超威动力(00951) - 2024 - 中期财报

Corporate Information The company's corporate information includes its board structure, committee oversight, listing details, and key professional advisers Board of Directors and Committees The company's Board of Directors comprises executive, non-executive, and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure robust corporate governance - Board members include Chairman and CEO Mr. Zhou Mingming, Mr. Zhou Longrui, Ms. Yang Yunfei, Mr. Yang Xinxin (Executive Directors), Ms. Fang Jianjun (Non-executive Director), and Mr. Li Gangwei, Mr. Wu Zhijie, Mr. Sun Wenping (Independent Non-executive Directors)[2][3] - The Audit, Remuneration, and Nomination Committees are established, with Mr. Li Gangwei chairing the Audit and Remuneration Committees, and Mr. Zhou Mingming chairing the Nomination Committee[2][3] Company Details and Advisers The company is listed on the Hong Kong Stock Exchange with stock code 00951, maintaining its principal place of business in Hong Kong and headquarters in China, supported by major banks and Ernst & Young as auditor - The company's stock code is 00951, listed on The Stock Exchange of Hong Kong Limited[2] - The principal place of business in Hong Kong is in Tsim Sha Tsui, Guangdong Road, Lippo Sun Plaza, while the PRC head office is in Changxing County, Zhejiang Province[3] - Major bankers include China Construction Bank, Agricultural Bank of China, Industrial and Commercial Bank of China, and Bank of China; Ernst & Young is the auditor[4] Management Discussion & Analysis This section provides an overview of the company's financial performance, industry trends, business operations, future strategies, and detailed financial review for the period Overall Financial Highlights For the six months ended June 30, 2024, total group revenue increased by 28.4% to RMB 21.236 billion, driven by renewable materials sales, despite a decline in gross profit and profit attributable to owners, with gross margin decreasing from 10.4% to 7.6% Key Financial Data for H1 2024 | Indicator | H1 2024 (RMB million) | H1 2023 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 21,236 | 16,539 | +28.4% | | Gross Profit | 1,614 | 1,712 | -5.7% | | Gross Profit Margin | 7.6% | 10.4% | -2.8 percentage points | | Profit Attributable to Owners of the Company | 203.4 | 254.4 | -20.1% | | Basic Earnings Per Share | 0.18 | 0.23 | -21.7% | - Revenue growth was primarily driven by increased sales of renewable materials[41][42] - The decline in gross profit margin was mainly due to the increased revenue from lower-margin renewable materials[41][42] Industry Review The e-bike and electric tricycle markets continue to grow, driven by policy support and increasing demand, with new national standards and trade-in programs stimulating replacement demand and industry consolidation, while lead-acid battery demand remains stable amidst favorable regulatory developments for leading enterprises - The e-bike market is driven by "low-carbon environmental protection" and "intelligentization" trends, rising oil prices, and traffic congestion, expanding application scenarios to personal mobility and instant delivery[7][8] China Instant Delivery Market Data | Indicator | 2023 | 2028 (Estimated) | CAGR | | :--- | :--- | :--- | :--- | | Order Volume (100 million orders) | 408.8 | 813.1 | 14.7% | - The Chinese government's implementation of the "New National Standard" for e-bike safety, with transition periods ending or extending to 2025 in many provinces and cities, continues to drive e-bike replacement demand[7][8] - In 2023, China's total e-bike shipments reached 67.4 million units, a year-on-year increase of approximately 4.5%; the social ownership is expected to reach approximately 350 million units by the end of 2024[9][11] - The state has strengthened regulation of electric tricycles, with Beijing implementing a "one vehicle, one battery, one code" policy, driving replacement demand and industry consolidation[9][11] - China's Ministry of Commerce and 13 other departments issued the "Action Plan for Promoting Trade-in of Consumer Goods," encouraging e-bike trade-ins to accelerate the elimination of outdated products and enhance safety standards[10][11] - Lead-acid power batteries maintain competitiveness in the e-bike market due to their cost-effectiveness, stable safety, wide applicability, and high recycling rate, with a two-year replacement cycle creating a huge replacement market[14] - Three ministries, including the Ministry of Industry and Information Technology, issued "E-bike Industry Standard Conditions" and "Management Measures" to strengthen industry management and improve product quality and safety; the "Safety Technical Specification for Lithium-ion Batteries for E-bikes" will be implemented on November 1, 2024, standardizing lithium-ion battery products[15][16] Business Review The Group maintains a leading position in lead-acid power batteries, steadily develops its lithium-ion battery business, and actively promotes renewable materials recycling, enhancing market influence through optimized sales networks, overseas expansion, and continuous brand promotion, while solidifying industry leadership through technological innovation and talent reserves - Lead-acid power batteries are the Group's main product, maintaining an industry-leading position through technological strength, product quality, market channels, and brand effect[19][21] Lead-Acid Power Battery Sales Revenue Composition (H1 2024) | Product Category | Sales Revenue (RMB million) | Share of Total Revenue (%) | | :--- | :--- | :--- | | Total Lead-Acid