Infore Environment Technology Group Co., Ltd.
Annual Report 2020
April 2021
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as thedirectors, supervisors and senior management of Infore Environment Technology Group Co.,Ltd. (hereinafter referred to as the “Company”) hereby guarantee that the contents of thisReport are true, accurate and complete and free of any misrepresentations, misleadingstatements and material omissions, and collectively and individually accept legalresponsibility for such contents.Ma Gang, the Company’s legal representative, Lu Anfeng, the Company’s ChiefFinancial Officer, and Wu Shanshan, the Head of the Company’s Accounting Department(equivalent to Financial Manager) hereby guarantee that the financial statements carried inthis Report are truthful, accurate and complete.All the directors of the Company attended in person the board meeting for the approvalof this Report.
Any forward-looking statements such as plans for the future in this Report shall not beconsidered as promises to investors. And investors are reminded to exercise caution whenmaking investment decisions.
The Board has approved a final dividend plan as follows: based on the total share capital(minus the shares in the Company’s repurchase account) at the date of record for the 2020final dividend plan, a cash dividend of RMB1.2 (tax inclusive) per 10 shares is planned to bedistributed to the shareholders, with no bonus issue from either profit or capital reserves.
This Report has been prepared in Chinese and translated into English. Should there beany discrepancies or misunderstandings between the two versions, the Chinese version shallprevail.
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 2
Part II Corporate Information and Key Financial Information ...... 5
Part III Business Summary ...... 13
Part IV Management Discussion and Analysis ...... 21
Part V Significant Events ...... 52
Part VI Share Changes and Shareholder Information ...... 86
Part VII Preference Shares ...... 97
Part VIII Convertible Corporate Bonds ...... 98
Part IX Directors, Supervisors, Senior Management and Staff ...... 100
Part X Corporate Governance ...... 107
Part XI Corporate Bonds ...... 114
Part XII Financial Statements ...... 122
Part XIII Documents Available for Reference ...... 264
Definitions
| Term | Definition |
| Infore Environment, or the “Company” | Infore Environment Technology Group Co., Ltd. |
| Zoomlion Environmental | Changsha Zoomlion Environmental Industry Co., Ltd. |
| Greenlander | Shenzhen Greenlander Environmental Protection Co., Ltd. |
| Infore Technology | Guangdong Infore Technology Co., Ltd. |
| CSRC | China Securities Regulatory Commission |
| SZSE, or the “Stock Exchange” | Shenzhen Stock Exchange |
| General Meeting | General Meeting of Infore Environment Technology Group Co., Ltd. |
| Board of Directors | Board of Directors of Infore Environment Technology Group Co., Ltd. |
| Supervisory Committee | Supervisory Committee of Infore Environment Technology Group Co., Ltd. |
| Company Law | Company Law of the People’s Republic of China |
| Securities Law | Securities Law of the People’s Republic of China |
| Articles of Association | Articles of Association of Infore Environment Technology Group Co., Ltd. |
| PPP | Public-private partnership, a funding model for a public infrastructure project |
| BOT | Build-operate-transfer, a form wherein a private enterprise participates in infrastructure construction and provides public services to the society |
| EPC | Engineering procurement construction, in which the contractor is responsible for the whole procedure or several stages of a construction project such as design, procurement, construction, and trial operation based on contractual agreements. |
| Reporting Period | The period from 1 January 2020 to 31 December 2020 |
| RMB, RMB’0,000 | Expressed in the Chinese currency of Renminbi, expressed in tens of thousands of Renminbi |
Part II Corporate Information and Key Financial InformationI Corporate Information
| Stock name | Infore Environment | Stock code | 000967 |
| Stock exchange | Shenzhen Stock Exchange | ||
| Company name in Chinese | 盈峰环境科技集团股份有限公司 | ||
| Abbr. | 盈峰环境科技集团 | ||
| Company name in English (if any) | Infore Environment Technology Group Co., Ltd. | ||
| Legal representative | Ma Gang | ||
| Registered address | 1818 Renmin West Road, Dongguan Street, Shangyu District, Shaoxing City, Zhejiang Province, China | ||
| Zip code | 312300 | ||
| Office address | 23/F, Infore Center, 7-8 Yixin Road, Xincheng District, Beijiao Town, Shunde District, Foshan City, Guangdong Province, China | ||
| Zip code | 528300 | ||
| Company website | www.inforeenviro.com | ||
| Email address | inforeenviro@infore.com | ||
II Contact Information
| Board Secretary | Securities Representative | |
| Name | JinTaotao | Wang Fei |
| Office address | 23/F, Infore Center, 7-8 Yixin Road, Xincheng District, Beijiao Town, Shunde District, Foshan City, Guangdong Province, China | 23/F, Infore Center, 7-8 Yixin Road, Xincheng District, Beijiao Town, Shunde District, Foshan City, Guangdong Province, China |
| Tel. | 0757-26335291 | 0757-26335291 |
| Fax | 0757-26330783 | 0757-26330783 |
| Email address | wangyf@infore.com | wangyf@infore.com |
III Media for Information Disclosure and Place where this Report is Lodged
| Newspapers designated by the Company for information disclosure | China Securities Journal, Shanghai Securities News, Securities Times, and Securities Daily |
| Website designated by the CSRC for publication of this Report | http://www.cninfo.com.cn |
| Place where this Report is lodged | The Securities Department, 23/F, Infore Center, 7-8 Yixin Road, Xincheng District, Beijiao Town, Shunde District, Foshan City, Guangdong Province, China |
IV Change to Company Registered Information
| Organization code | 913300006096799222 |
| Change to the principal activities of the Company since its listing (if any) | Since it went public in 2000, the Company has changed its business scope five times. Business scope on 18 November 1993: Research, development, and production of ventilators, and air-cooled, water-cooled, and air conditioning equipment, refrigeration and quick-freezing equipment, mold, and power-generating machines. Operation of export businesses (refer to the approval document of the Ministry of Foreign Trade and Economic Cooperation for details); on 2 July 2002, "metal and plastic steel composites pipe and profile" was included in the Company's business scope; on November 14, 2003, "undertaking environmental engineering" was included in the business scope; On 29 February 2016, due to the strategic transformation, the Company's business scope was changed to: R&D, maintenance, and operation services of environmental monitoring instruments, development, consulting, and services of environmental management technologies, operation services of environmental management facilities, design and construction of environmental engineering, environmental protection engineering, municipal engineering, and water conservancy and other water-related projects, development and services of technologies for water pollution control, water treatment, and ecological restoration, R&D, sales, and relevant technology consultation services of communication products, network products, mechatronic products, automatic control products, buildings, and intelligent community products, as well as software products, design, development, investment, operation management, and technical consulting services of relevant supporting facilities for the disposal and recycle of municipal waste and solid waste, sales of ventilators and air-cooled, water-cooled, and air conditioning equipment, operation of import and export businesses, industrial investment, investment management, asset management, and investment consultation; On 18 May 2016, "operation of import and export businesses, industrial investment, investment management, and asset management" were excluded from the Company's business scope; on 28 June 2019, the Company's business scope was changed to: R&D, manufacturing, sales, technology consultation, maintenance, and operation services of sanitation equipment, special type of working robots, new energy vehicles, environmental monitoring equipment, special equipment for environmental protection, and automobile charging equipment and parts, equipment leasing, design, operation management, technological development and services of relevant supporting facilities for the disposal and recycle of municipal waste and solid waste, design, construction, operation management, technological development and services of environmental engineering, municipal engineering, landscape engineering, |
| electric power engineering, water conservancy and other water-related projects, water pollution control projects, air pollution control projects, and soil remediation projects, commercial cleaning, collection, transportation, and treatment services (based on the license) of urban solid waste, development, consultation, and services of environmental protection, IoT, and Internet technologies, R&D and sales of software, sales of ventilators and air-cooled, water-cooled, and air conditioning equipment, engagement in import and export businesses, and investment consultation. | |
| Every change of controlling shareholder since incorporation (if any) | 1. In 2000, the Company went public, and its largest shareholder was Zhejiang Fan & Air-cooled Equipment Company. 2. On 23 February 2006, Zhejiang Shangfeng Industry Group Co., Ltd., the former controlling shareholder of the Company, and Media Group Co., Ltd., a shareholder, transferred their stocks of 9,575,027 shares and 24,897,984 shares to Guangdong Infore Group Co., Ltd. respectively. Therefore, Guangdong Infore Group Co., Ltd. became the largest shareholder of the Company. 3. On 5 August 2008, the Company's controlling shareholder, Guangdong Infore Group Co., Ltd. changed its name to "Guangdong Infore Holding Investment Group Co., Ltd.". 4. On 30 September 2010, Guangdong Infore Holding Investment Group Co., Ltd. changed its name to "Infore Holding Investment Group Co., Ltd.", which was the controlling shareholder of the Company. 5. On 4 January 2019, based on the private placement of new shares for purchasing assets, the Company issued 1,017,997,382 shares to Ningbo Infore Asset Management Co., Ltd. to acquire the 51% equity of Zoomlion Environmental held by it. The Company's largest shareholder has been changed to Ningbo Infore Asset Management Co., Ltd. As at the end of the Reporting Period, the Company's controlling shareholder was Ningbo Infore Asset Management Co., Ltd. |
V Other InformationThe independent auditor hired by the Company:
| Name of the independent auditor | Pan-China Certified Public Accountants LLP |
| Office address | 28/F, Block B, China Resources Building, 1366 Qianjiang Road, Jianggan District, Hangzhou City, Zhejiang Province, China |
| Accountants writing signatures | Bian Shanshan and Cao Cuijuan |
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
√ Applicable □ Not applicable
| Name of sponsor | Office address | Representative | Period of supervision |
| Huaxing Securities Co., Ltd. | Room 2501, 575 Wusong Road, Hongkou District, Shanghai | Li Zeming and Zheng Zaoshun | 2020-2021 |
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
√ Applicable □ Not applicable
| Name of financial advisor | Office address | Representative | Period of supervision |
| GF Securities Co., Ltd. | GF Securities Tower, 26 Machang Road, Tianhe District, Guangzhou | Yuan Fengzhou and Yin Yue | 2018-2020 |
VI Key Financial Information
Indicate whether there is any retrospectively restated datum in the table below.
□ Yes √ No
| 2020 | 2019 | 2020-over-2019 change (%) | 2018 | |
| Operating revenue (RMB) | 14,332,025,075.40 | 12,695,858,666.40 | 12.89% | 13,044,761,115.49 |
| Net profit attributable to the listed company’s shareholders (RMB) | 1,386,476,099.73 | 1,361,453,754.17 | 1.84% | 928,577,765.32 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 1,432,219,046.72 | 1,252,134,237.70 | 14.38% | 319,411,269.58 |
| Net cash generated from/used in operating activities (RMB) | 1,688,714,091.75 | 1,484,750,054.02 | 13.74% | -1,150,744,895.07 |
| Basic earnings per share (RMB/share) | 0.44 | 0.43 | 2.33% | 0.41 |
| Diluted earnings per share (RMB/share) | 0.44 | 0.43 | 2.33% | 0.41 |
| Weighted average return on equity (%) | 8.62% | 9.05% | -0.43% | 7.62% |
| 31 December 2020 | 31 December 2019 | Change of 31 December 2020 over 31 December 2019 (%) | 31 December 2018 | |
| Total assets (RMB) | 30,110,536,990.88 | 24,854,667,694.94 | 21.15% | 24,461,293,934.13 |
| Equity attributable to the listed company’s shareholders (RMB) | 16,920,214,085.42 | 15,514,697,715.97 | 9.06% | 14,471,811,680.32 |
Indicate whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional gains andlosses was negative for the last three accounting years, and the latest independent auditor’s report indicated that there was uncertaintyabout the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional gains andlosses was negative.
□ Yes √ No
VII Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.VIII Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 2,199,341,508.70 | 3,420,092,351.48 | 3,835,286,466.43 | 4,877,304,748.79 |
| Net profit attributable to the listed company’s shareholders | 147,734,732.90 | 378,964,794.02 | 371,118,285.78 | 488,658,287.03 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 189,096,408.24 | 358,028,986.55 | 363,826,725.52 | 521,266,926.41 |
| Net cash generated from/used in operating activities | -144,580,287.91 | -140,597,577.65 | 397,179,806.32 | 1,576,712,150.99 |
Indicate whether any of the quarterly financial data in the table above or their summations differs materially from what have beendisclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | 2020 | 2019 | 2018 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | -42,036,810.26 | -60,892,199.11 | 7,668,560.36 | Gains of RMB488,224.46 on the disposal of long-term equity investments, gains of RMB-1,787,925.37 on the disposal of fixed |
| assets, gains of RMB-11,767,441.22 on the retirement of fixed assets, and gains of RMB-28,969,668.13 on the retirement of intangible assets | ||||
| Tax rebates, reductions and exemptions given with ultra vires approval or in lack of official approval documents | 621,422.30 | 1,728,888.91 | -- | |
| Government grants through profit or loss (exclusive of government grants given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | 42,047,479.15 | 104,385,272.35 | 20,368,085.62 | -- |
| Capital occupation charges on non-financial enterprises that are recognized in profit or loss | 22,117,071.89 | 19,799,364.06 | 4,582,264.18 | RMB4,578,541.63 of Lianjiang Greenlander New Energy Co., Ltd., RMB2,012,499.98 of Guangdong Liangke Environmental Protection Engineering Co., Ltd., RMB1,328,771.30 of Shantou ZhonglianRuikang Environmental Health Service Co., Ltd., RMB264,600.00 of Jilin Xinyu Environmental Protection Engineering Co., Ltd., RMB162,543.33 of Guangdong Tianshu New Energy Technology Co., Ltd., and RMB20,252.48 of Shantou Chaoyang ZhonglianRuikang Environmental Health Service Co., Ltd. The |
| value-added tax amount excluding those incurred from the above-mentioned borrowing and lending stood at RMB178,515.17 and the amortization of installment receipt of the transfer funds of Universtar Science & Technology (Shenzhen) Co., Lt. has generated a finance income of RMB13,928,378.34. | ||||
| Gain or loss on assets entrusted to other entities for investment or management | 23,771,715.03 | 4,556,023.27 | 6,859,065.89 | Returns of RMB23,771,715.03 on investments in wealth management products |
| Restructuring costs in staff arrangement, integration, etc. | -- | -- | -26,087,060.31 | -- |
| Current profit or loss on subsidiaries obtained in business combinations involving entities under common control from the period-beginning to combination dates, net | -- | -- | 864,922,410.13 | -- |
| Gain or loss on fair-value changes on held-for-trading and derivative financial assets and liabilities & income from disposal of held-for-trading and derivative financial assets and liabilities and other debt investments (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | -90,608,285.06 | 24,337,671.43 | 160,990,725.00 | Changes of RMB-89,949,855.53 in the fair value of held-for-trading financial assets, gains of RMB5,117,398.33 on the ineffective portion of closed hedges, gains of RMB-5,769,445.94 on the fair value changes of the ineffective portion of open hedges, and futures transaction costs of RMB-6,381.92 |
| Reversed portions of impairment allowances for receivables and contract assets which are tested individually for impairment | 140,000.00 | 390,000.00 | -- | |
| Non-operating income and expense other than the above | -7,514,468.68 | -467,259.49 | 19,341,734.66 | -- |
| Other gains and losses that meet the definition of exceptional gain/loss | 839,195.26 | 24,676,400.00 | 22,611,600.00 | Performance commitment compensation from Tengine Innovation (Beijing) Instruments Inc. |
| Less: Income tax effects | -8,391,224.21 | 6,566,767.92 | 45,211,244.61 | -- |
| Non-controlling interests effects (net of tax) | 3,371,490.83 | 648,988.12 | 428,998,534.09 | -- |
| Total | -45,742,946.99 | 109,319,516.47 | 609,166,495.74 | -- |
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/LossItems:
√ Applicable □ Not applicable
| Item | Amount involved (RMB) | Reason |
| Value-added tax rebates | 28,804,978.15 | Government grants continuously given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s policies or regulations |
| Subsidy for sludge disposal | 2,816,166.83 | Government grants continuously given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s policies or regulations |
Part III Business SummaryI Principal Activities of the Company in the Reporting Period
1. Main business fields
Infore Environment is a leading environmental sanitation investor and operator in China. With "smart environmental sanitation"as its core business strategy, the Company employs a flexible and competitive business model, based on its smart environmentalsanitation equipment such as new energy equipment and self-driving equipment, and its proprietary cloud-based smart sanitationplatform empowered by IoT, big data and other advanced technologies. The Company provides its customers with full lifecycle IoTintegrated application solutions and smart platform operation services, from cleaning and disinfection in urban and rural areas,domestic waste sorting, collection, transportation and disposal of solid waste, sanitation personnel management, collection andtransportation of food waste, to muck transportation supervision, leachate treatment and smart city construction.In 2020, the Company has gained a significant momentum in the environmental sanitation service industry, moving up to No.1by market share in terms of the five-year annualized contract value and the total new contract value. Also, in 2020, it ranked first insales of sanitation equipment for the 20th consecutive year in China.
2. Main business and products
In terms of intelligent equipment, by virtue of its scientific research strengths, leading capabilities of producing andmanufacturing environmental equipment and a well-established nation-wide sales network, the Company has established acomprehensive product portfolio of environmental sanitation equipment to provide its customers with a wide range of equipmentsolutions including a variety of environmental sanitation and cleaning equipment, waste collection and transportation equipment, newenergy and clean energy environmental sanitation equipment with more than 400 product models. With leading capabilities ofresearching and developing smart equipment, the Company has a range of products covering 5G environmental sanitation robots,autonomous environmental sanitation vehicles, intelligent small environmental sanitation robots, new energy environmentalsanitation equipment, waste collection and transportation equipment, separate station equipment and environmental sanitation andcleaning equipment.
Smart Cloud Platform, independently developed by the Company with an investment of more than RMB100 million, is aleading big data platform serving across the whole industrial chain in the domestic environmental sanitation industry. With advancedunderlying technologies such as 5G, AI, big data, cloud computing and edge computing, and immersive thinking R&D strategyintegrated into the platform, the Company has developed core technologies including IoT integrated application, datacommunication, video command and control, safe driving tests, IoT hardware and software compatible technology and big dataapplication. Therefore, the Company is able to offer technological solutions such as market-oriented operation solution, industrialapplication solution and connected integrated solution to management of environmental sanitation service. With 14 softwarecopyrights related to smart environmental sanitation, the platform has been included in the Top Ten Innovative Cases in China'sSmart Environmental Sanitation in 2018, Pilot and Demonstration Industrial Internet Platform of MIIT in Key Industries in 2019 andPlan for Building of Provincial Industrial Internet Platform of Hunan Province in 2020. At present, by dint of the platform, theCompany has built and operated over 110 smart environmental sanitation projects in many cities and provinces in China.
With respect to smart service, through intelligent hardware and the IoT technology, the Company is able to continuously gatherand analyze data generated from all aspects such as R&D of environmental sanitation equipment, production and manufacturing,operation and management, and after-sales service, across the whole industrial chain of "smart sorting, smart environmentalsanitation, smart environment, new energy and autonomous driving", allowing the Company to implement a highly efficientmanagement model for operation and maintenance service and remote monitoring, which features seamless connection between frontand back offices on all fronts in terms of personnel, vehicles, items and events involved in environmental sanitation operationservice. In this way, the Company has managed to improve city management capabilities and public service capabilities of thegovernment from management to service and from governance to operation.
3. The Company's main position in the industry
(1) With respect to environmental sanitation service, the Company ranked first in terms of the annual contract value and the totalnew contract value in 2020
According to the statistics of Environmental Compass, the Company witnessed a rapid growth in its market share in thecompetitive landscape of the environmental sanitation service industry, ranking top 1 in 2020 in terms of the new contract value andthe new annual contract value in China. In 2020, the Company recorded revenue of RMB1,969 million from environmental sanitationservice, and signed a total of 59 new contracts of environmental sanitation service projects in 19 provinces in China, addingRMB1,248 million new annual contract value to the total contract value of RMB12,574 million. As at the end of the ReportingPeriod, Infore Environment operated 118 environmental sanitation service projects in total, with an annualized contract value ofRMB2,831 million and an accumulative contract value of RMB37 billion. Its projects in hand were mainly PPP projects and
medium- and long-term market-oriented projects, indicating prominent capabilities of sustainable operation. During the period of2016-2020, the Company’s environmental sanitation service business recorded total contract value of RMB1,237 million, RMB5,561million, RMB8,711 million, RMB9,720 million and RMB12,574 million respectively, and annual service value of RMB55 million,RMB305 million, RMB429 million, RMB855 million and RMB1,248 million respectively, representing a year-on-year growth rateof annual income from environmental sanitation service of 454.54%, 40.66%, 99.30% and 45.96% respectively from 2017 to 2020.With increasing competitiveness in the industry, the Company has developed a unique smart environmental sanitation system.
(2) The Company ranked first in sales of environmental sanitation equipment in 2020
According to the statistics of compulsory traffic accident liability insurance for motor vehicles from the China Banking andInsurance Regulatory Commission ("the CBIRC"), in 2020, the Company ranked first in sales of environmental sanitation equipmentfor the 20th consecutive year. In 2020, the Company recorded sales of environmental sanitation equipment of RMB8,355 million, ayear-on-year increase of 18.78%, and it sold a total of 19,199 pieces of equipment, a year-on-year increase of 11.39%. Among them,it sold 10,643 pieces of medium- and high-end products, a year-on-year increase of 0.59%, representing the largest market share of
29.79%; it also sold 1,367 new energy products, a year-on-year increase of 42.69%, representing the largest market share of 27.85%.
According to the statistics of compulsory traffic accident liability insurance for motor vehicles from the CBIRC, as at 31December 2020, a total of 113,867 environmental sanitation vehicles were sold in China, a year-on-year increase of 4,089 or 3.72%,wherein 35,721 medium- and high-end operating vehicles were sold, a year-on-year increase of 499 or 1.42%.
4. Technology accumulation and innovation
(1) Accumulation of R&D strengths
The Company’s R&D team of environmental sanitation equipment came from a background of national scientific researchinstitutes, and “innovation genes” have been embedded in each member of the team. The Company declared 73 patents, including 47patents of invention. As at the end of the Reporting Period, it had as many as 810 independent patents, including 355 patents of
invention, 390 utility models and 65 patents for design. The Company ranked first in terms of the number of technical patents andpatents of invention in the industry, took the lead in formulating multiple national, industrial and local standards, and had establishedprovincial research centers. It was granted the honorary title of "Top Ten Enterprises of Intellectual Property Rights in HunanProvince", the China Machinery Industry Science and Technology Award, the Science and Technology Progress Award by HunanProvince and the China Award for Science and Technology in Construction. Besides, the Company was granted the first drive testlicense for autonomous driving in environmental sanitation by the government. It was also included on the list of the key enterprisesfor China's new-generation AI industry innovation issued by the Ministry of Industry and Information Technology ("the MIIT"),indicating that the Company was among top AI research teams in China and became a "national team" of innovation in the smartrobot industry in terms of environmental sanitation.
(2) Could platform innovation
Smart Cloud Platform, independently developed by the Company, is a leading big data platform serving across the wholeindustrial chain in the domestic environmental sanitation industry. With advanced underlying technologies such as big data, cloudcomputing, IoT, mobile Internet and AI integrated into the platform, the Company has developed core technologies including IoTintegrated application, data communication, video command and control, safe driving tests, IoT hardware and software compatibletechnology and big data application. With the integration of environmental sanitation equipment and service operation, the platformis able to achieve real-time connection of personnel, vehicles, items and events involved in environmental sanitation service, as wellas standardized, digitalized and intelligentized operation and management. In smart governance, the Company established a digitaloperation and management system for plants, stations and equipment based on the cloud platform, achieving intelligent and safeoperation requiring less manual labor and energy consumption, and striving to develop competitive advantages in smartenvironmental governance. In terms of application of intelligent control platforms, through application integration of four systems,the Company achieved full lifecycle real-time monitoring of equipment products. Besides, based on AI, 5G, edge computing and bigdata, it continuously boosted product innovation and industrial upgrading. In industrial Internet big data, the Company adoptedreal-time online IoT big data technology for its intelligent product application to learn about equipment status before its customersdid. By doing so, it established a new model for active after-sales service, reduced the fault rate of equipment, and improvedcustomer satisfaction. At present, the platform has provided intelligent services for more than 50,000 products of customers acrossthe country. In the future, the Company will continue to apply digital technologies and create innovative intelligent equipment andsmart service. Moreover, through in-depth integration into smart city development, it will continuously boost application of smartcorporate cloud platforms to become a leader and enabler in digital transformation of the environmental sanitation industry by dint ofintelligence.
(3) Leader in new energy
The Company began to research, develop and manufacture new energy environmental sanitation equipment in 2007, andsuccessfully introduced the first battery-electric sweeping machine in China in July 2008, which was used for cleaning during BeijingOlympic Games in 2008. Based on the experience in professional R&D of environmental sanitation vehicles for more than threedecades, and committed effort in R&D of new energy sanitation vehicles for more than ten years, Infore Environment has managedto offer the most comprehensive and diversified product portfolio in the new energy sanitation vehicles industry in China, with 144vehicle models and more than 40 types, covering cleaning, rinsing, waste collection and transportation and municipal vehicles. Keyfeatures of the Company's new energy products include, 1) Safety: its new energy products are equipped with six layers of protectionto ensure safety; 2)Leadership in technology: its new energy products have "six-in-one" controllers and industry-leading newtechnologies; 3)Reliability: the Company has formed an alliance with domestically renowned commercial vehicle companies to buildthe most reliable new energy environmental sanitation vehicles;4)Efficiency: thanks to the optimal match of high-torque permanentmagnet synchronous motors + AMT gearboxes + universal drive axles + electric drives, energy consumption dropped by 15% year onyear; 5)Pertaining to high standards: the Company has strictly controlled quality of its new energy products in the whole process via
its quality control system including over 500 vehicle inspections and 24 road tests; 6)Timely service: the Company's engineers canset out within 30 minutes once receiving customer requests and complete general fault handling within 24 hours across the country.
(4) Forerunner in intelligent robots
By virtue of Zoomlion Environmental's industry-leading position and R&D capabilities in terms of environmental protectionequipment over the years, the Company launched a product mix of intelligent small environmental sanitation robots, which haveintegrated advanced technologies such as 5G, artificial intelligence, machine vision technology, full-scene image recognition andgreen new energy power. In this way, it made breakthroughs in the traditional operation model in which manual labor was the mainmethod supported by equipment in areas such as streets and alleys. It also increased the mechanical rate of environmental sanitationat a faster pace, and improved ecological, social and economic benefits. For each type of robots, there are two versions available,namely, the standard version and the robot version. Therefore, machines can be seamlessly switched between autonomous drivingand manual driving, 5G communication models can be installed, and the Car Caretaker - Palm Environmental Sanitation APP ofInfore Zoomlion can be used to achieve remote supervision and smart operation for intelligent management of operation equipment,refined management of the operation process and quantitative management of operation materials. The Company is focused on thedevelopment of industrial robots, service robots, specialized robots, automatic systems and related industrial chains, and has got ahead start and a competitive advantage in smart environmental sanitation and smart city management industries. The Company’s selfdeveloped smart sanitation robot crews have been successfully deployed in projects in Orange Isle Scenic Spot in Changsha City,Hunan Province and Futian District, Shenzhen City.Other businesses of the Company mainly include environmental monitoring and solid waste disposal, electric materials andventilation machinery manufacturing.The Company’s environmental monitoring business covers smoke, air quality, haze, water quality, water conservation, soil anddust, and provides one-stop comprehensive environmental services for environmental protection, water conservation and waterservice and smart cities. Product sales are the main source of revenue, with operation and maintenance services contributing the rest.
The Company's solid waste disposal business mainly engages in the businesses of domestic waste-to-energy, domestic wastelandfilling, food waste recycling and industrial parks of solid waste recycling. With waste-to-energy projects as the core, theindustrial parks of solid waste recycling are equipped with treatment facilities of domestic waste disposal, hazardous waste disposal,sludge treatment, food waste treatment, sewage treatment, construction wastewater treatment, ecological restoration of landfills,leachate treatment and fly ash disposal. By coordinating these businesses, the Company is able to provide a one-stop solution forsolid waste treatment and recycling through Build-Operate-Transfer (BOT) business model.
In terms of electric materials, the Company mainly engages in electromagnetic wire processing, whose products include wires atmultiple temperature levels such as copper wires, aluminum wires, round wires, flat wires, enameled wires, paper-wrapped wires andsilk-covered wires. These products are widely used in electric motors and appliances such as automobile motors, refrigerationcompressors, explosion-proof motors, electronic coils, electric tools, ultra-high voltage transmission and distribution equipment, railtransportation and wind power generation equipment. The Company has adopted a direct selling model by limiting its production ofelectromagnetic wires to its market ability.
With respect to ventilation machinery manufacturing, the Company's products mainly include fans, mufflers, dampers,refrigeration equipment, magnetic levitation fans, nuclear grade valve blowers and blowers, and its business scope includes nuclearpower, subways, tunnels, rail transportation, industrial and civil construction. It has adopted a direct selling model supported byagency sales for its fans.
For further analysis on the industry, please refer to “Discussion and Analysis on the Future Development of the Company” in“Part IV Management Discussion and Analysis”.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
| Major assets | Main reason for significant changes |
| Equity assets | Profits or losses were recognized, using the equity method, on the equity interests held in Guangdong Shunkong Environmental Investment Co., Ltd. (Shunkong Environmental), Tengine Innovation (Beijing) Instruments Inc. (Tengine Innovation), etc. in the current period |
| Fixed assets | Transfer of newly purchased equipment and the related construction and installation projects, as well as the completed Shunde Environmental Protection Industrial Park, into fixed assets |
| Intangible assets | Transfer to intangible assets associated with completed BOT |
| Construction in progress | Increase in the investment in the sanitation service PPP project of Zoomlion Environmental |
2. Major Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
1. Leading advantages in environmental sanitation equipment
As a leader in China's environmental sanitation equipment, the Company has state-of-the-art core technologies and acomprehensive product line of environmental protection equipment in the industry. In terms of R&D, the Company has masteredindustry-leading technologies in new energy environmental sanitation equipment, intelligent robots of environmental sanitation andautonomous environmental sanitation vehicles, and has been granted the first drive test license in environmental sanitation by thegovernment. The world’s first smart sanitation robot crew was developed by the Company and has been successfully deployed inOrange Isle Scenic Spot, a national 5A scenic area in Changsha City, Hunan Province, and the 5G autonomous robot crew forenvironmental sanitation has come into service in the university town in the same city. In terms of products, the Company hasestablished a comprehensive product line of environmental protection equipment including approximately 400 models, thus allowingthe Company to meet various demands in main application scenarios across the country. Regarding market position, the Companyhas ranked the first in sales in the domestic market for 20 consecutive years. According to the data of China Automotive Technologyand Research Center, the Company had a market share of 29.79% in terms of medium- and high-end products, and a market share of
27.85% in terms of new energy products, far ahead of other market competitors. Pertaining to brand, as one of the forerunners inenvironmental sanitation equipment, the Company has made achievements by developing the first wet and dry vacuum sweepertruck, the first full-hydraulic mini road sweeper, the first tunnel cleaning vehicle, the first pure electric road sweeper and the firstnatural gas-powered cleaning vehicle in China. Therefore, the Company has accumulated abundant experiences in the environmentalsanitation industry and made a strong brand impact as the No. 1 brand in the industry.
2. Edges in intelligent management and rapid growth of environmental sanitation service
With respect to smart service of environmental sanitation, the Company has invested in and operated flexible business models.Based on advanced underlying technologies such as 5G, IoT, AI, big data, cloud computing and edge computing, the Company hasdeveloped brand-new smart, refined, mechanized and economical environmental sanitation business models, facilitating the wholeindustrial chain of "smart sorting, smart environmental sanitation, smart environment, new energy and autonomous driving", andproviding accurate and efficient full-time operation and maintenance service and remote monitoring and management model whichfeatures seamless connection between front and back offices on all fronts in terms of personnel, vehicles, items and events involvedin environmental sanitation operation service. Given the above efforts and achievements, the Company has been included in the TopTen Innovative Cases in China's Smart Environmental Sanitation in 2018, Pilot and Demonstration Industrial Internet Platform ofMIIT in Key Industries in 2019 and Plan for Building of Provincial Industrial Internet Platform of Hunan Province in 2020. TheCompany is equipped with strong leading technological advantages in intelligent operation of environmental sanitation service.According to the statistics of Environmental Compass, during the period of 2016-2020, the Company has recorded a total contractvalue in environmental sanitation service of RMB1,237 million, RMB5,561 million, RMB8,711 million, RMB9,720 million andRMB12,574 million respectively, and an annual service value of RMB55 million, RMB305 million, RMB429 million, RMB855million and RMB1,248 million respectively, representing a growth rate of the annual income from environmental sanitation serviceof 454.54%, 40.66%, 99.30% and 45.96% respectively from 2017 to 2020. In 2020, the Company ranked first in terms of new annualenvironmental sanitation service contracts in China, up three places year on year. In terms of environmental sanitation service, withincreasing competitiveness in the industry, the Company has developed a unique smart environmental sanitation system.
3. Advantages in the sound marketing network
With its mature sales and service network for environmental sanitation equipment as well as excellent industry experience, theCompany has established a business marketing network all over the country, including 300 operation centers and nearly 1,000environmental governance operation service projects in 31 provinces, cities and autonomous regions. Environmental sanitationservice projects vary from city to city, and thus require localization and customization. As governments at all levels have paid moreattention to environmental sanitation, sanitation service providers require higher professional operation experience and long-termfollow-up services in order to maintain current cooperation while obtaining new projects. Therefore, the development of a highlyspecialized marketing network is needed for sanitation services to explore commercial opportunities in each region, improve serviceand delivery quality, and eventually obtain business contracts.
4. Edges in capital and funds
With a sound financial status, good reputation and abundant financing channels, the Company can provide strong fundingsupport for its business development and improve its sustainable operation capabilities, through equity financing and debt financingsuch as bank loans, corporate bonds (or green bonds), medium-term notes and short-term commercial papers. Meanwhile, theCompany has accumulated abundant experience in industrial acquisition, integration and capital operation, as well as strongresources to support itself by multiple means. In addition, the capital strengths and good reputation of the controlling shareholder canoffer a solid support to the Company's development.
Part IV Management Discussion and AnalysisI OverviewIn 2020, in the face of the severe external situation caused by the coronavirus pandemic, Infore Environment stuck to itsdevelopment strategies and the annual business plan, seized the industry momentum, focused on its core "5115" strategy, andproactively promoted the development of its smart environmental sanitation business relying on its competitive strengths inenvironmental sanitation equipment. Thus, the Company has remained an industry leader, by forming its unique smart environmentalsanitation system with "intelligent equipment, smart service and Smart Cloud Platform" as its strategic focuses. During the ReportingPeriod, the Company witnessed a rapid growth in environmental sanitation service and continued leadership in environmentalsanitation equipment.In 2020, the Board of Directors of the Company fully grasped the national economic situation and the development trend of theenvironmental protection industry, and implemented a business-focused strategy to focus the Company's main business on smartenvironmental sanitation, in which the Company has core competitive advantages, and the proportion of the Company's main businessof smart environmental sanitation rose to 72.03%. The Company has gradually adjusted the non-core businesses by business structureoptimization, asset divestiture and spin-off and listing, thus revitalizing the existing resources and inefficient assets, improving theasset management capacity and operational quality, and underpinning the Company's high-quality sustainable development.For 2020, the Company recorded operating revenue of RMB14,332.0251 million, up 12.89% year on year; and a net profitattributable to the shareholders of the Company of RMB1,386.4761 million, up 1.84% year on year.For 2020, Zoomlion Environmental recorded operating revenue of RMB10,135.6730 million, up 24.01% year on year; a netprofit of RMB1,436.5164 million, up 8.71% year on year; and a net profit attributable to the shareholders of the Company beforeexceptional gains and losses of RMB1,409.4124 million. Its audited net profit attributable to the shareholders of the Company beforeexceptional gains and losses totaled RMB3,778 million for the period from 2018 to 2020, higher than the promised amount byRMB56 million, which means that the interests of the Listed Company and minority investors are well protected.
1. Continuously rapid growth of environmental sanitation service
Since the beginning of 2020, the coronavirus pandemic has impacted the environmental sanitation service industry. FromJanuary to March, the market stagnated. Amid the pandemic, there were both crisis and opportunities. As one of the heroes in harm'sway, practitioners of environmental sanitation have led the public to reflect and hold that it is imperative that we strengthen modernequipment and high-tech application to change the weak position of the traditional environmental sanitation service industry. At theearly stage, Infore Environment gained presence in smart environmental sanitation in a targeted manner, and seized opportunities for"intelligent equipment, smart service and Smart Cloud Platform", resulting in preliminary benefits during the Reporting Period.According to the statistics of Environmental Compass, in 2020, the Company ranked No.1in the new contract value and the newannual contract value in China. In 2020, the Company recorded operating revenue of RMB1,969 million from environmentalsanitation service, and signed a total of 59 new contracts of environmental sanitation service projects in 19 provinces in China,adding RMB1,248 million new annual contract values to the total contract value of RMB12,574 million. As at the end of theReporting Period, Infore Environment operated 118 environmental sanitation service projects in total, and had contracts worthRMB2,831 million in hand and an accumulative contract value of RMB37 billion. Its projects in hand were mainly PPP projects andmedium- and long-term market-oriented projects, indicating prominent capabilities of sustainable operation. During the period of2016-2020, the Company saw an increase in the total contract value in terms of environmental sanitation service of RMB1,237
million, RMB5,561 million, RMB8,711 million, RMB9,720 million and RMB12,574 million, and recorded annual service value ofRMB55 million, RMB305 million, RMB429 million, RMB855 million and RMB1,248 million respectively. During the period of2017-2020, the Company witnessed a growth rate of the annual income from environmental sanitation service of 454.54%, 40.66%,
99.30% and 45.96% respectively. With rapid improvement of competitiveness in the industry, the Company has developed a uniquesmart environmental sanitation system. During the Reporting Period, by virtue of Bao'an Project, the Company not only set a recordin the industry in terms of volume, but also ranked first place in multiple achievements such as application of new energyenvironmental sanitation equipment, application of information-based management technologies and AI. It changed city managementstandards, and fostered internationally-benchmarked public service capabilities of Shenzhen.
2. Continuously leading environmental sanitation equipment
Due to the impact of COVID-19, there was a downturn in bidding of environmental sanitation equipment. After the pandemiceased, the industry started to recover in May. Amid the pandemic, the Company strengthened Internet applications, launched "cloudmodels" including online product release, publicity and promotion, and displayed new products by visiting customers across thecountry. Through promotion with the "cloud + offline" models, it boosted growth of market demand, and brought new technologiesand products to its customers so that they could learn about new products without traveling afar. Moreover, the Company injectedvitality into the market, motivated enterprises, activated capacity, and thus made great achievements and earned a good recognitionamong customers.According to the statistics of compulsory traffic accident liability insurance for motor vehicles of the CBIRC, in 2020, theCompany ranked first in sales of environmental sanitation equipment for the 20th consecutive year. In 2020, the Company recordedsales of environmental sanitation equipment of RMB8,355 million, a year-on-year increase of 18.78%, and it sold a total of 19,199pieces of equipment, a year-on-year increase of 11.39%. Among them, it sold 10,643 pieces of medium- and high-end products, ayear-on-year increase of 0.59%, with the largest market share of 29.79%; it also sold 1,367 new energy products, a year-on-yearincrease of 42.69%, with the largest market share of 27.85%.
3. Continuously leading the new energy environmental sanitation equipment
In 2020, the Company sold 1,367 new energy environmental sanitation vehicles, a year-on-year increase of 42.69%, accountingfor a market share of 27.85% and ranking first. It also sold 860 all-electric environmental sanitation vehicles, representing an increaseof 32.10% in the sales volume, accounting for a market share of 23.06% and ranking first. During the Reporting Period, the Companydeveloped and launched the first hydrogen fuel-powered multifunctional dust suppression vehicle.
4. Improvement of quality and efficiency and continuous optimization of net cash generated from operating activities
During the Reporting Period, with the key task of "achieving high-quality development", centering on production and operationlinks, the Company explored multiple methods for improving its asset operation capabilities to reduce existing assets and controlincremental assets. It conducted financing leasing, abandoned high-risk orders, strengthened the mechanism for classification,grading and responsibility regarding contract risks, enhanced reflow of corporate sales income, and accelerated operation turnoverefficiency to improve net cash generated from operating activities. As at the end of the Reporting Period in 2020, the Companyrecorded net cash generated from operating activities of RMB1.669 billion, representing a year-on-year increase of 13.74% fromRMB1.485 billion in the previous year. Increase in net cash generated from operating activities of the Company led to improvementof operation quality ultimately. The Company improved quality and efficiency and supported its high-quality sustainabledevelopment.
5. Issuance of convertible bonds and consolidation of industrial development basis
During the Reporting Period, the Company issued convertible corporate bonds of RMB1,476 million to raise funds for buildinga comprehensive allocation center for smart environmental sanitation. Upon completion, through integration of high-quality
traditional environmental sanitation equipment, new energy and new technology environmental sanitation equipment, Smart CloudPlatform with leading technologies and professional training for practitioners of environmental sanitation, the project will provide theCompany's environmental sanitation service with more high-quality cloud platform with informatization, IoT and big data as thecore. It will help continuously improve the data capabilities of the Company's environmental sanitation service, optimize themanagement capabilities of environmental sanitation service, and establish a professional brand of operation and management ofenvironmental sanitation service. This project emphasizes Infore Environment's resource integration capabilities in environmentalsanitation to build a more professional and modern brand for environmental sanitation service.
