 25% | 40% | | Number of employees | 93 | 176 | - The Group's operations are mainly in Mainland China with most transactions settled in RMB, exposing it to RMB exchange rate fluctuation risk; no foreign exchange hedging measures are currently in place[57] Principal Risks and Uncertainties The Group's main risks include credit, interest rate, and liquidity risks, which are managed through monitoring - The Group's main financial risks include credit risk from contract assets and trade receivables, interest rate risk, and liquidity risk, which is managed by monitoring cash levels[66][67][68] - The Group is committed to environmental protection and will publish a detailed ESG report by September 30, 2020[69] - During the reporting period, the Company complied with all material relevant laws and regulations, including the Securities and Futures Ordinance and the GEM Listing Rules[70] Biographical Details of Directors and Senior Management Biographical Details of Directors and Senior Management This section details the extensive experience of the executive and independent non-executive directors - Executive Director Team: - Mr. Wu Jiannong (Chairman and CEO): Responsible for strategic development, with an engineer qualification and an MBA - Ms. Shen Menghong (Executive Director and Compliance Officer): Responsible for strategic development, experienced in corporate strategy, M&A, and financial management - Mr. Xu Shuisheng (Executive Director): Responsible for strategic development, with an engineer qualification in mechanical engineering[79][80][82] - Independent Non-executive Director Team: - Ms. Wang Xiaoxiong: Experienced in audit, finance, and accounting; a Chinese Certified Public Accountant - Mr. Zhou Yuan: Experienced in corporate, government, and chamber of commerce management - Mr. Yuan Jiangang: A Chinese Certified Public Accountant and Certified Asset Appraiser, serving as an independent director for multiple listed companies[83][87] Report of the Directors Principal Business, Performance and Dividends The Group is engaged in the renewable energy business in China and does not recommend a final dividend - The Company's principal activity is investment holding, with its subsidiaries primarily engaged in the renewable energy business in China[91][92] - The Board does not recommend the payment of a final dividend for the year ended 31 March 2020, consistent with the previous year[94] Major Customers, Suppliers and Connected Transactions The Group has high customer and supplier concentration and conducted a connected transaction for equipment sales | Concentration Metric | Percentage | | :--- | :--- | | Sales to top five customers | ~83% | | Sales to largest customer | ~38% | | Purchases from top five suppliers | ~59% | | Purchases from largest supplier | ~25% | - On 31 October 2019, the Group entered into an agreement to sell freeze-drying equipment and provide related services to Zhejiang Xingcai Agricultural Technology Co, Ltd (indirectly controlled by Chairman Mr. Wu Jiannong) for a consideration of RMB2.97 million[107] Directors' and Shareholders' Interests in Shares Chairman Mr. Wu Jiannong is deemed to hold approximately 28.30% of the Company's shares | Shareholder Name | Capacity/Nature of Interest | Number of Shares | Approx. % of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Wu Jiannong | Interest in a controlled corporation | 231,454,000 | 28.30% | | Zhenjie Co, Ltd | Beneficial owner | 224,380,000 | 27.43% | | Victory Stand | Beneficial owner | 206,000,000 | 25.18% | - Mr. Wu Jiannong, Mr. Xu Shuisheng, and Ms. Shen Menghong jointly hold shares in Zhenjie Co, Ltd and Century Group Co, Ltd, and under the SFO, Mr. Wu Jiannong is deemed to have an interest in all shares held by these two companies[125] Share Option Scheme The Company has a share option scheme adopted in 2013, but no options have been granted to date - The share option scheme is designed to incentivize employees, directors, consultants, and business partners of the Group[137] - Since the adoption of the share option scheme to the date of this report, no options have ever been granted, and thus there are no options outstanding, granted, cancelled, or lapsed[147][148] Corporate Governance Report Corporate Governance Practices The Company complied with the Corporate Governance Code, with the deviation of the Chairman and CEO roles being combined - The Company complied with all applicable code provisions of the Corporate Governance Code, with one deviation[160] - The deviation relates to code provision A.2.1, where the roles of Chairman and CEO are held by the same individual, Mr. Wu Jiannong, which the Board believes provides strong leadership and is balanced by the Board's composition[161] Board of Directors and Committees The Board is supported by Audit, Remuneration, Nomination, and Compliance Committees to fulfill its duties - The Board has established four committees: Audit, Remuneration, Nomination, and Compliance, each with written terms of reference[176] - The Audit Committee consists of three independent non-executive directors and is primarily responsible for reviewing financial reports, accounting policies, and internal controls[177][178] - The Company has adopted a board diversity policy, with selection criteria including gender, age, cultural background, and professional experience[188] | Committee | Chairman | Key Responsibilities | | :--- | :--- | :--- | | Audit Committee | Mr. Yuan Jiangang | Review financial reports, internal controls | | Remuneration Committee | Mr. Zhou Yuan | Review director and senior management remuneration | | Nomination Committee | Ms. Wang Xiaoxiong | Review board structure, nominate directors | | Compliance Committee | Ms. Shen Menghong | Supervise the Group's compliance system | Risk Management and Internal Control The