Power Batteries | 12,658 | 59.6% | | - E-bike Batteries | 8,596 | 40.5% | | - Electric Vehicle and Special Purpose EV Batteries | 4,062 | 19.1% | - The lithium-ion battery business, through the development and application of new materials, technologies, and processes, obtained the "National Torch Program Industrialization Demonstration Project Certificate," with sales revenue of approximately RMB 65 million during the period[20][21] - The Group fully launched producer responsibility extension, established a standardized national recycling network, and independently developed a battery full lifecycle IoT management system to achieve full traceability of waste lead-acid battery circulation[23][24][25] - The Group has established a national sales and distribution network covering tier-one and tier-two markets, and continues to expand into overseas markets such as Southeast Asia and Africa[27][28][29] - The Group hosted the 2024 Chaowei New Energy Marketing Summit, formed a "Battery Doctor Service Team," and has continuously engaged Mr. Donnie Yen as brand ambassador for 21 years, deepening brand influence[30][31] - The Group's R&D expenditure was approximately RMB 556 million, accounting for about 2.6% of total revenue, a year-on-year increase of 11.8%[34][36][45] - The Group holds 39 related technology patents in graphene batteries and launched a new product, the "Andre Geim Technology Guided Battery," developed under the guidance of Nobel laureate Professor Andre Geim[35][36] - The Group was listed among "China's Top 500 Enterprises" and "Global New Energy Enterprises Top 500," and recognized as a National Technology Innovation Demonstration Enterprise and National Intellectual Property Demonstration Enterprise[33][36][38][39] Future Development Strategies The Group will seize "dual carbon" strategic opportunities, focus on "new technologies, new materials, and new products" innovation, commit to green development, build "Zero-Carbon Chaowei" and "Smart Chaowei," consolidate its leading position in the domestic market, deepen overseas market penetration, and strive to become a global leader in new energy manufacturing, operations, and services - Seize new industry opportunities brought by the national "dual carbon" strategy, focusing on continuous innovation in new energy batteries, key materials, and high-safety technologies[38][39] - Fulfill the mission of "enabling the world to use Chaowei green energy," vigorously promote the construction of "Zero-Carbon Chaowei" and "Smart Chaowei," and plan high-quality development with a global perspective[38][39] - Consolidate its leading position in the Chinese battery market, seize opportunities to deeply cultivate overseas markets, and promote the widespread application of new energy technologies globally[40][41] - Continuously develop high-performance battery products with superior performance, longer lifespan, and greater environmental friendliness, and enhance brand image through product, marketing, and service innovation[40][41] Financial Review The Group's revenue significantly increased during the period, but gross profit and profit attributable to owners declined, mainly due to changes in renewable materials sales structure and increased expenses; government grants grew substantially, liquidity remained ample, but net debt and gearing ratio increased Key Financial Indicator Changes for H1 2024 | Indicator | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 21,236,322 | 16,539,103 | +28.4% | | Gross Profit | 1,614,208 | 1,712,264 | -5.7% | | Other Income | 391,175 | 157,152 | +148.9% | | Distribution and Selling Expenses | 442,537 | 428,227 | +3.3% | | Administrative Expenses | 317,946 | 308,766 | +3.0% | | Research and Development Expenses | 555,867 | 497,113 | +11.8% | | Finance Costs | 230,246 | 195,528 | +17.8% | | Profit Before Tax | 408,317 | 407,606 | +0.2% | | Income Tax Expense | 95,724 | 116,277 | -17.7% | | Profit Attributable to Owners of the Company | 203,355 | 254,389 | -20.1% | - Other income significantly increased by 148.9%, primarily due to higher government grants received during the period[45][46] - Income tax expense decreased by 17.7%, with the effective tax rate falling from 28.5% to 23.4%, mainly due to increased profit contributions from subsidiaries with lower tax rates[49] Liquidity and Financial Resources (As at June 30, 2024) | Indicator | As at June 30, 2024 (RMB thousand) | As at December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Net Current Assets | 2,844,468 | 2,301,298 | | Cash and Bank Balances | 2,832,550 | 3,540,761 | | Net Debt | 2,626,145 | 2,146,701 | | Current Ratio | 1.21 | 1.18 | | Gearing Ratio | 11.4% | 9.9% | - The Group possesses ample cash and available bank facilities to meet its commitments and working capital needs, and to explore potential investment and business development opportunities[52] - The Group's business is primarily transacted in RMB, and the Directors believe there are no significant foreign exchange rate risks to operating cash flows and liquidity[55][56] Total Carrying Amount of Pledged Assets (RMB thousand) | Asset Category | As at June 30, 2024 | As at December 31, 2023 | | :--- | :--- | :--- | | Buildings | 263,601 | 458,022 | | Right-of-use Assets | 144,890 | 78,915 | | Receivables at Fair Value Through Other Comprehensive Income | 2,401,864 | 2,128,772 | | Restricted Bank Deposits | 1,160,047 | 1,036,265 | | Inventories | 433,883 | 325,139 | - As at June 30, 2024, the Group had no contingent liabilities[58] Human Resources and Employees' Remuneration As at June 30, 2024, the Group's total headcount was 