6. Positive fulfillment of the social responsibility and shouldering the corporate responsibilityAfter the outbreak of COVID-19, Infore Environment attached great importance to it and set up an emergency working group atthe first time to respond to various emergencies.On 23 January, the central government imposed a lockdown in Wuhan. On 24 January, Infore Environment launched anemergency action to support Wuhan, and actively contacted with relevant departments of Wuhan. Knowing that there were manypeople entering and leaving hospitals in Wuhan, which hampered the disinfection and might endanger relevant staff, InforeEnvironment decided to donate 15 cleaning and disinfection vehicles and 15 tons of disinfectant to the Wuhan Urban ManagementCommittee on the same day. On 25 January, Infore Environment urgently deployed equipment and materials and arranged forprofessional technical engineers and management personnel back to the workshop to ensure the completion of the vehiclemodification. On 27 January, through the concerted efforts of all staff, all 15 cleaning and disinfection vehicles were prepared andsent to Wuhan, accompanied by 15 tons of disinfectant.During the fight against the pandemic, Infore Environment actively donated money and materials, with a total value of nearlyRMB10 million. It was honored by the All-China Federation of Industry and Commerce as an “Outstanding Representative of PrivateEnterprises in the Fight against the COVID-19 Pandemic”. In addition to supporting Wuhan, the Company also provided emergencysupport to Zhengzhou Qiboshan Hospital for 2 sets of water quality monitoring stations for pollution sources, and donated medicalwastewater monitoring equipment to Huanggang Infectious Disease Hospital, actively undertaking corporate social responsibility. Atthe same time, in accordance with the government's requirements, Infore Environment made every effort to resume work andproduction, actively coordinating all resources to organize production, and timely delivery of a number of fog cannon trucks,cleaning and disinfection vehicles, cleaning trucks, rubbish trucks and other large sanitation equipment across the country. While thesociety had reached a crucial juncture between fighting against the pandemic in prevention and control, and achieving high-qualitydevelopment, Infore Environment has always been working with all sectors of the society to overcome difficulties.II Core Business Analysis
1. Overview
See “I Overview” above.
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
| 2020 | 2019 | Change (%) | |||
| Operating revenue | As a % of total | Operating revenue | As a % of total | ||
| operating revenue (%) | operating revenue (%) | ||||
| Total | 14,332,025,075.40 | 100% | 12,695,858,666.40 | 100% | 12.89% |
| By operating division | |||||
| Smart environmental sanitation | 10,323,422,172.13 | 72.03% | 8,034,877,719.43 | 63.29% | 28.48% |
| Others | 4,008,602,903.27 | 27.97% | 4,660,980,946.97 | 36.71% | -14.00% |
| By product category | |||||
| Traditional environmental sanitation equipment | 7,452,381,951.97 | 52.00% | 6,146,996,844.09 | 48.42% | 21.24% |
| New-energy environmental sanitation equipment | 902,172,174.16 | 6.29% | 886,400,216.94 | 6.98% | 1.78% |
| Environmental sanitation services | 1,968,868,046.00 | 13.74% | 1,001,480,658.40 | 7.89% | 96.60% |
| Others | 4,008,602,903.27 | 27.97% | 4,660,980,946.97 | 36.71% | -14.00% |
| By operating segment | |||||
| Domestic | 14,276,021,772.44 | 99.61% | 12,640,299,972.80 | 99.56% | 12.94% |
| Overseas | 56,003,302.96 | 0.39% | 55,558,693.60 | 0.44% | 0.80% |
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of OperatingRevenue or Operating Profit
√ Applicable □ Not applicable
Unit: RMB
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
| By operating division | ||||||
| Smart environmental sanitation | 10,323,422,172.13 | 7,494,987,200.17 | 27.40% | 28.48% | 35.97% | -4.00% |
| Others | 4,008,602,903.27 | 3,271,301,758.83 | 18.39% | -14.00% | -15.63% | 1.58% |
| By product category | ||||||
| Traditional environmental sanitation | 7,452,381,951.97 | 5,422,933,163.68 | 27.23% | 21.24% | 27.98% | -3.84% |
| equipment | ||||||
| New-energy environmental sanitation equipment | 902,172,174.16 | 553,314,420.62 | 38.67% | 1.78% | 3.92% | -1.26% |
| Environmental sanitation services | 1,968,868,046.00 | 1,518,739,615.87 | 22.86% | 96.60% | 104.59% | -3.02% |
| Others | 4,008,602,903.27 | 3,271,301,758.83 | 18.39% | -14.00% | -15.63% | 1.58% |
| By operating segment | ||||||
| Domestic | 14,276,021,772.44 | 10,715,099,244.25 | 24.94% | 12.94% | 14.73% | -1.17% |
| Overseas | 56,003,302.96 | 51,189,714.75 | 8.60% | 0.80% | 2.84% | -1.81% |
Core business data restated according to the changed methods of measurement that occurred in the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
| Operating division | Item | Unit | 2020 | 2019 | Change (%) |
| Environmental sanitation equipment | Sales volume | Unit | 24,233 | 20,217 | 19.86% |
| Output | Unit | 24,515 | 20,015 | 22.48% | |
| Inventory | Unit | 2,122 | 1,840 | 15.33% | |
| Electric materials | Sales volume | Ton | 54,767 | 60,932 | -10.12% |
| Output | Ton | 54,602 | 60,774 | -10.16% | |
| Inventory | Ton | 1,870 | 2,035 | -8.11% | |
| Ventilation machinery | Sales volume | Unit | 150,694 | 123,694 | 21.83% |
| Output | Unit | 149,019 | 125,068 | 19.15% | |
| Inventory | Unit | 3,417 | 5,092 | -32.89% |
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
The inventory of ventilation machinery as at the end of the current year decreased 32.89% compared to the end of last year, primarilydriven by a decrease in the number of products with a low unit value.
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division
Unit: RMB
| Operating division | Item | 2020 | 2019 | Change (%) | ||
| Cost of sales | As a % of total cost of sales (%) | Cost of sales | As a % of total cost of sales (%) | |||
| Smart environmental sanitation | Raw materials | 6,641,092,791.72 | 88.77% | 5,307,778,765.76 | 96.28% | 25.12% |
| Smart environmental sanitation | Labor costs | 343,174,808.02 | 4.59% | 79,211,526.55 | 1.44% | 333.24% |
| Smart environmental sanitation | Depreciation | 104,388,340.95 | 1.40% | 20,132,469.93 | 0.37% | 418.51% |
| Smart environmental sanitation | Energy resources including water, electricity, and steam | 66,597,774.16 | 0.89% | 9,119,691.94 | 0.17% | 630.26% |
| Smart environmental sanitation | Other manufacturing costs | 325,178,262.77 | 4.35% | 95,795,127.03 | 1.74% | 239.45% |
| Others | Raw materials | 2,870,104,855.95 | 88.56% | 3,549,155,655.58 | 92.03% | -19.13% |
| Others | Labor costs | 97,432,062.90 | 3.01% | 94,467,394.48 | 2.45% | 3.14% |
| Others | Depreciation | 127,190,822.18 | 3.93% | 57,679,325.43 | 1.50% | 120.51% |
| Others | Energy resources including water, electricity, and steam | 47,866,336.76 | 1.48% | 79,859,131.84 | 2.07% | -40.06% |
| Others | Other manufacturing costs | 97,771,335.08 | 3.02% | 75,211,551.74 | 1.95% | 30.00% |
Note:
Labor costs, depreciation, consumption of energy resources including water, electricity, and steam, as well as other manufacturingcosts rose significantly year on year, primarily because revenue from sanitation service increased in the current period, resulting in acorresponding increase in supporting facilities, labor costs, and labor outsourcing costs.
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
1. Entities Newly Included in the Consolidated Financial Statements
| Name of entity | How the interest in the entity was obtained | Time of interest obtaining | The Company’s capital contribution | The Company’s interest (%) |
| Changde Zelian Environmental Service Co., Ltd. | Incorporation | 2020.03 | 46,695,300.00 | 90.00 |
| Xiantao Yinglian Environmental Protection Technology Co., Ltd. | Incorporation | 2020.04 | 1,000,000.00 | 100.00 |
| Shenzhen Yinglian Environmental Industry Co., Ltd. | Incorporation | 2020.10 | 2,000,000.00 | 100.00 |
| Shenzhen Bao’an Yinglian Urban Service Co., Ltd. | Incorporation | 2020.05 | 109,142,740.00 | 70.00 |
| Binchuan Zhongying Environmental Service Co., Ltd. | Incorporation | 2020.06 | 927,333.00 | 92.73 |
| Tangyin Yinglian Environmental Service Co., Ltd. | Incorporation | 2020.07 | 5,760,000.00 | 100.00 |
| Yangbi Zhongying Environmental Service Co., Ltd. | Incorporation | 2020.07 | 704,682.00 | 70.47 |
| Shaoyang Zhongfeng Environmental Industry Co., Ltd. | Incorporation | 2020.06 | 10,000,000.00 | 100.00 |
| Foshan Shunde Yinghe Urban Environmental Service Co., Ltd. | Incorporation | 2020.07 | 1,000,000.00 | 100.00 |
| Rongcheng Yinglian Urban Environmental Service Co., Ltd. | Incorporation | 2020.07 | 21,000,000.00 | 100.00 |
| Xi’an Yinglian Urban Environmental Service Co., Ltd. | Incorporation | 2020.07 | 2,000,000.00 | 100.00 |
| Yongshun Zhongfeng Jingtou Environmental Technology Co., Ltd. | Incorporation | 2020.07 | 10,246,725.00 | 75.00 |
| Xianghe Yinglian Environmental Protection Technology Co., Ltd. | Incorporation | 2020.05 | 10,000,000.00 | 100.00 |
| Lanling Zoomlion Environmental Service Co., Ltd. | Incorporation | 2020.12 | 2,000,000.00 | 100.00 |
| Yuncheng Zhongying Urban Environmental Service Co., Ltd. | Incorporation | 2020.12 | 1,000,000.00 | 100.00 |
| Foshan Yingshun Urban Environmental Service Co., Ltd. | Incorporation | 2020.11 | 7,000,000.00 | 70.00 |
| Anshan Yinglian Urban Environmental Sanitation Management Co., Ltd. | Incorporation | 2020.10 | 10,000,000.00 | 100.00 |
| Foshan Yingtong Electric Material Co., Ltd. | Incorporation | 2020.10 | 350,000,000.00 | 100.00 |
| Donglan Yinglian Urban Environmental Service Co., Ltd. | Incorporation | 2020.01 | [Note] | 100.00 |
| Baise Yinglian Urban Environmental | Incorporation | 2020.01 | [Note] | 100.00 |
| Service Co., Ltd. | ||||
| Infore Zoomlion (Tianjin) Environmental Technology Co., Ltd. | Incorporation | 2020.12 | [Note] | 100.00 |
| Tongbai Tongying Environmental Sanitation Development Co., Ltd. | Incorporation | 2020.11 | [Note] | 100.00 |
| Guangdong Xingzhou Water Treatment Technology Co., Ltd. | Incorporation | 2020.09 | [Note] | 100.00 |
| Anhua Yingsheng Environmental Sanitation Service Co., Ltd. | Incorporation | 2020.04 | [Note] | 100.00 |
| Foshan Shunde Zhongying Urban Environmental Management Co., Ltd. | Incorporation | 2020.12 | [Note] | 100.00 |
| Qixian Tongying Environmental Sanitation Service Co., Ltd. | Incorporation | 2020.11 | [Note] | 100.00 |
| Lai’an Zhongfeng Environmental Technology Co., Ltd. | Incorporation | 2020.07 | [Note] | 100.00 |
| Zhaoyuan Jincheng Environmental Sanitation Management Service Co., Ltd. | Incorporation | 2020.07 | [Note] | 100.00 |
| Ji’an Zhongfeng Environmental Technology Co., Ltd. | Incorporation | 2020.09 | [Note] | 100.00 |
| Heze Yingsheng Environmental Sanitation Service Co., Ltd. | Incorporation | 2020.10 | [Note] | 100.00 |
| Luannan Yinglian Environmental Management Co., Ltd. | Incorporation | 2020.11 | [Note] | 100.00 |
| Guangxi Guiping Yinghe Environmental Sanitation Management Co., Ltd. | Incorporation | 2020.11 | [Note] | 100.00 |
| Shennongjia Forestry District Yinghe Environmental Sanitation Management Co., Ltd. | Incorporation | 2020.11 | [Note] | 100.00 |
| Chongqing Zhongying Environmental Sanitation Service Co., Ltd. | Incorporation | 2020.12 | [Note] | 100.00 |
| Renshou Yinglian Urban and Rural Sanitation Service Co., Ltd. | Incorporation | 2020.12 | [Note] | 100.00 |
| Liucheng Yinglian Environmental Sanitation Management Co., Ltd. | Incorporation | 2020.12 | [Note] | 100.00 |
| Shengzhou Yinghe Environmental Sanitation Management Co., Ltd. | Incorporation | 2020.10 | [Note] | 100.00 |
| Shengzhou Zoomlion Environmental Engineering Co., Ltd. | Incorporation | 2020.11 | [Note] | 100.00 |
| Foshan Liansheng Environmental Sanitation Service Co., Ltd. | Incorporation | 2020.09 | [Note] | 100.00 |
| Heping Hesheng Environmental Sanitation Service Co., Ltd. | Incorporation | 2020.08 | [Note] | 100.00 |
| Foshan Shunde Lianying Environmental Development Co., Ltd. | Incorporation | 2020.10 | [Note] | 100.00 |
| Suqian Lianying Urban Service Co., Ltd. | Incorporation | 2020.11 | [Note] | 100.00 |
| Shouxian Liansheng Environmental Sanitation Management Co., Ltd. | Incorporation | 2020.12 | [Note] | 100.00 |
| Zaozhuang Zhongying Urban Environmental Service Co., Ltd. | Incorporation | 2020.02 | [Note] | 100.00 |
[Note]: As of 31 December 2020, the Company has not yet paid in the capital contributions to these entities.
2. Entities Newly Excluded from the Consolidated Financial Statements
| Name of entity | How the interest in the entity was disposed of | Time of interest disposal | Net assets at the date of disposal | Net profit from the beginning of the current period to the disposal date |
| Leiyang Zhongfeng Environmental Industry Co., Ltd. | De-registration | December 2020 | 0 | 2,071,976.28 |
| Shenzhen Infore Environment Network Technology Co., Ltd. | De-registration | August 2020 | 0 | 118,157.09 |
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
| Total sales to top five customers (RMB) | 1,207,911,520.82 |
| Total sales to top five customers as a % of total sales of the Reporting Period (%) | 8.43% |
| Total sales to related parties among top five customers as a % of total sales of the Reporting Period (%) | 7.01% |
Top five customers:
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As a % of total sales revenue (%) |
| 1 | Customer A | 318,593,711.38 | 2.23% |
| 2 | Customer B | 254,151,014.66 | 1.77% |
| 3 | Customer C | 242,552,390.47 | 1.69% |
| 4 | Customer D | 201,878,188.07 | 1.41% |
| 5 | Customer E | 190,736,216.24 | 1.33% |
| Total | -- | 1,207,911,520.82 | 8.43% |
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
| Total purchases from top five suppliers (RMB) | 2,819,265,985.89 |
| Total purchases from top five suppliers as a % of total purchases of the Reporting Period (%) | 31.13% |
| Total purchases from related parties among top five suppliers as a % of total purchases of the Reporting Period (%) | 0.00% |
Top five suppliers:
| No. | Supplier | Purchase in the Reporting Period (RMB) | As a % of total purchases (%) |
| 1 | Supplier A | 1,526,789,831.86 | 16.86% |
| 2 | Supplier B | 427,478,302.52 | 4.72% |
| 3 | Supplier C | 295,563,961.16 | 3.26% |
| 4 | Supplier D | 287,050,379.99 | 3.17% |
| 5 | Supplier E | 282,383,510.37 | 3.12% |
| Total | -- | 2,819,265,985.90 | 31.13% |
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expenses
Unit: RMB
| 2020 | 2019 | Change (%) | Reason for any significant change | |
| Selling expense | 801,289,013.51 | 917,261,553.74 | -12.64% | -- |
| Administrative expense | 536,466,686.12 | 391,834,512.74 | 36.91% | Increase in employee remunerations, intermediary consulting expenditures and other administrative expenses as a result of growth in the Company’s business |
| Finance costs | 66,121,331.59 | 53,955,504.01 | 22.55% | Increase in interest expense, as well as a decrease in cash discount income and financing income in the current period |
| R&D expense | 254,677,332.19 | 245,637,610.35 | 3.68% | Increase in R&D investments |
4. R&D Investments
√ Applicable □ Not applicable
The Company continued to promote technological innovation, process reform and product development. The total R&D investmentsamounted to RMB264 million in the Reporting Period, accounting for 1.56% of the audited net assets as at the end of the ReportingPeriod, and 1.84% of the operating revenue.Particulars about R&D investments:
| 2020 | 2019 | Change (%) | |
| Number of R&D personnel | 1,356 | 1,286 | 5.44% |
| R&D personnel as a % of total employees | 15.54% | 17.99% | -2.45% |
| R&D investments (RMB) | 264,110,819.71 | 245,637,610.35 | 7.52% |
| R&D investments as a % of operating revenue | 1.84% | 1.93% | -0.09% |
| Capitalized R&D investments (RMB) | 9,433,487.52 | 27,560,044.93 | -65.77% |
| Capitalized R&D investments as a % of total R&D investments | 3.57% | 11.22% | -7.65% |
Reasons for any significant YoY change in the percentage of R&D investments in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D investments and rationale:
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
| Item | 2020 | 2019 | Change (%) |
| Subtotal of cash generated from operating activities | 15,584,916,372.80 | 13,800,108,466.88 | 12.93% |
| Subtotal of cash used in operating activities | 13,896,202,281.05 | 12,315,358,412.86 | 12.84% |
| Net cash generated from/used in operating activities | 1,688,714,091.75 | 1,484,750,054.02 | 13.74% |
| Subtotal of cash generated from investing activities | 5,451,867,664.79 | 5,111,910,988.96 | 6.65% |
| Subtotal of cash used in investing activities | 6,335,579,681.05 | 6,075,274,324.63 | 4.28% |
| Net cash generated from/used in investing activities | -883,712,016.26 | -963,363,335.67 | 8.27% |
| Subtotal of cash generated from financing activities | 5,922,067,481.72 | 3,188,986,842.48 | 85.70% |
| Subtotal of cash used in financing activities | 4,680,215,496.91 | 2,814,654,695.61 | 66.28% |
| Net cash generated from/used in financing activities | 1,241,851,984.81 | 374,332,146.87 | 231.75% |
| Net increase in cash and cash equivalents | 2,046,145,151.54 | 891,714,315.91 | 129.46% |
Explanation of why any of the data above varies significantly on a year-on-year basis:
√ Applicable □ Not applicable
1) Cash generated from financing activities increased 85.70% year on year, primarily driven by the issuance of convertible corporatebonds in the Reporting Period.
2) Cash used in financing activities increased 66.28% year on year, primarily driven by a greater amount of bank borrowings repaidupon maturity.Explanation of why the net cash generated from/used in operating activities varies significantly from the net profit of the ReportingPeriod:
□ Applicable √ Not applicable
III Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
| Amount | As a % of gross profit | Primary source/reason | Recurrent or not | |
| Return on investment | 78,328,670.09 | 4.78% | Return on investment recognized using the equity method, and returns on wealth management products | RMB41,578,662.81 is the returns on long-term equity investments calculated using the equity method, which is recurrent. And the other portion is not recurrent. |
| Gain/loss on changes in fair value | -95,719,301.47 | -5.85% | -- | Not |
| Asset impairment loss | -82,478,500.15 | -5.04% | -- | Not |
| Non-operating income | 9,844,019.69 | 0.60% | -- | Not |
| Non-operating expense | 58,229,724.05 | 3.56% | -- | Not |
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Indicate whether the Company has adopted the new accounting standards governing revenue and leases since 2020 and restated thebeginning amounts of relevant financial statement line items in the year.Applicable.
Unit: RMB
| 31 December 2020 | 1 January 2020 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As a % of total assets | Amount | As a % of total assets | |||
| Monetary assets | 5,904,127,970.85 | 19.61% | 3,160,767,624.40 | 12.72% | 6.89% | -- |
| Accounts receivable | 5,564,834,864.04 | 18.48% | 4,912,568,006.30 | 19.77% | -1.29% | -- |
| Inventories | 1,305,177,407.85 | 4.33% | 1,145,000,730.01 | 4.61% | -0.28% | -- |
| Investment property | 2,009,006.98 | 0.01% | 568,026.39 | 0.00% | 0.01% | -- |
| Long-term equity investments | 318,243,332.69 | 1.06% | 303,292,231.01 | 1.22% | -0.16% | -- |
| Fixed assets | 1,640,546,747.67 | 5.45% | 994,681,585.66 | 4.00% | 1.45% | -- |
| Construction in progress | 1,782,529,087.95 | 5.92% | 1,550,462,442.48 | 6.24% | -0.32% | -- |
| Short-term borrowings | 1,657,905,376.55 | 5.51% | 1,606,673,817.48 | 6.46% | -0.95% | -- |
| Long-term borrowings | 765,643,457.78 | 2.54% | 643,843,170.78 | 2.59% | -0.05% | -- |
| Bonds payable | 1,199,466,109.60 | 3.98% | 3.98% | -- | ||
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
| Item | Opening amount | Gain/loss on fair-value changes in the current period | Cumulative fair-value changes recognized in equity | Impairment allowance for the current period | Purchased in the current period | Sold in the current period | Other changes | Closing amount |
| Financial assets | ||||||||
| 1. Held-for-trading financial assets (exclusive of derivative financial assets) | 217,138,046.28 | -89,949,855.53 | 4,794.36 | 127,192,985.11 | ||||
| 2. Derivative financial assets | 51,100.00 | -3,205,100.27 | 4,793,300.00 | 0.00 | 814,549.73 | 824,750.00 | ||
| 3. Other debt investments | 0.00 | |||||||
| 4. Investments in other equity instruments | 26,070,000.00 | 26,070,000.00 | ||||||
| Subtotal of financial assets | 243,259,146.28 | -93,154,955.80 | 0.00 | 0.00 | 4,798,094.36 | 0.00 | 814,549.73 | 154,087,735.11 |
| Total of the above | 243,259,146.28 | -93,154,955.80 | 0.00 | 0.00 | 4,798,094.36 | 0.00 | 814,549.73 | 154,087,735.11 |
| Financial liabilities | 866,300.00 | -2,564,345.67 | 0.00 | 2,622,150.00 | 1,804.33 | 810,300.00 |
Particulars about other changes:
Other changes in derivative financial assets and financial liabilities were changes in the fair value of a hedged item—copper in stock.Indicate whether any significant change occurred to the measurement attributes of the major assets in the Reporting Period.
□ Yes √ No
3. Assets to which the Company’s Rights Were Restricted as at the Period-End
Unit: RMB
| Item | Closing carrying amount | Reason for restriction |
| Monetary assets | 1,246,301,871.62 | Security deposits, frozen and preserved amount in legal procedures, and amount in escrow account |
| Accounts receivable | 103,965,922.09 | In pledge |
| Receivables financing | 306,145,249.74 | In pledge |
| Long-term receivables and current portion of | 49,160,385.66 | Factoring with the right of recourse |
non-current liabilitiesFixed assets
| Fixed assets | 551,470,379.29 | As collateral |
| Investment property | 51,185.99 | As collateral |
| Intangible assets | 236,472,755.88 | As collateral |
| 100% equity interests of Funan Greenlander Environmental Protection Co., Ltd. | 58,236,923.40 | In pledge |
| 100% equity interests of Shouxian Greenlander New Energy Co., Ltd. | 80,691,695.44 | In pledge |
| 100% equity interests of Xiantao Greenlander Environmental Protection Power Co., Ltd. | 204,935,012.39 | In pledge |
| 25% equity interests in Lianjiang Greenlander New Energy Co., Ltd. | 23,149,733.54 | Frozen and preserved in legal procedures |
| Total | 2,860,581,115.04 | -- |
V Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
2. Significant Equity Investments Acquired in the Reporting Period
□ Applicable √ Not applicable
3. Significant Non-Equity Investments of which the Acquisition Was Uncompleted in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB
| Security type | Security code | Security name | Initial investment cost | Measurement method | Opening carrying amount | Gain/loss on fair-value changes in the current period | Cumulative fair-value changes recognized in equity | Purchased in the current period | Sold in the current period | Gain/loss in the current period | Closing carrying amount | Accounting title | Funding source |
| Domestically/ overseas listed stock | 600340 | CFLD | 3,019,500.00 | Fair value | 215,250,000.00 | -89,182,500.00 | -89,182,500.00 | 126,067,500.00 | Held-for-trading financial assets | Original contribution | |||
| Domestically/ overseas listed stock | 002161 | Invengo | 1,662,299.72 | Fair value | 1,888,046.28 | -770,753.07 | -770,753.07 | 1,117,293.21 | Held-for-trading financial assets | Purchased from the secondary market | |||
| Domestically/ overseas listed stock | 605155 | Xidamen | 2,095.83 | Fair value | 0.00 | 921.69 | 0.00 | 2,095.83 | 921.69 | 3,017.52 | Held-for-trading financial assets | Purchased from the secondary market | |
| Domestically/ overseas listed stock | 605179 | Yiming Food | 2,698.53 | Fair value | 0.00 | 2,475.85 | 0.00 | 2,698.53 | 2,475.85 | 5,174.38 | Held-for-trading financial assets | Purchased from the secondary market | |
| Total | 4,686,594.08 | -- | 217,138,046.28 | -89,949,855.53 | 0.00 | 4,794.36 | 0.00 | -89,949,855.53 | 127,192,985.11 | -- | -- | ||
| Disclosure date of the board announcement approving the securities investments | 23 April 2018 | ||||||||||||
| Disclosure date of the general meeting announcement approving the securities investments (if any) | 16 May 2018 | ||||||||||||
(2) Investments in Derivative Financial Instruments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Use of Raised Funds
√ Applicable □ Not applicable
(1) Overall Use of Raised Funds
√ Applicable □ Not applicable
Unit: RMB’0,000
| Year for fund-raising | Method of fund-raising | Total raised funds | Total raised funds that have been used in the current period | Total raised funds that have been used accumulatively | Total raised funds with altered purposes during the Reporting Period | Total accumulative raised funds with altered purposes | Proportion of total accumulative raised funds with altered purposes | Total raised funds that have not been used yet | Use and ownership change of unused raised funds | Raised funds that have been left unused for over two years |
| 2020 | Public offering | 145,733.62 | 17,463.39 | 17,463.39 | 0 | 0 | 0.00% | 128,270.23 | The Proposal on Using Some Idle Raised Funds to Replenish Working Capital was deliberated and approved at the 9th Extraordinary Meeting of the 9th Board of Directors and the 10th Extraordinary Meeting of the 9th Board of Directors held by the Company on 4 December 2020, allowing the Company to use restricted raised funds of no more than RMB1 | 0 |
| billion for temporary replenishment of working capital, which shall be used for the production and operation related to the Company's main businesses with a term of no more than 12 months as of the date when the Proposal was deliberated and approved by the Board of Directors. | ||||||||||
| Total | -- | 145,733.62 | 17,463.39 | 17,463.39 | 0 | 0 | 0.00% | 128,270.23 | -- | 0 |
| Explanation of the overall use of raised funds | ||||||||||
| Upon approval by the Document ZH.J.X.K. [2020] No. 2219 of the China Securities Regulatory Commission (CSRC) and with the consent of the Shenzhen Stock Exchange (SZSE), the lead underwriter of the Company, Huaxing Securities Co., Ltd. (formerly known as “Huajing Securities”, hereinafter referred to as Huaxing Securities) issued 14,761,896 convertible corporate bonds (hereinafter referred to as CB) to the public with the offering price of RMB100, each having a par value of RMB100, totaling RMB1,476,189,600.00. Specifically, priority allotment of 9,405,386 CB was issued to original shareholders of the Company, accounting for 63.71% of the total amount of this public offering; 5,304,730 CB was issued to public investors through online channels, accounting for 35.94% of the total amount of this public offering; 51,780 CB was to be underwritten by the lead underwriter, accounting for 0.35% of the total amount of this public offering. Funds raised in this offering had been remitted to the Company's raised fund supervision account by the lead underwriter Huaxing Securities on 10 November 2020, and the amount actually received after deducting RMB15,238,100 of underwriting and sponsorship fees (tax-exclusive) was RMB1,460,951,500. After deducting RMB3,615,300 (tax-exclusive) of external fees that were directly related to CB such as online offering expenses, printing fee for the prospectus, fees of the reporting accountant, counsel fee, credit rating fee, information disclosure expenses, and issuance commission fee, the net raised funds of the Company from this offering were RMB1,457,336,200. The availability of the above-mentioned raised funds has been verified by Pan-China Certified Public Accountants LLP in its Capital Verification Report (T.J.Y. [2020] No.490). | ||||||||||
(2) Committed Projects of Raised Funds
√ Applicable □ Not applicable
Unit: RMB’0,000
| Committed investment projects and investment of excessive raised funds | Whether projects have been altered (including partial alternation) | Total committed investment with raised funds | Adjusted total investment amount (1) | The investment amount during the Reporting Period | Accumulative investment amount as at the end of the Reporting Period (2) | Investment progress as at the end of the Reporting Period (3)-(2)/(1) | Date when the projects are ready for their intended use | Benefits recorded during the Reporting Period | Whether the estimated benefits are reached | Whether there are material changes in the project feasibility |
| Committed investment projects | ||||||||||
| The project of the comprehensive intelligent sanitation allocation center | No | 129,638.49 | 129,638.49 | 1,368.26 | 1,368.26 | 1.06% | 31 December 2022 | N/A | No | |
| Replenishment of working capital | No | 16,095.13 | 16,095.13 | 16,095.13 | 16,095.13 | 100.00% | 31 December 2020 | N/A | No | |
| Subtotal of committed investment projects | -- | 145,733.62 | 145,733.62 | 17,463.39 | 17,463.39 | -- | -- | -- | -- | |
| Investment of excessive raised funds | ||||||||||
| N/A | ||||||||||
| Repayment of bank loans (if any) | -- | 0 | 0 | 0 | 0 | 0.00% | -- | -- | -- | -- |
| Replenishment of working capital (if any) | -- | 0 | 0 | 0 | 0 | 0.00% | -- | -- | -- | -- |
| Subtotal of investment of excessive raised funds | -- | 0 | 0 | 0 | 0 | -- | -- | 0 | -- | -- |
| Total | -- | 145,733.62 | 145,733.62 | 17,463.39 | 17,463.39 | -- | -- | 0 | -- | -- |
| Cases and reasons for | None | |||||||||
| failing to reach the planned progress or predicted return (by specific projects) | |
| Explanations of the material changes in the project feasibility | None |
| Amount, use, and use progress of excessive raised funds | N/A |
| Implementation of location changes in the investment projects with the raised funds | N/A |
| Implementation of method adjustments to the investment projects with the raised funds | N/A |
| Early investment and placement concerning the investment projects with the raised funds | N/A |
| Temporary replenishment of working capital with the idle raised funds | Applicable |
| The Proposal on Using Some Idle Raised Funds to Replenish Working Capital was deliberated and approved at the 9th Extraordinary Meeting of the 9th Board of Directors and the 10th Extraordinary Meeting of the 9th Board of Directors held by the Company on 4 December 2020, allowing the Company to use restricted raised funds of no more than RMB1 billion for temporary replenishment of working capital, which shall be used for the production and operation related to the Company's main businesses with a term of no more than 12 months as of the date when the |
| Proposal was deliberated and approved by the Board of Directors. As at 31 December 2020, the balance of the idle raised funds used by the Company for temporary replenishment of working capital was RMB1,000,000,000. | |
| Surplus raised funds for project implementation and reasons for the surplus | N/A |
| Use and ownership change of unused raised funds | The Proposal on Using Some Idle Raised Funds to Replenish Working Capital was deliberated and approved at the 9th Extraordinary Meeting of the 9th Board of Directors and the 10th Extraordinary Meeting of the 9th Board of Directors held by the Company on 4 December 2020, allowing the Company to use raised funds of no more than RMB1 billion for temporary replenishment of working capital, which shall be used for the production and operation related to the Company's main businesses with a term of no more than 12 months as of the date when being deliberated and approved by the Board of Directors. As at 31 December 2020, the balance of the idle raised funds used by the Company for temporary replenishment of working capital was RMB1,000,000,000. Other unused raised funds of RMB284,509,100 were still retained on the special account of raised funds in the form of demand deposits at banks for the purpose of continuous construction of corresponding fund-raising projects. |
| Problems in the use of raised funds and disclosure, or other cases | None |
(3) Altered Projects of Raised Funds
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VI Sale of Major Assets and Equity Investments
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Investments
□ Applicable √ Not applicable
VII Principal Subsidiaries and Joint Stock Companies
√ Applicable □ Not applicable
Principal subsidiaries and joint stock companies with an over 10% effect on the consolidated net profit:
Unit: RMB
| Name | Relationship with the Company | Principal activities | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| Changsha Zoomlion Environmental Industry Co., Ltd. | Subsidiary | Intelligent sanitation | RMB2,351.5298 million | 14,748,699,793.30 | 6,813,202,919.41 | 10,135,672,962.73 | 1,701,177,612.90 | 1,436,516,377.48 |
| Shenzhen Greenlander Environmental Protection Co., Ltd. | Subsidiary | Environment monitoring and treatment of solid waste | RMB150 million | 1,741,873,028.13 | 38,592,327.42 | 181,203,208.46 | 2,913,858.34 | 1,458,573.11 |
| Guangdong Infore Technology Co., Ltd. | Subsidiary | Environment monitoring and treatment of solid waste | RMB110 million | 789,035,728.95 | 101,177,283.36 | 211,026,157.11 | 16,676,579.49 | 22,011,639.68 |
| Foshan Infore Environment Water Treatment Co., Ltd. | Subsidiary | Environment monitoring and treatment of solid waste | RMB100,000 | 595,470,908.92 | 163,408,762.29 | 156,482,090.72 | 62,080,036.62 | 55,592,595.40 |
| Foshan Yingtong Electric Material Co., Ltd. | Subsidiary | Manufacturing of electric materials and others | RMB350 million | 1,275,456,508.41 | 552,633,962.43 | 2,541,740,190.79 | 48,813,200.25 | 33,222,086.94 |
Subsidiaries acquired or disposed of in the Reporting Period:
√ Applicable □ Not applicable
| Name | Way of acquisition or disposal | Effects on the overall operations and performance |
| Donglan Yinglian Urban Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Baise Yinglian Urban Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Zaozhuang Zhongying Urban Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Changde Zelian Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| XiantaoYinglian Environmental Protection | Incorporation | Positive effects on the Company’s business |
| Technology Co., Ltd. | ||
| Xianghe Yinglian Environmental Protection Technology Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Binchuan Zhongying Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Shenzhen Bao’an Yinglian Urban Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Foshan Shunde Yinghe Urban Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Foshan Liansheng Environmental Sanitation Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Shaoyang Zhongfeng Environmental Industry Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Tangyin Yinglian Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Xi’an Yinglian Urban Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Yangbi Zhongying Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Rongcheng Yinglian Urban Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Lai’an Zhongfeng Environmental Technology Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Zhaoyuan Jincheng Environmental Sanitation Management Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Ji’an Zhongfeng Environmental Technology Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Heping Hesheng Environmental Sanitation Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Yongshun Zhongfeng Jingtou Environmental Technology Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Foshan Shunde Lianying Environmental Development Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Shouxian Liansheng Environmental Sanitation Management Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Foshan Shunde Zhongying Urban Environmental Management Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Suqian Lianying Urban Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Anshan Yinglian Urban Environmental Sanitation Management Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Liucheng Yinglian Environmental Sanitation Management Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Chongqing Zhongying Environmental | Incorporation | Positive effects on the Company’s business |
| Sanitation Service Co., Ltd. | ||
| Renshou Yinglian Urban and Rural Sanitation Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Infore Zoomlion (Tianjin) Environmental Technology Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Yuncheng Zhongying Urban Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Lanling Zoomlion Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Tongbai Tongying Environmental Sanitation Development Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Shennongjia Forestry District Yinghe Environmental Sanitation Management Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Shengzhou Zoomlion Environmental Engineering Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Shengzhou Yinghe Environmental Sanitation Management Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Guangxi Guiping Yinghe Environmental Sanitation Management Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Heze Yingsheng Environmental Sanitation Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Shenzhen Yinglian Environmental Industry Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Foshan Yingshun Urban Environmental Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Guangdong Xingzhou Water Treatment Technology Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Foshan Yingtong Electric Material Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Qixian Tongying Environmental Sanitation Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Anhua Yingsheng Environmental Sanitation Service Co., Ltd. | Incorporation | Positive effects on the Company’s business |
| Shenzhen Infore Environment Network Technology Co., Ltd. | De-registration | Asset optimization, with no significant impact on the Company’s operations and performance |
| Leiyang Zhongfeng Environmental Industry Co., Ltd. | De-registration | Asset optimization, with no significant impact on the Company’s operations and performance |
Other information on principal subsidiaries and joint stock companies:
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Prospects
(I) Industry Development and Trend
1. National policies will promote the development of the sanitation industry
According to the New Energy Vehicle Industry Development Plan (2021-2035), from 2021, new energy vehicles (NEVs) shouldaccount for no less than 80% of the vehicles newly added and replaced in public transport areas such as national ecologicalcivilization pilot zone and key regions for prevention and control of atmospheric pollution.The State Council has issued the Guidelines on Carrying out the Patriotic Public Health Campaign in a Deep-going Way toperfect public health facilities, improve the living environments for urban and rural residents, and promote the comprehensivemanagement of environmental hygiene in urban and rural areas; enhance social health management, make coordinated efforts topromote the building of a healthy China, and vigorously boost the construction of health cities and towns.The Fifth Plenary Session of the 19th CPC Central Committee raised clear requirements for "drawing up an action plan forcarbon emissions to peak by 2030", putting forward specific objectives, indicators, main ways, and policy suggestions for the plan tomake it practical and feasible and can be continued and carried forward in the future. Many local governments clearly stated that theywould take solid steps toward the goals of achieving peak carbon emissions and carbon neutrality, develop action plans for carbonemissions to peak by 2030, optimize the industrial and energy structures, promote the clean and efficient use of coal, and make amajor push to the development of new energy resources.According to the Several Opinions on Further Promoting the Classification of Domestic Waste, China aims to take another fiveyears or so to establish a fundamentally complete system of laws and regulations for domestic waste classification; cities at theprefecture level and above shall establish a system for domestic waste sorting, separate collection, classified transportation, andsorting treatment according to local conditions. Residents shall generally cultivate household waste sorting habits; the recycling rateof domestic garbage in cities across the country should exceed 35%.The Guiding Opinions on Building a Modern Environmental Governance System require that key environmental protectiontechnologies and products shall be enhanced, the demonstration and application of first (set of) technical equipment forenvironmental protection shall be advanced, and the quality of technical equipment for the environmental protection industry shall beexpeditiously improved.
2. The demands for sanitation services will keep increasing
As a part of public services, sanitation services' income comes from the government's fiscal expenditure as inflexible items andis less affected by macroeconomic regulation. Therefore, sanitation services are featured by sustainability and stability.
(1) Urbanization has led to increasing service demands
With the constant development of urbanization, the construction of urban roads will directly increase road cleaning space, urbanhousing, community construction, and urban green space, and thus give rise to higher demands for sanitation equipment and cleaningservices in cities and towns. In addition, public sanitation is a necessary guarantee condition for cities in different provinces toengage in a series of urban upgrading and construction as "national civilized cities", "national health cities", "national environmentalprotection exemplary cities", "national ecological garden cities", etc. According to the statistical data released by Ministry of Housingand Urban-Rural Development, from 2010 to 2018, China's road cleaning space in cities and counties increased from 6,257 millionsquare meters to 11,249 million square meters, with the overall road cleaning space increasing by nearly 80%. Meanwhile, thedomestic waste generated in cities and counties increased from 221 million tons to 295 million tons, with the overall domestic wasteincreasing by 33%. In the context of urbanization, to ensure the roads, residential districts, and municipal gardens in cities and towns
are clean, and maintain the normal transportation and treatment of domestic waste, cities and towns are continuously raising demandsfor sanitation services.
(2) The rural sanitation market is gradually developing with the onset of building "beautiful villages"For a long time, not enough attention has been paid to the waste produced in China's rural areas. In most rural areas, theconstruction of waste disposal facilities is rare, with an extremely unsound treatment mechanism for rural waste. The 13th Five-YearPlan for National Integrated Rural Environment Management specified that by 2020, additional 130,000 incorporated villages wouldhave completed the integrated environmental management, adding the number of such villages up to over one third of the totalincorporated villages across the country, and more than 4.5 million pieces/sets garbage collection, transportation, and treatmentfacilities would have been established. The 13th Five-Year Plan for Ecological & Environmental Protection released by the StateCouncil in November 2016 also clarified that China would speed up the construction of waste treatment facilities in counties andrealize the full coverage of waste treatment facilities in cities and towns by the end of 2020.In the era of building "beautiful villages" and boosting urban and rural sanitation integration, projects like promotion by allcounties and comprehensive management have emerged continuously and the rural sanitation market will enter a new stage forfurther rapid market expansion. In the further, with great potential, the rural sanitation market will be able to provide a broad marketand large room for improvement for the sanitation service industry and even the whole sanitation market.