Board oversees the risk management system, which is based on a "three lines of defense" model - The Board has overall responsibility for overseeing the risk management and internal control systems and reviews their effectiveness through the Audit Committee[197] - The Group's risk management adopts a "three lines of defense" model: the first line is operational management, the second is the finance department, and the third is the outsourced independent internal audit (performed by TUS Corporate Advisory Co, Ltd)[202][209] - The Group currently does not have an internal audit function, as the Board considers it more cost-effective to appoint external professionals given the company's scale[201] Independent Auditor's Report Independent Auditor's Report The auditor issued an unqualified opinion, highlighting the accounting for construction contracts as a key audit matter - The auditor, HLB Hodgson Impey Cheng Limited, issued an unqualified opinion on the consolidated financial statements, stating they give a true and fair view of the Group's financial position and performance in accordance with HKFRSs[228] - The key audit matter was identified as the "accounting for revenue, costs and contract assets from construction contracts" due to the significant management judgment and estimation required[230][233] Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income Revenue from continuing operations was HK$285 million, with profit for the year at HK$8.1 million | Item (HK$ '000) | FY2020 | FY2019 | | :--- | :--- | :--- | | Revenue from continuing operations | 284,887 | 542,314 | | Profit before tax | 11,395 | 35,121 | | Profit for the year | 8,090 | 31,624 | | Profit attributable to owners of the Company | 6,329 | 29,640 | | - From continuing operations | 6,329 | 23,424 | | - From discontinued operations | – | 6,216 | | Basic earnings per share (HK cents) | 0.77 | 3.62 | - Other comprehensive expense for the year was mainly from exchange differences on translation of foreign operations, amounting to HK$16.68 million, resulting in a total comprehensive expense of HK$8.59 million[255] Consolidated Statement of Financial Position As of 31 March 2020, the Group's total assets were HK$419 million and net assets were HK$222 million | Item (HK$ '000) | 31 March 2020 | 31 March 2019 | | :--- | :--- | :--- | | Non-current assets | 45,046 | 52,547 | | Current assets | 373,504 | 434,006 | | - Cash and cash equivalents | 118,214 | 78,659 | | - Trade and bills receivables | 118,167 | 198,504 | | - Contract assets | 102,255 | 96,393 | | Current liabilities | 196,763 | 256,180 | | - Bank borrowings | 62,110 | 103,171 | | Net assets | 221,787 | 230,373 | | Total equity | 221,787 | 230,373 | Consolidated Statement of Cash Flows Net cash from operating activities was HK$80.4 million, resulting in a net increase in cash of HK$44.5 million | Item (HK$ '000) | FY2020 | FY2019 | | :--- | :--- | :--- | | Net cash from operating activities | 80,418 | (6,130) | | Net cash from/(used in) investing activities | 291 | (1,321) | | Net cash (used in)/from financing activities | (36,240) | 31,795 | | Net increase in cash and cash equivalents | 44,469 | 24,344 | | Cash and cash equivalents at beginning of year | 78,659 | 69,831 | | Cash and cash equivalents at end of year | 118,214 | 78,659 | Notes to the Financial Statements (Selected) The notes detail financial items, including the adoption of HKFRS 16, customer concentration, and related party transactions Note 5: Segment Information and Revenue The Group now operates a single reportable segment, renewable energy, with significant customer concentration - Following the disposal of the restaurant business, the Group's renewable energy business is considered a single reportable segment[418] | Major Customer | FY2020 Revenue (HK$ '000) | % of Total Revenue | | :--- | :--- | :--- | | Customer B | 107,201 | 37.6% | | Customer D | 42,822 | 15.0% | | Customer C | 39,799 | 14.0% | | Customer A | 32,768 | 11.5% | Note 40: Related Party Transactions The Group engaged in transactions with related parties, including rental expenses and equipment sales - The Group conducted several transactions with companies controlled by directors, which were carried out on terms mutually agreed upon in the ordinary course of business[569] | Related Party | Controlling Party | Nature of Transaction | Amount (HK$ '000) | | :--- | :--- | :--- | :--- | | Jiangshan Youhe Machinery Co, Ltd | Mr. Xu Shuisheng | Rental expenses | 518 | | Zhejiang Xingcai Agricultural Technology Co, Ltd | Mr. Wu Jiannong | Sale of equipment | 3,297 | Note 44: Financial Risk Management Objectives and Policies The Group manages financial risks including credit and liquidity, with the gearing ratio improving from 40% to 25% - The Group faces major financial risks including credit, interest rate, foreign exchange, and liquidity risks[582] - There is a significant credit concentration risk: trade receivables from the largest customer accounted for 27% of the total, and the top five customers accounted for 73%[593] | Item (HK$ '000) | 2020 | 2019 | | :--- | :--- | :--- | | Total debt | 73,465 | 154,522 | | Total equity | 221,787 | 230,373 | | Gearing ratio | 25% | 40% | Five-Year Financial Summary Five-Year Financial Summary The summary shows a revenue peak in 2018 followed by a decline, with assets and equity slightly down in 2020 | Item (HK$ '000) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 284,887 | 691,113 | 907,651 | 834,970 | 406,285 | | Profit attributable to owners of the Company | 6,329 | 29,640 | 21,006 | 25,992 | 5,078 | | Total Assets | 418,550 | 486,553 | 701,891 | 623,777 | 434,763 | | Total Liabilities | (196,763) | (256,180) | (478,410) | (467,391) | (344,411) | | Equity attributable to owners of the Company | 201,637 | 210,722 | 197,166 | 152,077 | 85,975 |