15,654, a decrease from the prior year, while total employee costs increased, reflecting the Group's ongoing commitment to staff training and competitive remuneration Employee Headcount and Costs | Indicator | As at June 30, 2024 | As at June 30, 2023 | | :--- | :--- | :--- | | Total Employees | 15,654 | 17,973 | | Total Employee Costs (RMB thousand) | 822,520 | 751,919 | - The Group provides targeted training and study opportunities for management and professional technical personnel, and communicates the latest industry policies to enhance employees' professional standards and overall quality[60] Significant Investments and Material Acquisitions or Disposals of Subsidiaries, Associates and Joint Ventures As at June 30, 2024, the Group held no significant investments, nor did it undertake any material acquisitions or disposals of subsidiaries, associates, or joint ventures during the period, with no such plans authorized by the Board - As at June 30, 2024, no significant investments were held; no material acquisitions or disposals of subsidiaries, associates, or joint ventures occurred during the period; and as of the report date, the Board had not authorized any plans for other significant investments or capital asset increases[61] Purchase, Sale or Redemption of Listed Shares Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed shares during the period, and the number of treasury shares remained zero - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed shares (including the sale of treasury shares) during the period[61][62] - As at June 30, 2024, the number of treasury shares held by the Company was zero[61][62] Directors' Report This report details the interim dividend decision, directors' and substantial shareholders' interests in shares, share option schemes, corporate governance practices, and securities transactions Interim Dividend The Board of Directors resolved not to declare an interim dividend for the period - The Board of Directors resolved not to declare an interim dividend for the period[65][66] Directors' Interests in Shares, Underlying Shares and Debentures As at June 30, 2024, several directors and their spouses held company shares directly or through controlled corporations, with Mr. Zhou Mingming and Ms. Fang Jianjun collectively owning approximately 37.33% of the company's equity Directors' Long Positions in Shares (As at June 30, 2024) | Director's Name | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Shareholding in the Company (%) | | :--- | :--- | :--- | :--- | | Mr. Zhou Mingming | Interest in controlled corporation, spouse's interest and beneficial owner | 412,149,500 | 37.33% | | Ms. Fang Jianjun | Interest in controlled corporation and spouse's interest | 412,149,500 | 37.33% | | Mr. Zhou Longrui | Interest in controlled corporation and spouse's interest | 62,100,000 | 5.62% | | Ms. Yang Yunfei | Interest in controlled corporation and spouse's interest | 62,100,000 | 5.62% | | Mr. Yang Xinxin | Interest in controlled corporation | 20,000,000 | 1.81% | - Mr. Zhou Mingming holds shares through Great State Investment Limited and Jolly Pride Limited, and directly holds 3,900,000 shares[68][70] - Ms. Fang Jianjun holds shares through Bai Xiang Limited and is deemed to have an interest in shares held by Mr. Zhou Mingming due to being his spouse[68][71] Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares of the Company As at June 30, 2024, several entities, in addition to the directors, held 5% or more of the company's equity, with Great State Investment Limited and Tianneng Power International Limited identified as substantial shareholders Substantial Shareholders' Long Positions in Shares (As at June 30, 2024) | Name | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Shareholding (%) | | :--- | :--- | :--- | :--- | | Great State (振邦) | Beneficial owner | 248,407,500 (L) | 22.50% | | Jolly Pride (榮喜) | Beneficial owner | 48,205,000 (L) | 4.37% | | Bai Xiang (百祥) | Beneficial owner | 111,637,000 (L) | 10.11% | | High Joy (高樂) | Beneficial owner | 25,875,000 (L) | 2.34% | | Shiny Century (紀明) | Beneficial owner | 36,225,000 (L) | 3.28% | | Tianneng Power International Limited (天能動力) | Interest in controlled corporation | 111,680,000 (L) | 10.11% | - Tianneng Power International Limited indirectly holds shares through Tianneng International Investment Holdings Limited and Zhejiang Tianneng Innovation Investment Management Co., Ltd[78][80] Share Option Schemes The company adopted the 2023 Share Option Scheme on June 6, 2023, to incentivize and retain eligible participants, with authorized and service provider limits, specified exercise prices, vesting periods, and clawback provisions; no options have been granted as of the report date - The 2023 Share Option Scheme was approved and adopted at the Annual General Meeting on June 6, 2023, with a validity period of 10 years[84][85] - The scheme aims to acknowledge contributions, provide incentives, retain and motivate employees, and attract suitable talent[85][86] - Eligible participants include directors and employees of the Company and its subsidiaries, as well as suppliers, customers, and consultants providing services to the Group[87][88] - The scheme's authorized limit is 10% of the total issued shares on the adoption date (110,412,697 shares), with a service provider limit of 2% (22,082,539 shares)[89][90][92] - The option exercise price shall not be less than the highest of the nominal value of the shares, the closing price on the grant date, or the average closing price for the five business days immediately preceding the grant date[93][95] - The