(3) With the continuous advancement of waste sorting, the market demands will be increasing constantlyIn September 2020, President Xi Jinping chaired the meeting of the Central Commission for Comprehensively DeepeningReform, at which the Several Opinions on Further Promoting the Classification of Domestic Waste were deliberated and passed. Withthe accelerated promotion of waste sorting policies, since the traditional collection and transportation facilities cannot satisfy thedemands for classified collection and transportation and the four treatment procedures including delivery, collection, transportation,and treatment of domestic waste will be divided into four steps, the traditional collection and transportation system for domesticwaste will be completely changed. Accordingly, as demands to upgrade traditional practices and sanitation technologies andequipment keeps rising, plus the investment demand for intelligent system improvement, the market demands will be constantlyincreasing.
(4) Under the influence of the goal of carbon neutrality, the process of sanitation equipment using new energy resources will befurther acceleratedAccording to the relevant policies that have been successively issued by local governments, in principle, the updated sanitationvehicles should be mainly based on new energy resources. In the future, it is expected that the procurement of new energy sanitationvehicles will be on the rise, which will further accelerate the process of sanitation equipment using new energy resources for years tocome. In November 2020, the New Energy Vehicle Industry Development Plan (2021-2035) was issued, requiring that new energyvehicles (NEVs) should account for no less than 80% of the vehicles newly added and replaced in key regions and public areas. Since2012, China has worked out the guiding policy on accelerating fostering the new energy vehicle industry and issued severalimportant documents successively for implementation. In addition, after going through a gestation period, the promotion of newenergy sanitation vehicles has now entered a period of explosive growth.
(5) The enhanced mechanization rate will drive the growth in the incremental volume of sanitation equipment in the market
The improvement in the mechanization rate in the sanitation industry can reduce the cost of the sanitation work and reduce thefinancial burdens on the government and enterprises. With the increasing expansion of road cleaning space in China's urban and ruralareas, the mechanization rate in the sanitation industry will gradually rise. According to the statistical communique on urban andrural construction prepared by Ministry of Housing and Urban-Rural Development, at the end of 2018, the mechanical cleaning spaceof the road in cities across the country reached 5,986 million square meters, with a mechanical cleaning rate of 68.85%; the
mechanical cleaning space of the road in counties across the country reached 1,628 million square meters, with a mechanicalcleaning rate of 63.70%. However, compared with cities in advanced countries whose mechanical sanitation rates usually reach 80%,there is still a large space for the improvement of mechanization rate in the sanitation industry in China. In the future, in the contextof the increasingly higher labor cost, the mechanical sanitation work will become the main development direction for China'ssanitation market and cover miscellaneous segments such as road sweeping, guardrail cleaning, and waste collection andtransportation.
(6) The aging trend in China will expand the sanitation equipment market
The frequent adjustments made by China in terms of minimum wages in different countries have largely influenced theoperating costs of sanitation service enterprises. The defects including high operating costs and low working efficiency in thetraditional manual sanitation service model have increased the business pressure on sanitation operation enterprises. In addition,according to the prediction made by the China National Committee on Aging, China's elderly population will reach 248 million by2020, indicating that the percentage of the elderly population has reached 17.17%. The trend will aggravate the shortage of laborforce in the field of sanitation services. Meanwhile, with the diversification of employment selections, the number of young andmiddle-aged workers that are willing to engage in sanitation work continues to decline day by day. Therefore, improving themechanical sanitation rate and expanding the use scope of sanitation equipment not only are the real needs in the context of theshortage of labor force in the market but also are the requirements for the development of the urban sanitation level.
(7) Technological progress has caused breakthroughs in the industry
The rapid development of 5G and AI technologies has broadened the industry boundary and brought about infinite possibilitiesfor industry reform. Intelligent, manpower saving, and even unmanned operation will be the general trend while small intelligentequipment and smart services will be the new spotlights, bringing about new factors and growth points for the industry.
(II) Competitive landscape in the industry
At this stage, due to the marketization of the environmental sanitation service, a large number of enterprises have engaged inthis industry. According to the Annual Report on Sanitation Bidding Market released by the Yi Biao Tong Sanitation Data Center,there were currently about 10,000 relatively active sanitation enterprises nationwide. In the future, under the trends of mid- andhigh-end mechanization, intelligent sanitation operation, sanitation services integration and wide-area sanitation market, thesanitation market will put forward higher requirements for enterprises in the sanitation industry in terms of technical strength,marketing strength, R&D strength and financial strength. Therefore, with the continuous enhancement of sanitation industry access,survival barriers, Chinese sanitation market concentration will also continue to improve in the future. Enterprises with weak financialstrength, small scale, low technology and inefficient management will be gradually replaced, while enterprises with large scale,strong financial strength, leading technology, diversified business model and standardized operation will become the mainstream ofthe industry.
Industry-leading intelligent management
The Company chose flexible business model for investment and operation in its "smart environmental sanitation" service,relying on the leading technology, brand, marketing network, and management advantages of sanitation equipment, etc., to develop asmart environmental sanitation system with its own characteristics, including a unified system of smart equipment, smart platform,and smart environmental sanitation. Taking into account the continuous technological changes and application innovations ofsanitation IoT, cloud platform development, the core of intelligent operation of sanitation services was to continuously upgrade itsproducts and operation platform in accordance with the changes in frontier technology. The Company has accumulated rich industryexperience in sanitation services, and has accumulated a strong foundation of research and development strength in the intelligentmanagement. The Company's self-developed products, such as smart environmental sanitation cloud platform, smart sorting
platform, smart environment platform and new energy autonomous driving platform, met the main needs of the market to upgradefrom "cleaners" to "urban housekeepers", and provided integrated IoT application solutions of full lifecycle and platform operationservices for customers in the fields of new energy autonomous driving, domestic waste sorting, waste collection and transfer, roadcleaning, sanitation personnel management, kitchen waste collection and transportation, sludge transportation supervision, leachatetreatment and smart city construction.
Industry-leading sanitation equipmentThe sanitation equipment required for environmental sanitation services is a technological and capital-intensive industry. As newtechnologies and application updates of the industry are accelerating, the Company must keep up with industry development fortechnological improvement and innovation and enhance knowledge reserves and updates to adapt to the changing competitiveenvironment so that the company can meet market demands. After years of continuous technological innovation, Infore Environmenthas established product series with diversified categories and specifications in the field of environmental sanitation equipment, whichinvolve a wide range of disciplines, strong comprehensiveness across different sectors, integrating hydromechanics, mechanicalengineering, aerodynamics, environmental engineering, material science and other professional knowledge. The Company is ahigh-tech enterprise with industry-leading R&D capacity, and has taken the lead in formulating a number of national, industry andlocal standards. Therefore, with its strong R&D capacity, technical advantages and industry-leading position, the Company'scomprehensive sanitation resources allocation center can continuously provide high-quality environmental sanitation equipment forsanitation service projects.In addition, the Company enjoys the largest share of environmental sanitation equipment business in China, covering a total ofmore than 400 product models including intelligent sanitation robot, autonomous sanitation vehicle, sanitizer, cleaning sweeper,high-pressure sewer flushing vehicle, compression refuse collector, waste transfer truck, kitchen refuse truck, refuse stationequipment, waste sorting equipment, municipal garden equipment, snow and ice removal equipment, leachate and wastewatertreatment equipment. These equipment can fully meet the personalized requirements and product mix demands of downstreamcustomer segments with high quality.
Well-established marketing networkSanitation service projects are highly regional and customized; as governments at all levels have attached more importance toenvironmental health, sanitation service projects require higher professional operation experience and long-term follow-up servicesto maintain current cooperation while obtaining new projects. Therefore, the development of a highly specialized marketing networkis needed for sanitation services to explore commercial opportunities in each region, improve service and delivery quality, and obtainbusiness opportunities. Benefiting from its first-mover advantage in the field of environmental sanitation equipment, the Companyhas established a business marketing network covering all provinces, cities, and autonomous regions (except for Hong Kong, Macaoand Taiwan) in China. It has actively expanded its investment and operation of sanitation service projects over the past few yearswith its mature sales and service network for environmental sanitation equipment as well as excellent industry experience.In summary, as market concentration continues to increase, the Company will rely on its absolute advantage in environmentalsanitation equipment, and fully leverage its strong R&D capacity and technical foundation, wide-range marketing network,well-known industry brand image, mature sanitation integration model and other core competitive advantages to adapt to and evenlead the development of the sanitation industry. Driven by the aforementioned core competitive advantages, the Company's marketshare will continue to increase, and it will become a leading enterprise in the sanitation industry.
(III) Work and business plan for 2021In 2020, centering on the development strategy and annual business plan, the Company focused on core strategic business,stripped and split off non-core businesses, actively promoted smart environmental sanitation, environmental monitoring and solid
waste treatment, and soundly completed the business plan for 2020. The business target set at the beginning of the year was for theCompany to achieve RMB35 billion in the planned cumulative contract amount of its smart environmental sanitation services andRMB1.5 billion in its annual operating revenue; the actual planned cumulative contract amount of the Company's smartenvironmental sanitation services reached RMB37 billion while its annual operating revenue recorded RMB1,969 million,completing the business target.The business target for 2021: The Company will reach RMB50 billion in the planned cumulative contract amount of its smartenvironmental sanitation services and RMB2.8 billion in its annual operating revenue; the planned cumulative contract amount of theCompany's smart environmental sanitation services from 2020 to 2024 will reach RMB100 billion while its annual operating revenuereaches RMB10 billion.Since smart environmental sanitation service is the Company's strategic core business, the Company will continue to increaseresource input and strive to become one of the best enterprises in the industry.In 2021, the Company will continue to focus on its core business - smart environmental sanitation, adhere to the businessstrategy of leading technology and leading product, steadily reinforce its leading advantages in environmental sanitation equipmentas well as environmental sanitation services featuring intellectualization, the Internet of Things and network, and maintain itsindustry-leading position.
(IV) Plan for the use of fundsSince 2021 is a key phase for its rapid development, the Company has a large demand for funds and will establish a fundsupply/demand plan competent for its development. The Company will make full use of its own funds, optimize its financialstructure while enhancing the management of accounts receivable, provide strong capital guarantee for its business development, andcontrol financial risks. The sources of funds mainly include the optimization and combination of funds raised through variouschannels such as the issuance of commercial paper and medium-term note, cash flow from operating activities, and bank loans.
(V) Main risk factors that may cast adverse impacts on the realization of the Company's future development strategies andbusiness objectives
1. Policy risk
As the state attaches more importance to environmental protection and environmental governance, unprecedented developmentopportunities will also appear in the environmental protection industry, but such industry is also highly dependent on nationalindustrial policies since it is typically policy-driven. The adjustment of macroeconomic policies, tax policies, environmentalprotection industry policies and environmental management policies will affect the Company's business performance.
Countermeasures: The Company will pay close attention to the changes in national macroeconomic policies, step up its studyand analysis of industry policies, increase the scientific decision-making level of management personnel, and improve its ability tofend off policy risks.
2. Operation and control risk
As the Company continuously expands its business scale, enriches its business types, broadens its markets and develops moresubsidiaries, its asset scale, personnel scale and organization scale are also undergoing rapid expansion, causing its organizationalstructure and management system to become more complex. Although the Company has formed a complete set of managementpolicies for internal control and improved it annually, , the difficulties and risks in the management and control are still increasingdue to the differences in industry attributes, geographic distribution, cultural characteristics and corporate culture of its branchinstitutions.
Countermeasures: While strengthening the building of its talent team, the Company will place emphasis on developing itsmanagement and risk control systems, further improve its operation and management systems as well as business procedures,continue to enhance refined management, and strengthen the risk control and cultural development of subordinate enterprises.
3. Risk of intensified market competition
The environmental sanitation industry is an emerging comprehensive industry at its early marketization stage in China with loworganizational level and concentration. However, it is currently going through rapid growth. More upstream and downstreamenterprises as well as new enterprises in other fields are entering the industry, and market competition will continue to intensify,which brings the risk that the Company's market share may decline in the future.
Countermeasures: The Company will continue to adhere to the technology-driven development strategy and ensure itstechnology-leading position in the industry to consolidate its industry-leading position.
The contents herein involving plans and result forecasts shall not constitute the Company's commitment to any investors andrelevant persons. All investors and relevant persons shall remain adequately aware of risks.X Communications with the Investment Community such as Researches, Inquiries andInterviews
1. During the Reporting Period
√ Applicable □ Not applicable
| Date | Place | Way of communication | Type of the communication party | Main discussions and materials provided by the Company | Index to the relevant information |
| 15 January 2020 | Company Conference Room | By phone | Individual | Learned about the Company’s operations | - |
| 18 March 2020 | Company Conference Room | By phone | Individual | Learned about the current market condition for the Company | - |
| 7 May 2020 | Shenzhen | By visit | Institution | Learned about the Company’s primary operations | The log sheet of investor relations activities disclosed by the Company on www.cninfo.com.cndated 9 May 2020 |
| 27 May 2020 | Company Conference Room | By phone | Institution | Learned about the Company’s operations | The log sheet of investor relations activities disclosed by the Company on www.cninfo.com.cn dated 28 May 2020 |
| 2 July 2020 | Foshan City in Guangdong | By visit | Institution | Learned about the Company’s | The log sheet of investor relations activities |
| Province, and Changsha City in Hunan Province | operations | disclosed by the Company on www.cninfo.com.cn dated 2 July 2020 | |||
| 25 August 2020 | Foshan City in Guangdong Province | By visit | Institution | Operating results briefing | The log sheet of investor relations activities disclosed by the Company on www.cninfo.com.cn dated 26 August 2020 |
| 28 October 2020 | Changsha City in Hunan Province | By visit | Institution | Learned about the Company’s operations | The log sheet of investor relations activities disclosed by the Company on www.cninfo.com.cn dated 28 October 2020 |
| 18 November 2020 | Company Conference Room | By phone | Individual | Learned about the Company’s operations | - |
| 29 December 2020 | Company Conference Room | By phone | Individual | Learned about the Company’s operations | - |
| Times of communications | 9 | ||||
| Number of institutions communicated with | 5 | ||||
| Number of individuals communicated with | 4 | ||||
| Number of other communication parties | 0 | ||||
| Tip-offs or leakages of substantial confidential information | None | ||||
Part V Significant EventsI Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)The profit distribution policy for ordinary shareholders, especially the formulation, implementation and amendments to the cashdividend policy, in the Reporting Period:
√ Applicable □ Not applicable
According to the Articles of Association, while satisfying the conditions of cash dividend and ensuring the Company's normaloperation and long-term development, the Company shall in principle pay cash dividend once a year. The Board of Directors maypropose interim cash dividends depending on the Company's profit status, cash flow status, development stage and capitalrequirements. The Company shall maintain continuity and stability of the profit distribution policy. When the conditions for cashdividends are met, the cumulative profit distributed in cash in the recent three years shall not be less than 30% of the average annualdistributable profit recorded in the recent three years.During the Reporting Period, the Company distributed profit in strict accordance with the provisions of the Articles ofAssociation and fully protected the legitimate rights and interests of small and medium investors. Independent directors have voicedtheir opinions on the annual profit distribution plan of the Company.
| Special statement about the cash dividend policy | |
| In compliance with the Company’s Articles of Association and resolution of general meeting | Yes |
| Specific and clear dividend standard and ratio | Yes |
| Complete decision-making procedure and mechanism | Yes |
| Independent directors faithfully performed their duties and played their due role | Yes |
| Non-controlling shareholders are able to fully express their opinion and desire and their legal rights and interests are fully protected | Yes |
| In case of adjusting or changing the cash dividend policy, the conditions and procedures involved are in compliance with applicable regulations and transparent | Yes |
The profit distributions to ordinary shareholders, either in the form of cash or stock, in the past three years (including the ReportingPeriod) are summarized as follows:
1. 2020: According to the 2020 Final Dividend Plan approved at the 13
th
Meeting of the 9
thBoard of Directors on 22 April 2021,based on the total share capital (minus the shares in the Company’s repurchase account) at the date of record for the 2020 FinalDividend Plan, a cash dividend of RMB1.20 (tax inclusive) per 10 shares is planned to be distributed to the shareholders.
2. 2019: According to the 2019 Final Dividend Plan approved at the 4
th
Meeting of the 9
thBoard of Directors on 23 April 2020,based on the total share capital (minus the shares in the Company’s repurchase account) at the date of record for the 2019 FinalDividend Plan, a cash dividend of RMB1.10 (tax inclusive) per 10 shares is planned to be distributed to the shareholders.
3. 2018: According to the 2018 Final Dividend Plan approved at the 27
th Meeting of the 8
th
Board of Directors on 17 April 2019,a cash dividend of RMB1.00 (tax inclusive) per 10 shares is planned to be distributed to the shareholders. The total cash dividend
payout amounted to RMB316,306,214.60, and the retained earnings of RMB606,780,499.66 were carried forward for futuredistribution.
Cash dividends for ordinary shareholders in the past three years (including the Reporting Period):
Unit: RMB
| Year | Cash dividends (tax inclusive) (A) | Net profit attributable to ordinary shareholders of the listed company in consolidated statements for the year (B) | A as % of B (%) | Cash dividends in other forms (like share repurchase) (C) | C as % of B (%) | Total cash dividends (including those in other forms) (A+C) | A+C as % of B (%) |
| 2020 | 379,569,641.52 | 1,386,476,099.73 | 27.38% | 8,920,597.83 | 0.64% | 388,490,239.35 | 28.02% |
| 2019 | 347,936,836.06 | 1,361,453,754.17 | 25.56% | 99,993,196.00 | 7.34% | 447,930,032.06 | 32.90% |
| 2018 | 316,306,214.60 | 928,577,765.32 | 34.06% | 0.00 | 0.00% | 316,306,214.60 | 34.06% |
Indicate whether the Company fails to put forward a cash dividend proposal for the ordinary shareholders despite the facts that theCompany has made profits in the Reporting Period and the profits of the Company distributable to the ordinary shareholders arepositive.
□ Applicable √ Not applicable
II Final Dividend Plan for the Reporting Period
√ Applicable □ Not applicable
| Bonus issue from profit (share/10 shares) | 0 |
| Cash dividend/10 shares (RMB) (tax inclusive) | 1.2 |
| Share base (share) | 3,163,080,346.00 |
| Cash dividends (RMB) (tax inclusive) | 379,569,641.52 |
| Cash dividends in other forms (such as share repurchase) (RMB) | 8,920,597.83 |
| Total cash dividends (including those in other forms) (RMB) | 388,490,239.35 |
| Distributable profit (RMB) | 502,505,012.72 |
| Total cash dividends (including those in other forms)as a % of total distributable profit | 28.02% |
| Cash dividend policy | |
| Other | |
| Cash and/or stock dividend plan in detail | |
III Performance of Undertakings
1. Undertakings of relevant parties such as the actual controller, shareholders, related parties, buyers of the Company and the Company that had beencompleted during the Reporting Period and that had not been fully completely as of the end of the Reporting Period
√ Applicable □Not applicable
| Cause of undertakings | Parties of undertakings | Types of undertakings | Contents of undertakings | Date of undertakings | Term of undertakings | Fulfillment of undertakings |
| Undertakings related to reform of shareholder structure | -- | -- | -- | -- | -- | -- |
| Undertakings made in acquisition report of change of equity report | -- | -- | -- | -- | -- | -- |
| Undertakings made in asset reorganization | Yuemin Investment Yinglian, Hongchuang Investment, Ningbo Liantai, Ningbo Infore; Ningbo Yingtai, Ningbo Zhongfeng, Shanghai Junhe, Zoomlion | Undertaking related to performance and compensation arrangement | Zoomlion Environmental made an undertaking that the cumulative net profit in in 2018, 2019 and 2020 shall not be less than RMB3,722 million. | 15 August 2018 | 31 December 2020 | The undertaking has been performed and the person making the undertaking has strictly observed the above undertaking. |
| Actual controller He Jianfeng | Undertaking on not to relinquish the control right of the listed company | I undertake not to relinquish the actual control right of the listed company within 60 months from the date of completion of this transaction. | 3 January 2019 | 60 months | It is in normal progress of fulfillment, without breach of undertaking. | |
| Actual controller He Jianfeng | Undertaking on restrictions on sale of shares | If the proportion of the shares of the listed company held by me and the enterprises under my control increases, the shares of the listed company held by me before this transaction will not be transferred externally within 12 months after the completion of this transaction. | 3 January 2019 | 12 months | The undertaking has been performed and the person making the undertaking has strictly observed the above undertaking. | |
| Ningbo Infore Asset Management | Undertaking on restrictions on | 1. The shares of the listed company acquired from | 3 January 2019 | 42 months | It is in normal |
| Co., Ltd. | sale of shares | this transaction shall not be transferred within 36 months from the closing date of issuance. 2. Within 6 months from the completion of this transaction, in case the closing price of the listed company's stock is lower than its issue price for 20 consecutive trading days, or the closing price by the end of the sixth month from the completion of this transaction is lower than the issue price, the lock-up period of Ningbo Infore holding shares in the listed company shall automatically extend for at least 6 months. | progress of fulfillment, without breach of undertaking. | ||
| Counterparties Ningbo Yingtai, Ningbo Zhongfeng, Ningbo Liantai | Undertaking on restrictions on sale of shares | The shares of the listed company acquired from this transaction shall not be transferred within 36 months from the closing date of issuance. | 3 January 2019 | 36 months | It is in normal progress of fulfillment, without breach of undertaking. |
| Hongchuang Investment, Lvlian Junhe, Zoomlion | Undertaking on restrictions on sale of shares | The shares of the listed company acquired from this transaction shall be locked up upon completion of issuance and shall not be transferred within 12 months from the date of completion of issuance. | 3 January 2019 | 12 months | The undertaking has been performed and the person making the undertaking has strictly observed the above undertaking. |
| Yuemin Investment Yinglian | Undertaking on restrictions on sale of shares | 1. The shares of the listed company acquired from this transaction shall be locked up upon completion of issuance and shall not be transferred within 12 months from the date of completion of issuance. 2. The property shares held by Yuemin Investment Yinglian shall not be transferred, sold or withdrawn within 12 months from the closing date of issuance of shares of the listed company in this transaction. | 3 January 2019 | 12 months | The undertaking has been performed and the person making the undertaking has strictly observed the above undertaking. |
| Actual controller He Jianfeng, | Undertaking on avoiding | Undertaking on avoiding horizontal competition, | 15 August 2018 | Permanent | It is in normal |
| Ningbo Infore, Infore Holding | horizontal competition, regulating and reducing related-party transactions and independence of listed companies | regulating and reducing related-party transactions and independence of listed companies | progress of fulfillment, without breach of undertaking. | ||
| Ningbo Infore, Hongchuang Investment, Zoomlion, Ningbo Yingtai, Ningbo Zhongfeng, Ningbo Liantai | Undertaking on avoiding horizontal competition, regulating and reducing related-party transactions | Undertaking on avoiding horizontal competition, regulating and reducing related-party transactions | 15 August 2018 | Permanent | It is in normal progress of fulfillment, without breach of undertaking. |
| Ningbo Yingtai, Ningbo Zhongfeng, Ningbo Liantai | Undertaking related to the term of employment and non-competition | Core personnel such as the general manager of the Company (the specific list of main management personnel and other core personnel shall be verified and confirmed by Infore Environment) shall still work in the target company for at least 36 months from the closing date of the underlying shares. | 27 November 2018 | 36 months | It is in normal progress of fulfillment, without breach of undertaking. |
| Greenlander Investment Holding Co. Ltd. and Zheng Weixian | Undertaking related to performance | The accumulative total net profit recorded by Lianjiang Greenlander New Energy Co. Ltd., Xiantao Greenlander Environmental Protection Power Co., Ltd., Funan Greenlander Environmental Protection Energy Co., Ltd. and Shouxian Greenlander New Energy Co., Ltd. from 2016 to 2019 shall not be less than RMB120 million (whichever lower before and after exceptional gains and losses are deducted shall be basis of calculation of the net profit). | 14 October 2015 | 48 months | It has not been normally fulfilled. From 2016 to 2019, the audited net profit (whichever lower before and after exceptional gains and losses are deducted shall prevail) was RMB2,156,500, -RMB24,424,500, -RMB19,192,800 and -RMB625,700, respectively; the |
| accumulative net profit was -RMB42,086,600, -RMB162,086,600 less than the performance undertaken. The undertaking on net profit from 2016 to 2019 was completed. | ||||||
| Greenlander Investment Holding Co. Ltd. and Zheng Weixian | Undertaking related to projects | From 2016 to 2019, the newly signed waste incineration power generation BOT agreements (subject to the signing of franchise agreement) signed by Greenlander Environmental Protection shall specify a total daily disposal capacity of not less than 6,500 tons (a single project shall have a daily disposal capacity of not less than 500 tons, of which at least one shall be more than 2,000 tons). | 14 October 2015 | 48 months | It has not been normally fulfilled. The newly signed projects by Greenlander Environmental Protection from 2016 to 2019 totaled 1,400 tons, 5,100 tons less than the projects it undertook to complete. | |
| Greenlander Investment Holding Co. Ltd. and Zheng Weixian | Undertaking on project construction | Jiujiang Company must start construction and obtain approval before 31 December 2020. If it fails to start construction or the construction is recovered by the government, it shall compensate the listed company at a consideration of no less than RMB5 million. | 14 October 2015 | 48 months from 31 December 2020 | It has not been normally fulfilled. | |
| Undertakings made in IPO or | Infore Holding Group Co., Ltd. | Undertakings related to the | The company did not reduce the shares held in the | 14 March 2017 | Six months | The undertaking has |
| refinancing | private placement of shares in 2016 | issuer from 23 January 2016 to the date of issuance of this Letter of Undertaking; the company will not reduce the shares held in the issuer or make any plan to reduce the shares held in the issuer within six months from the date of issuance of the Letter of Undertaking to the completion of the private placement. And the company has no plans to relinquish the control right of the issuer by directly or indirectly reducing the shares held in the issuer. | after the completion of this private placement | been performed and the person making the undertaking has strictly observed the above undertaking. | ||
| Infore Holding Group Co., Ltd. | Undertakings related to the private placement of shares in 2016 | The company and the enterprises or related parties controlled by the company will not violate the provisions of Article 17 in the Measures for Administration of Securities Issuing and Underwriting (Revised in 2015) and other relevant laws and regulations, nor have they or will they provide financial support or compensation, directly or indirectly, to Mr. He Jianfeng and Mr. She Changguang as subscription objects in the future; nor have they or will they provide financial support or compensation, directly or indirectly, to other issuing objects in this private placement. | 14 March 2017 | Until the completion of this private placement of shares by the Company | The undertaking has been performed and the person making the undertaking has strictly observed the above undertaking. | |
| Infore Holding Group Co., Ltd. | Undertakings related to the private placement of shares in 2016 | The company's assets and credit standing are in good condition, and the company does not have any breach of contract, due outstanding debts or major pending litigation, arbitration and other circumstances affecting the company's holding of controlling interest in the issuer. | 14 March 2017 | Until the completion of this private placement of shares by the Company | The undertaking has been performed and the person making the undertaking has strictly observed the above undertaking. | |
| He Jianfeng | Undertaking on restrictions on sale of shares | The shares subscribed for this time shall not be transferred within 36 months from the closing date of this issuance. | 3 January 2018 | 36 months | It is in normal progress of fulfillment, without |
| breach of undertaking. | ||||||
| She Changguang | Undertaking on restrictions on sale of shares | The subscribed shares shall not be transferred within 36 months from the closing date of this issuance. | 3 January 2018 | 36 months | It is in normal progress of fulfillment, without breach of undertaking. | |
| Zoomlion Heavy Industry Science & Technology Development Co., Ltd. | Undertaking not to reduce holding-shares | From 16 March 2020 to 31 December 2020, the Company will not reduce the Company's holding-shares, including the portion during the undertaking period | 16 March 2020 | 31 December 2020 | The undertaking has been performed and the person making the undertaking has strictly observed the above undertaking. | |
| Undertakings related to equity incentives | -- | -- | -- | -- | -- | -- |
| Undertakings made to minority shareholders of the Company | -- | -- | -- | -- | -- | -- |
| Whether the undertakings were timely performed | No | |||||
| When not performing the undertakings timely, the Company shall specify specific reasons for not performing the undertakings timely and work plan in the next stage | The main cause is that the progress of project construction was slower than expected. To safeguard the rights and interests of the Company and protect the interests of shareholders, the Company applied to Foshan Intermediate People's Court for the asset preservation of Greenlander Investment Holding Co., Ltd., Zheng Weixian and Ren Zhe on 5 November 2018. The court froze the 30% stake of Greenlander Investment Holding Co., Ltd. in Shenzhen Greenlander Environmental Protection Co., Ltd. as well as Zheng Weixian's deposits of RMB9,816.09. On 21 August 2020, the Company received a counterclaim filed by Greenlander Investment Holding Co., Ltd. and Zheng Weixian with the court. On 24 August 2020 and 24 September 2020, the court held two hearings on the case, and on 13 January 2021, the court issued a judgment of first instance. Now Greenlander Investment Holding Co., Ltd. and Zheng Weixian have filed an appeal, but the Company has not received the notice of the second trial. | |||||
2. When there were profit forecast of assets or projects of the Company and the reporting period is coveredby the period of profit forecast, the Company shall specify whether the assets or projects reached theoriginal forecast and reasons for it
√ Applicable □Not applicable
| Name of profit forecast of assets or projects | Forecast starting time | Forecast ending time | Forecast performance in the current period (RMB’0,000) | Actual performance in the current period (RMB’0,000) | Reasons for not achieving the expected benefit (if applicable) | Date of original forecast disclosure | Index of original forecast disclosure |
| Zoomlion Environmental | 1 January 2018 | 31 December 2020 | 372,200 | 377,836.49 | The expected benefit is achieved | 10 August 2018 | www.cninfo.com.cn |
Undertakings made by the shareholders and counterparties of the Company during the reporting of the operating performance of theyear:
√ Applicable □Not applicable
According to the Agreement on Profit Forecast Compensation and the Profit Forecast Compensation Supplemental Agreement Isigned by the Company and the original eight shareholders of Zoomlion Environmental, the original eight shareholders of ZoomlionEnvironmental undertake that the cumulative net profit before exceptional gains and losses of Zoomlion Environmental from 2018 to2020 shall not be less than RMB3,722 million.
Completion of undertaking related to performance and its impact on goodwill impairment test:
There is not impact.IV Occupation of the Company’s Capital by the Controlling Shareholder or Its RelatedParties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Committee and theIndependent Directors (if any) Regarding the Independent Auditor's “Modified Opinion” onthe Financial Statements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates and Methods
√ Applicable □ Not applicable
1. The Company has adopted, since 1 January 2020, the revised version of the Accounting Standard No. 14 for BusinessEnterprises—Revenue (hereinafter, the “New Revenue Standard”) issued by the Ministry of Finance. Pursuant to the transitionalrequirements, the Company did not restate the comparable information, but retrospectively restated the opening retained earnings andother relevant financial statement line items of the Reporting Period according to the cumulative effects on the first adoption date of
the New Revenue Standard.The major effects of the adoption of the New Revenue Standard on the financial statements on 1 January 2020:
| Item | Balance sheet | ||
| 31 December 2019 | Effect of the New Revenue Standard | 1 January 2020 | |
| Accounts receivable | 5,163,050,940.07 | -250,482,933.77 | 4,912,568,006.30 |
| Contract assets | 197,287,015.51 | 197,287,015.51 | |
| Current portion of non-current assets | 760,845,984.28 | 2,872,896.31 | 763,718,880.59 |
| Long-term receivables | 1,152,179,083.21 | -1,299,273.03 | 1,150,879,810.18 |
| Other non-current assets | 44,360,378.52 | 51,622,294.98 | 95,982,673.50 |
| Advances from customers | 170,610,799.52 | -170,610,799.52 | |
| Contract liabilities | 150,983,008.42 | 150,983,008.42 | |
| Other current liabiltiies | 29,507,607.98 | 29,507,607.98 | |
| Deferred income | 50,399,106.23 | -9,879,816.88 | 40,519,289.35 |
2. The Company has adopted, since 1 January 2020, the Explanation No. 13 of the Accounting Standards for BusinessEnterprises issued in 2019 by the Ministry of Finance. The prospective application method is adopted for the said change to theaccounting policies.VII Retrospective Restatements due to Correction of Material Accounting Errors in theReporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.VIII YoY Changes to the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
1. Entities Newly Included in the Consolidated Financial Statements
| Name of entity | How the interest in the entity was obtained | Time of interest obtaining | Contribution | The Company’s interest |
| Donglan Yinglian Urban Environmental Service Co., Ltd. | Incorporation | January 2020 | 【Note】 | 100.00% |
| Baise Yinglian Urban Environmental Service Co., Ltd. | Incorporation | January 2020 | 【Note】 | 100.00% |
| Zaozhuang Zhongying Urban Environmental Service Co., Ltd. | Incorporation | Febuary 2020 | 【Note】 | 100.00% |
| Changde Zelian Environmental Service Co., Ltd. | Incorporation | March 2020 | 46,695,300.00 | 90.00% |
| XiantaoYinglian Environmental Protection Technology Co., Ltd. | Incorporation | April 2020 | 1,000,000.00 | 100.00% |
| Xianghe Yinglian Environmental Protection | Incorporation | May 2020 | 10,000,000.00 | 100.00% |
Technology Co., Ltd.Binchuan Zhongying Environmental Service Co., Ltd.
| Binchuan Zhongying Environmental Service Co., Ltd. | Incorporation | June 2020 | 927,333.00 | 92.73% |
| Shenzhen Bao’an Yinglian Urban Service Co., Ltd. | Incorporation | May 2020 | 109,142,740.00 | 70.00% |
| Foshan Shunde Yinghe Urban Environmental Service Co., Ltd. | Incorporation | July 2020 | 1,000,000.00 | 100.00% |
| Foshan Liansheng Environmental Sanitation Service Co., Ltd. | Incorporation | September 2020 | 【Note】 | 100.00% |
| Shaoyang Zhongfeng Environmental Industry Co., Ltd. | Incorporation | June 2020 | 10,000,000.00 | 100.00% |
| Tangyin Yinglian Environmental Service Co., Ltd. | Incorporation | July 2020 | 5,760,000.00 | 100.00% |
| Xi’an Yinglian Urban Environmental Service Co., Ltd. | Incorporation | July 2020 | 2,000,000.00 | 100.00% |
| Yangbi Zhongying Environmental Service Co., Ltd. | Incorporation | July 2020 | 704,682.00 | 70.47% |
| Rongcheng Yinglian Urban Environmental Service Co., Ltd. | Incorporation | July 2020 | 21,000,000.00 | 100.00% |
| Lai’an Zhongfeng Environmental Technology Co., Ltd. | Incorporation | July 2020 | 【Note】 | 100.00% |
| Zhaoyuan Jincheng Environmental Sanitation Management Service Co., Ltd. | Incorporation | July 2020 | 【Note】 | 100.00% |
| Ji’an Zhongfeng Environmental Technology Co., Ltd. | Incorporation | September 2020 | 【Note】 | 100.00% |
| Heping Hesheng Environmental Sanitation Service Co., Ltd. | Incorporation | August 2020 | 【Note】 | 100.00% |
| Yongshun Zhongfeng Jingtou Environmental Technology Co., Ltd. | Incorporation | July 2020 | 10,246,725.00 | 75.00% |
| Foshan Shunde Lianying Environmental Development Co., Ltd. | Incorporation | October 2020 | 【Note】 | 100.00% |
| Shouxian Liansheng Environmental Sanitation Management Co., Ltd. | Incorporation | December 2020 | 【Note】 | 100.00% |
| Foshan Shunde Zhongying Urban Environmental Management Co., Ltd. | Incorporation | December 2020 | 【Note】 | 100.00% |
| Suqian Lianying Urban Service Co., Ltd. | Incorporation | November 2020 | 【Note】 | 100.00% |
| Anshan Yinglian Urban Environmental Sanitation Management Co., Ltd. | Incorporation | October 2020 | 10,000,000.00 | 100.00% |
| Liucheng Yinglian Environmental Sanitation Management Co., Ltd. | Incorporation | December 2020 | 【Note】 | 100.00% |
| Chongqing Zhongying Environmental Sanitation Service Co., Ltd. | Incorporation | December 2020 | 【Note】 | 100.00% |
| Renshou Yinglian Urban and Rural Sanitation Service Co., Ltd. | Incorporation | December 2020 | 【Note】 | 100.00% |
| Infore Zoomlion (Tianjin) Environmental Technology Co., Ltd. | Incorporation | December 2020 | 【Note】 | 100.00% |
| Yuncheng Zhongying Urban Environmental Service Co., Ltd. | Incorporation | December 2020 | 1,000,000.00 | 100.00% |
| Lanling Zoomlion Environmental Service Co., Ltd. | Incorporation | December 2020 | 2,000,000.00 | 100.00% |
| Tongbai Tongying Environmental Sanitation Development Co., Ltd. | Incorporation | November 2020 | 【Note】 | 100.00% |
| Shennongjia Forestry District Yinghe Environmental Sanitation Management Co., Ltd. | Incorporation | November 2020 | 【Note】 | 100.00% |
| Shengzhou Yinghe Environmental Sanitation Management Co., Ltd. | Incorporation | October 2020 | 【Note】 | 100.00% |
| Shengzhou Zoomlion Environmental Engineering Co., Ltd. | Incorporation | November 2020 | 【Note】 | 100.00% |
| Guangxi Guiping Yinghe Environmental Sanitation Management Co., Ltd. | Incorporation | November 2020 | 【Note】 | 100.00% |
| Heze Yingsheng Environmental Sanitation Service Co., Ltd. | Incorporation | October 2020 | 【Note】 | 100.00% |
| Shenzhen Yinglian Environmental Industry Co., Ltd. | Incorporation | October 2020 | 2,000,000.00 | 100.00% |
| Foshan Yingshun Urban Environmental Service Co., Ltd. | Incorporation | November 2020 | 7,000,000.00 | 70.00% |
| Guangdong Xingzhou Water Treatment Technology Co., Ltd. | Incorporation | September 2020 | 【Note】 | 100.00% |
| Foshan Yingtong Electric Material Co., Ltd. | Incorporation | October 2020 | 350,000,000.00 | 100.00% |
| Anhua Yingsheng Environmental Sanitation Service Co., Ltd. | Incorporation | April 2020 | 【Note】 | 100.00% |
[Note]: As of 31 December 2020, the Company has not yet paid in the capital contributions to these entities.
2. Entities Newly Excluded from the Consolidated Financial Statements
| Name of entity | How the interest in the entity was disposed of | Time of interest disposal | Net assets at the date of disposal | Net profit from the beginning of the current period to the disposal date |
| Leiyang Zhongfeng Environmental Industry Co., Ltd. | De-registration | December 2020 | 0 | 2,071,976.28 |
| Shenzhen Infore Environment Network Technology Co., Ltd. | De-registration | August 2020 | 0 | 118,157.09 |
IX Engagement and Disengagement of Independent AuditorCurrent independent auditor:
| Name of the domestic independent auditor | Pan-China Certified Public Accountants LLP |
| The Company’s payment to the domestic independent auditor (RMB’0,000) | 260 |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 19 |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Bian Shanshan and Cao Cuijuan |
| How many consecutive years the certified public accountants have provided audit service for the Company | 2 years and 1 year respectively |
Indicate whether the independent auditor was changed for the Reporting Period.
□ Yes √ No
Independent auditor, financial advisor or sponsor hired for the audit of internal control:
√ Applicable □ Not applicable
During the Reporting Period, Pan-China Certified Public Accountants LLP was appointed as the independent auditor for thefinancial audit and the internal control audit, and GF Securities Co., Ltd. and Huaxing Securities Co., Ltd. were appointed as theindependent financial advisor and the sponsor, respectively.X Possibility of Delisting after the Disclosure of this Report
□ Applicable √ Not applicable
XI Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII Significant Legal Matters
□ Applicable √ Not applicable
No such cases in the Reporting Period.Other lawsuits that were not qualified as a significant lawsuit that requires disclosure primarily included purchase and sales contractdisputes, with the total amount involved being approximately RMB299 million, which are not expected to incur any provision of alarge amount.
XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIV Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
√ Applicable □ Not applicable
During the Reporting Period, the Company as well as its controlling shareholder and actual controller were of a good credit quality,with no such cases as refusing to execute any effective court decision, failing to repay any mature debt that was of a large amount,etc.
XV The Company's Implementation of Stock Incentive Plan and Employee Stock OwnershipPlan or Other Employee Incentive Measures
√ Applicable □Not applicable
Overview of the First Stock Incentive Plan:
1. On 25 April 2020, the Company disclosed the Announcement on Cancellation of Part of the Expired and Unexercised StockOptions in the Stock Incentive Plan, canceling 3,021,177 stock options that had been granted but not yet exercised for the third exerciseschedule of the first stock incentive plan. On 23 April 2020, the Company convened the 4th Meeting of the 9th Board of Directors.Upon discussion, the Meeting passed the Proposal on Canceling Part of the Expired and Unexercised Stock Options in the StockIncentive Plan. According to the Company's Stock Option Incentive Plan (Draft), as the stock options of 40 incentive objects had notbeen exercised at the end of the third exercise schedule of the Company's first stock option incentive plan, the Board of Directors agreedto cancel the above-mentioned 3,021,177 stock options that had been granted but not yet been exercised for the third exercise scheduleduring which the stock options were granted, in accordance with the applicable provisions. After the cancellation, the first stock optionincentive plan will be fully implemented.