vesting period is generally no less than 12 months, and the Board may, at its discretion, determine the vesting period for employee participants under specific circumstances[94][95] - Share options may be subject to clawback if there are material misstatements in financial reports or if participants are involved in gross negligence, fraud, or misconduct[94][95] - No share options have been granted under the 2023 Share Option Scheme since its adoption date and up to the date of this report[98] Corporate Governance The company is committed to maintaining high corporate governance standards and complies with all code provisions of the Corporate Governance Code, though the roles of Board Chairman and CEO are combined in Mr. Zhou Mingming, an arrangement the Board believes benefits business strategy execution and operational efficiency - The Company has complied with all code provisions of the Corporate Governance Code as set out in Appendix C1 to the Listing Rules throughout the period[98] - The roles of Chairman of the Board and Chief Executive Officer are combined in Mr. Zhou Mingming, which deviates from code provision C.2.1[99][100] - The Board believes the current arrangement facilitates the execution of the Group's business strategies and enhances operational efficiency, benefiting the Company and all its shareholders[99][100] Directors' Securities Transactions The company has adopted a code of conduct for securities transactions by directors, senior management, and relevant employees, and all directors confirmed compliance with both this code and the Model Code during the period - The Company has adopted a code of conduct for securities transactions by directors, senior management, and relevant employees, with terms no less exacting than those set out in the Model Code[103] - All Directors confirmed compliance with the Model Code and the Company's own code of conduct throughout the period[103] Audit Committee The Audit Committee, comprising three independent non-executive directors, is responsible for reviewing and monitoring the Group's financial reporting processes, risk management, and internal control systems, having reviewed the unaudited results for the period and confirmed their compliance with relevant accounting standards - The Audit Committee comprises three independent non-executive directors: Mr. Li Gangwei (Chairman), Mr. Wu Zhijie, and Mr. Sun Wenping[103][105] - Its primary responsibilities include reviewing and monitoring the Group's financial reporting processes, risk management, and internal control systems[103][105] - The Committee met with external auditor Ernst & Young and reviewed the Group's unaudited results for the period, deeming them compliant with relevant accounting standards, rules, and regulations[104][105] Report on Review of Interim Condensed Consolidated Financial Statements This report details the auditor's review of the interim condensed consolidated financial statements, outlining the scope and concluding on their compliance with International Accounting Standard 34 Introduction Ernst & Young has reviewed the interim condensed consolidated financial statements of Chaowei Power Holdings Limited and its subsidiaries for the six months ended June 30, 2024, prepared in accordance with International Accounting Standard 34 - The auditor has reviewed the Group's interim condensed consolidated financial statements for the six months ended June 30, 2024[106][107] - The financial statements are prepared in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and International Accounting Standard 34 "Interim Financial Reporting"[106][107] Scope of Review The review was conducted in accordance with International Standard on Review Engagements 2410, with a scope significantly narrower than an audit, thus no audit opinion is expressed - The review was conducted in accordance with International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity"[110] - The scope of a review is substantially less than an audit, and consequently, no audit opinion is expressed[110] Conclusion Based on the review, the auditor found no matters leading them to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 - The auditor has not become aware of any matter that causes them to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34[111][112] Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2024, the Group's revenue increased by 28.4% year-on-year, but both gross profit and profit attributable to owners of the company decreased, while other income significantly increased and income tax expense decreased Summary of Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30, 2024) | Indicator | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 21,236,322 | 16,539,103 | | Cost of Sales | (19,622,114) | (14,826,839) | | Gross Profit | 1,614,208 | 1,712,264 | | Other Income | 391,175 | 157,152 | | Other Gains and Losses | (70,148) | 6,227 | | Distribution and Selling Expenses | (442,537) | (428,227) | | Administrative Expenses | (317,946) | (308,766) | | Research and Development Expenses | (555,867) | (497,113) | | Finance Costs | (230,246) | (195,528) | | Profit Before Tax | 408,317 | 407,606 | | Income Tax Expense | (95,724) | (116,277) | | Profit for the Period | 312,593 | 291,329 | | Profit Attributable to Owners of the Company for the Period | 203,355 | 254,389 | | Profit Attributable to Non-controlling Interests for the Period | 109,238 | 36,940 | | Basic and Diluted Earnings Per Share (RMB) | 0.18 | 0.23 | Interim Condensed Consolidated Statement of Financial Position As at June 30, 2024, the Group's total assets less current liabilities amounted to RMB 9.192 billion, with net current assets increasing but cash and bank balances decreasing, and property, plant, and equipment representing the largest portion of non-current assets Summary of Interim Condensed Consolidated Statement of Financial Position (As at June 30, 2024) | Indicator | As at June 30, 2024 (RMB thousand) | As at December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Non-current Assets | | | | Property, Plant and Equipment | 4,510,003 | 4,751,420 | | Right-of-use Assets | 657,138 | 667,339 | | Goodwill | 49,447 | 49,447 | | Intangible Assets | 134,824 | 141,913 | | Deferred Tax Assets | 511,055 | 553,150 | | Current Assets | | | | Inventories | 5,157,858 | 4,473,315 | | Trade Receivables | 2,616,059 | 1,561,404 | | Receivables at Fair Value Through Other Comprehensive Income | 3,413,085 | 3,411,077 | | Bank Balances and Cash | 2,832,550 | 3,540,761 | | Current Liabilities | | | | Trade Payables | 1,615,348 | 1,582,586 | | Bills Payable | 3,821,903 | 2,255,100 | | Borrowings (Repayable within one year) | 5,075,805 | 5,208,025 | | Net Current Assets | 2,844,468 | 2,301,298 | | Total Assets Less Current Liabilities | 9,191,763 | 8,939,276 | | Total Equity | 7,449,024 | 7,196,807 | Interim Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2024, equity attributable to owners of the company increased from RMB 6.139 billion at the beginning of the period to RMB 6.284 billion, primarily due to profit contributions for the period, with non-controlling interests also increasing Summary of Interim Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30, 2024) | Indicator | As at January 1, 2024 (RMB thousand) | As at June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Share Capital | 74,704 | 74,704 | | Share Premium | 408,237 | 408,237 | | Statutory Surplus Reserve | 1,293,050 | 1,293,050 | | Share Option Reserve | 68,567 | 68,567 | | Fair Value Through Other Comprehensive Income Reserve | (26,702) | (31,095) | | Other Reserves | 220,024 | 220,024 | | Exchange Fluctuation Reserve | 319 | 107 | | Retained Earnings | 4,100,804 | 4,250,751 | | Subtotal Equity Attributable to Owners of the Company | 6,139,003 | 6,284,345 | | Non-controlling Interests | 1,057,804 | 1,164,679 | | Total Equity | 7,196,807 | 7,449,024 | - Profit attributable to owners of the Company for the period was RMB 203,355 thousand, and profit attributable to non-controlling interests was RMB 109,238 thousand[115] Interim Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2024, the Group experienced a significant decrease in net cash from operating activities, an increase in net cash used in investing activities, and a substantial increase in net cash used in financing activities, resulting in a net decrease in cash and cash equivalents at period-end Summary of Interim Condensed Consolidated Statement of Cash Flows (For the six months ended June 30, 2024) | Cash Flow Category | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | Net Cash From Operating Activities | 31,780 | 192,357 | | Net Cash Used In Investing Activities | (407,571) | (341,064) | | Net Cash (Used In)/From Financing Activities | (332,208) | 496,442 | | Net (Decrease)/Increase in Cash and Cash Equivalents | (707,999) | 347,735 | | Cash and Cash Equivalents at Beginning of Period | 3,540,761 | 2,157,975 | | Effect of Exchange Rate Changes | (212) | 269 | | Cash and Cash Equivalents at End of Period | 2,832,550 | 2,505,979 | - In investing activities, expenditures for the purchase of property, plant, and equipment amounted to RMB 238,735 thousand, and government grant income was RMB 7,416 thousand[116] - In financing activities, borrowings raised amounted to RMB 1,995,785 thousand, borrowings repaid were RMB 2,102,242 thousand, and interest paid was RMB 221,649 thousand[117] Notes to the Interim Condensed Consolidated Financial Statements This section provides detailed notes on the Group's general information, basis of preparation, principal accounting policies, revenue breakdown, operating segments, other income, gains and losses, finance costs, profit before tax, income tax, earnings per share, dividends, asset movements, receivables, payables, borrowings, capital commitments, fair value measurements, and related party transactions 1. General Information The company was incorporated in the Cayman Islands on January 18, 2010, with shares listed on the Main Board of the Hong Kong Stock Exchange, primarily engaged in manufacturing and selling lead-acid power batteries, lithium-ion batteries, and related products - The Company was incorporated in the Cayman Islands on January 18, 2010, and its shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited[119] - The Group's principal activities are the manufacture and sale of lead-acid power batteries, lithium-ion batteries, and other related products[119] 2. Basis of Preparation The interim condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and should be read in conjunction with the Group's annual financial statements for the year ended December 31, 2023 - The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting"[119] - The statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements for the year ended December 31, 2023[119] 3. Principal Accounting Policies The Group has not yet applied new and amended International Financial Reporting Standards that are issued but not yet effective, and is assessing their impact, which is not expected to have a significant effect on financial performance and position - The Group has not applied new and amended International Financial Reporting Standards