For more information, please refer to the announcement published on 25 April 2020 on the media of information disclosurespecified by the Company and the cninfo website (http://www.cninfo.com.cn).Overview of the Second Stock Incentive Plan:
1. On 23 April 2020, the Company convened the 4th Meeting of the 9th Board of Directors and the 3rd Meeting of the 9thSupervisory Committee. Upon discussion, the Meetings passed the Proposal on Canceling Part of the Expired and Unexercised StockOptions in the Stock Incentive Plan, Proposal on the Adjustment of Incentive Objects and Quantity of Stock Options to Be Exercised inthe Second and Third Stock Option Incentive Plans and Proposal on Matters Related to the Exercise in the Second Exercise Schedule ofthe Second Stock Option Incentive Plan.
(1) According to the Company's Second Stock Option Incentive Plan (Draft), as the stock options of 81 incentive objects havenot been exercised at the end of the first exercise schedule of the Company's second stock option incentive plan, the Board ofDirectors agreed to cancel the said 5,475,000 stock options that had been granted but not yet exercised for the first exercise scheduleduring which the second-phase stock options were granted, in accordance with the applicable provisions. As a result of thecancellation, number of options under the Company's Second Stock Option Incentive Plan will be reduced to 12,775,000.
(2) For reasons such as the resignation of 35 incentive objects and the fact that they are no longer working in the Company orthe holding subsidiary of the Company, they are deemed by the Company's Board of Directors to be no longer fit for the incentiveobjects. According to the Second Stock Option Incentive Plan (Draft), their 4.62 million stock options for the second and thirdexercise schedules were cancelled. After the above adjustments, the number of stock options granted in the second stock optionincentive plan was adjusted from 81 to 46, and the number of unlocked stock options granted was adjusted from 12,775,000 to8,155,000.
2. On 20 August 2020, the Company convened the 6th Meeting of the 9th Board of Directors and the 5th Meeting of the 9thSupervisory Committee. Upon discussion, the Meetings passed the Proposal on Adjustment to the Exercise Prices of the Second andThird Stock Option Incentive Plans. The Company's 2019 annual equity distribution was completed on 10 July 2020. In accordancewith requirements in the Company's Second Stock Option Incentive Plan (Draft) on the adjustment to exercise price of stock option,exercise price of the stock option will be adjusted accordingly in the event that the Company changes its capital reserves into additionalshare capital, distributes stock dividends or stock split, share reduction, dividend payment or allotment of shares occurs during thevalidity period of the stock option. After the completion of the equity allocation, the exercise price of the second stock option incentiveplan will be adjusted from RMB9.26 per share to RMB9.15 per share.
3. As at 11 March 2021, when the second exercise schedule of the Company's second stock option incentive plan ended, a total of18,200 stock options had been partially exercised by 46 incentive subjects, leaving 3,476,800 stock options unexercised. The Companywill cancel the 3,476,800 stock options that have been granted and have not yet exercised during the second exercise schedule of the
second stock option incentive plan, in accordance with the applicable laws and regulations.For more information, please refer to announcements published on 25 April 2020, 21 August 2020 and 23 April 2021 on themedia of information disclosure specified by the Company and the cninfo website (http://www.cninfo.com.cn).Overview of the Third Stock Incentive Plan:
1. On 23 April 2020, the Company convened the 4th Meeting of the 9th Board of Directors and the 3rd Meeting of the 9thSupervisory Committee. Upon discussion, the Meetings passed the Proposal on the Adjustment of Incentive Objects and Quantity ofStock Options to Be Exercised in the Second and Third Stock Option Incentive Plans. Five employees resigned out of personal reasonsand were no longer deemed fit to be the incentive objects by the Board of Directors. In accordance with the Second Stock OptionIncentive Plan (Draft), a total of 1.28 million stock options for the first, second and third exercise schedules were cancelled. After theabove adjustments, the number of incentive objects of the third stock option incentive plan was adjusted from 249 to 244, and thenumber of unlocked stock options granted was adjusted from 65.09 million to 63.81 million.Upon discussion, the Meetings also passed the Proposal on Failure to Meet the Exercise Conditions for the First ExerciseSchedule of the Third Stock Option Incentive Plan and Cancellation of Part of the Stock Options. As the performance of theCompany did not meet the exercise conditions for the first exercise schedule of the third stock option incentive plan, the 19,143,000stock options that had been granted but not yet exercised for the first exercise schedule could not be exercised. According to theCompany's Third Stock Option Incentive Plan (Draft), since the performance of the Company did not meet the exercise conditionsfor the first exercise schedule of the third stock option incentive plan, the Board of Directors agreed to cancel the said 19,143,000stock options that had been granted but not yet exercised for the first exercise schedule of the third stock option incentive plan. Afterthe cancellation, number of options under the Company's Third Stock Option Incentive Plan will be reduced to 44,667,000.
2. On 20 August 2020, the Company convened the 6th Meeting of the 9th Board of Directors and the 5th Meeting of the 9thSupervisory Committee. Upon discussion, the Meetings passed the Proposal on Adjustment to the Exercise Prices of the Second andThird Stock Option Incentive Plans. The Company's 2019 annual equity distribution was completed on 10 July 2020. In accordancewith requirements in the Company's Third Stock Option Incentive Plan (Draft) on the adjustment to exercise price of stock option,exercise price of the stock option will be adjusted accordingly in the event that the Company changes its capital reserves into additionalcapital stock, distributes stock dividends or stock split, share reduction, dividend payment or allotment of shares occurs during thevalidity period of the stock option. After the completion of the equity allocation, the exercise price of the third stock option incentiveplan will be adjusted from RMB6.45 per share to RMB6.34 per share.
Upon discussion, the Meetings also passed the Proposal on Revising the Performance Assessment Indicators of the Third StockOption Incentive Plan, agreeing to revise the exercise conditions for the second and third exercise schedules of the third stock optionincentive plan on the performance assessment of the Company.
3. As at 31 December 2020, the exercise time of the second exercise schedule of the third stock option incentive plan had not yetcome, and the stock options had not yet been exercised for the second exercise schedule of the Company's third stock option incentiveplan.
For more information, please refer to the announcements published on 25 April 2020 and 21 August 2020 on the media ofinformation disclosure specified by the Company and the cninfo website (http://www.cninfo.com.cn).Overview of the First Employee Stock Ownership Plan (ESOP):
1. The Company held the 31st Temporary Meeting of the 8th Board of Directors on 29 January 2021 and the 3rd ExtraordinaryGeneral Meeting of 2019 on 12 November 2019. Upon discussion, the Meetings passed the Proposal on the First Employee StockOwnership Plan (Draft) and Its Summary, Proposal on Formulating the Management Measures for the Employee Stock Ownership Planand Proposal on Requesting the General Meeting to Authorize the Board of Directors to Handle Matters Concerning the Company'sEmployee Stock Ownership Plan.
2. The Company, according to the Information Disclosure Guidelines for Listed Companies of the Shenzhen Stock Exchange No.4 -- Employee Stock Ownership Plan issued by the Shenzhen Stock Exchange on 3 November 2019, the Company supplemented andupdated the First Employee Stock Ownership Plan (Draft) and its summary. For more information, please refer to the announcement
published on 9 November 2019 on the media of information disclosure specified by the Company and the cninfo website(http://www.cninfo.com.cn).
3. As at 31 December 2020, the Company's first ESOP had completed the share purchase stage. The Company's special securitiesaccount related to the first ESOP held a total of 36,211,560 shares of the Company, accounting for 1.14% of the Company's current totalshare capital. The average transaction price was RMB6.31 per share, and the total transaction amount was RMB228,329,645.02.Specifically, a total of 20,885,352 shares of the Company were purchased via the secondary market, accounting for 0.66% of theCompany's current total share capital. The average transaction price was RMB6.22 per share, and the transaction amount wasRMB129,935,389.66. A total of 15,326,208 shares were transferred through the transferee company's repurchase special securitiesaccount, accounting for 0.48% of the Company's existing total share capital. The transaction price was RMB6.42 per share, and thetransaction amount was RMB98,394,255.36. For more information, please refer to the announcement published on 13 May 2020 on themedia of information disclosure specified by the Company and the cninfo website (http://www.cninfo.com.cn).XVI Significant Related-Party Transactions
1. Continuing Related-Party Transactions
√ Applicable □ Not applicable
| Related party | Relationship with the Company | Type of transaction | Specific transaction | Pricing principle | Transaction price | Total value (RMB’0,000) | As a % of total value of all transactions of the same nature | Approved transaction line (RMB’0,000) | Over the approved line or not | Method of settlement | Obtainable market price for transactions of the same nature | Disclosure date | Index to disclosed information |
| Midea Group Co., Ltd. and its subsidiaries | A company controlled by a relative of the Company’s actual controller | Goods or labor services | Goods or labor services | Market price | -- | 96,458.94 | 37.95% | 150,000 | Not | As per contractual provisions | -- | 25 April 2020 | www.cninfo.com.cn |
| Zoomlion Heavy Industry Science and | A greater-than-5% shareholder of | Goods or labor services | Goods or labor services | Market price | -- | 87,096.73 | 195,300 | Not | As per contractual provisions | -- | 25 April 2020 | www.cninfo.com.cn |
| Technology Co., Ltd. and its subsidiaries | the Company | |||||||||||
| Total | -- | -- | 183,555.67 | -- | 345,300 | -- | -- | -- | -- | -- | ||
| Large-amount sales return in detail | N/A | |||||||||||
| Give the actual situation in the Reporting Period (if any) where an estimate had been made for the total value of continuing related-party transactions by type to occur in the Reporting Period | N/A | |||||||||||
| Reason for any significant difference between the transaction price and the market reference price (if applicable) | N/A | |||||||||||
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related-Party Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Amounts Due to and from Related Parties
√ Applicable □ Not applicable
Indicate whether there were any amounts due to or from related parties for non-operating purposes.
□ Yes √ No
No such cases in the Reporting Period.
5. Other Significant Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVII Significant Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
√ Applicable □ Not applicable
Description of leases
In accordance with the Property Lease Contract signed between the Company and the related party Foshan Shunde YinghaiInvestment Co., Ltd., the Company leased the 23rd floor of Yingfeng Business Building at 8 Yixin Road, Junlan Community, BeijiaoTown, Shunde District, Foshan City, of the construction area of 1,578.68m
, to the latter as the office space. The annual rent payablein 2020 was RMB1,258,900, and the actual payment was RMB1,258,900, which was paid in full as of 31 December 2020.Items that brought about profits or losses to the Company accounting for more than 10% of the gross profit of the Company duringthe Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Significant Guarantees
√ Applicable □ Not applicable
(1) Particulars about Guarantees
Unit: RMB'0,000
| Guarantees provided by the Company and its subsidiaries for external parties (exclusive of those for subsidiaries) | ||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Accredited buyer | 25 April 2020 | 20,000 | 4,615.54 | Joint-liability | Joint-liability | Not | Not | |
| Total approved line for such guarantees in Reporting Period (A1) | 20,000 | Total actual amount of such guarantees in Reporting Period (A2) | 4,615.54 | |||||
| Total approved line for such guarantees at end of Reporting Period (A3) | 20,000 | Total actual balance of such guarantees at end of Reporting Period (A4) | 4,615.54 | |||||
| Guarantees provided by the Company for its subsidiaries | ||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Liaoning Donggong Magnet Wire Co., Ltd. | 25 April 2020 | 25,000 | 28 December | 16,000 | Joint-liability | 3 years | No | Yes |
| Zhejiang Shangfeng Special BL Ower Industrial Co., Ltd. | 25 April 2020 | 70,000 | 13 November 2020 | 12,407.33 | Joint-liability | 2 years | No | Yes |
| Zhejiang Shangfeng Special BL Ower Industrial Co., Ltd. | 1 December 2020 | 29,996.18 | Joint-liability | 1 year | No | Yes | ||
| Zhejiang Shangfeng Special BL Ower Industrial Co., Ltd. | 29 December 2020 | 11,343.45 | Joint-liability | 2 years | No | Yes | ||
| Zhejiang Shangfeng Special BL Ower Industrial Co., Ltd. | 21 August 2020 | 20,000 | 25 October 2019 | 4,198.82 | Joint-liability | 2 years | No | Yes |
| Zhejiang Shangfeng Special BL Ower Industrial Co., Ltd. | 17 August 2020 | 2,000 | Joint-liability | 1 year | No | Yes | ||
| Zhejiang Shangfeng Special BL Ower Industrial Co., Ltd. | 17 August 2020 | 4,500 | Joint-liability | 2 years | No | Yes | ||
| Maoming Infore Environment Water Treatment Technology Co., Ltd. | 26 December 2017 | 15,000 | 30 March 2018 | 11,102.83 | Joint-liability | 15 years | No | Yes |
| Shenzhen Greenlander Environmental Protection Co., Ltd. | 2 February 2016 | 13,000 | 25 August 2016 | 7,865 | Joint-liability | 8 years | No | Yes |
| Shenzhen Greenlander Environmental Protection Co., Ltd. | 27 October 2016 | 12,000 | 15 November 2016 | 6,840 | Joint-liability | 8 years | No | Yes |
| Shenzhen Greenlander Environmental Protection Co., Ltd. | 10 August 2019 | 25,000 | 17 December 2019 | 17,280 | Joint-liability | 10 years | No | Yes |
| Shenzhen Greenlander Environmental Protection Co., Ltd. | 25 April 2020 | 20,500 | 15 June 2020 | 13,000 | Joint-liability | 15 years | No | Yes |
| Shenzhen Greenlander Environmental Protection Co., Ltd. | 21 August 2020 | 29,200 | 25 October 2020 | 8,000 | Joint-liability | 15 years | No | Yes |
| GuangDong Wellkey Electric Material Co., Ltd. | 12 December 2018 | 2,000 | 31 March 2020 | 2,000 | Joint-liability | 1 year | No | Yes |
| GuangDong Wellkey Electric Material Co., Ltd. | 25 April 2020 | 14,000 | 17 June 2020 | 3,000 | Joint-liability | 1 year | No | Yes |
| GuangDong Wellkey Electric Material Co., Ltd. | 21 August 2020 | 18,000 | ||||||
| Anhui Wellkey Electric Material Co., Ltd. | 25 April 2020 | 12,000 | 17 June 2020 | 3,000 | Joint-liability | 1 year | No | Yes |
| Anhui Wellkey Electric Material Co., Ltd. | 17 June 2020 | 3,000 | Joint-liability | 1 year | No | Yes | ||
| Anhui Wellkey Electric Material Co., Ltd. | 25 March 2020 | 2,000 | Joint-liability | 1 year | No | Yes | ||
| Anhui Wellkey Electric Material Co., Ltd. | 17 June 2020 | 1,000 | Joint-liability | 1 year | No | No | ||
| Guangdong Infore Technology Co., Ltd. | 26 December 2017 | 15,000 | 26 December 2018 | 13,923.02 | Joint-liability | 5 years | No | Yes |
| Guangdong Infore Technology Co., Ltd. | 25 April 2020 | 15,000 | 1 March 2020 | 2,000 | Joint-liability | 1 year | No | Yes |
| Guangdong Infore Technology Co., Ltd. | 17 June 2020 | 197.41 | Joint-liability | 1 year | No | Yes |
| Guangdong Infore Technology Co., Ltd. | 20 May 2020 | 723.96 | Joint-liability | 1 year | No | Yes | ||
| Changsha Zoomlion Changgao Environmental Industry Co., Ltd. | 24 October 2019 | 10,000 | 25 March 2020 | 9,000 | Joint-liability | 5 years | No | Yes |
| Loudi Zoomlion Huabao Environmental Protection Technology Co., Ltd. | 25 April 2020 | 2,000 | -- | -- | -- | N/A | -- | Yes |
| Renshou Infore Zoomlion Urban Environmental Service Co., Ltd. | 25 April 2020 | 4,800 | -- | -- | -- | N/A | -- | Yes |
| Jishan Yinglian Urban Environmental Service Co., Ltd. | 25 April 2020 | 1,000 | -- | -- | -- | N/A | -- | Yes |
| Shenzhen Yinglian Urban Environmental Service Co., Ltd. | 25 April 2020 | 8,800 | -- | -- | -- | N/A | -- | Yes |
| Balinyouqi Xingzhou Environmental Water Co., Ltd. | 25 April 2020 | 5,000 | -- | -- | -- | N/A | -- | Yes |
| Guangdong Infore Environmental Investment Co., Ltd. | 25 April 2020 | 28,000 | -- | -- | -- | N/A | -- | Yes |
| Changde Zelian Environmental Service Co., Ltd. | 25 April 2020 | 11,900 | -- | -- | -- | N/A | -- | Yes |
| Shenzhen Bao’an Yinglian Urban Service Co., Ltd. | 21 August 2020 | 38,000 | -- | -- | -- | N/A | -- | Yes |
| Other majority-owned subsidiaries | 25 April 2020 | 8,000 | -- | -- | -- | N/A | -- | Yes |
| Total approved line for such guarantees in the Reporting Period (B1) | 333,200 | Total actual amount of such guarantees in the Reporting Period (B2) | 184,378 | |||||
| Total approved line for such guarantees at the end of the | 423,200 | Total actual balance of such guarantees at the end of the | 184,378 | |||||
| Reporting Period (B3) | Reporting Period (B4) | |||||||
| Guarantees provided between subsidiaries | ||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Total guarantee amount (total of the three kinds of guarantees above) | ||||||||
| Total guarantee line approved in the Reporting Period (A1+B1+C1) | 353,200 | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 188,993.54 | |||||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | 443,200 | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | 188,993.54 | |||||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 11.17% | |||||||
| Of which: | ||||||||
(2) Irregularities in Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overview of wealth management entrustments in the Reporting Period:
Unit: RMB’0,000
| Type | Funding source | Amount | Undue amount | Unrecovered overdue amount |
| Bank’s wealth management product | Self-funded | 145,150 | 0 | 0 |
| Total | 145,150 | 0 | 0 | |
High-risk wealth management transactions with a significant single amount or with low security, low liquidity and no principalprotection:
□ Applicable √ Not applicable
Wealth management transactions where the principal is expectedly irrecoverable or impairment may be incurred:
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Significant Contracts Arising in the Ordinary Course of Business
□ Applicable √ Not applicable
5. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVIII Social Responsibilities
1. Performance of Social Responsibilities
The Company has been attaching great importance to its social responsibilities, actively performing its duty as a corporatecitizen, assuming social responsibilities, committed to creating value for customers, creating opportunities for employees, creatingreturns for shareholders and creating wealth for the society, and contributing to the harmonious economic and social development,natural environment and balanced use of resources. It has also been assuming corresponding responsibilities for employees,customers, suppliers and other stakeholders, and promoting the comprehensive and coordinated development of itself and allstakeholders in the society.During the Reporting Period, the Company continued to thoroughly implement the scientific concept of development andactively fulfill its social responsibilities, and was committed to developing itself and keeping creating values for and protecting therights and interests of shareholders. It also fully respected the legitimate rights and interests of employees, customers, suppliers andother stakeholders, carried out active cooperation with all parties, enhanced communication and exchanges, and achieved mutualbenefits for shareholders, employees, upstream and downstream partners and all social parties. The Company's fulfillment of socialresponsibilities in 2020 is as follows:
1. Protection of the rights and interests of investors and creditors
The Company adhered to honest and law-abiding management, implemented standardized internal management, and paidshareholders with stable business performance. It kept improving the quality of information disclosure, treated all investors fairly andprotected shareholders' right to know through timely, true, accurate and full information disclosure, and kept improving corporategovernance and standardized operations to protect shareholders' rights and interests, ensure all legitimate rights and interests ofshareholders as stipulated by laws, regulations and rules, and safeguard the interests of creditors.
The Company established and improved the internal system for a sound corporate environment of self-development,self-restriction, self-regulation and self-control. It also provided hotlines and fax and email addresses for investors to maintain closecommunication and interaction with investors in multiple channels such as the investor interaction platform of Shenzhen StockExchange. Through general meetings, investor exchanges and phone calls, the Company maintained adequate communication andinformation exchange with investors.
2. Protection of the rights and interests of employees
The Company has always insisted on the people-oriented management philosophy, and regarded employees as its most valuableresources and wealth. It adhered to harmonious labor relations and strictly abode by the Labor Law. Sound labor and employmentmanagement policies, systematic and scientific salary systems, performance appraisal systems, reward, punishment and incentivesystems were established in the Company and its subsidiaries to ensure that the employees enjoy labor rights and fulfill laborobligations according to law based on such management policies. The Company gave top priority to safeguarding the legitimaterights and interests of employees, and strictly implemented the social security system.In addition to further improving the existing talent cultivation system, the Company offered diversified training and a largerlearning platform for employees of different levels and positions to improve employees' self-value while enhancing the Company'scomprehensive competitiveness.Upholding the value that "employees are our business partners.", the Company intends to realize and safeguard the interests ofall employees with its work, built the company-employee community of shared interests, protected the rights and interests ofemployees, promoted value realization and all-around development of employees, improved the corporate cohesion, and realizedsynchronous growth between the Company and employees.
3. Protection of the rights and interests of suppliers, customers and consumers
"Customers are the ones on whom our livelihood depends." The Company adhered to the business philosophy of "market first,customer first", saw customers as its most valuable assets, took customer satisfaction as the yardstick for its performance, valued thewin-win relationship with customers, and abode by integrity and was committed to providing customers with premium services.
The Company has always been attaching great importance to the protection of the legitimate rights and interests of suppliers,partners and consumers. While maintaining sound production and operation, the Company shared information with customers andsuppliers in various ways to enhance technical exchange and progress, create an environment of honest, harmonious and faircooperation and promote common development.
4. Environmental protection and sustainable development
The Company has been emphasizing environmental protection and sustainable development.
During the reporting period, the Company provided services in the fields of smart service, environmental monitoring and solidwaste treatment following the state's policy requirements for environmental protection and environmental governance, andcontributed to environmental protection with practical actions by producing great environmental and social benefits in addition toeconomic benefits. In project construction and operation, the Company strictly abode by local laws and regulations on environmentalprotection and constantly took pollution control and environmental protection measures, which were recognized by owners and localgovernments. In daily operation and management, the Company adhered to energy conservation, emission reduction andconsumption reduction in specific works, and advocated all employees to save electricity, paper and water as much as possible.Besides, it promoted digital network tools such as the collaborative office system and the financial management information systemto share resources and realize remote and paperless office while improving work efficiency.
5. Public relations and social welfare activities
Since its establishment, the Company has been strictly abiding by laws and regulations when pursuing profits and development,and actively practicing and assuming social responsibilities.
After the outbreak of COVID-19 at the beginning of 2020, the Company immediately organized the emergency working groupto aid Wuhan, Hubei, and allocated equipment and supplies, actively cooperated with local governments in disinfection and wasteclearing. It donated 15 disinfection vehicles and 15 tons of disinfectants to Wuhan City Management Committee during the SpringFestival. To fulfill its social responsibilities and contribute to epidemic prevention and control, the Company continued to donatemedical masks, disinfection liquid, medical wastewater monitoring equipment and waste masks collection buckets to many places inChina. In the face of the menacing epidemic, the Company responded quickly, shouldered social responsibilities to the best of itsability, and overcame difficulties and fought the epidemic with all sectors of society, aiming for a win in the battle againstCOVID-19 with the people of the whole country.
The development of a company and its active commitment to social responsibilities are complementary and inseparable. The
society and economy were in complicated and grave difficulties in 2020, and the Company was facing great challenges indevelopment. By fully cooperating with all related parties and through joint efforts of its employees, the Company achieved goodresults in all businesses. We hereby would like to express our gratitude to all our departments, customers, suppliers and investors andpeople from all walks of life for their strong support to us.
In 2021, the Company will continue to stay true to its original mission and forge ahead, and continue to speed up technicalinnovation, improve customer service and customer satisfaction, and create more value for shareholders. It will attach importance tocustomer and investor relationship management, adhere to people-orientation, effectively protect the rights and interests ofemployees, and provide employees with more room for career development. Furthermore, while maintaining the sustainabledevelopment of its major business, the Company will, as always, promote and improve the assumption of social responsibilities,actively undertake social responsibilities and humbly accept the supervision from all sectors of society, and strengthencommunication and exchanges with all stakeholders, devote itself to self-development, and insist on paying back the society with itsown strength.
2. Measures Taken for Targeted Poverty Alleviation
The Company did not carry out any work for targeted poverty alleviation in the Reporting Period, and has no such plans for now.
3. Relevant Information on Environmental Protection
Indicate whether the listed company and its subsidiaries fell into major pollutant-discharge enterprises and institutions published bynational environmental protection authorities.
√ Yes □ No
| Name of company or subsidiary | Names of main pollutants and characteristic pollutants | Way of discharge | Number of discharge outlets | Distribution of discharge outlets | Discharge concentration | Pollutant discharge standards abode by | Total discharge volume | Total approved discharge volume | Excessive discharge |
| Foshan Shunde District Huaqingyuan Water Environmental Protection Co., Ltd. (phases I and II sewage station by the gate), Foshan Shunde Yuanrun Water Environmental Protection Co., Ltd. (phase III sewage station by the gate) | COD | Continuous discharge | 1 | Beijiang River trunk stream waterway | 9.6mg/L | GB18918-2002 | 389.11t | 1606t/a | Naught |
| Foshan Shunde District Huaqingyuan Water | Ammonia-nitrogen | Continuous discharge | 1 | Beijiang River trunk stream | 0.27mg/L | GB18918-2002 | 10.94t | 200.75t/a | Naught |
| Environmental Protection Co., Ltd. (phases I and II sewage station by the gate), Foshan Shunde Yuanrun Water Environmental Protection Co., Ltd. (phase III sewage station by the gate) | waterway | ||||||||
| Foshan Shunde District Huaqingyuan Water Environmental Protection Co., Ltd. (phases I and II sewage station by the gate), Foshan Shunde Yuanrun Water Environmental Protection Co., Ltd. (phase III sewage station by the gate) | Total phosphorus | Continuous discharge | 1 | Beijiang River trunk stream waterway | 0.32mg/L | GB18918-2002 | 12.96t | 20.075t/a | Naught |
| Foshan Shunde District Huaqingyuan Water Environmental Protection Co., Ltd. (phases I and II sewage station by the gate), Foshan Shunde Yuanrun Water Environmental Protection Co., Ltd. (phase III sewage station by the gate) | Total nitrogen | Continuous discharge | 1 | Beijiang River trunk stream waterway | 5.86mg/L | GB18918-2002 | 237.50t | 602.25t/a | Naught |
| Funan Greenlander Environmental Protection Energy Co., Ltd. | Exhaust/smoke | 80m chimney | 1 | North side of the main building | 1.6mg/Nm? | GB18485-2014 | 1.105t | 14.6t/a | Naught |
| Funan Greenlander Environmental Protection Energy Co., Ltd. | Exhaust/SO2 | 80m chimney | 1 | North side of the main building | 31mg/Nm? | GB18485-2014 | 20.213t | 100t/a | Naught |
| Funan Greenlander Environmental Protection Energy Co., Ltd. | Exhaust/NOx | 80m chimney | 1 | North side of the main building | 148mg/Nm? | GB18485-2014 | 96.351t | 96.72t/a | Naught |
| Funan Greenlander Environmental Protection Energy Co., Ltd. | Exhaust/HCl | 80m chimney | 1 | North side of the main building | 33mg/Nm? | GB18485-2014 | 21.405t | -- | Naught |
| Funan Greenlander Environmental Protection Energy Co., Ltd. | Exhaust/CO | 80m chimney | 1 | North side of the main building | 3mg/Nm? | GB18485-2014 | 2.045t | -- | Naught |
| Funan Greenlander Environmental Protection Energy Co., Ltd. | Exhaust/Pb | 80m chimney | 1 | North side of the main building | 0.002mg/Nm? | GB18485-2014 | 1.3017kg | -- | Naught |
| Funan Greenlander Environmental Protection Energy Co., Ltd. | Exhaust/Cd | 80m chimney | 1 | North side of the main building | 0.00005mg/Nm? | GB18485-2014 | 0.032kg | -- | Naught |
| Funan Greenlander Environmental Protection Energy Co., Ltd. | Exhaust/Hg | 80m chimney | 1 | North side of the main building | 0.0038mg/Nm? | GB18485-2014 | 2.47kg | -- | Naught |
| Funan Greenlander Environmental Protection Energy Co., Ltd. | Exhaust/dioxin | 80m chimney | 1 | North side of the main building | 0.025ng-TEQ/m? | GB18485-2014 | 0.016g-TEQ/a | -- | Naught |
| Shouxian Greenlander New Energy Co., Ltd. | Exhaust/smoke | 80m chimney | 1 | West side of the main building | 2.5mg/Nm? | GB18485-2014 | 0.89t | 0.89t/a | Naught |
| Shouxian Greenlander New Energy Co., Ltd. | Exhaust/SO2 | 80m chimney | 1 | West side of the main building | 48mg/Nm? | GB18485-2014 | 29.143t | 70t/a | Naught |
| Shouxian Greenlander New Energy Co., Ltd. | Exhaust/NOx | 80m chimney | 1 | West side of the main building | 206mg/Nm? | GB18485-2014 | 141.945t | 144t/a | Naught |
| Shouxian Greenlander New Energy Co., Ltd. | Exhaust/HCl | 80m chimney | 1 | West side of the main building | 42mg/Nm? | GB18485-2014 | 22.464t | -- | Naught |
| Shouxian Greenlander New Energy Co., Ltd. | Exhaust/CO | 80m chimney | 1 | West side of the main building | 1mg/Nm? | GB18485-2014 | 4.98t | -- | Naught |
| Shouxian Greenlander New Energy Co., Ltd. | Exhaust/Pb | 80m chimney | 1 | West side of the main building | 0.118mg/m? | GB18485-2014 | 5.392kg | -- | Naught |
| Shouxian Greenlander New Energy Co., Ltd. | Exhaust/Cd | 80m chimney | 1 | West side of the main building | 0.000182mg/m? | GB18485-2014 | 0.0425kg | -- | Naught |
| Shouxian Greenlander New Energy Co., Ltd. | Exhaust/Hg | 80m chimney | 1 | West side of the main building | ND | GB18485-2014 | 2.06kg | -- | Naught |
| Shouxian Greenlander New Energy Co., Ltd. | Exhaust/dioxin | 80m chimney | 1 | West side of the main building | 0.018ngTEQ/m? | GB18485-2014 | 0.013g-TEQ/a | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (1# furnace) | Exhaust/smoke | 80m chimney | 1 | West side of the main building | 0.86mg/Nm? | GB18485-2014 | 0.32t | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (1# furnace) | Exhaust/SO2 | 80m chimney | 1 | West side of the main building | 12.83mg/Nm? | GB18485-2014 | 7.17t | 58t/a | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (1# furnace) | Exhaust/NOx | 80m chimney | 1 | West side of the main building | 180.38mg/Nm? | GB18485-2014 | 105.09t | 148.85t/a | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (1# | Exhaust/HCl | 80m chimney | 1 | West side of the main building | 16.01mg/Nm? | GB18485-2014 | 9.83t | -- | Naught |
| furnace) | |||||||||
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (1# furnace) | Exhaust/CO | 80m chimney | 1 | West side of the main building | 10.97mg/Nm? | GB18485-2014 | 4.05t | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (1# furnace) | Exhaust/Pb | 80m chimney | 1 | West side of the main building | 0.006mg/Nm? | GB18485-2014 | 5.04kg | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (1# furnace) | Exhaust/Cd | 80m chimney | 1 | West side of the main building | 0.00005mg/Nm? | GB18485-2014 | 0.042kg | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (1# furnace) | Exhaust/Hg | 80m chimney | 1 | West side of the main building | 0.0004mg/Nm? | GB18485-2014 | 0.035kg | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (1# furnace) | Exhaust/dioxin | 80m chimney | 1 | West side of the main building | 0.021ng-TEQ/m? | GB18485-2014 | 0.022g-TEQ/a | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (2# furnace) | Exhaust/smoke | 80m chimney | 1 | West side of the main building | 1.12mg/Nm? | GB18485-2014 | 0.36t | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (2# | Exhaust/SO2 | 80m chimney | 1 | West side of the main building | 25.24mg/Nm? | GB18485-2014 | 10.95t | 58t/a | Naught |
| furnace) | |||||||||
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (2# furnace) | Exhaust/NOx | 80m chimney | 1 | West side of the main building | 179.64mg/Nm? | GB18485-2014 | 76.48t | 148.85t/a | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (2# furnace) | Exhaust/HCl | 80m chimney | 1 | West side of the main building | 14.16mg/Nm? | GB18485-2014 | 6.10t | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (2# furnace) | Exhaust/CO | 80m chimney | 1 | West side of the main building | 31.93mg/Nm? | GB18485-2014 | 5.01t | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (2# furnace) | Exhaust/Pb | 80m chimney | 1 | West side of the main building | 0.007mg/Nm? | GB18485-2014 | 5.56kg | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (2# furnace) | Exhaust/Cd | 80m chimney | 1 | West side of the main building | 0.00007mg/Nm? | GB18485-2014 | 0.0548kg | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (2# furnace) | Exhaust/Hg | 80m chimney | 1 | West side of the main building | 0.0025mg/Nm? | GB18485-2014 | 2.02kg | -- | Naught |
| Xiantao Greenlander Environmental Protection Power Co., Ltd. (2# | Exhaust/dioxin | 80m chimney | 1 | West side of the main building | 0.010ng-TEQ/m? | GB18485-2014 | 0.012g-TEQ/a | -- | Naught |
| furnace) | |||||||||
| Xiantao Yinghe Environmental Protection Co., Ltd. | Ammonia, hydrogen sulfide | Centralized | 2 | Discharge outlets of kitchen wastes and sludges were set at the end of the deodorization system, and exhausts were discharged through the chimney | Ammonia: 0.06mg/Nm?; hydrogen sulfide: 1.5mg/Nm? | GB14554-93 | None | -- | Naught |
| Xiantao Yinghe Environmental Protection Co., Ltd. | Smoke, SO2, NOX | Centralized | 1 |
| Smoke: 20mg/Nm?; SO2: 50mg/Nm?; NOX: 200mg/Nm? | GB13271-2014 | None | Smoke: 0.241t; SO2: 0.467t; NOX: 1.809t | Naught | |||||
| Xiantao Yinghe Environmental Protection Co., Ltd. | COD, ammonia-nitrogen | Centralized | 1 | Sewage discharge outlets were set at the end of the sewage treatment facility, and sewage was discharged to Chengxi Sewage Plant after | COD: 500mg/L; ammonia-nitrogen: no limit | GB8978-1996 | None | COD: 4.2627t; ammonia-nitrogen: 0.427t | Naught |
Construction and operation of pollution prevention and control facilities:
The Company, in strict accordance with the Environmental Protection Law of the People's Republic of China, Law of thePeople's Republic of China on Prevention and Control of Air Pollution, Law of the People's Republic of China on Prevention andControl of Environmental Pollution Caused by Solid Waste, and Law of the People's Republic of China on Prevention and Control ofWater Pollution and the administrative requirement of simultaneous design, construction and application of main works and waterconservation measures, designed and constructed pollution prevention and control facilities and main works simultaneously andcarried out acceptance inspections and put them into use simultaneously. The Company ran its water treatment projects with matureand reliable production process, and recorded in full daily sampling and operation, with stable operation throughout the year. TheCompany also ran its domestic waste incineration power generation projects with the most mature and stable process in the industry,and input sufficient environmental consumables in them, with stable operation throughout the year. As required, all key pollutantdischarge projects of the Company were equipped with online monitoring devices at the outlets, with monitoring data directly sent tothe national environmental platform. All the projects were supervised by environmental protection authorities of the state, with allemissions in 2020 meeting the requirements.Assessment on the environmental impact of construction projects and other administrative licenses of environmental protection:
The Company has been running all its key pollutant discharge projects according to laws and regulations for many years. Duringthe construction period, EIA was carried out for these projects in accordance with the Environmental Protection Law of the People'sRepublic of China and Law of the People's Republic of China on Environmental Impact Assessment, and EIA documents wereapproved by environmental authorities. Besides, the Company obtained approval from environmental authorities before pilotproduction, had its environmental protection measures for completed project construction accepted during pilot production, anddesigned, constructed and put into use simultaneously the supporting environmental protection facilities and the main works.
Contingency plan for environmental emergencies:
The Company commissioned a professional third-party organization to develop a contingency plan for environmentalemergencies for each of its key pollutant discharge projects, which was approved and filed for record. In 2020, it carried out regulartraining and drills among its employees in different projects according to the requirements and contents of the contingency plans toenable them to timely and accurately deal with environmental pollution emergencies. In 2020, no major environmental risk incidentsoccurred in any of the projects.
Environmental self-monitoring plan:
The Company developed the 2020 Environmental Self-monitoring Plan for each of its key pollutant discharge projects, and filedthem with local ecological and environmental protection authorities. It also commissioned a professional third-party inspectioninstitution to carry out regular environmental monitoring of the pollutants discharged by the projects.
Other environmental information to be disclosed:
The Company disclosed the environmental information of each of its key pollutant discharge projects on the government'senvironmental information disclosure platform on a regular basis according to the requirements of local environmental authorities.
Other information related to environmental protection:
N/A.
XIX Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XX Significant Events of Subsidiaries
√ Applicable □Not applicable
1. On 10 January 2020, the Company held the 2nd Extraordinary Meeting of the 9th Board of Directors and deliberated andapproved the Proposal on Accepting the Transfer of Partial Equity of the Holding Subsidiary and Waiving the Preemptive Right andRelated-party Transactions. It was approved to accept the transfer of 5.20% of the equity of Zhejiang Shangfeng Special BL OwerIndustrial. Co. Ltd. (the "Shangfeng") and waive the preemptive right to purchase 17.90% of the equity of Shangfeng. The overallvaluation of Shangfeng was RMB350 million. After this transaction, the Company held 60.20% of the equity of Shangfeng, andShangfeng was still a holding subsidiary of the Company, causing no change to the scope of the consolidated statement, no significantimpact on the Company's financial status and operating results, and no damage to the interests of the Company and the generalshareholders, especially the small and medium shareholders. For details, please refer to relevant announcements published on 11January 2020 by the Company on the media of disclosure specified by CSRC and SZSE and the cninfo website (www.cninfo.com.cn).
2. On 20 November 2020, the Company held the 9th Extraordinary Meeting of the 9th Board of Directors and the 8thExtraordinary Meeting of the 9th Supervisory Committee, and deliberated and approved the Proposal of the Company's Plan for PublicListed Transfer of Controlling Interest of Subsidiary. It was approved to plan to transfer 51% to 100% of the controlling interest of thewholly-owned subsidiary Foshan Yingtong Electric Material Co., Ltd. (the "Foshan Yingtong"), with the reserve price of the firstlisting no lower than RMB492,507,300, the value of the net assets of 100% of the equity (the final transfer price was calculated bymultiplying RMB492,507,300 by the ratio of the equity to be transferred and bid on the premise that the ratio of the equity to betransferred and bid is no less than 51%). The Company was also approved to lower the listing price if it gets no intended transferee inthe first listing, provided that each lowering shall not exceed 20% of the last listing price.
On 29 January 2021, the Company held the 11th Extraordinary Meeting of the 9th Board of Directors and the 10th ExtraordinaryMeeting of the 9th Supervisory Committee, and deliberated and approved the Proposal on Public Listed Transfer of 51% of theControlling Right of Subsidiary. It was approved to transfer 51% of the controlling interest of the wholly-owned subsidiary FoshanYingtong to Guangdong Yinghe Corporate Management Co., Ltd. (Guangdong Yinghe) at RMB255 million by means of public listingand bidding.
On 17 March the Company disclosed the Announcement on Completion of Public Listed Transfer of 51% of Equity of Subsidiaryon the media of information disclosure specified by CSRC and SZSE and the cninfo website (www.cninfo.com.cn), upon which theCompany had gone through the procedures for transfer and registration of the 51% equity of Foshan Yingtong of this public listedtransfer. After the transfer, the Company held 49% of the equity of Foshan Yingtong. As of the date of the announcement, the Companyhad received RMB131 million of the transaction price paid by Guangdong Yinghe, and the remaining RMB124 million is to be paidaccording to the transfer agreement. After the transaction, Foshan Yingtong will become a joint-stock subsidiary of the Company, andwill be excluded from the consolidated statement of the Company.
For details, please refer to relevant announcements published by the Company on the media of disclosure specified by CSRC andSZSE and the cninfo website (www.cninfo.com.cn) on 21 November 2020, 30 January 2021, and 17 March 2021.