that have been issued but are not yet effective, including amendments to IFRS 10 and IAS 28, IFRS 9 and IFRS 7, IAS 21, and IFRS 18[119][125] - The Group is assessing the impact of these new and amended International Financial Reporting Standards upon initial application, which are not expected to have a significant effect on the Group's financial performance and financial position[123][125] 4. Revenue The Group's total revenue for the period was RMB 21.236 billion, a year-on-year increase of 28.4%, with significant growth in renewable materials sales, lead-acid power batteries remaining the primary revenue source, and a slight decrease in lithium-ion battery sales Disaggregation of Revenue from Contracts with Customers (For the six months ended June 30, 2024) | Product Category | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | Lead-acid Power Batteries | 12,658,141 | 11,566,928 | | - E-bike Batteries | 8,596,208 | 7,857,739 | | - Electric Vehicle and Special Purpose EV Batteries | 4,061,933 | 3,709,189 | | Lithium-ion Batteries | 65,459 | 76,545 | | Renewable Materials | 8,512,722 | 4,895,630 | | Total Revenue | 21,236,322 | 16,539,103 | - Revenue is recognized when control over the goods has been transferred, typically upon delivery of goods to the customer's designated location[131] - The Group generally grants credit terms of 45 to 90 days to trading customers with good credit records[131] 5. Operating Segments The Group's operating segment information is primarily based on product revenue analysis, with most external revenue and non-current assets originating from China, and the Group experiences higher battery sales in the second half of the financial year, accumulating inventory through increased production to meet seasonal demand - The information reported to the chief operating decision maker (CODM) focuses on revenue analysis by product, without providing other individual financial information[131] - During the period, most of the Group's external revenue was derived from customers in Mainland China, and most of its non-current assets are also located in Mainland China[131][132] - No single customer contributed 10% or more to the Group's total revenue[134][135] - The Group records higher battery sales in the second half of the financial year and accumulates inventories by increasing production in the second and third quarters, accounting for seasonal factors[134][135] 6. Other Income The Group's other income significantly increased by 148.9% to RMB 391 million during the period, primarily due to a substantial increase in government grants and higher interest income from bank deposits Other Income (For the six months ended June 30, 2024) | Income Category | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | Government grants — income related | 295,492 | 68,106 | | Government grants — asset related | 14,595 | 15,471 | | Interest income from bank deposits | 77,995 | 36,419 | | Interest income from loans receivable | 1,911 | - | | Rental income | 1,182 | - | | Others | - | 34,326 | | Total | 391,175 | 157,152 | - Government grants primarily include subsidies for various purposes such as encouraging enterprise expansion, technological advancement, strengthening environmental protection measures, and product development[135] 7. Other Gains and Losses The Group recorded other losses of RMB 70.148 million during the period, primarily due to fair value changes in financial assets at fair value through profit or loss and derivative financial assets Other Gains and Losses (For the six months ended June 30, 2024) | Item | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | Fair value changes in financial assets at fair value through profit or loss (loss)/gain | (9,532) | 7,555 | | Fair value changes in derivative financial assets (loss)/gain | (54,839) | 22,337 | | Donations | (1,490) | (4,164) | | Loss on disposal of property, plant and equipment | (7,159) | (13,636) | | Net foreign exchange gain/(loss) | 2,777 | (3,750) | | Others | - | (1,000) | | Total | (70,148) | 6,227 | - Fair value changes in financial assets at fair value through profit or loss refer to the Group's investments in listed equity securities on the Hong Kong Stock Exchange and Mainland China[137][138] 8. Finance Costs The Group's finance costs increased by 17.8% year-on-year to RMB 230 million during the period, primarily due to increased interest expenses on bank borrowings Finance Costs (For the six months ended June 30, 2024) | Item | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | Interest expense on borrowings | 234,357 | 199,290 | | Interest expense on lease liabilities | 341 | 358 | | Less: Amount capitalised in construction in progress | (4,452) | (4,120) | | Total | 230,246 | 195,528 | - Borrowing costs capitalized during the period were derived from general borrowings, calculated at an annual interest rate of 4.09% (H1 2023: 4.50%)[138][139] 9. Profit Before Tax The Group's profit before tax slightly increased by 0.2% to RMB 408 million during the period, with higher staff costs, depreciation and amortization, and cost of inventories sold, while impairment losses shifted from recognition to reversal Adjustments to Profit Before Tax (For the six months ended June 30, 2024) | Item | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | Total staff costs | 822,520 | 751,919 | | Amortisation of intangible assets | 63,282 | 25,670 | | Depreciation of property, plant and equipment | 404,049 | 334,310 | | Depreciation of right-of-use assets | 16,253 | 24,764 | | Cost of inventories sold | 19,622,114 | 14,366,105 | | Reversal of/(provision