Part VI Share Changes and Shareholder Information
I. Share Changes
1. Share Changes
Unit: share
| Before | Increase/decrease in the current period (+/-) | After | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| 1. Restricted shares | 2,017,305,260 | 63.78% | 0 | 0 | 0 | -858,948,616 | -858,948,616 | 1,158,356,644 | 36.62% |
| 1.1 Shares held by the state | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 1.2 Shares held by state-owned corporations | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 1.3 Shares held by other domestic investors | 2,017,305,260 | 63.78% | 0 | 0 | 0 | -858,948,616 | -858,948,616 | 1,158,356,644 | 36.62% |
| Including: Shares held by domestic corporations | 1,996,073,294 | 63.11% | 0 | 0 | 0 | -858,311,516 | -858,311,516 | 1,137,761,778 | 35.97% |
| Shares held by domestic individuals | 21,231,966 | 0.67% | 0 | 0 | 0 | -637,100 | -637,100 | 20,594,866 | 0.65% |
| 1.4 Shares held by overseas investors | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Including: Shares held by overseas corporations | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by overseas individuals | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2. Unrestricted shares | 1,145,756,886 | 36.22% | 0 | 0 | 0 | 858,948,616 | 858,948,616 | 2,004,705,502 | 63.38% |
| 2.1 RMB-denominated ordinary shares | 1,145,756,886 | 36.22% | 0 | 0 | 0 | 858,948,616 | 858,948,616 | 2,004,705,502 | 63.38% |
| 2.2 Domestically listed foreign shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2.3 Overseas listed foreign | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| shares | |||||||||
| 2.4 Others | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 3. Total shares | 3,163,062,146 | 100.00% | 0 | 0 | 0 | 0 | 0 | 3,163,062,146 | 100.00% |
Reasons for share changes:
√ Applicable □ Not applicable
1. The Company disclosed the Reminder on the Unlocking of Restricted Shares in Major Asset Restructuring on
www.cninfo.com.cn dated 11 January 2020. The shares issued in the private placement for asset purchase became publicly tradable
on the Shenzhen Stock Exchange on 4 January 2019. The shares were placed with eight entities including Ningbo Infore AssetManagement Co., Ltd., Zoomlion Heavy Industry Science And Technology Co., Ltd., Hongchuang (Shenzhen) Investment Center(L.P.), Guangzhou Yuemin Investment Yinglian Investment Partnership (L.P.) and Shanghai Lvlian Junhe Industry Buyout EquityInvestment Fund Partnership (L.P.). On 14 January 2020, a total of 858,311,516 shares (27.14% of the Company’s total shares)placed with four of the aforesaid shareholders, namely, Zoomlion Heavy Industry Science And Technology Co., Ltd., Hongchuang(Shenzhen) Investment Center (L.P.), Guangzhou Yuemin Investment Yinglian Investment Partnership (L.P.) and Shanghai LvlianJunhe Industry Buyout Equity Investment Fund Partnership (L.P.), became publicly tradable upon the expiration of a 12-monthlockup.
2. As prescribed, 100% of the 637,100shares held by former Vice President and Board Secretary Mr. Liu Kaiming wereunlocked upon the expiration of a 6-month lockup starting from his resignation.Approval of share changes:
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Progress on any share repurchases:
√ Applicable □ Not applicable
The Proposal on the Share Repurchase Plan was approved at the 3rd Extraordinary Meeting of the 9th Board of Directors on 13April 2020, and the Share Repurchase Report was disclosed on 17 April 2020. The Company decided to carry out a share repurchasethrough centralized bidding in a self-funded manner, and the repurchased shares would be used for equity incentive and employeestock ownership plans or reducing the registered capital according to law. The total amount used for the repurchase would be nolower than RMB200 million (inclusive) and no more than RMB400 million (inclusive), the repurchase price would not exceedRMB8.00/share (inclusive), and the repurchase period would be no more than 12 months starting from the approval of the sharerepurchase plan by the Board of Directors.
The 2019 Final Dividend Plan was approved at the 2019 Annual General Meeting on 15 May 2020. Based on the total sharecapital of 3,163,062,146shares (minus the 0 share in the Company’s repurchase account) at the date of record for the 2019 finaldividend plan, a cash dividend of RMB1.10 (tax inclusive) per 10 shares was distributed to the shareholders, with no bonus issuefrom either profit or capital reserves. The said plan was implemented on 10 July 2020. According to the Share Repurchase Report, adistribution of cash dividends occurred within the repurchase period. According to the applicable regulations of the CSRC and theShenzhen Stock Exchange, the upper limit of the share repurchase was accordingly adjusted to RMB7.89/share (inclusive) upon thecompletion of the profit distribution.
The Proposal on the Termination of Share Repurchase was approved at the 12th Extraordinary Meeting of the 9th Board ofDirectors on 8 April 2021. It was agreed that the Company had fewer opportunities to repurchase shares because the share price wasalways higher than the upper limit of the repurchase price, multiple sensitive periods were involved during the repurchase period, etc.Considering that the share price was still continuously higher than the upper limit of the repurchase price, the Company decided to
terminate the share repurchase upon deliberation.As of the date of this Report, a total of 7,634,138 shares (approximately 0.24% of the Company’s existing total share capital)have been repurchased by way of centralized bidding. The highest transaction price was RMB7.89/share, the lowest transaction pricewas RMB7.77/share, and the total transaction amount was RMB59,855,050.85 (exclusive of transaction costs).For further information, please refer to the relevant announcements disclosed by the Company on the media designated by theCSRC and the Shenzhen Stock Exchange for information disclosure and http://www.cninfo.com.cn dated 14 April 2020, 17 April2020, 25 September 2020, 9 October 2020, 3 November 2020, 3 December 2020, 5 January 2021, 2 February 2021, 2 March 2021, 3April 2021 and 9 April 2021.Progress on reducing the repurchased shares by way of centralized bidding:
□ Applicable √ Not applicable
Effects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable to the Company’sordinary shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
| Shareholder | Opening restricted shares | Increase in restricted shares in the current period | Unlocked in the current period | Closing restricted shares | Reason for restriction | Date of unlocking |
| Ningbo Infore Asset Management Co., Ltd. | 1,017,997,382 | 0 | 0 | 1,017,997,382 | Restricted shares in a private placement | 4 July 2022 |
| Zoomlion Heavy Industry Science And Technology Co., Ltd. | 399,214,659 | 0 | 399,214,659 | 0 | Restricted shares in a private placement | 14 January 2020 |
| Hongchuang (Shenzhen) Investment Center (L.P.) | 310,423,813 | 0 | 310,423,813 | 0 | Restricted shares in a private placement | 14 January 2020 |
| Guangzhou Yuemin Investment Yinglian Investment Partnership (L.P.) | 79,842,931 | 0 | 79,842,931 | 0 | Restricted shares in a private placement | 14 January 2020 |
| Shanghai Junhe | 68,830,113 | 0 | 68,830,113 | 0 | Restricted shares | 14 January 2020 |
| Licheng Investment Management Center (L.P.)－Shanghai Lvlian Junhe Industry Buyout Equity Investment Fund Partnership (L.P.) | in a private placement | |||||
| Ningbo Yingtai Investment Partnership (Limited Partnership) | 40,913,514 | 0 | 0 | 40,913,514 | Restricted shares in a private placement | 4 January 2022 |
| Ningbo Zhongfeng Investment Partnership (Limited Partnership) | 40,141,033 | 0 | 0 | 40,141,033 | Restricted shares in a private placement | 4 January 2022 |
| Ningbo Liantai Investment Partnership (Limited Partnership) | 38,709,849 | 0 | 0 | 38,709,849 | Restricted shares in a private placement | 4 January 2022 |
| He Jianfeng | 11,723,329 | 0 | 0 | 11,723,329 | Restricted shares in a private placement | 8 January 2021 |
| She Changguang | 7,033,997 | 0 | 0 | 7,033,997 | Restricted shares in a private placement | 8 January 2021 |
| Others | 2,474,640 | 0 | 637,100 | 1,837,540 | Locked-up shares of senior management | 25% of the total shareholdings are unlocked annually |
| Total | 2,017,305,260 | 0 | 858,948,616 | 1,158,356,644 | -- | -- |
II Issuance and Listing of Securities
1. Securities (Exclusive of Preference Shares) Issued in the Reporting Period
√ Applicable □ Not applicable
| Name of | Issue date | Issue price | Issued | Listing date | Number | Termination | Index to | Disclosure |
| stock and its derivative securities | (or interest rate) | number | approved for public trading | date of transaction | disclosed information | date | ||
| Type: stock | ||||||||
| Type: convertible corporate bonds, convertible corporate bonds with warrants, corporate bonds | ||||||||
| Infore Convertible Bonds | 4 November 2020 | RMB100 | 14,761,896 | 2 December 2020 | 14,761,896 | -- | Announcement No. 2020-102 on the Listing of Convertible Corporate Bonds Offered to the Public disclosed onwww.cninfo.com.cn | 1 December 2020 |
| Type: other derivative securities | ||||||||
Particulars about the securities (exclusive of preference shares) issued in the Reporting Period:
On 10 September 2020, the Company received the Reply on the Approval of the Public Offering of Convertible CorporateBonds by Infore Environment Technology Group Co., Ltd. (CSRC Permit [2020] No. 2219) issued by the CSRC. As such, theCompany was approved to carry out a public offering of convertible corporate bonds in the total par value of RMB1,476,189,600,with a term of six years. On 4 November 2020, the Company carried out the public offering of 14,761,896 convertible corporatebonds at the par value of RMB100 each, with the total par value being RMB1,476,189,600. For further information, please refer tothe Announcement No. 2020-083 on the Receipt of the CSRC Approval Reply to the Application for a Public Offering of ConvertibleCorporate Bonds and the Announcement No. 2020-102 on the Listing of Convertible Corporate Bonds Offered to the Publicdisclosed on www.cninfo.com.cn dated 18 September 2020 and 1 December 2020, respectively.
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable √ Not applicable
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
| Number of | 28,040 | Number of | 36,015 | Number of | 0 | Number of | 0 |
| ordinary shareholders at the period-end | ordinary shareholders at the month-end prior to the disclosure of this Report | preference shareholders with resumed voting rights at the period-end (if any) (see note 8) | preference shareholders with resumed voting rights at the month-end prior to the disclosure of this Report (if any) (see note 8) | |||||||||||
| 5% or greater shareholders or top 10 shareholders | ||||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Increase/decrease in the Reporting Period | Restricted shares held | Unrestricted shares held | Shares in pledge or frozen | |||||||
| Status | Shares | |||||||||||||
| Ningbo Infore Asset Management Co., Ltd. | Domestic non-state-owned corporation | 32.18% | 1,017,997,382 | 0 | 1,017,997,382 | 0 | In pledge | 610,798,429 | ||||||
| Zoomlion Heavy Industry Science And Technology Co., Ltd. | Domestic non-state-owned corporation | 12.62% | 399,214,659 | 0 | 0 | 399,214,659 | -- | -- | ||||||
| Infore Holding Group Co., Ltd. | Domestic non-state-owned corporation | 11.37% | 359,609,756 | 0 | 0 | 359,609,756 | In pledge | 258,617,365 | ||||||
| Hongchuang (Shenzhen) Investment Center (L.P.) | Domestic non-state-owned corporation | 9.81% | 310,423,813 | 0 | 0 | 310,423,813 | -- | -- | ||||||
| He Jianfeng | Domestic individual | 2.01% | 63,514,690 | 0 | 11,723,329 | 51,791,361 | In pledge | 62,952,175 | ||||||
| Zara Green Hong Kong Limited | Overseas corporation | 1.73% | 54,778,335 | -54,778,335 | 0 | 54,778,335 | In pledge | 54,778,335 | ||||||
| Ningbo Yingtai Investment Partnership (Limited Partnership) | Domestic non-state-owned corporation | 1.29% | 40,913,514 | 0 | 40,913,514 | 0 | -- | -- | ||||||
| Ningbo Zhongfeng Investment Partnership (Limited Partnership) | Domestic non-state-owned corporation | 1.27% | 40,141,033 | 0 | 40,141,033 | 0 | -- | -- | ||||||
| Shareholders above entrusting/entrusted with or waiving voting rights | N/A | |||
| Top 10 unrestricted shareholders | ||||
| Name of shareholder | Unrestricted shares held at the period-end | Shares by type | ||
| Class | Shares | |||
| Zoomlion Heavy Industry Science And Technology Co., Ltd. | 399,214,659 | RMB-denominated ordinary stock | 399,214,659 | |
| Infore Holding Group Co., Ltd. | 359,609,756 | RMB-denominated ordinary stock | 359,609,756 | |
| Hongchuang (Shenzhen) Investment Center (L.P.) | 310,423,813 | RMB-denominated ordinary stock | 310,423,813 | |
| Zara Green Hong Kong Limited | 54,778,335 | RMB-denominated ordinary stock | 54,778,335 | |
| He Jianfeng | 51,791,361 | RMB-denominated ordinary stock | 51,791,361 | |
| Infore Environment Technology Group Co., Ltd.－The First Employee Stock Ownership Plan | 36,211,560 | RMB-denominated ordinary stock | 36,211,560 | |
| Shanghai Junhe Licheng Investment Management Center (L.P.)－Shanghai Lvlian Junhe Industry Buyout Equity Investment Fund Partnership (L.P.) | 34,415,113 | RMB-denominated ordinary stock | 34,415,113 | |
| New China Life Insurance Company Ltd.－Dividend－Individual Dividend-018L-FH002S.Z. | 33,807,208 | RMB-denominated ordinary stock | 33,807,208 | |
| Ningbo Liantai Investment Partnership (Limited Partnership) | Domestic non-state-owned corporation | 1.22% | 38,709,849 | 0 | 38,709,849 | 0 | -- | -- |
| Infore Environment Technology Group Co., Ltd.－The First Employee Stock Ownership Plan | Other | 1.14% | 36,211,560 | 26,891,753 | 0 | 36,211,560 | -- | -- |
| Strategic investor or general corporation becoming a top-10 shareholder in a rights issue (if any) (see note 3) | N/A | |||||||
| Related or acting-in-concert parties among the shareholders above | Ningbo Infore Asset Management Co., Ltd. and Infore Holding Group Co., Ltd. share the same actual controller—Mr. He Jianfeng, and they act in concert. Apart from that, the Company is not aware of any related or acting-in-concert parties (as defined in the Methods for the Administration of Information Disclosure Regarding Changes in Shareholdings in Listed Companies) among the other shareholders above. | |||||||
| Chen Liyuan | 31,018,000 | RMB-denominated ordinary stock | 31,018,000 |
| Guangdong Hengjian Capital Management Co., Ltd. | 26,783,347 | RMB-denominated ordinary stock | 26,783,347 |
| Related or acting-in-concert parties among top 10 unrestricted public shareholders, as well as between top 10 unrestricted public shareholders and top 10 shareholders | Mr. He Jianfeng is the actual controller of Infore Holding Group Co., Ltd. Apart from that, the Company is not aware of any related or acting-in-concert parties (as defined in the Methods for the Administration of Information Disclosure Regarding Changes in Shareholdings in Listed Companies) among the other public shareholders above. | ||
| Top 10 ordinary shareholders involved in securities margin trading (if any) (see note 4) | None | ||
Indicate whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the Company conductedany promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: controlled by an individualType of the controlling shareholder: corporation
| Name of the controlling shareholder | Legal representative/person-in-charge | Date of incorporation | Organization code | Principal activities |
| Ningbo Infore Asset Management Co., Ltd. | Wei Ting | 2 May 2017 | 91330206MA290L5J3L | Asset management, industrial investment, and investment management. (The Company shall not engage in financial businesses such as absorbing deposits, financing guarantee, wealth management agency business, and raising (financing) funds from the public without the approval of regulators like financial regulators) (business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.). |
| Interests held in other domestically and overseas listed companies in the Reporting Period | Not applicable | |||
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Acting-in-Concert Parties
Nature of the actual controller: domestic individualType of the actual controller: individual
| Name of the actual controller | Relationship with the actual controller | Nationality | Residency in other countries or regions or not |
| He Jianfeng | Actual controller himself | Chinese | Yes |
| Main occupations and positions | Chairman of the Board and President of Infore Holding Group Co., Ltd. | ||
| Controlling interests in other domestically and overseas listed companies in the past 10 years | Not applicable | ||
Change of the actual controller in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Ownership and control relationship between the actual controller and the Company:
Indicate whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Other 10% or Greater Corporate Shareholders
√ Applicable □ Not applicable
| Name of corporate shareholder | Legal representative/person-in-charge | Date of incorporation | Registered capital | Principal activities |
| Zoomlion Heavy Industry | Zhan Chunxin | 31 August 1999 | 7,808,536,633 | Development, production, and sales of |
| Science And Technology Co., Ltd. | engineering machines, agricultural machines, sanitation machines, crane trucks and exclusive chassis, fire engines and exclusive chassis, high-altitude operation machines, other machinery equipment, metal and non-metal materials, and new high-tech products of optical-electro-mechanical integration and provision of leasing and after-sale technical services; sales of building and decorative materials, vehicles for engineering and metal materials, chemical materials, and chemical products (excluding hazardous chemicals and monitoring products); operation of commodity and technology import and export businesses; investment in real estate with self-owned assets (The Company shall not engage in national financial regulation and financial credit businesses such as absorbing deposits, fund-raising and collection, entrusted loans, and issuing notes and loans). Sales of second-hand vehicles; disassembly and recovery of disused machinery equipment. (Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.) | |||
| Infore Holding Group Co., Ltd. | He Jianfeng | 19 April 2002 | 4,000,000,000 | Investment in various industries, investment management, investment consultation, and asset management; enterprise management and enterprise consulting services; computer information services and software services; film product and planning (based on validated licenses); advertising planning and production; appraisal and consultancy services of artwork (excluding ivory and ivory products) and collectibles; planning of culture and art exhibitions; sales of maternal and baby products and clothing; supply and |
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
Part VII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
Part VIII Convertible Corporate Bonds
√ Applicable □ Not applicable
I Previous Price Adjustments for Conversion of Bonds into Shares
With the approval granted by the China Securities Regulatory Commission under Document ZH.J.X.K. [2020] No. 2219, theCompany on 4 November 2020 publicly issued 14,761,896 convertible corporate bonds, each with a par value of RMB100, and thetotal issue amount was RMB1,476,189,600. The initial conversion price of this tranche of convertible bonds is RMB8.31 per share. Ifthe Company distributes bonus shares, increases share capital, issues new shares (excluding the increase in share capital as a result ofthe conversion of this tranche of convertible bonds), issues shares or distributes cash dividends, the conversion price will be adjustedaccordingly in accordance with applicable laws and regulations.II Cumulative Conversion of Bonds into Shares
□ Applicable √ Not applicable
III Information on Top Ten Convertible Bond Holders
Unit: Share
| No. | Name of convertible bond folder | Nature of convertible bond holder | Number of convertible bonds held as at the end of the Reporting Period | Amount of convertible bonds held as at the end of the Reporting Period (RMB) | Share of convertible bonds held as at the end of the Reporting Period |
| 1 | Industrial and Commercial Bank of China Limited -- Aegon-Industrial Hengyi Bond Investment Fund | Other | 480,485 | 48,048,500.00 | 3.25% |
| 2 | Industrial and Commercial Bank of China Limited -- CUAM Convertible Bond Securities Investment Fund | Other | 466,992 | 46,699,200.00 | 3.16% |
| 3 | Sealand Securities Co., Ltd. | State-owned corporation | 326,366 | 32,636,600.00 | 2.21% |
| 4 | Agricultural Bank of China Limited -- China Southern Xiyuan Convertible Bond Securities Investment Fund | Other | 269,602 | 26,960,200.00 | 1.83% |
| 5 | CNPC Enterprise Annuity Program -- Industrial and Commercial Bank | Other | 256,417 | 25,641,700.00 | 1.74% |
| of China Limited | |||||
| 6 | China Galaxy Securities Co., Ltd. | State-owned corporation | 229,994 | 22,999,400.00 | 1.56% |
| 7 | Huatai Securities Co., Ltd. | State-owned corporation | 229,991 | 22,999,100.00 | 1.56% |
| 8 | National Social Security Fund 205 Portfolio | Other | 207,000 | 20,700,000.00 | 1.40% |
| 9 | National Social Security Fund 201 Portfolio | Other | 200,770 | 20,077,000.00 | 1.36% |
| 10 | ICBC Credit Suisse Investment Management Co., Ltd. | Domestic non-state-owned corporation | 199,991 | 19,999,100.00 | 1.35% |
IV Significant Changes in Profitability, Assets and Credit Standing of Guarantors
□ Applicable √ Not applicable
V The Company's Liabilities as at the End of the Reporting Period, Credit Standing Changesand Cash Arrangements for Debt Repayment For the Coming Year
1. Principal financial indicators of the Company
| Item | 2020 | 2019 | Changes |
| Liability/asset ratio | 42.64% | 35.88% | 6.77% |
| Interest cover (times) | 12.49 | 12.40 | 0.09 |
| Loan repayment ratio | 100% | 100% | 0.00% |
| Interest payment ratio | 100% | 100% | 0.00% |
2. Credit rating of convertible bonds
During the Reporting Period, China Chengxin Credit Rating Group assigned rating to convertible corporate bonds issued by theCompany and issued the Credit Rating Report on 2020 Public Offering of Convertible Corporate Bonds of Infore EnvironmentTechnology Group Co., Ltd. (X.P.W.H. [2020] No. 1498D). According to the rating report, the Company's corporate credit ratingwas AA+ and bond credit rating was AA+, with a stable outlook. For details, see the Credit Rating Report on 2020 Public Offering ofConvertible Corporate Bonds disclosed by the Company on 2 November 2020 on the cninfo website (www.cninfo.com.cn).
3. Financial arrangements for debt repayment in the coming year
The primary sources of funds for the Company to pay the principal and interest of convertible bonds in the future are as follows: (1)The Company seeks endogenous growth by strengthening financial management and increasing the net cash inflow from operatingactivities and net profit; (2) The Company has good credit standing and a reasonable asset structure and can obtain financing frombanks and other channels to reasonably arrange for redemption funds.
Part IX Directors, Supervisors, Senior Management and StaffI Changes in the Shareholdings of Directors, Supervisors and Senior Management
| Name | Office title | Incumbent/Former | Gender | Age | Start of tenure | End of tenure | Opening shareholding (share) | Increase in the current period (share) | Decrease in the current period (share) | Other increase/decrease (share) | Closing shareholding (share) |
| Ma Gang | Chairman of the Board and President | Incumbent | Male | 42 | 4 December 2014 | 26 December 2022 | 1,654,600 | 0 | 0 | 0 | 1,654,600 |
| Kuang Guangxiong | Director | Incumbent | Male | 42 | 30 January 2019 | 26 December 2022 | 0 | 0 | 0 | 0 | 0 |
| Shen Ke | Director | Incumbent | Male | 50 | 30 January 2019 | 26 December 2022 | 0 | 0 | 0 | 0 | 0 |
| Chen Peiliang | Director and Vice President | Incumbent | Male | 49 | 30 January 2019 | 26 December 2022 | 0 | 0 | 0 | 0 | 0 |
| Shi Shuiping | Independent Director | Incumbent | Male | 46 | 14 November 2016 | 26 December 2022 | 0 | 0 | 0 | 0 | 0 |
| Zhang Yu | Independent Director | Incumbent | Male | 43 | 26 December 2019 | 26 December 2022 | 0 | 0 | 0 | 0 | 0 |
| Li Ruidong | Independent Director | Incumbent | Male | 44 | 26 December 2019 | 26 December 2022 | 0 | 0 | 0 | 0 | 0 |
| Jiao Wanjiang | Chairman of the Supervisory Committee | Incumbent | Male | 40 | 14 November 2016 | 26 December 2022 | 308,692 | 0 | 0 | 0 | 308,692 |
| Liu Kan | Superviso | Incumbent | Male | 37 | 26 | 26 | 0 | 0 | 0 | 0 | 0 |
| r | December 2019 | December 2022 | |||||||||
| Lin Meiling | Employee supervisor | Incumbent | Female | 36 | 14 November 2016 | 26 December 2022 | 0 | 0 | 0 | 0 | 0 |
| Lu Anfeng | Vice President and Chief Financial Officer | Incumbent | Male | 43 | 8 November 2013 | 26 December 2022 | 486,762 | 0 | 0 | 0 | 486,762 |
| JinTaotao | Vice President and Board Secretary | Incumbent | Male | 38 | 26 December 2019 | 26 December 2022 | 0 | 0 | 0 | 0 | 0 |
| Total | -- | -- | -- | -- | -- | -- | 2,450,054 | 0 | 0 | 0 | 2,450,054 |
II Changes of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
III Biographical InformationProfessional backgrounds, major work experience and current posts in the Company of the incumbent directors, supervisors andsenior management:
1. Mr. Ma Gang, born in 1979, with a master's degree, is Chairman of the eighth and ninth Board of Directors of InforeEnvironment. Starting from December 2014, he serves as President of the Company. He joined Midea Group in June 2001, andsuccessively held the positions of R&D Engineer, branch salesman and Regional Director at Midea Rice Cooker Division, DomesticSales General Manager at Midea Small Domestic Appliance Division, President of China Marketing Headquarters of Midea DailyHome Electric Appliance Group, Vice President and Domestic Sales General Manager at Midea Small Domestic Appliance Division,Vice President of Midea Small Domestic Appliance Division and General Manager at Midea Water Material Entity, and DeputyDirector at Midea Domestic Market Department.
2. Mr. Kuang Guangxiong, born in 1979, with a master's degree, is PRC Certified Public Accountant and international accountant,in addition to Director of the eighth and ninth Board of Directors of Infore Environment. He has been Vice President of Infore Groupsince October 2018. From July 2002 to October 2018, he successively held the positions of Financial Manager at Midea Daily HomeElectric Appliance Group, Financial Manager at Midea subsidiary in the US, the Financial Director at Midea Kitchen AppliancesDivision, Financial Director at Midea Commercial Air Conditioner Division, and Financial Director at Midea-KUKA Joint Venture inChina.
3. Mr. Shen Ke, born in 1971, with a master's degree, is Director of the eighth and ninth Board of Directors of Infore Environment.Since January 2019, he has served as Chief Investment Officer at Zoomlion Heavy Industry Science And Technology Co., Ltd. FromJuly 2003 to January 2019, he successively held the positions of Deputy Manager and Head of Investment Development Department,Deputy General Manager of Investment & Financing Management Department, and Board Secretary of Zoomlion Heavy IndustryScience And Technology Co., Ltd.
4. Mr. Chen Peiliang, born in 1972, with a bachelor's degree, is Director of the eighth and ninth Board of Directors of InforeEnvironment. He has been General Manager of Changsha Zoomlion Environmental Industry Co., Ltd. since September 2013. Heserved as General Manager of Hunan Zoomlion International Trade Co., Ltd. from July 2002 to May 2010, Executive Deputy GeneralManager of the Concrete Machinery Division of Zoomlion Heavy Industry Science And Technology Co., Ltd. from May 2010 toSeptember 2013, and Assistant to President and Vice President of Zoomlion Heavy Industry Science And Technology Co., Ltd. fromSeptember 2006 to July 2016.
5. Mr. Zhang Yu, born in 1978, has a doctorate. He serves as Associate Professor at China Europe International Business Schoolfrom 2015, and held the position of Assistant Professor at University of California, Irvine from 2008 to 2015.
6. Mr. Li Ruidong, born in 1977, is a bachelor's degree holder. He has been President and Editor-in-chief at the China Environmentmagazine since November 2013. He served as Assistant to General Manager of Environmental Protection Magazine Co., Ltd. fromFebruary 2012 to November 2013, and Director of the Office of Environmental Protection from March 2008 to January 2012.
7. Mr. Shi Shuiping, born in 1975, has a doctorate and is Certified Anti-Fraud Professional and Independent Director of the eighthand ninth Board of Directors of Infore Environment. Since October 2010, he has Professor and Graduate Students’ Supervisor atSchool of Management, Jinan University. It is also Visiting Scholar at Boston University and City University of Hong Kong, SeniorMember of Accounting Society of China, Senior Member of China Audit Society, Director at Guangdong Audit Society, ExecutiveDirector at Guangzhou Audit Society, and Expert Member of Guangdong Enterprise Institute for Internal Controls.
8. Mr. Lu Anfeng, born in 1978, with a master's degree, is PRC Certified Public Accountant and Certified Tax Agent. SinceSeptember 2012, he has served as Vice President and Chief Financial Officer of the Company. He held the positions of Senior FinancialManager at PCI Technology Group Co., Ltd., Audit Manager at Mayland Group, and Certified Public Accountant at GuangzhouBranch of Shenzhen Dahua Tiancheng Accounting Firm.
9. Mr. JinTaotao, born in 1983, is a master's degree holder. He is Vice President and Board Secretary of the Company. He held thepositions of Engineer at the Environmental Planning Institute of the former Ministry of Environmental Protection from September 2005to April 2016, Vice President at Infore Environment Technology Group Co., Ltd from May 2016 to June 2019, and Board Secretary atStariver Environmental Technology Co., Ltd from July 2019 to November 2019. Mr. Jin Tao joined the qualification training ofShenzhen Stock Exchange for board secretaries in November 2019 and obtained the qualification certificate for Board Secretary.
10. Mr. Jiao Wanjiang, born in 1981, holds a master's degree. He is currently General Manager of the Business Department ofInfore Environment Technology Group Co., Ltd. He successively served as Head of the Operation Management Department andGeneral Manager of the Solid Waste Treatment Department of Infore Environment. He joined Midea in July 2005. He successivelyheld the positions of Domestic Sales Branch Manager, Senior Product Planning Manager at Headquarters and Head of Brand &Marketing Department of Guangdong Midea Consumer Electric Manufacturing Co., Ltd.
11. Mr. Liu Kan, born in 1984, is a bachelor's degree holder. He has worked in the Company since February 2016, and is currentlyDirector of the Operation Management Department of Zoomlion Environmental. He served as General Manager at Infore NetworkTechnology Co., Ltd. from 2017 to November 2019, Director of the Operation Management Department of Universtar Science &Technology (Shenzhen) Co., Ltd. from 2016 to 2017, and Rice Cooker Product Planning Manager at Midea Small Domestic ApplianceShenzhen Branch and Midea Small Domestic Appliance Division from 2006 to 2015.
12. Ms. Lin Meiling, born in 1985, has a bachelor's degree. She is currently Director of Human Resources at Infore EnvironmentTechnology Group Co., Ltd. From 2010 to now, she is responsible for the administration and human resources affairs of the Company.Offices held concurrently in shareholding entities:
√ Applicable □ Not applicable
| Name | Shareholding entity | Office held in the entity | Start of tenure | End of tenure | Remuneration or allowance from the entity or not |
| Ma Gang | Infore Holding Group Co., Ltd. | Director | 16 March 2018 | -- | Not |
| Kuang | Infore Holding Group Co., Ltd. | Director and | 1 October 2018 | -- | Yes |
| Guangxiong | Vice President | ||||
| Shen Ke | Zoomlion Heavy Industry Science And Technology Co., Ltd. | Chief Investment Officer | 1 July 2003 | -- | Yes |
| Note | Mr. Ma Gang concurrently served as a Director of Infore Holding Group Co., Ltd. Mr. Kuang Guangxiong concurrently served as a Director and Vice President of Infore Holding Group Co., Ltd. Mr. Shen Ke concurrently served as the Chief Investment Officer of Zoomlion Heavy Industry Science And Technology Co., Ltd. | ||||
Offices held concurrently in other entities:
√ Applicable □ Not applicable
| Name | Other entity | Office held in the entity | Start of tenure | End of tenure | Remuneration or allowance from the entity or not |
| Shen Ke | Bichamp Cutting Technology (Hunan) Co., Ltd. | Director | 5 July 2014 | -- | Not |
| Zhang Yu | China Europe International Business School | Associate professor | 1 July 2015 | -- | Yes |
| Li Ruidong | The China Environment magazine | President and Editor-in-Chief | 1 November 2013 | -- | Yes |
| Shi Shuiping | Jinan University | Associate Professor and Master Supervisor of the Faculty of Management | 1 January 2010 | -- | Yes |
| Note | Mr. Shen Ke concurrently served as a Director of Bichamp Cutting Technology (Hunan) Co., Ltd. Mr. Zhang Yu concurrently served as an Associate Professor of China Europe International Business School. Mr. Li Ruidong concurrently served as the President and Editor-in-Chief of The China Environment magazine. Mr. Shi Shuiping concurrently served as an Associate Professor and Master Supervisor of the Faculty of Management of Jinan University. | ||||
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and seniormanagement as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and seniormanagement:
The remunerations of the directors, supervisors and senior management of the Company strictly comply with the Rules ofProcedure of the Board of Directors, the Rules of Procedure of the Supervisory Committee and the Articles of Association of the
Company, as well as the relevant provisions of the Company Law. The remunerations of the Company's directors, supervisors andsenior management shall be determined on the basis of reasonable remuneration in the market and according to the Company'sperformance appraisal results. The actual remuneration of the directors of the Company is paid on an annual basis. The actualremuneration of senior management is partly on a monthly basis, and the part linked to the Company's performance is paid at the endof the year.Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
| Name | Office title | Gender | Age | Incumbent/Former | Total before-tax remuneration from the Company | Remuneration from any related party or not |
| Ma Gang | Chairman of the Board and President | Male | 42 | Incumbent | 228.51 | Not |
| Kuang Guangxiong | Director | Male | 42 | Incumbent | 0 | Yes |
| Shen Ke | Director | Male | 50 | Incumbent | 0 | Yes |
| Chen Peiliang | Director and Vice President | Male | 49 | Incumbent | 624.91 | Not |
| Shi Shuiping | Independent Director | Male | 46 | Incumbent | 10 | Not |
| Zhang Yu | Independent Director | Male | 43 | Incumbent | 10 | Not |
| Li Ruidong | Independent Director | Male | 44 | Incumbent | 10 | Not |
| Jiao Wanjiang | Chairman of the Supervisory Committee | Male | 40 | Incumbent | 59.93 | Not |
| Liu Kan | Supervisor | Male | 37 | Incumbent | 67.96 | Not |
| Lin Meiling | Employee Supervisor | Female | 36 | Incumbent | 12.8 | Not |
| Lu Anfeng | Vice President and Chief Financial Officer | Male | 43 | Incumbent | 77.8 | Not |
| JinTaotao | Vice President and Board Secretary | Male | 38 | Incumbent | 74.87 | Not |
| Total | -- | -- | -- | -- | 1,176.78 | -- |
Equity incentives granted to directors and senior management in the Reporting Period:
□ Applicable √ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
| Number of in-service employees of the Company | 86 |
| Number of in-service employees of principal subsidiaries | 8,639 |
| Total number of in-service employees | 8,725 |
| Total number of paid employees in the Reporting Period | 8,725 |
| Number of retirees to whom the Company or its major subsidiaries need to pay retirement pensions | 0 |
| Functions | |
| Function | Employees |
| Production | 4,681 |
| Sales | 656 |
| Technical | 1,356 |
| Financial | 206 |
| Administrative | 1,826 |
| Total | 8,725 |
| Educational backgrounds | |
| Educational background | Employees |
| Doctoral degree | 6 |
| Master’s degree | 373 |
| Bachelor’s degree | 2,369 |
| Junior college | 2,113 |
| Below junior college | 3,864 |
| Total | 8,725 |
2. Remuneration Policy
The Company adopts a fair remuneration system including positive incentives. It follows the performance-oriented principle andpromotes competent personnel. The remuneration of employees is paid on time according to the remuneration policy of theCompany. The fixed remuneration of employees is determined by the Company according to the position value and individualperformance, and the floating salary of employees is determined according to the Company's and individual performance. TheCompany swings the weight of salary payment towards technical professionals to ensure that the income level of core talent iscompetitive in the market. The employee remuneration policy will be dynamically adjusted according to regional conditions, talentsupply, staff turnover, degree of changes in the industry environment and the corporate payment capacity.
3. Training Plans
In adherence to the people-oriented principle, the Company is committed to building a team of highly skilled personnel. It hasestablished a multi-level talent training system ("Fenglin Program-Yingfeng Training Camp-Tanfeng training Camp-PanfengTraining Camp) and a multi-purpose professional training system covering all employees from fresh graduates to senior executives.In addition, according to the actual situation, the Company has built an online learning platform called "Infore Environment CoolCollege" and constantly rolled out more and better courses, providing convenience and institutional guarantee for employees to studyand enhance their competence anytime and anywhere. The Company exercises special management over training expenses and offersoffline training programs according to the actual job needs of employees at different levels, including programs for managementteam members, newbies, professionals, and ordinary employees. It adheres to the learning concept of integrating knowledge withpractice, with special attention to the selection and training of internal lecturers and development of training programs.
4. Labor Outsourcing
√ Applicable □ Not applicable
| Total hours of labor outsourced | 16,972,100 |
| Total payment for labor outsourcing (RMB) | 199,879,123.30 |
Part X Corporate GovernanceI General Information of Corporate Governance
1. The Company continuously perfects its corporate governance structure in strict accordance with the requirements of theCompany Law, the Securities Law and the relevant laws and regulations of the China Securities Regulatory Commission. The Board ofDirectors has four special committees, namely, Strategy Committee, Audit Committee, Nomination Committee, and Remuneration&Appraisal Committee, dedicated to providing advice and recommendations to make Board of Directors' deliberation anddecision-making professional and efficient.
2. The Company convenes Annual General Meeting in strict accordance with the relevant provisions of the Rules for Shareholders'General Meeting of Listed Companies, Articles of Association, and Rules of Procedure of General Meeting of the Company. The Boardof Directors, which is the decision-making body of the Company, conscientiously implements the resolutions of General Meetings. TheSupervisory Committee exercises its supervisory function and powers in strict accordance with the regulations, and it supervises thefinancial affairs of the Company as well duty performance and actions of directors and senior managers, thus safeguarding thelegitimate rights and interests of the Company and all shareholders. The Management of the Company strictly implements theresolutions of the General Meetings and the Board of Directors and executes decisions. All functional departments and holdingsubsidiaries of the Company are responsible for the day-to-day operations.
3. During the Reporting Period, in order to standardize its insider information management, ensure confidentiality of insiderinformation and effective registration and management of insider information, effectively prevent securities violations such as insidertrading, maintain the fairness of information disclosure, and protect the legitimate rights and interests of investors, the Companypromptly, truthfully and fully recorded the stages of consultation, demonstration, discussion, establishment, and reporting,transmission, preparation, examination, resolution, and disclosure of inside information before disclosure as well as the content, time,place, basis, method and other related information and files containing insider information that all insider personnel know, and file withthe relevant regulatory authorities to strictly prevent the occurrence of insider trading, pursuant to the laws and regulations such as theSecurities Law, the Management Measures for Information Disclosure by Listed Companies, CSRC Provisions on the Establishment ofRegistration Management System for Insider Information by Listed Companies, as well as the relevant provisions of the Articles ofAssociation, Information Disclosure Management Policy and the Policy on Internal Reporting of Significant Matters of the Company.
4. The Company discloses information strictly in accordance with the provisions of the Company Law, the Securities Law, theStock Listing Rules of the Shenzhen Stock Exchange and other relevant laws, regulations and normative documents, as well as theInformation Disclosure Management Policy, to ensure that it makes true, accurate, complete, timely and fair information disclosure toincrease the openness and transparency of its operations. The Company has received no disciplinary actions such as criticism andreprimand from the Shenzhen Stock Exchange for issues relating to information disclosure. During the Reporting Period, there were nogovernance irregularities such as provision of undisclosed information to the controlling shareholder and the actual controller.
5. During the Reporting Period, material events occurred in the Company, but there was no change in the stock price arising fromleakage of inside information. As part of its next steps, the Company will constantly improve corporate governance structure, furtherstandardize corporate operations, and raise the level of corporate governance pursuant to relevant laws and regulations as well as therequirements of the Shenzhen Stock Exchange.Indicate whether there is any material incompliance with the regulatory documents issued by the CSRC governing the governance oflisted companies.
□ Yes √ No
No such cases in the Reporting Period.
II Independence of the Company from the Controlling Shareholder on Businesses, Personnel,Assets, Structure, and FinanceThe Company is completely independent of the controlling shareholder in terms of businesses, structure, personnel, finance, andassets and has fully independent businesses and operation. Details are as follows:
(1) Business independence: The Company's businesses are independent of the controlling shareholder, and the controllingshareholder and its affiliates are not engaged in any businesses in competition with the Company.
(2) Personnel separation: The personnel of the Company are independent of the controlling shareholder, and the President, ChiefFinancial Officer, Board Secretary and other senior management of the Company do not hold positions other than directors in thecontrolling shareholder and its affiliates, the financial officers of the Company does not have a part-time job in related companies.The Company has put in place independent policies on labor, personnel and remuneration management and established anindependent labor and personnel management department. Thus, its labor, personnel and remuneration management is completelyindependent.
(3) Integrity of assets: The Company owns independent and complete assets and has independent production, supply andmarketing systems, and there is no horizontal competition between the Company and its controlling shareholder in the manufacturingand operation of the same products.
(4) Organizational independence: The Company is organizationally complete, and there is no superior-subordinate relationshipbetween its controlling shareholder and functional departments thereof and the Company and functional departments thereof. TheCompany's Board of Directors, Supervisory Committee and other internal institutions operate completely independently.
(5) Financial separation: The Company's finance is entirely independent, with an independent financial department. It has alsoestablished an independent accounting system and financial accounting management system responsible for independent accounting,independent opening of bank accounts, and independent tax payment.III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Date of the meeting | Disclosure date | Index to disclosed information |
| The 2019 Annual General Meeting | Annual General Meeting | 62.19% | 15 May 2020 | 16 May 2020 | Announcement No. 2020-047 disclosed on http://www.cninfo.com.cn |
| The First Extraordinary General Meeting of 2020 | Extraordinary General Meeting | 51.22% | 10 September 2020 | 11 September 2020 | Announcement No. 2020-082 disclosed on http://www.cninfo.com.cn |
2. Extraordinary General Meetings Convened at the Request of Preference Shareholders with ResumedVoting Rights
□ Applicable √ Not applicable
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
| Attendance of independent directors at board meetings and general meetings | |||||||
| Independent director | Total number of board meetings the independent director was eligible to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Board meetings the independent director failed to attend | The independent director failed to attend two consecutive board meetings or not | General meetings attended |
| Shi Shuiping | 9 | 7 | 2 | 0 | 0 | Not | 2 |
| Zhang Yu | 9 | 8 | 1 | 0 | 0 | Not | 2 |
| Li Ruidong | 9 | 7 | 2 | 0 | 0 | Not | 2 |
Explanation of why any independent director failed to attend two consecutive board meetings:
2. Objections Raised by Independent Directors on Matters of the Company
Indicate whether any independent directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about the Performance of Duty by Independent DirectorsIndicate whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Explanation on adoption/rejection of recommendations of independent director of the Company
During the Reporting Period, the independent director of the Company strictly complied with the requirements of the StockListing Rules of the Shenzhen Stock Exchange, Articles of Association and Work Policy for Independent Director of the Company,diligently and earnestly performed his duties, performed his duties independently, objectively and impartially, and conducted on-siteinvestigation to understanding matters at on-site meetings of the Board of Directors and Annual Meeting. He kept in regular contactwith the directors, the Board Secretary, Chief Financial Officer and other relevant staff to understand the day-to-day production andoperations of the Company, seriously reviewed the proposals of the Board of Directors, and reviewed matters concerningrelated-party transactions beforehand, and issued independent opinions on material matters of the Company as per regulations.Furthermore, he paid attention to the reports published on newspapers, the Internet and media agencies in relation to the Company tokeep abreast of the operations of the Company. The independent director put forward relevant recommendations on the investment
decisions of the Company. For example, he suggested that the Company should make more investments in intelligent and automatictechnologies while keeping all risks under control.VI Performance of Duty by Specialized Committees under the Board in the Reporting Period(I) Duty performance of the Audit Committee of the Board of Directors: During the Reporting Period, the Audit Committeegave full play to the role of audits and actively promoted the standardization of corporate governance. During the Reporting Period,the Audit Committee primarily completed the following tasks:
(1) During the audit on the 2019 Annual Report of the Company, the Audit Committee carefully reviewed the Company'sfinancial statements and internal controls, actively communicated with the accounting firm responsible for annual audit of theCompany, discussed and determined the audit arrangements, and repeatedly urged the accounting firm to organize the audit activitiesin strict accordance with the audit plan to ensure the smooth completion of the audit on the 2019 Annual Report.
(2) The Audit Committee reviewed, approved and submitted the accounting firm re-engagement proposal to the Board ofDirectors, recommended that Pan-China Certified Public Accounts LLP should be re-engaged to be responsible for the Company's2020 annual audit, including the audits on 2020 Annual Report and internal controls.
(3) In the related-party transaction supervision and internal control assessment for the Reporting Period, the Audit Committeeconducted a meticulous review of the related-party transactions that occurred in the Company in 2020. It guided and supervised thestandard implementation and assessment of the Company's internal control and advanced the development of the Company's internalcontrols.
(II) Duty performance of the Remuneration & Appraisal Committee of the Board of Directors: The Remuneration & AppraisalCommittee, in accordance with relevant laws and regulations, earnestly performed its duties, formulated and reviewed theremuneration policies and schemes for the Company's directors, supervisors and senior management, and guided the Board ofDirectors to improve the Company's remuneration policy. It concluded that the remunerations of the Company's directors,supervisors and senior management were in line with the relevant remuneration policies of the Company as well as the Company'sbusiness performance and individual performance. The Remuneration & Appraisal Committee reviewed the Company's stock optionincentive plan, the eligibility of its beneficiaries for exercising the rights, related adjustment items, etc.
(III) Duty performance the Nomination Committee of the Board of Directors: During the Reporting Period, the NominationCommittee of the Board of Directors carried out its work pursuant to the relevant regulations of the CSRC and the Shenzhen StockExchange, as well as the principle of diligence and due diligence. According to the business activities of the Company during theReporting Period, it carefully supervised the post qualifications and duty performance of each director, supervisor and seniormanager. During the Reporting Period, the directors, supervisors and senior management of the Company were not found to haveviolated the Company Law, the Articles of Association of the Company, etc.
(IV) Duty performance of the Strategy Committee of the Board of Directors: The Strategy Committee of the Board of Directorsparticipated in the meetings of the Management on acceptance of partial shares of the holding subsidiary, wavier of the preemptionrights and related-party transactions, repurchase scheme for the Company's shares, discussion and issuance of convertible bonds ofthe Company, and spin-off listing of subsidiary, in accordance with the relevant legal provisions such as the Code of CorporateGovernance of Listed Companies, the Articles of Association of the Company and other relevant laws and regulations. Also, itlistened to the reports of the Management on the relevant plans, jointly analyzed the feasibility of various issues, and offeredprofessional opinions and recommendations.
VII Performance of Duty by the Supervisory CommitteeIndicate whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.VIII Appraisal of and Incentive for Senior ManagementThe Company adopts a remuneration policy comprised of basic annual salary and annual performance-based bonus for seniormanagement. It determines and specific assessment, reward and punishment measures according to the overall development strategyand business objectives of the Company at the beginning of the year, and distribute corresponding performance rewards at the end ofthe year according to the completion of business objectives.IX Internal Control
1. Details of material internal control deficiencies identified during the Reporting Period
□ Yes √ No
2. Internal control self-assessment report
| Date of full disclosure of the internal control assessment report | 23 April 2021 | |
| Index of full disclosure of the internal control assessment report | For details, see the 2020 Internal Control self-Assessment Report disclosed on http://www.cninfo.com.cn | |
| Ratio of the total assets of the organizations included in the assessment to the Company's consolidated total assets | 100.00% | |
| Ratio of the revenue of the organizations included in the assessment to the Company's consolidated revenue | 100.00% | |
| Deficiency identification criteria | ||
| Category | Financial report | Non-financial report |
| Qualitative criteria | (1) Significant deficiencies: 1) Anti-fraud procedures and controls; 2) Internal control over unconventional or unsystematic transactions; 3) Internal control over the selection and application of accounting policies against GAAP; 4) Internal control over the final financial reporting procedures. (2) Material deficiencies: 1) Fraud committed by directors, supervisors and senior managers; 2) Correction of corporate financial report published or reported; 3) Material misstatement in the current financial report identified by certified public accountant, which is not identified in the | (1) Material deficiencies: 1) Violations of State laws and regulations, e.g., environmental pollution, serious damage to local ecological environment, failure to report or disclose information as regulations; 2) Loss of more than 30% of middle and senior managers and senior technical personnel without timely replenishment, affecting the normal operations of the Company; 3) Failure to take timely and active response measures for frequent negative media reports, which involve a wide range of subjects, leading to a significant negative impact |
| course of running of internal control; 4) Ineffective supervision over internal control by the Audit Committee and internal audit agency; 5) Lack of post qualification or incompetence of principal financial officer; 6) Ineffective compliance supervision, and violations of regulations, which may have a significant impact on the reliability of financial reporting; 7) The Management's failure to correct significant deficiency after a reasonable period of the deficiency being reported to the Management. | on the Company; 4) Failure to remedy internal control assessment findings, especially material or significant deficiencies; absence of policy control or systematic failure of critical businesses; 5) Unreasonable decision-making procedures, e.g., decision-making mistakes, resulting in unsuccessful M&A; 6) Losses seen by the Company in consecutive years for reasons apart from policy reasons, posing challenges to sustainable operations; 7) Lack of internal controls in subsidiaries, leading to poor management. (2) Significant deficiencies: 1) Fraud committed by middle managers; 2) Negative reports published by influential media agency in that year; 3) Failure to remedy general deficiencies identified in the prior year without reasonable explanation; 4) Incompetency of some managers or operators. Circumstances, including but not limited to the following, may be recognized as internal control "general deficiencies": Fraud committed by general employees; failure to remedy general deficiencies identified in the prior year with reasonable explanation. | |
| Quantitative criteria | (1) Material deficiencies: 1) The potentially misstated amount in the profit statement is greater than 1% of the consolidated revenue of the Company's in the most recent financial year or 5% of the total pre-tax profit; 2) The potentially misstated amount in the balance sheet is greater than 1% of the consolidated total assets of the Company in the most recent financial year. (2) Significant deficiencies: 1) The potentially misstated amount is greater than 0.5% of the Company's consolidated revenue or 3% of the total pre-tax profit in the income statement but less than 1% of the Company's consolidated revenue or 5% of the total pre-tax profit in the most recent | General deficiency: Less than RMB5 million; Significant deficiency: RMB5 million (including RMB5 million)-RMB10 million; Material deficiency: RMB10 million and above. |
| financial year; 2) The potentially misstated amount is greater than 0.5% but less than 1% of the consolidated total assets of the Company in the most recent financial year. (3) General deficiencies: 1) The potentially misstated amount in the income statement is less than 0.5% of the consolidated revenue of the Company' in the most recent financial year or 3% of the total pre-tax profit; 2) The potentially misstated amount in the balance sheet is less than 0.5% of the consolidated total assets of the Company' in the most recent financial year. | |||
| Number of material deficiencies in financial reports | 0 | ||
| Number of material deficiencies in non-financial reports | 0 | ||
| Number of significant deficiencies in financial reports | 0 | ||
| Number of significant deficiencies in non-financial reports | 0 | ||
X Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
| Opinion paragraph in the independent auditor’s report on internal control | |
| Infore Environment Technology Group Co., Ltd. maintained, in all material respects, effective internal control over financial reporting as of 31 December 2020, based on the Basic Rules on Enterprise Internal Control and other applicable rules. | |
| Independent auditor’s report on internal control disclosed or not | Disclosed |
| Disclosure date | 23 April 2021 |
| Index to the disclosed report | PCCPA Auditor’s Report [2021] No. 3832 |
| Type of the auditor’s opinion | Unmodified unqualified opinion |
| Material weaknesses in internal control not related to financial reporting | None |
Indicate whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal control.
□ Yes √ No
Indicate whether the independent auditor’s report on the Company’s internal control is consistent with the internal controlself-evaluation report issued by the Company’s Board of Directors.
√ Yes □ No
Part XI Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of thisReport’s approval or were due but could not be redeemed in full?No.
Infore Environment Technology Group Co., Ltd.Annual Report 2020
Part XII Financial StatementsI Independent Auditor’s Report
| Type of the independent auditor’s opinion | Unmodified unqualified opinion |
| Date of signing the independent auditor’s report | 22 April 2021 |
| Name of the independent auditor | Pan-China Certified Public Accountants LLP |
| Number of the independent auditor’s report | PCCPAAR [2021] No. 4208 |
| Name of the certified public accountants | Bian Shanshan and Cao Cuijuan |
Auditor’s Report
To the Shareholders of Infore Environment Technology Group Co., Ltd.:
I. Audit OpinionWe have audited the accompanying financial statements of Infore Environment Technology Group Co., Ltd. (the “Company”), whichcomprise the consolidated and parent company balance sheets as at December 31, 2020, the consolidated and parent company incomestatements, the consolidated and parent company cash flow statements, and the consolidated and parent company statements ofchanges in equity for the year then ended, as well as notes to financial statements.In our opinion, the attached financial statements present fairly, in all material respects, the financial position of the Company as atDecember 31, 2020, and of its financial performance and its cash flows for the year then ended in accordance with China AccountingStandards for Business Enterprises.II. Basis for Audit OpinionWe conducted our audit in accordance with China Standards on Auditing. Our responsibilities under those standards are furtherdescribed in the Certified Public Accountant’s Responsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have fulfilledother ethical responsibilities. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financialstatements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, andin forming our opinion thereon, and we do not express a separate opinion on these matters.(I) Revenue recognition
1. Key audit matters
Please refer to section III (XXVI) and section V (II) 1 of notes to the financial statements for details.
The Company is mainly engaged in manufacturing of sanitation vehicles and equipment, electromagnetic wire, ventilation equipment,environmental monitoring instruments, and construction and operation of environmental protection engineering as well as otherindustries, and adopts different recognition methods for revenue from each industry and product service. In 2020, the operatingrevenue amounted to 14,332,025,075.40 yuan, increasing by 12.89% compared with that in previous year amounting to12,695,858,666.40 yuan.Sales of sanitation vehicles and equipment, electromagnetic wire and ventilation equipment are performance obligations satisfied at apoint in time. Revenue is recognized when the Company has delivered goods to the designated address as agreed by contract andsuch delivered goods have been verified for acceptance by customers, and the Company has collected the payments or has obtainedthe right to the payments, and related economic benefits are highly probable to flow to the Company. The environment and sanitationcomprehensive management projects are performance obligations satisfied over time. Revenue is recognized at the percentage ofcompletion of the performance obligation based on the completion status confirmed by the project supervisor.As operating revenue is one of the key performance indicators of the Company, the authenticity, accuracy and completeness ofrevenue recognition have a significant impact on the Company’s profit, we have identified revenue recognition as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for revenue recognition are as follows:
(1) We obtained understandings of key internal controls related to revenue recognition, assessed the design of these controls,determined whether they had been executed, and tested the effectiveness of the operation;
(2) We checked sale contracts and construction contracts with clients, obtained understandings of main contractual terms orconditions, and assessed whether the revenue recognition method conformed to China Accounting Standards for BusinessEnterprises;
(3) We performed analysis procedure on operating revenue and gross margin by month, product, client, project, etc., so as to identifywhether there are significant or abnormal fluctuations and find out the reason of fluctuations;
(4) For revenue recognition, we checked supporting documents related to revenue recognition by sampling method, including salescontracts, orders, sales invoices, delivery lists, delivery orders, shipping documents, client acceptance receipts, progress confirmationsheets, construction acceptance and supervision reports, etc.;
(5) We selected significant engineering contracts, checked the documents including cost budget, purchase contracts, subcontractagreements and others on which the expected total cost was based, and evaluated the reasonableness of the expected total costestimated by the Management;
(6) We performed confirmation procedure or on-site visit procedure on significant clients and projects to confirm the sales amounts inthe current period, the balances of transactions and the performance of the contracts;
(7) We performed cut-off tests on the operating revenue recognized around the balance sheet date, and assessed whether the operatingrevenue was recognized in the appropriate period; and
(8) We checked whether information related to operating revenue had been presented appropriately in the financial statements.
(II) Impairment of accounts receivable and long-term receivables (including those due within one year)
1. Key audit matters
Please refer to section III (X) and section V (I) 4, 10 and 12 of notes to the financial statements for details.As of December 31, 2020, the book balance of accounts receivable amounted to 5,979,099,528.01 yuan, with provision for bad debtsof 414,264,663.97 yuan, and the carrying amount amounted to 5,564,834,864.04 yuan; the book balance of long-term receivables
(including those due within one year) amounted to 2,557.32 million yuan, with provision for bad debts of 152.83 million yuan, andthe carrying amount amounted to 2,221.29 million yuan.Based on credit risk features of accounts receivable, the Company’s management (the “Management”) measures the provision for baddebts at the amount of lifetime expected credit losses, either on an individual basis or on a collective basis. For accounts receivablewith expected credit losses measured on an individual basis, the Management estimates the expected cash flows, so as to identify theprovision for bad debts to be accrued, based on a comprehensive consideration of information with reasonableness and evidence,which is related to the past events, the current situation and the forecast of future economic conditions. For accounts receivable withexpected credit losses measured on a collective basis, the Management classifies portfolios on the basis of ages, adjusts them basedon historical credit risk loss experience and forward-looking estimations, prepares the comparison table of ages of accountsreceivable, so as to calculate the provision for bad debts to be accrued.As the amount of accounts receivable is significant and the impairment involves significant judgment of the Management, we haveidentified impairment of accounts receivable as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for impairment of accounts receivable and long-term receivables (including those due within one year) areas follows:
(1) We obtained understandings of key internal controls related to accounts receivable and long-term receivables (including those duewithin one year), assessed the design of these controls, determined whether they had been executed, and tested the effectiveness oftheir operation;
(2) We reviewed accounts receivable and long-term receivables (including those due within one year) with provision for bad debtsmade in previous periods for their subsequent write-off or reversal, and assessed the accuracy of historical estimations made by theManagement;
(3) We reviewed the consideration of the Management on credit risk assessment of accounts receivable and long-term receivables(including those due within one year) and objective evidences, and assessed whether the credit risk features of accounts receivablehad been appropriately identified by the Management;
(4) For accounts receivable and long-term receivables (including those due within one year) with expected credit losses measured ona collective basis, we assessed the reasonableness of portfolio classification on the basis of credit risk features; we assessed thereasonableness of the comparison table of ages and expected credit loss rate of accounts receivable and long-term receivables(including those due within one year) prepared by the Management based on the historical credit loss experience of portfolios withsimilar credit risk features and forward-looking estimations; we tested the accuracy and completeness of data used by theManagement (including ages) and whether the calculation of provision for bad debts was accurate;
(5) We checked the subsequent collection of accounts receivable and long-term receivables (including those due within one year) andassessed the reasonableness of provision for bad debts made by the Management; and
(6) We checked whether information related to impairment of accounts receivable and long-term receivables (including those duewithin one year) had been presented appropriately in the financial statements.
(III) Impairment of goodwill
1. Key audit matters
Please refer to section III (XX) and section V (I) 20 of the notes to the financial statements for details.
As of December 31, 2020, the book balance of goodwill amounted to 6,224,243,094.37 yuan, with provision for bad debts of53,434,058.51 yuan, and the carrying amount amounted to 6,170,809,035.86 yuan, accounting for 20.49% of total assets. Both thecarrying amount and the proportion are relatively large.The Management will perform impairment test on goodwill arising from business combination together with related asset groups orasset group portfolios at the end of each period, and the recoverable amount of related asset groups or asset group portfolios isdetermined based on the present value of estimated future cash flows. Key assumptions adopted in the impairment test include:
revenue growth rate in detailed forecast period, growth rate for stable income, profit margin, pre-tax discount rate, etc.As the amount of goodwill is significant and impairment test involves significant judgment of the Management, we have identifiedimpairment of goodwill as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for impairment of goodwill are as follows:
(1) We obtained understandings of key internal controls related to impairment of goodwill, assessed the design of these controls,determined whether they had been executed, and tested the effectiveness of their operation;
(2) We reviewed the present value of future cash flows estimated by the Management in previous years and the actual operatingresults, and assessed the accuracy of the Management’s historical estimations;
(3) We obtained understandings of and assessed the competency, professional quality and objectivity of external appraisers engagedby the Management;
(4) We assessed the reasonableness and consistency of impairment test method adopted by the Management;
(5) We assessed the reasonableness of key assumptions used in impairment test and reviewed whether relevant assumptions wereconsistent with overall economy environment, industry condition, management situation, historical experience, operation plan,approved budget, meeting summary and other assumptions related to the financial statements used by the Management;
(6) We reviewed the sensitivity analysis on key assumptions performed by the Management, assessed the effect of changes in keyassumptions on impairment test result, and identified signs of possible management bias in choosing key assumptions;
(7) We tested the accuracy, completeness and relativity of data used in the impairment test and reviewed the internal consistency ofrelated information in the impairment test;
(8) We tested whether the calculation of present value of estimated future cash flows was accurate; and
(9) We checked whether information related to impairment of goodwill had been presented appropriately in the financial statements.(IV) Related party transactions and identification
1. Key audit matters
Please refer to section X of the notes to the financial statements for details.Due to the complex relationship between the Company’s ultimate controller 何剑锋 (He Jianfeng) and its controlling shareholder盈峰控股集团有限公司 (Infore Holding Group Co., Ltd.
?), a large number of affiliated entities of the Company’s major shareholder中联重科股份有限公司 (Zoomlion Heavy Industry Co., Ltd.
*
), and various types of related party transactions, which may exist arisk that related party relationships and transactions are not fully disclosed in the notes to the financial statements, we have identifiedthe completeness of disclosure on related party relationships and transactions as a key audit matter.
2. Responsive audit procedures
?
The English names are for identification purpose only.
Our main audit procedures for related party transactions and identification are as follows:
(1) We assessed and tested the internal controls related to the identification and disclosure of related party relationships andtransactions. Internal controls included regularly reviewing the list of related parties by the Management, performing related partyreconciliations on a regular basis and following up on discrepancies, and collecting annual statistics on related party transactions andmaking a public announcement;
(2) We obtained the list of related party relationships compiled by the Management, and checked it with the related partyrelationships listed in the sub-ledger and information obtained from other publicly available sources;
(3) We checked significant sales, purchases and other contracts to identify whether there are undisclosed related party relationshipsand transactions;
(4) We obtained the current account schedule provided by the Management, checked the reconciliation results of amounts andbalances of related party transactions to confirm the completeness of the transactions, and checked the original vouchers ofcorresponding transactions to confirm the authenticity of the transactions;
(5) We performed confirmation procedures to verify the amounts and balances of related party transactions by sampling method; and
(6) We checked whether related party information and transactions had been disclosed in the financial statements.
IV. Other InformationThe Management is responsible for the other information. The other information comprises the information included in theCompany’s annual report, but does not include the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusionthereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, considerwhether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are requiredto report that fact. We have nothing to report in this regard.
V. Responsibilities of the Management and Those Charged with Governance for the Financial StatementsThe Management is responsible for preparing and presenting fairly the financial statements in accordance with China AccountingStandards for Business Enterprises, as well as designing, implementing and maintaining internal control relevant to the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.In preparing the financial statements, the Management is responsible for assessing the Company’s ability to continue as a goingconcern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless theManagement either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI. Certified Public Accountant’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with China Standards on Auditing will always detecta material misstatement when it exists. Misstatement can arise from fraud or error and are considered material if, individually or inthe aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financialstatements.We exercise professional judgment and maintain professional skepticism throughout the audit performed in accordance with ChinaStandards on Auditing. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design andperform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, asfraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmade by the Management.(IV) Conclude on the appropriateness of the Management’s use of the going concern basis of accounting and, based on the auditevidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attentionin our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Company to cease to continue as a going concern.(V) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements representthe underlying transactions and events in a manner that achieves fair presentation.(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities withinthe Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance ofthe group audit. We remain sole responsibility for our audit opinion.We communicate with those charged with governance regarding the planned audit scope, time schedule and significant audit findings,including any deficiencies in internal control of concern that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regardingindependence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance inthe audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.
Pan-China Certified Public Accountants LLP Chinese Certified Public Accountant: Bian Shanshan(Engagement Partner)Hangzhou · China Chinese Certified Public Accountant: Cao Cuijuan
Date of Report: April 22, 2021
The auditor’s report and the accompanying financial statements are English translations of the Chinese auditor’s report andstatutory financial statements prepared under accounting principles and practices generally accepted in the People’s Republic ofChina. These financial statements are not intended to present the financial position and results of operations and cash flows inaccordance with accounting principles and practices generally accepted in other countries and jurisdictions. In case the Englishversion does not conform to the Chinese version, the Chinese version prevails.
Infore Environment Technology Group Co., Ltd.Annual Report 2020
Infore Environment Technology Group Co., Ltd.Consolidated balance sheet as at December 31, 2020(Expressed in Renminbi Yuan)
| Assets | Note No. | Closing balance | December 31, 2019 |
| Current assets: | |||
| Cash and bank balances | 1 | 5,904,127,970.85 | 3,160,767,624.40 |
| Settlement funds | |||
| Loans to other banks | |||
| Held-for-trading financial assets | 2 | 128,017,735.11 | 217,189,146.28 |
| Derivative financial assets | |||
| Notes receivable | 3 | 64,663,544.98 | 40,493,712.20 |
| Accounts receivable | 4 | 5,564,834,864.04 | 5,163,050,940.07 |
| Receivables financing | 5 | 520,429,874.86 | 683,999,481.60 |
| Advances paid | 6 | 137,769,198.53 | 71,052,084.75 |
| Premiums receivable | |||
| Reinsurance accounts receivable | |||
| Reinsurance reserve receivable | |||
| Other receivables | 7 | 257,670,998.28 | 224,865,915.72 |
| Financial assets under reverse repo | |||
| Inventories | 8 | 1,305,177,407.85 | 1,145,000,730.01 |
| Contract assets | 9 | 170,840,655.62 | |
| Assets classified as held for sale | |||
| Non-current assets due within one year | 10 | 1,157,997,329.53 | 760,845,984.28 |
| Other current assets | 11 | 524,859,055.94 | 331,614,554.91 |
| Total current assets | 15,736,388,635.59 | 11,798,880,174.22 | |
| Non-current assets: | |||
| Loans and advances paid | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | 12 | 1,063,292,418.65 | 1,152,179,083.21 |
| Long-term equity investments | 13 | 318,243,332.69 | 303,292,231.01 |
| Other equity instrument investments | 14 | 26,070,000.00 | 26,070,000.00 |
| Other non-current financial assets | |||
| Investment property | 15 | 2,009,006.98 | 568,026.39 |
| Fixed assets | 16 | 1,640,546,747.67 | 994,681,585.66 |
| Construction in progress | 17 | 1,782,529,087.95 | 1,550,462,442.48 |
| Productive biological assets | |||
| Oil & gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 18 | 3,163,935,814.41 | 2,686,210,546.90 |
| Development expenditures | 19 | 4,449,066.69 | 7,861,260.14 |
| Goodwill | 20 | 6,170,809,035.86 | 6,196,214,398.16 |
| Long-term prepayments | 21 | 12,703,802.65 | 16,109,938.88 |
| Deferred tax assets | 22 | 95,270,882.31 | 77,777,629.37 |
| Other non-current assets | 23 | 94,289,159.43 | 44,360,378.52 |
| Total non-current assets | 14,374,148,355.29 | 13,055,787,520.72 |
| Total assets | 30,110,536,990.88 | 24,854,667,694.94 |
| Company’s legal representative： Ma Gang | Company’s Chief Financial Officer: Lu Anfeng | Head of the Company’s Accounting Department: Wu Shanshan | ||
Infore Environment Technology Group Co., Ltd.Consolidated balance sheet as at December 31, 2020 (continued)(Expressed in Renminbi Yuan)
| Liabilities & Equity | Note No. | Closing balance | December 31, 2019 |
| Current liabilities: | |||
| Short-term borrowings | 24 | 1,657,905,376.55 | 1,606,673,817.48 |
| Central bank loans | |||
| Loans from other banks | |||
| Held-for-trading financial liabilities | 25 | 810,300.00 | 866,300.00 |
| Derivative financial liabilities | |||
| Notes payable | 26 | 3,853,175,394.09 | 2,941,694,181.14 |
| Accounts payable | 27 | 3,404,825,085.03 | 2,486,177,851.99 |
| Advances received | 28 | 170,610,799.52 | |
| Contract liabilities | 29 | 181,051,683.90 | |
| Financial liabilities under repo | |||
| Absorbing deposit and interbank deposit | |||
| Deposit for agency security transaction | |||
| Deposit for agency security underwriting | |||
| Employee benefits payable | 30 | 321,861,989.64 | 225,112,437.87 |
| Taxes and rates payable | 31 | 372,514,942.66 | 192,120,056.48 |
| Other payables | 32 | 443,477,082.48 | 374,873,715.69 |
| Handling fee and commission payable | |||
| Reinsurance accounts payable | |||
| Liabilities classified as held for sale | |||
| Non-current liabilities due within one year | 33 | 150,862,201.57 | 86,554,242.52 |
| Other current liabilities | 34 | 55,106,039.73 | |
| Total current liabilities | 10,441,590,095.65 | 8,084,683,402.69 | |
| Non-current liabilities: | |||
| Insurance policy reserve | |||
| Long-term borrowings | 35 | 765,643,457.78 | 643,843,170.78 |
| Bonds payable | 36 | 1,199,466,109.60 | |
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | 37 | 255,735,814.91 | 188,400,523.49 |
| Long-term employee benefits payable | |||
| Provisions | 38 | 1,461,553.82 | |
| Deferred income | 39 | 96,734,819.84 | 50,399,106.23 |
| Deferred tax liabilities | 22 | 78,884,957.38 | 120,043,177.41 |
| Other non-current liabilities | |||
| Total non-current liabilities | 2,397,926,713.33 | 1,002,685,977.91 | |
| Total liabilities | 12,839,516,808.98 | 9,087,369,380.60 | |
| Equity: | |||
| Share capital | 40 | 3,163,062,146.00 | 3,163,062,146.00 |
| Other equity instruments | 41 | 266,939,831.65 | |
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 42 | 9,707,741,876.49 | 9,698,117,762.75 |
| Less: Treasury shares | 43 | 8,920,597.83 | 99,993,195.75 |
| Other comprehensive income | 44 | 479,437.51 | |
| Special reserve | 45 | ||
| Surplus reserve | 46 | 232,701,943.56 | 232,701,943.56 |
| General risk reserve | |||
| Undistributed profit | 47 | 3,558,688,885.55 | 2,520,329,621.90 |
| Total equity attributable to the parent company | 16,920,214,085.42 | 15,514,697,715.97 | |
| Non-controlling interest | 350,806,096.48 | 252,600,598.37 | |
| Total equity | 17,271,020,181.90 | 15,767,298,314.34 |
| Total liabilities & equity | 30,110,536,990.88 | 24,854,667,694.94 |
| Company’s legal representative： Ma Gang | Company’s Chief Financial Officer: Lu Anfeng | Head of the Company’s Accounting Department: Wu Shanshan |
Infore Environment Technology Group Co., Ltd.Parent company balance sheet as at December 31, 2020(Expressed in Renminbi Yuan)
| Assets | Note No. | Closing balance | December 31, 2019 |
| Current assets: | |||
| Cash and bank balances | 1,279,695,772.57 | 414,150,578.04 | |
| Held-for-trading financial assets | 126,075,691.90 | 215,250,000.00 | |
| Derivative financial assets | |||
| Notes receivable | |||
| Accounts receivable | |||
| Receivables financing | 528,356,236.97 | 151,020,990.77 | |
| Advances paid | |||
| Other receivables | 1 | 3,095,331,754.24 | 2,542,917,115.03 |
| Inventories | |||
| Contract assets | |||
| Assets classified as held for sale | |||
| Non-current assets due within one year | 337,148,608.96 | 181,784,542.01 | |
| Other current assets | |||
| Total current assets | 5,366,608,064.64 | 3,505,123,225.85 | |
| Non-current assets: | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | 355,122,722.70 | ||
| Long-term equity investments | 2 | 16,694,341,699.36 | 16,637,081,190.34 |
| Other equity instrument investments | 26,070,000.00 | 26,070,000.00 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | |||
| Construction in progress | |||
| Productive biological assets | |||
| Oil & gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 3,395,200.95 | 4,974,866.68 | |
| Development expenditures | |||
| Goodwill | |||
| Long-term prepayments | 1,155,903.84 | 2,583,187.08 | |
| Deferred tax assets | |||
| Other non-current assets | |||
| Total non-current assets | 16,724,962,804.15 | 17,025,831,966.80 | |
| Total assets | 22,091,570,868.79 | 20,530,955,192.65 |
| Company’s legal representative： Ma Gang | Company’s Chief Financial Officer: Lu Anfeng | Head of the Company’s Accounting Department: Wu Shanshan |
Infore Environment Technology Group Co., Ltd.Parent company balance sheet as at December 31, 2020 (continued)(Expressed in Renminbi Yuan)
| Liabilities & Equity | Note No. | Closing balance | December 31, 2019 |
| Current liabilities: | |||
| Short-term borrowings | 600,733,518.18 | 337,975,971.15 | |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | |||
| Accounts payable | 3,899,667.53 | 7,029,961.20 | |
| Advances received | |||
| Contract liabilities | |||
| Employee benefits payable | 8,700,968.00 | 2,204,822.27 | |
| Taxes and rates payable | 12,475,208.42 | 11,019,711.54 | |
| Other payables | 753,207,113.25 | 514,074,773.76 | |
| Liabilities classified as held for sale | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | |||
| Total current liabilities | 1,379,016,475.38 | 872,305,239.92 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | 1,199,466,109.60 | ||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | 3,000,000.00 | 3,000,000.00 | |
| Long-term employee benefits payable | |||
| Provisions | 218,598.02 | ||
| Deferred income | 350,000.00 | 296,000.00 | |
| Deferred tax liabilities | 30,762,849.39 | 46,963,875.00 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 1,233,797,557.01 | 50,259,875.00 | |
| Total liabilities | 2,612,814,032.39 | 922,565,114.92 | |
| Equity: | |||
| Share capital | 3,163,062,146.00 | 3,163,062,146.00 | |
| Other equity instruments | 266,939,831.65 | ||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 15,356,688,889.72 | 15,345,428,341.90 | |
| Less: Treasury shares | 8,920,597.83 | 99,993,195.75 | |
| Other comprehensive income | |||
| Special reserve | |||
| Surplus reserve | 198,481,554.14 | 198,481,554.14 | |
| Undistributed profit | 502,505,012.72 | 1,001,411,231.44 | |
| Total equity | 19,478,756,836.40 | 19,608,390,077.73 |
| Total liabilities & equity | 22,091,570,868.79 | 20,530,955,192.65 |
| Company’s legal representative： Ma Gang | Company’s Chief Financial Officer: Lu Anfeng | Head of the Company’s Accounting Department: Wu Shanshan |
Infore Environment Technology Group Co., Ltd.Consolidated income statement for the year ended December 31, 2020(Expressed in Renminbi Yuan)
| Items | Note No. | Current period cumulative | Preceding period comparative |
| I. Total operating revenue | 1 | 14,332,025,075.40 | 12,695,858,666.40 |
| Including: Operating revenue | 1 | 14,332,025,075.40 | 12,695,858,666.40 |
| Interest income | |||
| Premium earned | |||
| Revenue from handling charges and commission | |||
| II. Total operating cost | 12,499,304,152.40 | 11,069,345,626.71 | |
| Including: Operating cost | 1 | 10,766,288,959.00 | 9,389,456,412.74 |
| Interest expenses | |||
| Handling charges and commission expenditures | |||
| Surrender value | |||
| Net payment of insurance claims | |||
| Net provision of insurance policy reserve | |||
| Premium bonus expenditures | |||
| Reinsurance expenses | |||
| Taxes and surcharges | 2 | 74,460,829.99 | 71,200,033.13 |
| Selling expenses | 3 | 801,289,013.51 | 917,261,553.74 |
| Administrative expenses | 4 | 536,466,686.12 | 391,834,512.74 |
| R&D expenses | 5 | 254,677,332.19 | 245,637,610.35 |
| Financial expenses | 6 | 66,121,331.59 | 53,955,504.01 |
| Including: Interest expenses | 127,630,040.16 | 99,893,189.87 | |
| Interest income | 49,689,471.88 | 26,182,679.84 | |
| Add: Other income | 7 | 74,276,327.83 | 135,919,040.42 |
| Investment income (or less: losses) | 8 | 78,328,670.09 | 158,539,294.34 |
| Including: Investment income from associates and joint ventures | 41,578,662.81 | 33,697,177.55 | |
| Gains from derecognition of financial assets at amortized cost | |||
| Gains on foreign exchange (or less: losses) | |||
| Gains on net exposure to hedging risk (or less: losses) | |||
| Gains on changes in fair value (or less: losses) | 9 | -95,719,301.47 | 22,408,443.66 |
| Credit impairment loss | 10 | -119,562,421.08 | -111,054,884.67 |
| Assets impairment loss | 11 | -82,478,500.15 | -40,642,899.39 |
| Gains on asset disposal (or less: losses) | 12 | -1,787,925.37 | -2,966,334.79 |
| III. Operating profit (or less: losses) | 1,685,777,772.85 | 1,788,715,699.26 | |
| Add: Non-operating revenue | 13 | 9,844,019.69 | 12,335,161.18 |
| Less: Non-operating expenditures | 14 | 58,229,724.05 | 163,245,079.19 |
| IV. Profit before tax (or less: total loss) | 1,637,392,068.49 | 1,637,805,781.25 | |
| Less: Income tax expenses | 15 | 207,571,413.76 | 246,239,615.82 |
| V. Net profit (or less: net loss) | 1,429,820,654.73 | 1,391,566,165.43 | |
| (I) Categorized by the continuity of operations | |||
| 1. Net profit from continuing operations (or less: net loss) | 1,429,820,654.73 | 1,391,566,165.43 | |
| 2. Net profit from discontinued operations (or less: net loss) | |||
| (II) Categorized by the portion of equity ownership | |||
| 1. Net profit attributable to owners of parent company (or less: net loss) | 1,386,476,099.73 | 1,361,453,754.17 | |
| 2. Net profit attributable to non-controlling shareholders (or less: net loss) | 43,344,555.00 | 30,112,411.26 | |
| VI. Other comprehensive income after tax | 16 | -479,437.51 | 1,558,587.50 |
| Items attributable to the owners of the parent company | -479,437.51 | 1,377,025.00 | |
| (I) Not to be reclassified subsequently to profit or loss | |||
| 1. Changes in remeasurement on the net defined benefit plan | |||
| 2. Items under equity method that will not be reclassified to profit or loss | |||
| 3. Changes in fair value of other equity instrument investments | |||
| 4. Changes in fair value of own credit risk | |||
| 5. Others | |||
| (II) To be reclassified subsequently to profit or loss | -479,437.51 | 1,377,025.00 | |
| 1. Items under equity method that may be reclassified to profit or loss |
| 2. Changes in fair value of other debt investments | |||
| 3. Profit or loss from reclassification of financial assets into other comprehensive income | |||
| 4. Provision for credit impairment of other debt investments | |||
| 5. Cash flow hedging reserve | -479,437.51 | 1,377,025.00 | |
| 6. Translation reserve | |||
| 7. Others | |||
| Items attributable to non-controlling shareholders | 181,562.50 | ||
| VII. Total comprehensive income | 1,429,341,217.22 | 1,393,124,752.93 | |
| Items attributable to the owners of the parent company | 1,385,996,662.22 | 1,362,830,779.17 | |
| Items attributable to non-controlling shareholders | 43,344,555.00 | 30,293,973.76 | |
| VIII. Earnings per share (EPS): | |||
| (I) Basic EPS (yuan per share) | 0.44 | 0.43 | |
| (II) Diluted EPS (yuan per share) | 0.44 | 0.43 |
| Company’s legal representative： Ma Gang | Company’s Chief Financial Officer: Lu Anfeng | Head of the Company’s Accounting Department: Wu Shanshan |
Infore Environment Technology Group Co., Ltd.Parent company income statement for the year ended December 31, 2020(Expressed in Renminbi Yuan)
| Items | Note No. | Current period cumulative | Preceding period comparative |
| I. Operating revenue | 1 | 7,213,284.07 | 33,915,501.26 |
| Less: Operating cost | 1 | 4,157,985.26 | 28,584,116.83 |
| Taxes and surcharges | 182,314.26 | 5,874,151.83 | |
| Selling expenses | 369,570.87 | 2,529,102.21 | |
| Administrative expenses | 39,475,371.54 | 30,060,667.94 | |
| R&D expenses | |||
| Financial expenses | -26,807,548.72 | -62,072,926.77 | |
| Including: Interest expenses | 39,786,911.13 | 13,591,427.20 | |
| Interest income | 52,733,916.01 | 53,003,430.82 | |
| Add: Other income | 46,200.00 | 5,031,000.00 | |
| Investment income (or less: losses) | 2 | -51,519,175.85 | 231,319,838.67 |
| Including: Investment income from associates and joint ventures | 30,182,747.26 | 24,371,021.87 | |
| Gains from derecognition of financial assets at amortized cost | |||
| Gains on net exposure to hedging risk (or less: losses) | |||
| Gains on changes in fair value (or less: losses) | -89,179,102.46 | 24,375,000.00 | |
| Credit impairment loss | -9,948,732.66 | -3,417,654.17 | |
| Assets impairment loss | |||
| Gains on asset disposal (or less: losses) | |||
| II. Operating profit (or less: losses) | -160,765,220.11 | 286,248,573.72 | |
| Add: Non-operating revenue | 4,001.38 | 419.21 | |
| Less: Non-operating expenditures | 6,251,989.16 | 100,000.00 | |
| III. Profit before tax (or less: total loss) | -167,013,207.89 | 286,148,992.93 | |
| Less: Income tax expenses | -16,043,825.23 | ||
| IV. Net profit (or less: net loss) | -150,969,382.66 | 286,148,992.93 | |
| (I) Net profit from continuing operations (or less: net loss) | -150,969,382.66 | 286,148,992.93 | |
| (II) Net profit from discontinued operations (or less: net loss) | |||
| V. Other comprehensive income after tax | |||
| (I) Not to be reclassified subsequently to profit or loss | |||
| 1. Changes in remeasurement on the net defined benefit plan | |||
| 2. Items under equity method that will not be reclassified to profit or loss | |||
| 3. Changes in fair value of other equity instrument investments | |||
| 4. Changes in fair value of own credit risk | |||
| 5. Others | |||
| (II) To be reclassified subsequently to profit or loss | |||
| 1. Items under equity method that may be reclassified to profit or loss | |||
| 2. Changes in fair value of other debt investments | |||
| 3. Profit or loss from reclassification of financial assets into other comprehensive income | |||
| 4. Provision for credit impairment of other debt investments | |||
| 5. Cash flow hedging reserve | |||
| 6. Translation reserve | |||
| 7. Others | |||
| VI. Total comprehensive income | -150,969,382.66 | 286,148,992.93 | |