for) impairment losses | (19,777) | 60,214 | | Loss on disposal of property, plant and equipment | 7,159 | 13,636 | - Total staff costs increased, primarily comprising wages and salaries, contributions to retirement benefit schemes, and labor costs[140] - Impairment losses shifted from recognition in H1 2023 to a reversal in the current period, mainly related to trade receivables, other receivables, and amounts due from related parties[140] 10. Income Tax Expense The Group's income tax expense decreased by 17.7% to RMB 95.724 million during the period, with the effective tax rate falling to 23.4%, primarily due to increased profit contributions from subsidiaries with lower tax rates Income Tax Expense (For the six months ended June 30, 2024) | Item | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | PRC enterprise income tax | 59,252 | 113,149 | | Over-provision in prior years — PRC enterprise income tax | (4,346) | (17) | | Deferred tax | 40,818 | 3,145 | | Total | 95,724 | 116,277 | - PRC subsidiaries are subject to a tax rate of 25%, while those qualified as high and new technology enterprises are entitled to a preferential tax rate of 15%[145][146] - The Company and its subsidiaries incorporated in the British Virgin Islands, Germany, Hong Kong, and other countries had no assessable profits during the period[148][149] 11. Earnings Per Share Basic earnings per share attributable to owners of the company for the period was RMB 0.18, a decrease from RMB 0.23 in the prior period, with no dilution adjustment made as there were no potential dilutive ordinary shares Earnings Per Share Calculation Data (For the six months ended June 30, 2024) | Indicator | 2024 | 2023 | | :--- | :--- | :--- | | Profit attributable to owners of the Company for the period (RMB thousand) | 203,355 | 254,389 | | Weighted average number of ordinary shares for basic earnings per share (thousand shares) | 1,104,127 | 1,104,127 | | Basic and diluted earnings per share (RMB) | 0.18 | 0.23 | - No diluted earnings per share amount was presented as there were no potential dilutive ordinary shares in issue for both the current and prior periods[154] 12. Dividends A final dividend of HKD 0.053 per share for the year ended December 31, 2023, totaling RMB 53.408 million, was declared to owners of the company during the period, while the Board resolved not to pay a dividend for the current period - A final dividend of HKD 0.053 per share (equivalent to RMB 0.048) for the year ended December 31, 2023, was declared to owners of the Company during the period[154] - The total final dividend declared was HKD 58,519,000 (equivalent to RMB 53,408,000), which was paid in July 2024[154] - The Board of Directors of the Company resolved not to pay a dividend for the period[155][156] 13. Movements in Property, Plant and Equipment and Right-of-Use Assets During the period, the Group incurred losses from the disposal of certain plant and machinery, while also recognizing right-of-use assets and lease liabilities related to leased office and manufacturing buildings - During the period, the Group disposed of plant and machinery with a total carrying amount of RMB 19,910,000, resulting in a loss on disposal of RMB 7,159,000[155][156] - The Group leases several office and manufacturing buildings for periods ranging from 2 to 8 years[158][159] - Lease liabilities of RMB 6,052,000 related to right-of-use assets were recognized during the period[158][159] 14. Loans Receivable As at June 30, 2024, the Group's total loans receivable amounted to RMB 5,108 thousand, all classified as current assets Loans Receivable Analysis (RMB thousand) | Category | As at June 30, 2024 | As at December 31, 2023 | | :--- | :--- | :--- | | Current assets | 5,108 | 5,108 | | Non-current assets | - | 53,831 | | Total | 5,108 | 58,939 | 15. Trade Receivables As at June 30, 2024, the Group's net trade receivables amounted to RMB 2.616 billion, an increase from the end of 2023, with most receivables aged within 90 days Trade Receivables (RMB thousand) | Item | As at June 30, 2024 | As at December 31, 2023 | | :--- | :--- | :--- | | Trade receivables — from contracts with customers | 3,217,465 | 2,199,567 | | Less: Provision for credit losses | (601,406) | (638,163) | | Net | 2,616,059 | 1,561,404 | Ageing Analysis of Trade Receivables (As at June 30, 2024) | Ageing | As at June 30, 2024 (RMB thousand) | As at December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | 0–45 days | 1,260,864 | 864,298 | | 46–90 days | 577,426 | 204,244 | | 91–180 days | 559,153 | 219,493 | | 181–365 days | 78,927 | 109,709 | | Over 365 days | 139,689 | 163,660 | | Total | 2,616,059 | 1,561,404 | - The Group normally grants credit terms of 45 to 90 days to customers with good credit records[163] 16. Receivables at FVTOCI This balance represents bills receivable held by the Group, measured at fair value through other comprehensive income, as its business model aims to collect contractual cash flows and sell financial assets - The balance represents bills receivable held by the Group measured at fair value through other comprehensive income[165] - These bills are held under a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and whose contractual cash flows are solely payments of principal and interest on the principal amount outstanding[165] 17. Restricted Bank Deposits Restricted bank deposits refer to bank deposits pledged by the Group to banks as collateral for certain credit facilities granted - Restricted bank deposits represent bank deposits pledged by the Group to banks as collateral for certain credit facilities granted to the