| VII. Earnings per share (EPS): | |||
| (I) Basic EPS (yuan per share) | |||
| (II) Diluted EPS (yuan per share) |
| Company’s legal representative： Ma Gang | Company’s Chief Financial Officer: Lu Anfeng | Head of the Company’s Accounting Department: Wu Shanshan | ||
Infore Environment Technology Group Co., Ltd.Consolidated cash flow statement for the year ended December 31, 2020(Expressed in Renminbi Yuan)
| Items | Note No. | Current period cumulative | Preceding period comparative |
| I. Cash flows from operating activities: | |||
| Cash receipts from sale of goods or rendering of services | 14,388,470,951.18 | 12,887,175,130.38 | |
| Net increase of client deposit and interbank deposit | |||
| Net increase of central bank loans | |||
| Net increase of loans from other financial institutions | |||
| Cash receipts from original insurance contract premium | |||
| Net cash receipts from reinsurance | |||
| Net increase of policy-holder deposit and investment | |||
| Cash receipts from interest, handling charges and commission | |||
| Net increase of loans from others |
| Net increase of repurchase | |||
| Net cash receipts from agency security transaction | |||
| Receipts of tax refund | 42,951,350.75 | 31,686,156.47 | |
| Other cash receipts related to operating activities | 1 | 1,153,494,070.87 | 881,247,180.03 |
| Subtotal of cash inflows from operating activities | 15,584,916,372.80 | 13,800,108,466.88 | |
| Cash payments for goods purchased and services received | 9,435,508,509.89 | 8,905,268,694.35 |
| Net increase of loans and advances to clients | |||
| Net increase of central bank deposit and interbank deposit | |||
| Cash payments for insurance indemnities of original insurance contracts | |||
| Net increase of loans to others | |||
| Cash payments for interest, handling charges and commission | |||
| Cash payments for policy bonus | |||
| Cash paid to and on behalf of employees | 1,060,641,117.62 | 838,624,632.82 | |
| Cash payments for taxes and rates | 617,586,885.55 | 839,766,913.35 | |
| Other cash payments related to operating activities | 2 | 2,782,465,767.99 | 1,731,698,172.34 |
| Subtotal of cash outflows from operating activities | 13,896,202,281.05 | 12,315,358,412.86 | |
| Net cash flows from operating activities | 1,688,714,091.75 | 1,484,750,054.02 | |
| II. Cash flows from investing activities: | |||
| Cash receipts from withdrawal of investments | 25,375,775.54 | 1,495,138.38 | |
| Cash receipts from investment income | 47,958,881.63 | 23,794,593.10 | |
| Net cash receipts from the disposal of fixed assets, intangible assets and other long-term assets | 4,912,554.51 | 8,674,586.32 | |
| Net cash receipts from the disposal of subsidiaries & other business units | 213,687,034.09 | 8,017,154.08 | |
| Other cash receipts related to investing activities | 3 | 5,159,933,419.02 | 5,069,929,517.08 |
| Subtotal of cash inflows from investing activities | 5,451,867,664.79 | 5,111,910,988.96 |
| Cash payments for the acquisition of fixed assets, intangible assets and other long-term assets | 1,291,812,173.08 | 1,256,740,258.91 | |
| Cash payments for investments | 7,639,195.26 | 30,863,232.45 | |
| Net increase of pledged borrowings | |||
| Net cash payments for the acquisition of subsidiaries & other business units | |||
| Other cash payments related to investing activities | 4 | 5,036,128,312.71 | 4,787,670,833.27 |
| Subtotal of cash outflows from investing activities | 6,335,579,681.05 | 6,075,274,324.63 | |
| Net cash flows from investing activities | -883,712,016.26 | -963,363,335.67 | |
| III. Cash flows from financing activities: | |||
| Cash receipts from absorbing investments | 64,992,660.00 | 174,941,340.00 |
| Including: Cash received by subsidiaries from non-controlling shareholders as investments | 64,992,660.00 | 174,941,340.00 | |
| Cash receipts from borrowings | 5,849,194,821.72 | 2,753,857,571.44 |
| Items | Note No. | Current period cumulative | Preceding period comparative |
| Other cash receipts related to financing activities | 5 | 7,880,000.00 | 260,187,931.04 |
| Subtotal of cash inflows from financing activities | 5,922,067,481.72 | 3,188,986,842.48 | |
| Cash payments for the repayment of borrowings | 4,153,395,539.94 | 2,227,333,573.58 | |
| Cash payments for distribution of dividends or profits and for interest expenses | 488,778,125.98 | 422,951,642.23 | |
| Including: Cash paid by subsidiaries to non-controlling shareholders as dividend or profit | |||
| Other cash payments related to financing activities | 6 | 38,041,830.99 | 164,369,479.80 |
| Subtotal of cash outflows from financing activities | 4,680,215,496.91 | 2,814,654,695.61 | |
| Net cash flows from financing activities | 1,241,851,984.81 | 374,332,146.87 | |
| IV. Effect of foreign exchange rate changes on cash & cash equivalents | -708,908.76 | -4,004,549.31 | |
| V. Net increase in cash and cash equivalents | 2,046,145,151.54 | 891,714,315.91 | |
| Add: Opening balance of cash and cash equivalents | 2,611,680,947.69 | 1,719,966,631.78 | |
| VI. Closing balance of cash and cash equivalents | 4,657,826,099.23 | 2,611,680,947.69 |
| Company’s legal representative： Ma Gang | Company’s Chief Financial Officer: Lu Anfeng | Head of the Company’s Accounting Department: Wu Shanshan | ||
Infore Environment Technology Group Co., Ltd.Parent company cash flow statement for the year ended December 31, 2020(Expressed in Renminbi Yuan)
| Items | Current period cumulative | Preceding period comparative |
| I. Cash flows from operating activities: | ||
| Cash receipts from sale of goods and rendering of services | 8,741,951.34 | 17,998,824.68 |
| Receipts of tax refund | ||
| Other cash receipts related to operating activities | 532,435,143.45 | 652,476,441.77 |
| Subtotal of cash inflows from operating activities | 541,177,094.79 | 670,475,266.45 |
| Cash payments for goods purchased and services received | 8,712,307.61 | 33,189,961.15 |
| Cash paid to and on behalf of employees | 9,702,646.88 | 7,109,509.51 |
| Cash payments for taxes and rates | 339,945.08 | 29,230,723.56 |
| Other cash payments related to operating activities | 1,244,340,931.04 | 1,091,355,390.42 |
| Subtotal of cash outflows from operating activities | 1,263,095,830.61 | 1,160,885,584.63 |
| Net cash flows from operating activities | -721,918,735.82 | -490,410,318.18 |
| II. Cash flows from investing activities: | ||
| Cash receipts from withdrawal of investments | 513,687,034.09 | 1,164,337,014.74 |
| Cash receipts from investment income | 95,158,453.24 | 219,484,322.89 |
| Net cash receipts from the disposal of fixed assets, intangible assets and other long-term assets | ||
| Net cash receipts from the disposal of subsidiaries & other business units | ||
| Other cash receipts related to investing activities | 4,883,758,860.22 | 5,599,051,756.93 |
| Subtotal of cash inflows from investing activities | 5,492,604,347.55 | 6,982,873,094.56 |
| Cash payments for the acquisition of fixed assets, intangible assets and other long-term assets | 1,135,853.50 | 3,099,961.65 |
| Cash payments for investments | 427,739,035.26 | 164,640,000.00 |
| Net cash payments for the acquisition of subsidiaries & other business units | ||
| Other cash payments related to investing activities | 4,870,251,731.64 | 5,916,147,547.23 |
| Subtotal of cash outflows from investing activities | 5,299,126,620.40 | 6,083,887,508.88 |
| Net cash flows from investing activities | 193,477,727.15 | 898,985,585.68 |
| III. Cash flows from financing activities: | ||
| Cash receipts from absorbing investments | ||
| Cash receipts from borrowings | 2,497,336,184.17 | 348,000,000.00 |
| Other cash receipts related to financing activities | 6,100,000.00 | 152,370,003.00 |
| Subtotal of cash inflows from financing activities | 2,503,436,184.17 | 500,370,003.00 |
| Cash payments for the repayment of borrowings | 777,500,000.00 | 299,600,000.00 |
| Cash payments for distribution of dividends or profits and for interest expenses | 375,434,276.64 | 329,014,228.83 |
| Other cash payments related to financing activities | 8,920,597.83 | 159,993,195.75 |
| Subtotal of cash outflows from financing activities | 1,161,854,874.47 | 788,607,424.58 |
| Net cash flows from financing activities | 1,341,581,309.70 | -288,237,421.58 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | ||
| V. Net increase in cash and cash equivalents | 813,140,301.03 | 120,337,845.92 |
| Add: Opening balance of cash and cash equivalents | 400,848,473.92 | 280,510,628.00 |
| VI. Closing balance of cash and cash equivalents | 1,213,988,774.95 | 400,848,473.92 |
| Company’s legal representative： Ma Gang | Company’s Chief Financial Officer: Lu Anfeng | Head of the Company’s Accounting Department: Wu Shanshan | ||
Infore Environment Technology Group Co., Ltd.Consolidated statement of changes in equity for the year ended December 31, 2020(Expressed in Renminbi Yuan)
Items
Current period cumulativeEquity attributable to parent company
| Equity attributable to parent company | Non-controlling interest | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | ||||
| Preferred shares | Perpetual bonds | Others | ||||||||||
| 3,163,062,146.00 | 9,698,117,762.75 | 99,993,195.75 | 479,437.51 | 232,701,943.56 | 2,520,329,621.90 | 252,600,598.37 |
| 3,163,062,146.00 | 9,698,117,762.75 | 99,993,195.75 | 479,437.51 | 232,701,943.56 | 2,520,329,621.90 | 252,600,598.37 |
| 266,939,831.65 | 9,624,113.74 | -91,072,597.92 | -479,437.51 | 1,038,359,263.65 | 98,205,498.11 |
| -479,437.51 | 1,386,476,099.73 | 43,344,555.00 |
| 266,939,831.65 | 9,624,113.74 | -91,072,597.92 | 54,860,943.11 |
| 8,920,597.83 | 61,699,287.49 |
| 266,939,831.65 |
| 11,260,547.81 | 765,449.01 |
| -1,636,434.07 | -99,993,195.75 | -7,603,793.39 |
| -348,116,836.08 |
| -348,116,836.08 |
| 8,699,413.98 |
| -8,699,413.98 |
| 3,163,062,146.00 | 266,939,831.65 | 9,707,741,876.49 | 8,920,597.83 | 232,701,943.56 | 3,558,688,885.55 | 350,806,096.48 |
| Company’s Chief Financial Officer: Lu Anfeng | Head of the Company’s Accounting Department: Wu Shanshan |
Infore Environment Technology Group Co., Ltd.Consolidated statement of changes in equity for the year ended December 31, 2020 (continued)(Expressed in Renminbi Yuan)
Items
Preceding period comparativeEquity attributable to parent company
| Equity attributable to parent company | Non-controlling interest | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | ||||
| Preferred shares | Perpetual bonds | Others | ||||||||||
| 3,163,062,146.00 | 9,601,763,095.92 | 139,994,037.51 | 189,997,881.77 | 1,376,994,519.12 | 160,308,852.24 |
| -140,891,625.00 | 14,089,162.50 | 126,802,462.50 |
| 3,163,062,146.00 | 9,601,763,095.92 | -897,587.49 | 204,087,044.27 | 1,503,796,981.62 | 160,308,852.24 |
| 96,354,666.83 | 99,993,195.75 | 1,377,025.00 | 28,614,899.29 | 1,016,532,640.28 | 92,291,746.13 |
| 1,377,025.00 | 1,361,453,754.17 | 30,293,973.76 |
| 96,354,666.83 | 99,993,195.75 | 71,447,772.37 |
| 99,993,195.75 | 109,227,856.31 |
| 1,196,651.67 | 303,956.61 |
| 95,158,015.16 | -38,084,040.55 |
| 28,614,899.29 | -344,921,113.89 | -9,450,000.00 |
| 28,614,899.29 | -28,614,899.29 |
| -316,306,214.60 | -9,450,000.00 |
| 8,203,248.10 |
| -8,203,248.10 |
| 3,163,062,146.00 | 9,698,117,762.75 | 99,993,195.75 | 479,437.51 | 232,701,943.56 | 2,520,329,621.90 | 252,600,598.37 |
| Company’s Chief Financial Officer: Lu Anfeng | Head of the Company’s Accounting Department: Wu Shanshan |
Infore Environment Technology Group Co., Ltd.Parent company statement of changes in equity for the year ended December 31, 2020(Expressed in Renminbi Yuan)
Items
Current period cumulativeShare capital
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Total equity | ||
| Preferred shares | Perpetual bonds | Others | ||||||||
| 3,163,062,146.00 | 15,345,428,341.90 | 99,993,195.75 | 198,481,554.14 | 1,001,411,231.44 | 19,608,390,077.73 |
| 3,163,062,146.00 | 15,345,428,341.90 | 99,993,195.75 | 198,481,554.14 | 1,001,411,231.44 | 19,608,390,077.73 |
| 266,939,831.65 | 11,260,547.82 | -91,072,597.92 | -498,906,218.72 | -129,633,241.33 |
| -150,969,382.66 | -150,969,382.66 |
| 266,939,831.65 | 11,260,547.82 | -91,072,597.92 | 369,272,977.39 |
| 8,920,597.83 | -8,920,597.83 |
| 266,939,831.65 | 266,939,831.65 |
| 11,260,547.82 | 11,260,547.82 |
| -99,993,195.75 | 99,993,195.75 |
| -347,936,836.06 | -347,936,836.06 |
| -347,936,836.06 | -347,936,836.06 |
| 3,163,062,146.00 | 266,939,831.65 | 15,356,688,889.72 | 8,920,597.83 | 198,481,554.14 | 502,505,012.72 | 19,478,756,836.40 |
| Company’s Chief Financial Officer: Lu Anfeng | Head of the Company’s Accounting Department: Wu Shanshan |
Infore Environment Technology Group Co., Ltd.Parent company statement of changes in equity for the year ended December 31, 2020 (continued)(Expressed in Renminbi Yuan)
Items
| Preceding period comparative | ||||||||||
| Share capital | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Total equity | |||
| Other equity instruments | ||||||||||
| Preferred shares | Perpetual bonds | Others | ||||||||
| 3,163,062,146.00 | 15,344,231,690.23 | 140,891,625.00 | 155,377,168.95 | 923,086,714.26 | 19,726,649,344.44 |
| -140,891,625.00 | 14,089,162.50 | 126,802,462.50 |
| 3,163,062,146.00 | 15,344,231,690.23 | 169,466,331.45 | 1,049,889,176.76 | 19,726,649,344.44 |
| 1,196,651.67 | 99,993,195.75 | 29,015,222.69 | -48,477,945.32 | -118,259,266.71 |
| 286,148,992.93 | 286,148,992.93 |
| 1,196,651.67 | 99,993,195.75 | -98,796,544.08 |
| 99,993,195.75 | -99,993,195.75 |
| 1,196,651.67 | 1,196,651.67 |
| 28,614,899.29 | -344,921,113.89 | -316,306,214.60 |
| 28,614,899.29 | -28,614,899.29 |
| -316,306,214.60 | -316,306,214.60 |
| 400,323.40 | 10,294,175.64 | 10,694,499.04 |
| 3,163,062,146.00 | 15,345,428,341.90 | 99,993,195.75 | 198,481,554.14 | 1,001,411,231.44 | 19,608,390,077.73 |
Company’s legal representative：
Ma Gang
| Company’s Chief Financial Officer: Lu Anfeng | Head of the Company’s Accounting Department: Wu Shanshan |
Infore Environment Technology Group Co., Ltd.
Notes to Financial StatementsFor the year ended December 31, 2020
Monetary unit: RMB Yuan
I. Company profile
Infore Environment Technology Group Co., Ltd. (the “Company”), formerly known as 浙江上风实业股份有限公司 (Zhejiang Shangfeng Industrial Co., Ltd.
), was registered at Zhejiang Administration for Industry andCommerce on November 18, 1993. Under the approval of Zhejiang Share System Pilot Work Coordination Groupwith document of approval numbered Zhe Gu [1993] 51, the Company was established by 浙江风机风冷设备公司 (Zhejiang Fan Air Cooling Equipment Co., Ltd.
*), the main initiator, and 上虞风机厂 (Shangyu Fan Factory
*)and 绍兴市流体工程研究所 (Shaoxing Fluid Engineering Research Institute
*), the joint initiators, throughtargeted fundraising. It is headquartered in Shaoxing City, Zhejiang Province. The Company currently holds abusiness license with unified social credit code of 913300006096799222. As of December 31, 2020, its registeredcapital is 3,163,062,146.00 yuan, a total of 3,163,062,146 shares (each with par value of 1 yuan), of which,1,158,356,644shares are restricted outstanding shares, and 2,004,705,502 shares are unrestricted outstandingshares. The Company’s shares were listed at Shenzhen Stock Exchange on March 30, 2000.The Company belongs to the ecological protection and environmental management industry. The main businessactivities include R&D, maintenance and operation services of environmental monitoring instruments andenvironmental sanitation equipment, environmental treatment technology development, consulting and services,operation services of environmental treatment facilities, environmental engineering, environmental protectionengineering, urban engineering, sale of ventilators, air-cooling, and water-cooling and air-conditioning equipment,etc. The main product categories include sanitation vehicles and equipment, electrotechnical equipment industrialproducts, ventilation equipment industrial products and environmental integrated industrial services.The financial statements were approved and authorized for issue by the 13
th
meeting of the ninth session of theBoard of Directors dated April 22, 2021.The Company has brought 136 subsidiaries and sub-subsidiaries including 长沙中联重科环境产业有限公司(Changsha Zoomlion Environmental Industry Co., Ltd.
*, hereinafter referred to as Zoomlion EnvironmentalCompany), 浙江上风高科专风实业股份有限公司 (Zhejiang Shangfeng Hi-Tech Zhuanfeng Industrial Co.,Ltd.
*
, hereinafter referred to as Shangfeng Industrial Company), 广东威奇电工材料有限公司 (GuangdongWeiqi Electrical Materials Co., Ltd.
*, hereinafter referred to as Guangdong Weiqi Company),广东盈峰科技有限公司 (Guangdong Infore Technology Co., Ltd.
*
, hereinafter referred to as Infore Technology Company) and 深
The English names are for identification purpose only.
*The English names are for identification purpose only.
圳市绿色东方环保有限公司 (Shenzhen Green Oriental Environmental Protection Co., Ltd.
*, hereinafter referredto as Green Oriental Company)into the consolidation scope. Please refer to section VI and VII of notes to financialstatements for details.
II. Preparation basis of the financial statements(I) Preparation basisThe financial statements have been prepared on the basis of going concern.(II) Assessment of the ability to continue as a going concernThe Company has no events or conditions that may cast significant doubts upon the Company’s ability to continueas a going concern within the 12 months after the balance sheet date.
III. Significant accounting policies and estimatesImportant note:
The Company has set up accounting policies and estimates on transactions or events such as impairment offinancial instruments, depreciation of fixed assets, amortization of intangible assets, and revenue recognition, etc.based on the Company’s actual production and operation features.(I) Statement of complianceThe financial statements have been prepared in accordance with the requirements of China Accounting Standardsfor Business Enterprises (CASBEs), and present truly and completely the financial position, results of operationsand cash flows of the Company.(II) Accounting periodThe accounting year of the Company runs from January 1 to December 31 under the Gregorian calendar.(III) Operating cycleThe Company has a relatively short operating cycle for its business, an asset or a liability is classified as current ifit is expected to be realized or due within 12 months.(IV) Functional currencyThe Company’s functional currency is Renminbi (RMB) Yuan.(V) Accounting treatments of business combination under and not under common control
1. Accounting treatment of business combination under common control
Assets and liabilities arising from business combination are measured at carrying amount of the combined partyincluded in the consolidated financial statements of the ultimate controlling party at the combination date.Difference between carrying amount of the equity of the combined party included in the consolidated financialstatements of the ultimate controlling party and that of the combination consideration or total par value of sharesissued is adjusted to capital reserve, if the balance of capital reserve is insufficient to offset, any excess is adjustedto retained earnings.
2. Accounting treatment of business combination not under common control
When combination cost is in excess of the fair value of identifiable net assets obtained from the acquiree at theacquisition date, the excess is recognized as goodwill; otherwise, the fair value of identifiable assets, liabilitiesand contingent liabilities, and the measurement of the combination cost are reviewed, then the difference isrecognized in profit or loss.(VI) Compilation method of consolidated financial statementsThe parent company brings all its controlled subsidiaries into the consolidation scope. The consolidated financialstatements are compiled by the parent company according to “CASBE 33 – Consolidated Financial Statements”,based on relevant information and the financial statements of the parent company and its subsidiaries.(VII) Classification of joint arrangements and accounting treatment of joint operations
1. Joint arrangements include joint operations and joint ventures.
2. When the Company is a joint operator of a joint operation, it recognizes the following items in relation to itsinterest in a joint operation:
(1) its assets, including its share of any assets held jointly;
(2) its liabilities, including its share of any liabilities incurred jointly;
(3) its revenue from the sale of its share of the output arising from the joint operation;
(4) its share of the revenue from the sales of the assets by the joint operation; and
(5) its expenses, including its share of any expenses incurred jointly.
(VIII) Recognition criteria of cash and cash equivalentsCash as presented in cash flow statement refers to cash on hand and deposit on demand for payment. Cashequivalents refer to short-term, highly liquid investments that can be readily converted to cash and that are subjectto an insignificant risk of changes in value.(IX) Foreign currency translation
1. Translation of transactions denominated in foreign currency
Transactions denominated in foreign currency are translated into RMB yuan at the spot exchange rate at thetransaction date at initial recognition. At the balance sheet date, monetary items denominated in foreign currencyare translated at the spot exchange rate at the balance sheet date with difference, except for those arising from theprincipal and interest of exclusive borrowings eligible for capitalization, included in profit or loss; non-cash itemscarried at historical costs are translated at the spot exchange rate at the transaction date, with the RMB amountsunchanged; non-cash items carried at fair value in foreign currency are translated at the spot exchange rate at thedate when the fair value was determined, with difference included in profit or loss or other comprehensiveincome.
2. Translation of financial statements measured in foreign currency
The assets and liabilities in the balance sheet are translated into RMB at the spot rate at the balance sheet date; the
equity items, other than undistributed profit, are translated at the spot rate at the transaction date; the revenues andexpenses in the income statement are translated into RMB at the spot exchange rate at the transaction date. Thedifference arising from the aforementioned foreign currency translation is included in other comprehensiveincome.(X) Financial instruments
1. Classification of financial assets and financial liabilities
Financial assets are classified into the following three categories when initially recognized: (1) financial assets atamortized cost; (2) financial assets at fair value through other comprehensive income; (3) financial assets at fairvalue through profit or loss.Financial liabilities are classified into the following four categories when initially recognized: (1) financialliabilities at fair value through profit or loss; (2) financial liabilities that arise when a transfer of a financial assetdoes not qualify for derecognition or when the continuing involvement approach applies; (3) financial guaranteecontracts not fall within the above categories (1) and (2), and commitments to provide a loan at a below-marketinterest rate, which do not fall within the above category (1); (4) financial liabilities at amortized cost.
2. Recognition criteria, measurement method and derecognition condition of financial assets and financialliabilities
(1) Recognition criteria and measurement method of financial assets and financial liabilitiesWhen the Company becomes a party to a financial instrument, it is recognized as a financial asset or financialliability. The financial assets and financial liabilities initially recognized by the Company are measured at fairvalue; for the financial assets and liabilities at fair value through profit or loss, the transaction expenses thereof aredirectly included in profit or loss; for other categories of financial assets and financial liabilities, the transactionexpenses thereof are included into the initially recognized amount. However, at initial recognition, for accountsreceivable that do not contain a significant financing component or contracts in which the financing componentswith associated period less than one year are not considered, the Company measures at their transaction price inaccordance with “CASBE 14 – Revenues”.
(2) Subsequent measurement of financial assets
1) Financial assets measured at amortized cost
The Company measures its financial assets at the amortized costs using effective interest method. Gains or losseson financial assets that are measured at amortized cost and are not part of hedging relationships shall be includedinto profit or loss when the financial assets are derecognized, reclassified, amortized using effective interestmethod or recognized with impairment loss.
2) Debt instrument investments at fair value through other comprehensive incomeThe Company measures its debt instrument investments at fair value. Interests, impairment gains or losses, andgains and losses on foreign exchange that calculated using effective interest method shall be included into profitor loss, while other gains or losses are included into other comprehensive income. Accumulated gains or lossesthat initially recognized as other comprehensive income should be transferred out into profit or loss when the
financial assets are derecognized.
3) Equity instrument investments at fair value through other comprehensive incomeThe Company measures its equity instrument investments at fair value. Dividends obtained (other than those aspart of investment cost recovery) shall be included into profit or loss, while other gains or losses are included intoother comprehensive income. Accumulated gains or losses that initially recognized as other comprehensiveincome should be transferred out into retained earnings when the financial assets are derecognized.
4) Financial assets at fair value through profit or loss
The Company measures its financial assets at fair value. Gains or losses arising from changes in fair value(including interests and dividends) shall be included into profit or loss, except for financial assets that are part ofhedging relationships.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities (includingderivatives that are liabilities) and financial liabilities designated as at fair value through profit or loss. TheCompany measures such kind of liabilities at fair value. The amount of changes in the fair value of the financialliabilities that are attributable to changes in the Company’s own credit risk shall be included into othercomprehensive income, unless such treatment would create or enlarge accounting mismatches in profit or loss.Other gains or losses on those financial liabilities (including interests, changes in fair value that are attributable toreasons other than changes in the Company’s own credit risk) shall be included into profit or loss, except forfinancial liabilities that are part of hedging relationships. Accumulated gains or losses that originally recognizedas other comprehensive income should be transferred out into retained earnings when the financial liabilities arederecognized.
2) Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when thecontinuing involvement approach appliesThe Company measures its financial liabilities in accordance with “CASBE 23 – Transfer of Financial Assets”.
3)Financial guarantee contracts not fall within the above categories 1) and 2), and commitments to provide a loanat a below-market interest rate, which do not fall within the above category 1)The Company measures its financial liabilities at the higher of: a. the amount of loss allowances in accordancewith impairment requirements of financial instruments; b. the amount initially recognized less the amount ofaccumulated amortization recognized in accordance with “CASBE 14 – Revenues”.
4) Financial liabilities at amortized cost
The Company measures its financial liabilities at amortized cost using effective interest method. Gains or losseson financial liabilities that are measured at amortized cost and are not part of hedging relationships shall beincluded into profit or loss when the financial liabilities are derecognized and amortized using effective interestmethod.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when:
a. the contractual rights to the cash flows from the financial assets expire; orb. the financial assets have been transferred and the transfer qualifies for derecognition in accordance with“CASBE 23 – Transfer of Financial Assets”.
2) Only when the underlying present obligations of a financial liability are relieved totally or partly may thefinancial liability be derecognized accordingly.
3. Recognition criteria and measurement method of financial assets transfer
Where the Company has transferred substantially all of the risks and rewards related to the ownership of thefinancial asset, it derecognizes the financial asset, and any right or liability arising from such transfer isrecognized independently as an asset or a liability. If it retained substantially all of the risks and rewards related tothe ownership of the financial asset, it continues recognizing the financial asset. Where the Company does nottransfer or retain substantially all of the risks and rewards related to the ownership of a financial asset, it is dealtwith according to the circumstances as follows respectively: (1) if the Company does not retain its control over thefinancial asset, it derecognizes the financial asset, and any right or liability arising from such transfer isrecognized independently as an asset or a liability; (2) if the Company retains its control over the financial asset,according to the extent of its continuing involvement in the transferred financial asset, it recognizes the relatedfinancial asset and recognizes the relevant liability accordingly.If the transfer of an entire financial asset satisfies the conditions for derecognition, the difference between theamounts of the following two items are included in profit or loss: (1) the carrying amount of the transferredfinancial asset as of the date of derecognition; (2) the sum of consideration received from the transfer of thefinancial asset, and the accumulative amount of the changes of the fair value originally included in othercomprehensive income proportionate to the transferred financial asset (financial assets transferred refer to debtinstrument investments at fair value through other comprehensive income). If the transfer of financial assetpartially satisfies the conditions to derecognition, the entire carrying amount of the transferred financial asset is,between the portion which is derecognized and the portion which is not, apportioned according to their respectiverelative fair value, and the difference between the amounts of the following two items are included into profit orloss: (1) the carrying amount of the portion which is derecognized; (2) the sum of consideration of the portionwhich is derecognized, and the portion of the accumulative amount of the changes in the fair value originallyincluded in other comprehensive income which is corresponding to the portion which is derecognized (financialassets transferred refer to debt instrument investments at fair value through other comprehensive income).
4. Fair value determination method of financial assets and liabilities
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data areavailable to measure fair value. The inputs to valuation techniques used to measure fair value are arranged in thefollowing hierarchy and used accordingly:
(1) Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the
Company can access at the measurement date.
(2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset orliability, either directly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in activemarkets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other thanquoted prices that are observable for the asset or liability, for example, interest rates and yield curves observable atcommonly quoted intervals; market-corroborated inputs;
(3) Level 3 inputs are unobservable inputs for the asset or liability. Level 3 inputs include interest rate that is notobservable and cannot be corroborated by observable market data at commonly quoted intervals, historicalvolatility, future cash flows to be paid to fulfill the disposal obligation assumed in business combination, andfinancial forecast developed using the Company’s own data, etc.
5. Impairment of financial instruments
(1) Measurement and accounting treatment
The Company, on the basis of expected credit loss, recognizes loss allowances of financial assets at amortized cost,debt instrument investments, contract assets or leases receivable at fair value through other comprehensive income,loan commitments other than financial liabilities at fair value through profit or loss, financial guarantee contractsnot belong to financial liabilities at fair value through profit or loss or financial liabilities that arise when a transferof a financial asset does not qualify for derecognition or when the continuing involvement approach applies.Expected credit losses refer to the weighted average of credit losses with the respective risks of a default occurringas the weights. Credit loss refers to the difference between all contractual cash flows that are due to the Companyin accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls),discounted at the original effective interest rate. Among which, purchased or originated credit-impaired financialassets are discounted at the credit-adjusted effective interest rate.At the balance sheet date, the Company shall only recognize the cumulative changes in the lifetime expectedcredit losses since initial recognition as a loss allowance for purchased or originated credit-impaired financialassets.For accounts receivable and contract assets that do not contain a significant financing component or financingcomponents in contracts with associated period less than one year that are not considered by the Company, whichresult from transactions as regulated in “CASBE 14 – Revenues”, the Company chooses simplified approach tomeasure the loss allowance at an amount equal to lifetime expected credit losses.For lease receivables, accounts receivable and contract assets that result from transactions as regulated in“CASBE 14 – Revenues” and contain a significant financing component, the Company chooses simplifiedapproach to measure the loss allowance at an amount equal to lifetime expected credit losses.For financial assets other than the above, on each balance sheet date, the Company shall assess whether the creditrisk on the financial instrument has increased significantly since initial recognition. The Company shall measurethe loss allowance for the financial instrument at an amount equal to the lifetime expected credit losses if the
credit risk on that financial instrument has increased significantly since initial recognition; otherwise, theCompany shall measure the loss allowance for that financial instrument at an amount equal to 12-month expectedcredit loss.Considering reasonable and supportable forward-looking information, the Company compares the risk of a defaultoccurring on the financial instrument as at the balance sheet date with the risk of a default occurring on thefinancial instrument as at the date of initial recognition, so as to assess whether the credit risk on the financialinstrument has increased significantly since initial recognition.The Company may assume that the credit risk on a financial instrument has not increased significantly since initialrecognition if the financial instrument is determined to have relatively low credit risk at the balance sheet date.The Company shall estimate expected credit risk and measure expected credit losses on an individual or acollective basis. When the Company adopts the collective basis, financial instruments are grouped with similarcredit risk features.The Company shall remeasure expected credit loss on each balance sheet date, and increased or reversed amountsof loss allowance arising therefrom shall be included into profit or loss as impairment losses or gains. For afinancial asset measured at amortized cost, the loss allowance reduces the carrying amount of such financial assetpresented in the balance sheet; for a debt investment measured at fair value through other comprehensive income,the loss allowance shall be recognized in other comprehensive income and shall not reduce the carrying amount ofsuch financial asset.
(2) Financial instruments with expected credit risk assessed and expected credit losses measured on a collectivebasis
| Items | Basis for determination of portfolio | Method for measuring expected credit loss |
| Other receivables – Portfolio grouped with balance due from related parties within the consolidation scope | Balance due from related parties within the consolidation scope | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and 12-month or lifetime expected credit loss rate. |
| Other receivables – Portfolio grouped with ages | Ages | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and 12-month or lifetime expected credit loss rate. |
| Long-term receivables – Portfolio grouped with equity transfer payment received in installments | Nature of the balance | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and 12-month or lifetime expected credit loss rate. |
| Long-term receivables – Portfolio grouped with finance lease payment/ Accounts receivable – Commercial factoring payment | Nature of the balance | Managed by five-level classification of credit assets of non-bank financial institutions and expected credit loss rates are calculated accordingly: 1.5% for pass category, 3% for special-mention category, 30% for substandard category, 60% for doubtful category, and 100% for loss category |
(3) Accounts receivable and contract assets with expected credit losses measured on a collective basis
1) Specific portfolios and method for measuring expected credit loss
| Items | Basis for determination of portfolio | Method for measuring expected credit loss |
| Bank acceptance receivable | Type of notes | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and lifetime expected credit loss rate. |
| Trade acceptance receivable | ||
| Accounts receivable – Portfolio grouped with balance due from related parties within the consolidation scope | Balance due from related parties within the consolidation scope | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and lifetime expected credit loss rate. |
| Accounts receivable – Portfolio grouped with ages | Nature of the balance | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company prepares the comparable table between overdue days/ages and lifetime expected credit loss rate, and calculates expected credit loss of the portfolio. |
| Contract assets – Portfolio grouped with ages | Nature of the balance | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company prepares the comparable table between overdue days/ages and lifetime expected credit loss rate, and calculates expected credit loss of the portfolio. |
| Long-term receivables – Portfolio grouped with ages | Nature of the balance | For long-term receivables within the credit period that has not reached the contractual payment deadline, provision for bad debts is accrued at 5% of the balance. For long-term receivables that have exceeded the contractual payment deadline and have not yet been paid, provision for bad debts is accrued based on the age of the balance. |
2) Accounts receivable – comparison table of ages and lifetime expected credit loss rate of portfolio grouped withages
① Parent company and electrotechnical equipment manufacturing industry
| Ages | Expected credit loss rate of accounts receivable (%) | Expected credit loss rate of other receivables (%) |
| 1-180 days (inclusive, the same hereinafter) | 0 | 0 |
| 180 days-1 year | 2 | 2 |
| 1-2 years | 10 | 10 |
| 2-3 years | 30 | 30 |
| 3-5 years | 50 | 50 |
| Over 5 years | 80 | 80 |
② Ventilation equipment manufacturing industry and environmental integrated industry
| Ages | Expected credit loss rate of accounts receivable (%) | Expected credit loss rate of other receivables (%) |
| Within 1 year (inclusive, the same hereinafter) | 5 | 5 |
| 1-2 years | 10 | 10 |
| 2-3 years | 30 | 30 |
| 3-5 years | 50 | 50 |
| Over 5 years | 100 | 100 |
6. Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are not offset. However,the Company offsets a financial asset and a financial liability and presents the net amount in the balance sheetwhen, and only when, the Company: (a) currently has a legally enforceable right to set off the recognized amounts;and (b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.For a transfer of a financial asset that does not qualify for derecognition, the Company does not offset thetransferred asset and the associated liability.(XI) Inventories
1. Classification of inventories
Inventories include finished goods or goods held for sale in the ordinary course of business, work in process in theprocess of production, and materials or supplies etc. to be consumed in the production process or in the renderingof services.
2. Accounting method for dispatching inventories:
Inventories dispatched from storage are accounted for with weighted average method.
3. Basis for determining net realizable value
At the balance sheet date, inventories are measured at the lower of cost and net realizable value; provisions forinventory write-down are made on the excess of its cost over the net realizable value. The net realizable value ofinventories held for sale is determined based on the amount of the estimated selling price less the estimated sellingexpenses and relevant taxes and surcharges in the ordinary course of business; the net realizable value of materialsto be processed is determined based on the amount of the estimated selling price less the estimated costs ofcompletion, selling expenses and relevant taxes and surcharges in the ordinary course of business; at the balancesheet date, when only part of the same item of inventories have agreed price, their net realizable value isdetermined separately and is compared with their costs to set the provision for inventory write-down to be madeor reversed.
4. Inventory system
Perpetual inventory method is adopted.
5. Amortization method of low-value consumables and packages
(1) Low-value consumables
Low-value consumables are amortized with one-off method.
(2) Packages
Packages are amortized with one-off method.(XII) Contract costs
Assets related to contract costs including costs of obtaining a contract and costs to fulfil a contract.The Company recognizes as an asset the incremental costs of obtaining a contract if those costs are expected to berecovered. The costs of obtaining a contract shall be included into profit or loss when incurred if the amortizationperiod of the asset is one year or less.If the costs incurred in fulfilling a contract are not within the scope of standards related to inventories, fixed assetsor intangible assets, etc., the Company shall recognize the costs to fulfil a contract as an asset if all the followingcriteria are satisfied:
1. The costs relate directly to a contract or to an anticipated contract, including direct labor, direct materials,manufacturing overhead cost (or similar cost), cost that are explicitly chargeable to the customer under thecontract, and other costs that are only related to the contract;
2. The costs enhance resources of the Company that will be used in satisfying performance obligations in thefuture; and
3. The costs are expected to be recovered.
An asset related to contract costs shall be amortized on a systematic basis that is consistent with related goods orservices, with amortization included into profit or loss.The Company shall make provision for impairment and recognize an impairment loss to the extent that thecarrying amount of an asset related to contract costs exceeds the remaining amount of consideration that theCompany expects to receive in exchange for the goods or services to which the asset relates less the costsexpected to be incurred. The Company shall recognize a reversal of an impairment loss previously recognized inprofit or loss when the impairment conditions no longer exist or have improved. The carrying amount of the assetafter the reversal shall not exceed the amount that would have been determined on the reversal date if no provisionfor impairment had been made previously.(XIII) Non-current assets or disposal groups classified as held for sale
1. Classification of non-current assets or disposal groups as held for sale
Non-current assets or disposal groups are accounted for as held for sale when the following conditions are all met:
a. the asset must be available for immediate sale in its present condition subject to terms that are usual andcustomary for sales of such assets or disposal groups; b. its sales must be highly probable, i.e., the Company hasmade a decision on the sale plan and has obtained a firm purchase commitment, and the sale is expected to becompleted within one year.When the Company acquires a non-current asset or disposal group with a view to resale, it shall classify thenon-current asset or disposal group as held for sale at the acquisition date only if the requirement of “expected tobe completed within one year” is met at that date and it is highly probable that other criteria for held for sale willbe met within a short period (usually within three months).An asset or a disposal group is still accounted for as held for sale when the Company remains committed to its
plan to sell the asset or disposal group in the circumstance that non-related party transactions fail to be completedwithin one year due to one of the following reasons: a. a buyer or others unexpectedly set conditions that willextend the sale period, while the Company has taken timely actions to respond to the conditions and expects afavorable resolution of the delaying factors within one year since the setting; (2) a non-current asset or disposalgroup classified as held for sale fails to be sold within one year due to rare cases, and the Company has takenaction necessary to respond to the circumstances during the initial one-year period and the criteria for held for saleare met.
2. Measurement of non-current assets or disposal groups as held for sale
(1) Initial measurement and subsequent measurement
For initial measurement and subsequent measurement as at the balance sheet date of a non-current asset ordisposal group as held for sale, where the carrying amount is higher than the fair value less costs to sell, thecarrying amount is written down to the fair value less costs to sell, and the write-down is recognized in profit orloss as assets impairment loss, meanwhile, provision for impairment of assets as held for sale shall be made.For a non-current asset or disposal group classified as held for sale at the acquisition date, the asset or disposalgroup is measured on initial recognition at the lower of its initial measurement amount had it not been soclassified and fair value less costs to sell. Apart from the non-current asset or disposal group acquired throughbusiness combination, the difference arising from the initial recognition of a non-current asset or disposal group atthe fair value less costs to sell shall be included into profit or loss.The assets impairment loss recognized for a disposal group as held for sale shall reduce the carrying amount ofgoodwill in the disposal group first, and then reduce its carrying amount based on the proportion of eachnon-current asset’s carrying amount in the disposal group.No provision for depreciation or amortization shall be made on non-current assets as held for sale or non-currentassets in disposal groups as held for sale, while interest and other expenses attributable to the liabilities of adisposal group as held for sale shall continue to be recognized.
(2) Reversal of assets impairment loss
When there is a subsequent increase in fair value less costs to sell of a non-current asset as held for sale at thebalance sheet date, the write-down shall be recovered, and shall be reversed not in excess of the impairment lossthat has been recognized after the non-current asset was classified as held for sale. The reversal shall be includedinto profit or loss. Assets impairment loss that has been recognized before the classification is not reversed.When there is a subsequent increase in fair value less costs to sell of a disposal group as held for sale at thebalance sheet date, the write-down shall be recovered, and shall be reversed not in excess of the non-current assetsimpairment loss that has been recognized after the disposal group was classified as held for sale. The reversal shallbe included into profit or loss. The reduced carrying amount of goodwill and non-current assets impairment lossthat has been recognized before the classification is not reversed.For the subsequent reversal of the impairment loss that has been recognized in a disposal group as held for sale,
the carrying amount is increased based on the proportion of carrying amount of each non-current asset (excludinggoodwill) in the disposal group.