Group[167] 18. Trade Payables As at June 30, 2024, the Group's total trade payables amounted to RMB 1.615 billion, with the majority aged within 90 days Ageing Analysis of Trade Payables (As at June 30, 2024) | Ageing | As at June 30, 2024 (RMB thousand) | As at December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | 0–30 days | 891,327 | 873,249 | | 31–90 days | 519,562 | 509,025 | | 91–180 days | 46,105 | 26,555 | | 181–365 days | 25,829 | 37,062 | | 1–2 years | 36,232 | 42,355 | | Over 2 years | 96,293 | 94,340 | | Total | 1,615,348 | 1,582,586 | 19. Bills Payable All bills payable are trade-related and will mature within one year from their issue date - All bills payable are trade in nature and will mature within one year from their issue date[168][169] 20. Borrowings During the period, the Group raised new bank and other borrowings of RMB 1.996 billion and repaid RMB 2.102 billion, with new borrowings bearing market interest rates ranging from 2.80% to 4.75% per annum - During the period, the Group raised new bank and other borrowings of RMB 1,995,785,000 (H1 2023: RMB 2,509,434,000)[168][169] - Repayments of bank and other borrowings amounted to RMB 2,102,242,000 (H1 2023: RMB 1,759,923,000)[168][169] - New borrowings raised bear interest at market rates ranging from 2.80% to 4.75% per annum (H1 2023: 3.30% to 5.50%)[168][169] 21. Capital Commitments As at June 30, 2024, the Group's total contracted but unprovided capital commitments for the acquisition of property, plant and equipment, and contributions to associates and joint ventures amounted to RMB 82.335 million Capital Commitments (RMB thousand) | Item | As at June 30, 2024 | As at December 31, 2023 | | :--- | :--- | :--- | | Acquisition of property, plant and equipment | 75,761 | 206,571 | | Contribution to associates | 6,400 | 6,400 | | Contribution to joint ventures | 174 | 174 | | Total | 82,335 | 213,145 | 22. Fair Value Measurements of Financial Instruments The Group measures certain financial instruments at fair value, including financial assets at fair value through profit or loss, equity instruments and receivables at fair value through other comprehensive income, and derivative financial assets/liabilities, using valuation techniques such as quoted market prices and discounted cash flow methods Financial Assets and Liabilities Measured at Fair Value (As at June 30, 2024) | Financial Assets and Liabilities | As at June 30, 2024 (RMB thousand) | As at December 31, 2023 (RMB thousand) | Fair Value Hierarchy | Valuation Techniques and Key Inputs | | :--- | :--- | :--- | :--- | :--- | | Financial assets at fair value through profit or loss (listed equity securities) | 77,131 | 96,994 | Level 1 | Quoted bid prices in active markets | | Equity instruments at fair value through other comprehensive income (unlisted entities) | 60,300 | 42,300 | Level 3 | Reference to issue price of recent share issuance or discounted cash flow method | | Receivables at fair value through other comprehensive income (bills receivable) | 3,413,085 | 3,411,077 | Level 2 | Discounted cash flow method | | Derivative financial assets/(liabilities) (futures contracts) | 578 | (266) | Level 1 | Quoted bid prices in active markets | - The Group's management appoints a team responsible for determining valuation techniques and inputs, and engages third-party valuers when necessary[173] - There were no transfers between Level 1, Level 2, and Level 3 during the period[174] 23. Related Party Transactions During the period, the Group engaged in purchase transactions with related parties and had amounts due from/to related parties, with key management personnel remuneration determined based on individual performance and market trends Purchases from Related Parties (For the six months ended June 30, 2024) | Related Party Category | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | Entities controlled by directors of the Company | 17,389 | 9,913 | Amounts Due From Related Parties (Before Expected Credit Losses) (As at June 30, 2024) | Related Party Category | As at June 30, 2024 (RMB thousand) | As at December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Entities controlled by directors of the Company (trade) | 3,590 | 16,392 | | Associates (trade) | 8,265 | 8,269 | | Associates (non-trade) | 262,180 | 311,816 | | Joint ventures (trade) | 27,397 | 27,397 | | Joint ventures (non-trade) | 52,382 | 76,583 | | Total | 353,814 | 440,457 | Amounts Due To Related Parties (As at June 30, 2024) | Related Party Category | As at June 30, 2024 (RMB thousand) | As at December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Entities controlled by directors of the Company (trade) | 6,943 | 19,796 | | Entities controlled by directors of the Company (non-trade) | 3,010 | 4,085 | | Associates (non-trade) | 10,150 | 12,570 | | Joint ventures (non-trade) | 6,843 | 507 | | Total | 26,946 | 37,169 | - Non-trade balances due from/to related parties are unsecured, interest-free, and repayable on demand[179] Key Management Personnel Remuneration (For the six months ended June 30, 2024) | Item | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | Short-term employee benefits | 5,693 | 3,556 | | Contributions to retirement benefit schemes | 68 | 52 | | Total | 5,761 | 3,608 | 24. Approval of the Condensed Consolidated Financial Statements The condensed consolidated financial statements were approved and authorized for issue by the Board of Directors on August 29, 2024 - The condensed consolidated financial statements were approved and authorized for issue by the Board of Directors on August 29, 2024[183][184]