(3) Non-current asset or disposal group that is no longer classified as held for sale and derecognizedA non-current asset or disposal group that does not met criteria for held for sale and no longer classified as heldfor sale, or a non-current asset that removed from a disposal group as held for sale shall be measured at the lowerof: a. its carrying amount before it was classified as held for sale, adjusted for any depreciation, amortization orimpairment that would have been recognized had it not been classified as held for sale; and b. its recoverableamount.When a non-current asset or disposal group classified as held for sale is derecognized, unrecognized gains orlosses shall be included into profit or loss.(XIV) Long-term equity investments
1. Judgment of joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisionsabout the relevant activities require the unanimous consent of the parties sharing control. Significant influence isthe power to participate in the financial and operating policy decisions of the investee but is not control or jointcontrol of these policies.
2. Determination of investment cost
(1) For business combination under common control, if the consideration of the combining party is that it makespayment in cash, transfers non-cash assets, assumes its liabilities or issues equity securities, on the date ofcombination, it regards the share of the carrying amount of the equity of the combined party included in theconsolidated financial statements of the ultimate controlling party as the initial cost of the investment. Thedifference between the initial cost of the long-term equity investments and the carrying amount of the combinationconsideration paid or the par value of shares issued offsets capital reserve; if the balance of capital reserve isinsufficient to offset, any excess is adjusted to retained earnings.When long-term equity investments are obtained through business combination under common control achievedin stages, the Company determines whether it is a “bundled transaction”. If it is a “bundled transaction”, stages asa whole are considered as one transaction in accounting treatment. If it is not a “bundled transaction”, on the dateof combination, investment cost is initially recognized at the share of the carrying amount of net assets of thecombined party included the consolidated financial statements of the ultimate controlling party. The differencebetween the initial investment cost of long-term equity investments at the acquisition date and the carryingamount of the previously held long-term equity investments plus the carrying amount of the consideration paid forthe newly acquired equity is adjusted to capital reserve; if the balance of capital reserve is insufficient to offset,any excess is adjusted to retained earnings.
(2) For business combination not under common control, investment cost is initially recognized at theacquisition-date fair value of considerations paid.
When long-term equity investments are obtained through business combination not under common controlachieved in stages, the Company determined whether they are stand-alone financial statements or consolidatedfinancial statements in accounting treatment:
1) In the case of stand-alone financial statements, investment cost is initially recognized at the carrying amount ofthe previously held long-term equity investments plus the carrying amount of the consideration paid for the newlyacquired equity.
2) In the case of consolidated financial statements, the Company determines whether it is a “bundled transaction”.If it is a “bundled transaction”, stages as a whole are considered as one transaction in accounting treatment. If it isnot a “bundled transaction”, the carrying amount of the acquirer’s previously held equity interest in the acquiree isremeasured at the acquisition-date fair value, and the difference between the fair value and the carrying amount isrecognized in investment income; when the acquirer’s previously held equity interest in the acquiree involvesother comprehensive income under equity method, the related other comprehensive income is reclassified asincome for the acquisition period, excluding other comprehensive income arising from changes in net liabilities orassets from remeasurement of defined benefit plan of the acquiree.
(3) Long-term equity investments obtained through ways other than business combination: the initial cost of along-term equity investment obtained by making payment in cash is the purchase cost which is actually paid; thatobtained on the basis of issuing equity securities is the fair value of the equity securities issued; that obtainedthrough debt restructuring is determined according to “CASBE 12 – Debt Restructuring”; and that obtainedthrough non-cash assets exchange is determined according to “CASBE 7 – Non-cash Assets Exchange”.
3. Subsequent measurement and recognition method of profit or loss
For long-term equity investments with control relationship, it is accounted for with cost method; for long-termequity investments with joint control or significant influence relationship, it is accounted for with equity method.
4. Disposal of a subsidiary in stages resulting in the Company’s loss of control
(1) Stand-alone financial statements
The difference between the carrying amount of the disposed equity and the consideration obtained thereof isrecognized in profit or loss. If the disposal does not result in the Company’s loss of significant influence or jointcontrol, the remained equity is accounted for with equity method; however, if the disposal results in theCompany’s loss of control, joint control, or significant influence, the remained equity is accounted for accordingto “CASBE 22 – Financial Instruments: Recognition and Measurement”.
(2) Consolidated financial statements
1) Disposal of a subsidiary in stages not qualified as “bundled transaction” resulting in the Company’s loss ofcontrolBefore the Company’s loss of control, the difference between the disposal consideration and the proportionateshare of net assets in the disposed subsidiary from acquisition date or combination date to the disposal date isadjusted to capital reserve (capital premium), if the balance of capital reserve is insufficient to offset, any excess isadjusted to retained earnings.
When the Company loses control, the remained equity is remeasured at the loss-of-control-date fair value. Theaggregated value of disposal consideration and the fair value of the remained equity, less the share of net assets inthe disposed subsidiary held before the disposal from the acquisition date or combination date to the disposal dateis recognized in investment income in the period when the Company loses control over such subsidiary, andmeanwhile goodwill is offset correspondingly. Other comprehensive income related to equity investments informer subsidiary is reclassified as investment income upon the Company’s loss of control.
2) Disposal of a subsidiary in stages qualified as “bundled transaction” resulting in the Company’s loss of controlIn case of “bundled transaction”, stages as a whole are considered as one transaction resulting in loss of control inaccounting treatment. However, before the Company loses control, the difference between the disposalconsideration at each stage and the proportionate share of net assets in the disposed subsidiary is recognized asother comprehensive income at the consolidated financial statements and reclassified as profit or loss in the periodwhen the Company loses control over such subsidiary.(XV) Investment property
1. Investment property includes land use right of leased-out property and of property held for capital appreciationand buildings that have been leased out.
2. The initial measurement of investment property is based on its cost, and subsequent measurement is made usingthe cost model, the depreciation or amortization method is the same as that of fixed assets and intangible assets.(XVI) Fixed assets
1. Recognition principles of fixed assets
Fixed assets are tangible assets held for use in the production of goods or rendering of services, for rental to others,or for administrative purposes, and expected to be used during more than one accounting year. Fixed assets arerecognized if, and only if, it is probable that future economic benefits associated with the assets will flow to theCompany and the cost of the assets can be measured reliably.
2. Depreciation method of different categories of fixed assets
| Categories | Depreciation method | Useful life (years) | Residual value proportion (%) | Annual depreciation rate (%) |
| Buildings and structures | Straight-line method | 3-35 | 3-5 | 1.90-19.40 |
| General equipment | Straight-line method | 3-5 | 3-5 | 9.50-32.33 |
| Special equipment | Straight-line method | 2-15 | 0-5 | 6.33-47.50 |
| Transport facilities | Straight-line method | 3-15 | 3-5 | 9.50-32.33 |
| Other equipment | Straight-line method | 3-10 | 5 | 9.50-31.67 |
(XVII) Construction in progress
1. Construction in progress is recognized if, and only if, it is probable that future economic benefits associatedwith the item will flow to the Company, and the cost of the item can be measured reliably. Construction inprogress is measured at the actual cost incurred to reach its designed usable conditions.
2. Construction in progress is transferred into fixed assets at its actual cost when it reaches the designed usableconditions. When the auditing of the construction in progress was not finished while reaching the designed usable
conditions, it is transferred to fixed assets using estimated value first, and then adjusted accordingly when theactual cost is settled, but the accumulated depreciation is not to be adjusted retrospectively.(XVIII) Borrowing costs
1. Recognition principle of borrowing costs capitalization
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition andconstruction or production of assets eligible for capitalization, it is capitalized and included in the costs of relevantassets; other borrowing costs are recognized as expenses on the basis of the actual amount incurred, and areincluded in profit or loss.
2. Borrowing costs capitalization period
(1) The borrowing costs are not capitalized unless the following requirements are all met: 1) the assetdisbursements have already incurred; 2) the borrowing costs have already incurred; and 3) the acquisition andconstruction or production activities which are necessary to prepare the asset for its intended use or sale havealready started.
(2) Suspension of capitalization: where the acquisition and construction or production of a qualified asset isinterrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of theborrowing costs is suspended; the borrowing costs incurred during such period are recognized as expenses, andare included in profit or loss, till the acquisition and construction or production of the asset restarts.
(3) Ceasing of capitalization: when the qualified asset under acquisition and construction or production is readyfor the intended use or sale, the capitalization of the borrowing costs is ceased.
3. Capitalization rate and capitalized amount of borrowing costs
For borrowings exclusively for the acquisition and construction or production of assets eligible for capitalization,the to-be-capitalized amount of interests is determined in light of the actual interest expenses incurred (includingamortization of premium or discount based on effective interest method) of the special borrowings in the currentperiod less the interest income on the unused borrowings as a deposit in the bank or as a temporary investment;where a general borrowing is used for the acquisition and construction or production of assets eligible forcapitalization, the Company calculates and determines the to-be-capitalized amount of interests on the generalborrowing by multiplying the weighted average asset disbursement of the part of the accumulative assetdisbursements less the general borrowing by the capitalization rate of the general borrowing used.(XIX) Intangible assets
1. Intangible assets include land use right, patent right and non-patented technology etc. The initial measurementof intangible assets is based on its cost.
2. For intangible assets with finite useful lives, their amortization amounts are amortized within their useful livessystematically and reasonably, if it is unable to determine the expected realization pattern reliably, intangibleassets are amortized by the straight-line method with details as follows:
| Items | Amortization period (years) |
| Items | Amortization period (years) |
| Franchise | Contractual term |
| Land use right | 35-50 |
| Proprietary technology | Economic life cycle |
| Software | 3-10 |
| Other | 5 |
3. Expenditures on the research phase of an internal project are recognized as profit or loss when they are incurred.An intangible asset arising from the development phase of an internal project is recognized if the Company candemonstrate all of the followings: (1) the technical feasibility of completing the intangible asset so that it will beavailable for use or sale; (2) its intention to complete the intangible asset and use or sell it; (3) how the intangibleasset will generate probable future economic benefits, among other things, the Company can demonstrate theexistence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be usedinternally, the usefulness of the intangible asset; (4) the availability of adequate technical, financial and otherresources to complete the development and to use or sell the intangible asset; and (5) its ability to measure reliablythe expenditure attributable to the intangible asset during its development.Criteria for distinguishing the research phase from the development phase of an internal project to create anintangible asset:
The planned investigation phase for acquiring new technology and knowledge should be defined as the researchphase, which has the characteristics of planning and exploratory nature; before commercial production or use,when the research results or other knowledge are applied to a certain plan or design with the intention to producenew or substantially improved materials, devices, products, etc., such stage should be determined as thedevelopment phase, which has the characteristics of pertinence and greater possibility of forming results. TheCompany divides the research and development phases by forming the prototype drawing and starting theprototype trial production. Expenditures in the research phase of internal research and development projects areincluded in profit or loss when they incur. When the Company enters the development phase, project expendituresare first calculated by projects under “development expenditure”, and if the capitalization conditions are met, theyare reported as development expenditures in the financial statements. The project will be transferred to intangibleassets when the project has the conditions for sale or mass production.(XX) Impairment of part of long-term assetsFor long-term assets such as long-term equity investments, investment property at cost model, fixed assets,construction in progress, intangible assets with finite useful lives, etc., if at the balance sheet date there isindication of impairment, the recoverable amount is to be estimated. For goodwill recognized in businesscombination and intangible assets with indefinite useful lives, no matter whether there is indication of impairment,impairment test is performed annually. Impairment test on goodwill is performed on related asset group or assetgroup portfolio.When the recoverable amount of such long-term assets is lower than their carrying amount, the difference isrecognized as provision for assets impairment through profit or loss.
(XXI) Long-term prepaymentsLong-term prepayments are expenses that have been recognized but with amortization period over one year(excluding one year). They are recorded with actual cost, and evenly amortized within the beneficiary period orstipulated period. If items of long-term prepayments fail to be beneficial to the following accounting periods,residual values of such items are included in profit or loss.(XXII) Employee benefits
1. Employee benefits include short-term employee benefits, post-employment benefits, termination benefits andother long-term employee benefits.
2. Short-term employee benefits
The Company recognizes, in the accounting period in which an employee provides service, short-term employeebenefits actually incurred as liabilities, with a corresponding charge to profit or loss or the cost of a relevant asset.
3. Post-employment benefits
The Company classifies post-employment benefit plans as either defined contribution plans or defined benefitplans.
(1) The Company recognizes in the accounting period in which an employee provides service the contributionpayable to a defined contribution plan as a liability, with a corresponding charge to profit or loss or the cost of arelevant asset.
(2) Accounting treatment by the Company for defined benefit plan usually involves the following steps:
1) In accordance with the projected unit credit method, using unbiased and mutually compatible actuarialassumptions to estimate related demographic variables and financial variables, measure the obligations under thedefined benefit plan, and determine the periods to which the obligations are attributed. Meanwhile, the Companydiscounts obligations under the defined benefit plan to determine the present value of the defined benefit planobligations and the current service cost;
2) When a defined benefit plan has assets, the Company recognizes the deficit or surplus by deducting the fairvalue of defined benefit plan assets from the present value of the defined benefit plan obligation as a net definedbenefit plan liability or net defined benefit plan asset. When a defined benefit plan has a surplus, the Companymeasures the net defined benefit plan asset at the lower of the surplus in the defined benefit plan and the assetceiling;
3) At the end of the period, the Company recognizes the following components of employee benefits cost arisingfrom defined benefit plan: a. service cost; b. net interest on the net defined benefit plan liability (asset); and c.changes as a result of remeasurement of the net defined benefit liability (asset). Item a and item b are recognizedin profit or loss or the cost of a relevant asset. Item c is recognized in other comprehensive income and is not to bereclassified subsequently to profit or loss. However, the Company may transfer those amounts recognized in othercomprehensive income within equity.
4. Termination benefits
Termination benefits provided to employees are recognized as an employee benefit liability for terminationbenefits, with a corresponding charge to profit or loss at the earlier of the following dates: a. when the Companycannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or acurtailment proposal; or b. when the Company recognizes cost or expenses related to a restructuring that involvesthe payment of termination benefits.
5. Other long-term employee benefits
When other long-term employee benefits provided to the employees satisfied the conditions for classifying as adefined contribution plan, those benefits are accounted for in accordance with the requirements relating to definedcontribution plan, while other benefits are accounted for in accordance with the requirements relating to definedbenefit plan. The Company recognizes the cost of employee benefits arising from other long-term employeebenefits as the followings: a. service cost; b. net interest on the net liability or net assets of other long-termemployee benefits; and c. changes as a result of remeasurement of the net liability or net assets of other long-termemployee benefits. As a practical expedient, the net total of the aforesaid amounts is recognized in profit or loss orincluded in the cost of a relevant asset.(XXIII) Provisions
1. Provisions are recognized when fulfilling the present obligations arising from contingencies such as providingguarantee for other parties, litigation, products quality guarantee, onerous contract, etc., may cause the outflow ofthe economic benefit and such obligations can be reliably measured.
2. The initial measurement of provisions is based on the best estimated expenditures required in fulfilling thepresent obligations, and its carrying amount is reviewed at the balance sheet date.(XXIV) Share-based payment
1. Types of share-based payment
Share-based payment consists of equity-settled share-based payment and cash-settled share-based payment.
2. Accounting treatment for settlements, modifications and cancellations of share-based payment plans
(1) Equity-settled share-based payment
For equity-settled share-based payment transaction with employees, if the equity instruments granted vestimmediately, the fair value of those equity instruments is measured at grant date and recognized as transactioncost or expense, with a corresponding adjustment in capital reserve; if the equity instruments granted do not vestuntil the counterparty completes a specified period of service, at the balance sheet date within the vesting period,the fair value of those equity instruments measured at grant date based on the best estimate of the number ofequity instruments expected to vest is recognized as transaction cost or expense, with a corresponding adjustmentin capital reserve.For equity-settled share-based payment transaction with parties other than employees, if the fair value of theservices received can be measured reliably, the fair value is measured at the date the Company receives the service;if the fair value of the services received cannot be measured reliably, but that of equity instruments can bemeasured reliably, the fair value of the equity instruments granted measured at the date the Company receives the
service is referred to, and recognized as transaction cost or expense, with a corresponding increase in equity.
(2) Cash-settled share-based payment
For cash-settled share-based payment transactions with employees, if share appreciation rights vest immediately,the fair value of the liability incurred as the acquisition of services is measured at grant date and recognized astransaction cost or expense, with a corresponding increase in liabilities; if share appreciation rights do not vestuntil the employees have completed a specified period of service, the liability is measured, at each balance sheetdate until settled, at the fair value of the share appreciation rights measured at grant date based on the bestestimate of the number of share appreciation right expected to vest.
(3) Modifications and cancellations of share-based payment plan
If the modification increases the fair value of the equity instruments granted, the Company includes theincremental fair value granted in the measurement of the amount recognized for services received as considerationfor the equity instruments granted; similarly, if the modification increases the number of equity instrumentsgranted, the Company includes the fair value of the additional equity instruments granted, in the measurement ofthe amount recognized for services received as consideration for the equity instruments granted; if the Companymodifies the vesting conditions in a manner that is beneficial to the employee, the Company takes the modifiedvesting conditions into account.If the modification reduces the fair value of the equity instruments granted, the Company does not take intoaccount that decrease in fair value and continue to measure the amount recognized for services received asconsideration for the equity instruments based on the grant date fair value of the equity instruments granted; if themodification reduces the number of equity instruments granted to an employee, that reduction is accounted for asa cancellation of that portion of the grant; if the Company modifies the vesting conditions in a manner that is notbeneficial to the employee, the Company does not take the modified vesting conditions into account.If the Company cancels or settles a grant of equity instruments during the vesting period (other than that cancelledwhen the vesting conditions are not satisfied), the Company accounts for the cancellation or settlement as anacceleration of vesting, and therefore recognizes immediately the amount that otherwise would have beenrecognized for services received over the remainder of the vesting period.(XXV) Other financial instruments such as preferred shares and perpetual bondsPursuant to CASBEs on financial instruments, “Regulations on Distinguishing Financial Liabilities and EquityInstruments and Related Accounting Treatments” numbered Cai Kuai [2014] 13, and “Regulations on AccountingTreatments of Perpetual Bonds” numbered Cai Kuai [2019] 2 by Ministry of Finance (MOF), for financialinstruments such as convertible bonds etc., the Company classifies a financial instrument or its components atinitial recognition as a financial asset or liability or equity instrument, based on contract terms and economicessence it reveals instead of its legal form, combining with the definitions of financial asset, liability and equityinstrument.At the balance sheet date, for a financial instrument classified as an equity instrument, its interest expenditure ordividend distribution is treated as profit distribution, and share repurchase and cancelation are treated as changes
in equity; for a financial instrument classified as a financial liability, its interest expenditure or dividenddistribution is treated as borrowing expense, and gain or loss on repurchase or redemption is included in profit orloss.(XXVI) Revenue
1. Revenue recognition principles
At contract inception, the Company shall assess the contracts and shall identify each performance obligation in thecontracts, and determine whether the performance obligation should be satisfied over time or at a point in time.The Company satisfies a performance obligation over time if one of the following criteria are met, otherwise, theperformance obligation is satisfied at a point in time: (1) the customer simultaneously receives and consumes theeconomic benefits provided by the Company’s performance as the Company performs; (2) the customer cancontrol goods as they are created by the Company’s performance; (3) goods created during the Company’sperformance have irreplaceable uses and the Company has an enforceable right to receive the payments forperformance completed to date during the whole contract period.For each performance obligation satisfied over time, the Company shall recognize revenue over time bymeasuring the progress towards complete satisfaction of that performance obligation. In the circumstance that theprogress cannot be measured reasonably, but the costs incurred in satisfying the performance obligation areexpected to be recovered, the Company shall recognize revenue only to the extent of the costs incurred until it canreasonably measure the progress. For each performance obligation satisfied at a point in time, the Company shallrecognize revenue at the time point that the client obtains control of relevant goods or services. To determinewhether the customer has obtained control of goods, the Company shall consider the following indications: (1) theCompany has a present right to payment for the goods, i.e., the customer is presently obliged to pay for the goods;
(2) the Company has transferred the legal title of the goods to the customer, i.e., the customer has legal title to thegoods; (3) the Company has transferred physical possession of the goods to the client, i.e., the customer hasphysically possessed the goods; (4) the Company has transferred significant risks and rewards of ownership of thegoods to the client, i.e., the customer has obtained significant risks and rewards of ownership of the goods; (5) thecustomer has accepted the goods; (6) other evidence indicating the customer has obtained control over the goods.
2. Revenue measurement principle
(1) Revenue is measured at the amount of the transaction price that is allocated to each performance obligation.The transaction price is the amount of consideration to which the Company expects to be entitled in exchange fortransferring goods or services to a customer, excluding amounts collected on behalf of third parties and thoseexpected to be refunded to the customer.
(2) If the consideration promised in a contract includes a variable amount, the Company shall confirm the bestestimate of variable consideration at expected value or the most likely amount. However, the transaction price thatincludes the amount of variable consideration only to the extent that it is high probable that a significant reversalin the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variableconsideration is subsequently resolved.
(3) In the circumstance that the contract contains a significant financing component, the Company shall determinethe transaction price based on the price that a customer would have paid for if the customer had paid cash forobtaining control over those goods or services. The difference between the transaction price and the amount ofpromised consideration is amortized under effective interest method over contractual period. The effects of asignificant financing component shall not be considered if the Company expects, at the contract inception, that theperiod between when the customer obtains control over goods or services and when the customer paysconsideration will be one year or less.
(4) For contracts containing two or more performance obligations, the Company shall determine the stand-aloneselling price at contract inception of the distinct good underlying each performance obligation and allocate thetransaction price to each performance obligation on a relative stand-alone selling price basis.
3. Revenue recognition method
The Company mainly sells electromagnetic wires, ventilation equipment, environment and sanitation machinery,etc., and engages in environmental integrated sanitation management and operation business and providessupporting financial services.
(1) Sale of electromagnetic wires and ventilation equipment is a performance obligation satisfied at a point in time.Revenue from domestic sales is recognized when the Company has delivered goods to the designated address asagreed by contract and such delivered goods have been verified for acceptance by customers, and the Companyhas collected the payments or has obtained the right to the payments, and related economic benefits are highlyprobable to flow to the Company. Revenue from overseas sales is recognized when the Company has declaredgoods to the customs based on contractual agreements and has obtained a bill of lading, and the Company hascollected the payments or has obtained the right to the payments, and related economic benefits are highlyprobable to flow to the Company.
(2) For environment and sanitation machinery, environment and sanitation comprehensive management andoperation business, according to their different business models, revenue recognition methods are divided intothree types:
1) Sales of environment and sanitation machinery products are a performance obligation satisfied at a point intime, and revenue is recognized when customers receive and consume the products, and the Company hascollected the payments or has obtained the right to the payments, and related economic benefits are highlyprobable to flow to the Company.
2) Environment and sanitation comprehensive management business is a performance obligation satisfied overtime. Revenue is recognized at the percentage of completion of the performance obligation based on thecompletion status confirmed by the project supervisor.
3) For revenue policies on PPP business with BOT models, please refer to section III (XXXIII) of notes tofinancial statements – Other significant accounting policies and estimates – PPP business for details.
(3) For finance lease income, on the commencement date, the sum of the minimum lease payment and the initial
direct cost is included in finance lease receivable, and the difference between the sum of the minimum leasepayment and the initial direct cost and its present value is recognized as unrealized finance income, which isamortized during the lease term with the effective interest method, and included in finance income of the periodwhen it is amortized.(XXVII) Government grants
1. Government grants shall be recognized if, and only if, the following conditions are all met: (1) the Companywill comply with the conditions attaching to the grants; (2) the grants will be received. Monetary governmentgrants are measured at the amount received or receivable. Non-monetary government grants are measured at fairvalue, and can be measured at nominal amount in the circumstance that fair value cannot be assessed.
2. Government grants related to assets
Government grants related to assets are government grants with which the Company constructs or otherwiseacquires long-term assets under requirements of government. In the circumstances that there is no specificgovernment requirement, the Company shall determine based on the primary condition to acquire the grants, andgovernment grants related to assets are government grants whose primary condition is to construct or otherwiseacquire long-term assets. They offset carrying amount of relevant assets, or they are recognized as deferredincome. If recognized as deferred income, they are included in profit or loss on a systematic basis over the usefullives of the relevant assets. Those measured at notional amount are directly included into profit or loss. For assetssold, transferred, disposed or damaged within the useful lives, balance of unamortized deferred income istransferred into profit or loss of the period in which the disposal occurred.
3. Government grants related to income
Government grants related to income are government grants other than those related to assets. For governmentgrants that contain both parts related to assets and parts related to income, in which those two parts are blurred,they are thus collectively classified as government grants related to income. For government grants related toincome used for compensating the related future cost, expenses or losses, they are recognized as deferred incomeand included in profit or loss or used to offset relevant cost during the period in which the relevant cost, expensesor losses are recognized; for government grants related to income used for compensating the related cost,expenses or losses incurred to the Company, they are directly included in profit or loss or used to offset relevantcost.
4. Government grants related to the ordinary course of business shall be included into other income or used tooffset relevant cost based on business nature, while those not related to the ordinary course of business shall beincluded into non-operating revenue or expenditures.(XXVIII) Contract assets, contract liabilitiesThe Company presents contract assets or contract liabilities in the balance sheet based on the relationship betweenits performance obligations and customers’ payments. Contract assets and contract liabilities under the samecontract shall offset each other and be presented on a net basis.The Company presents an unconditional right to consideration (i.e., only the passage of time is required before the
consideration is due) as a receivable, and presents a right to consideration in exchange for goods that it hastransferred to a customer (which is conditional on something other than the passage of time) as a contract asset.The Company presents an obligation to transfer goods to a customer for which the Company has receivedconsideration (or the amount is due) from the customer as a contract liability.(XXIX) Deferred tax assets/Deferred tax liabilities
1. Deferred tax assets or deferred tax liabilities are calculated and recognized based on the difference between thecarrying amount and tax base of assets and liabilities (and the difference of the carrying amount and tax base ofitems not recognized as assets and liabilities but with their tax base being able to be determined according to taxlaws) and in accordance with the tax rate applicable to the period during which the assets are expected to berecovered or the liabilities are expected to be settled.
2. A deferred tax asset is recognized to the extent of the amount of the taxable income, which it is most likely toobtain and which can be deducted from the deductible temporary difference. At the balance sheet date, if there isany exact evidence that it is probable that future taxable income will be available against which deductibletemporary differences can be utilized, the deferred tax assets unrecognized in prior periods are recognized.
3. At the balance sheet date, the carrying amount of deferred tax assets is reviewed. The carrying amount of adeferred tax asset is reduced to the extent that it is no longer probable that sufficient taxable income will beavailable to allow the benefit of the deferred tax asset to be utilized. Such reduction is subsequently reversed tothe extent that it becomes probable that sufficient taxable income will be available.
4. The income tax and deferred tax for the period are treated as income tax expenses or income through profit orloss, excluding those arising from the following circumstances: (a) business combination; and (b) the transactionsor items directly recognized in equity.(XXX) Leases
1. Operating leases
When the Company is the lessee, lease payments are recognized as cost or profit or loss with straight-line methodover the lease term. Initial expenses are recognized directly into profit or loss. Contingent rents are charged asprofit or loss in the periods in which they are incurred.When the Company is the lessor, lease income is recognized as profit or loss with straight-line method over thelease term. Initial expenses, other than those with material amount and eligible for capitalization which arerecognized as profit or loss by installments, are recognized directly as profit or loss. Contingent rents are chargedas profit or loss in the periods in which they are incurred.
2. Finance leases
When the Company is the lessee, at the commencement of the lease term, lessees recognize finance leases asassets and liabilities in their balance sheets at amounts equal to the lower of fair value of the leased property andthe present value of the minimum lease payments, each determined at the inception of the lease, and recognize theminimum lease payments as the entering value of long-term payable, and treat the difference of the two as
unrecognized finance expense. Any initial direct costs of the lessee are added to the amount recognized as an asset.The effective interest method is used to recognize finance expense of the period during the lease term.When the Company is the lessor, at the commencement of the lease, lessor recognizes the aggregate of minimumlease receipts and initial direct costs, each determined at the inception of the lease, as the entering value of financelease receivables, and recognize the unguaranteed residual value at the same time. The difference between theaggregate of the minimum lease receipts, the initial direct costs and the unguaranteed residual value, and the sumof their present values is recognized as unrealized finance income. The effective interest method is used torecognize finance income of the period during the lease term.(XXXI) Work safety fundThe Company accrues work safety fund in accordance with the Circular on Management Measures on the Accrualand Use of Work Safety Fund numbered Cai Qi [2012] 16 by MOF and State Administration of Work Safety.Standard work safety fund is included in the cost or current profit or loss, meanwhile accounted for under “specialreserve”. When work safety fund is used as an expense, it is to offset special reserve directly. When work safetyfund is qualified to be included in the cost of fixed assets, it is accounted for under “construction in progress” andtransferred to fixed assets when related safety projects reach the designed useful conditions; meanwhile, the costincluded in fixed assets is to offset “special reserve”, and accumulated depreciation shall be recognized at thesame amount. Such fixed assets shall not be depreciated in future periods.(XXXII) Segment reportingOperating segments are determined based on the structure of the Company’s internal organization, managementrequirements and internal reporting system. An operating segment is a component of the Company:
(1) that engages in business activities from which it may earn revenues and incur expenses;
(2) whose financial performance is regularly reviewed by the Management to make decisions about resource to beallocated to the segment and to assess its performance; and
(3) for which accounting information regarding financial position, financial performance and cash flows isavailable through analysis.(XXXIII) Other significant accounting policies and estimates
1. PPP business
PPP is the abbreviation of Public-Private Partnerships. The so-called PPP model generally refers to a projectoperation model under which, the private sector obtains the authorization of the public sector to finance, constructand operate the project for a period of time after the completion of the construction, and to realize the best valueof funds by giving full play to the respective advantages of the public sector and the private sector. The PPPmodel can be divided into build-operate-transfer (BOT), management contract (MC), commissioned operation(OM), build-own-operate (BOO), transfer-operate-transfer (TOT), rebuild-operate-transfer (ROT), etc.
(1) Project construction period
The project company aggregates the actual expenditures incurred in the project and the capitalized interest
incurred as investment costs under “construction in progress”. Within a certain period after the completion of theinfrastructure as stipulated in the contract, the project company can unconditionally receive the definite amount ofpayment from the contract grantor (that is, the guaranteed minimum recovery part) and the indefinite guaranteedminimum recovery part, which are transferred to “long-term receivables” and “intangible assets” respectively afterthe project is completed.
(2) Project operation period
During the concession operation period, the project company amortizes the “intangible assets” with straight-linemethod, so that the income realized by the concession right is matched with the amortized cost, so as toobjectively reflect the status quo of the intangible assets. The Company’s specific accounting calculations are asfollows: during the operation period, costs incurred in operation and maintenance of the project are included in“operating cost”, services provided in the current period are included in “operating revenue”, while the amortizedamount of “intangible assets” in the same period is included in “operating cost”.
(3) Project termination and transfer
When the project is terminated, the project company needs to transfer project assets to the government. Projecttermination and transfer include free transfer upon maturity, charged transfer upon maturity, free transfer ahead ofmaturity, and charged transfer ahead of maturity. Under most circumstances, it is free transfer upon maturity. Nospecial accounting treatment is required for the termination and transfer. Any expense incurred during the transferprocess is directly expensed.
2. Basis of the adoption of hedge accounting and its accounting treatment
(1) Hedge includes fair value hedge, cash flow hedge and hedge of a net investment in a foreign operation.
(2) A hedging relationship qualifies for hedge accounting if all of the following conditions are met: 1) the hedgingrelationship consists only of eligible hedging instruments and eligible hedged instruments; 2) at the inception ofthe hedge there is formal designation of hedging instruments and hedged item, and documentation of the hedgingrelationship and the Company’s risk management objective and strategy for undertaking the hedge; 3) the hedgingrelationship meets the hedging effectiveness requirements.The Company recognizes that the hedging relationship meets effectiveness requirements if the all of thefollowings are simultaneously satisfied: a. there is an economic relationship between the hedged item and thehedging instruments; b. the effect of credit risk does not dominate the value changes that result from thateconomic relationship between the hedged item and the hedging instruments; and c. the hedge ratio of the hedgingrelationship is the same as the ratio of the quantity of the hedged item that the Company actually hedges and thenumber of hedging instruments that the Company actually uses to hedge that quantity of hedged item, but does notreflect an imbalance between the weightings of the hedged item and the hedging instrument.The Company shall assess whether a hedging relationship meets the hedge effectiveness requirements at inceptionand on an ongoing basis. If a hedging relationship ceases to meet the hedge effectiveness requirement relating tothe hedge ratio but the risk management objective for that designated hedging relationship remains the same, thehedging relationship shall be rebalanced.
(3) Hedge accounting
1) Fair value hedge
a. Gain or loss on the hedging instrument shall be recognized in profit or loss (or other comprehensive income, ifthe hedging instrument hedges a non-trading equity instrument (or a component thereof) at fair value throughother comprehensive income).b. The gain or loss on hedged item arising from risk exposure should be recognized in profit or loss, andmeanwhile, the carrying amount of the hedged item which is not measured at fair value should be adjusted. If thehedged item is a financial asset (or a component thereof) that is measured at fair value through othercomprehensive income in accordance with article XVIII in “CASBE 22 - Financial Instruments: Recognition andMeasurement”, the gain or loss arising from the risk exposure on the hedged item shall be recognized in profit orloss, with carrying amount unadjusted for it has already been measured at fair value; if the hedged item is anon-trading equity instrument (or a component thereof) for which the Company has elected to present changes atfair value through other comprehensive income, the gain or loss arising from the risk exposure on the hedged itemshall be recognized in profit or loss, with carrying amount unadjusted for it has already been measured at fairvalue.When a hedged item is an unrecognized firm commitment (or a component thereof), the cumulative change in fairvalue of the hedged item subsequent to its designation is recognized as an asset or a liability with a correspondinggain or loss recognized in profit or loss. When a firm commitment is performed to acquire an asset or assume aliability, the initial carrying amount of the asset or the liability is adjusted to include the cumulative change in fairvalue of the hedged item that was previously recognized.For a hedged item that is a financial instrument (or a component thereof) measured at amortized cost, anyadjustment on the carrying amount of the hedged item shall be amortized to profit or loss based on a recalculatedeffective interest rate at the date that amortization begins. In the case of a financial asset (or a component thereof)that is a hedged item and that is measured at fair value through other comprehensive income in accordance witharticle XVIII in “CASBE 22 - Financial Instruments: Recognition and Measurement”, amortization applies in thesame manner but to the amount that represents the cumulative gain or loss previously recognized, which shall besubsequently recognized in profit or loss, instead of by adjusting the carrying amount.
2) Cash flow hedges
a. The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge shall berecognized in other comprehensive income as cash flow hedge reserve, while the ineffective portion shall berecognized in profit or loss. The cash flow hedge reserve shall be recognized at the lower of the following (inabsolute amounts): (i) the cumulative gain or loss on the hedging instrument from inception of the hedge; and (ii)the cumulative change in present value of the expected future cash flows of the hedged item from inception of thehedge.b. If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financialliability, or a hedged forecast transaction for a non-financial asset or non-financial liability becomes a firm
commitment for which fair value hedge accounting is applied, the Company shall transfer out the amount of cashflow hedge reserve previously recognized in other comprehensive income, and include it in the initial cost of theasset or the liability.c. For other cash flow hedges, the amount of cash flow hedge reserve previously recognized in othercomprehensive income shall be transferred out into profit or loss in the same period the hedged forecast saleaffects profit or loss.
3) Hedges of a net investment in a foreign operation
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognizedin other comprehensive income, and reclassified from other comprehensive income to profit or loss on thedisposal of the foreign operation; and the ineffective portion is recognized in profit or loss.
3. Accounting treatment related to share repurchase
When the Company repurchases its shares for the purpose of reducing its registered capital or rewarding itsemployees, if the purchased shares are to be kept as treasury shares, the treasury shares are recorded at the cashdistributed to existing shareholders for repurchase; if the purchased shares are to be retired, the difference betweenthe total book value of shares retired and the cash distributed to existing shareholders for repurchase is to reducecapital reserve, or retained earnings when the capital reserve is not enough to reduce. If the Company repurchasesvested equity instruments in equity-settled share-based payment transactions with employees, cost of treasuryshares granted to employees and capital reserve (other capital reserve) accumulated within the vesting period areto be written off on the payment made to employees, with a corresponding adjustment in capital reserve (sharepremium).(XXXIV) Significant changes in accounting policies and estimates
1. Changes in accounting policies arising from changes in CASBEs
The Company has adopted the “CASBE 14 – Revenue” revised by the MOF since January 1, 2020. In accordancewith the relevant regulations for the convergence of the original and revised standards, the comparable periodinformation is not adjusted, and the cumulative impact of the implementation of the revised standards on the firstimplementation date is retrospectively adjusted to the amount of retained earnings at the beginning of thereporting period and other related items in the financial statements.Financial statement items on January 1, 2020 significantly affected by the implementation of the revised revenuestandard and their amounts
| Items | Balance sheet | ||
| December 31, 2019 | Adjustment due to the implementation of the revised revenue standard | January 1, 2020 | |
| Accounts receivable | 5,163,050,940.07 | -250,482,933.77 | 4,912,568,006.30 |
| Contract assets | 197,287,015.51 | 197,287,015.51 | |
| Non-current assets due within one year | 760,845,984.28 | 2,872,896.31 | 763,718,880.59 |
| Long-term receivables | 1,152,179,083.21 | -1,299,273.03 | 1,150,879,810.18 |
| Other non-current assets | 44,360,378.52 | 51,622,294.98 | 95,982,673.50 |
| Items | Balance sheet | ||
| December 31, 2019 | Adjustment due to the implementation of the revised revenue standard | January 1, 2020 | |
| Advances received | 170,610,799.52 | -170,610,799.52 | |
| Contract liabilities | 150,983,008.42 | 150,983,008.42 | |
| Other current liabilities | 29,507,607.98 | 29,507,607.98 | |
| Deferred income | 50,399,106.23 | -9,879,816.88 | 40,519,289.35 |
2. The Company has adopted the “Interpretation of China Accounting Standards for Business Enterprises No. 13”issued by the MOF in 2019 since January 1, 2020, and the prospective application method is applicable to changesin accounting policies.
IV. Taxes(I) Main taxes and tax rates
| Taxes | Tax bases | Tax rates |
| Value-added tax (VAT) | The output tax calculated based on the revenue from sales of goods or rendering of services in accordance with the tax law, net of the input tax that is allowed to be deducted in the current period | 3%, 6%, 9%, 13%. Exported goods are subject to “exemption, credit, refund” policies, with refund rate of 10% or 13%. |
| Housing property tax | For housing property levied on the basis of price, housing property tax is levied at the rate of 1.2% of the balance after deducting 30% of the cost; for housing property levied on the basis of rent, housing property tax is levied at the rate of 12% of rent revenue. | 1.2%, 12% |
| Urban maintenance and construction tax | Turnover tax actually paid | 7%, 5% |
| Education surcharge | Turnover tax actually paid | 3% |
| Local education surcharge | Turnover tax actually paid | 2%, 1% |
| Enterprise income tax | Taxable income | 15%, 20%, 25% |
Different enterprise income tax rates applicable to different taxpayers:
| Taxpayers | Income tax rate |
| Infore Technology Company | 15% |
| Guangdong Weiqi Company | 15% |
| 安徽威奇电工材料有限公司 (Anhui Weiqi Electrical Materials Co., Ltd.*) | 15% |
| Zoomlion Environmental Company | 15% |
| 佛山市顺德区华清源环保有限公司 (Foshan Shunde Huaqingyuan Environmental Protection Co., Ltd.*) | 15% |
| Shangfeng Industrial Company | 15% |
| 佛山市顺德区华博环保水务有限公司 (Foshan Shunde Huabo Environmental Water Co., Ltd.*) | 20% |
| 定南中联环境产业有限责任公司 (Dingnan Zoomlion Environmental Industry Co., Ltd.*) | 20% |
| 会昌中联环境产业有限责任公司 (Huichang Zoomlion Environmental Industry Co., Ltd.*) | 20% |
| 峰云物联科技有限公司 (Fengyun IoT Technology Co., Ltd.*) | 20% |
*
The English names are for identification purpose only.
| Taxpayers | Income tax rate |
| 耒阳市中锋环境产业有限公司 (Leiyang Zhongfeng Environmental Industry Co., Ltd.*) | 20% |
| 桦川县中峰城市环境服务有限公司 (Huachuan Zhongfeng Urban Environmental Service Co., Ltd.*) | 20% |
| 深圳盈联环境产业有限公司 (Shenzhen Yinglian Environmental Industry Co., Ltd.*) | 20% |
| Taxpayers other than the above-mentioned | 25% |
(II) Tax preferential policies
1. Enterprise income tax
| No. | Entities | Preferential policies |
| 1 | Anhui Weiqi Electrical Materials Co., Ltd. | According to the preferential income tax policy for high-tech enterprises, its 2018-2020 enterprise income tax rate is reduced to 15%. |
| 2 | Shangfeng Industrial Company, Guangdong Weiqi Company, Infore Technology Company, Foshan Shunde Huaqingyuan Environmental Protection Co., Ltd. | According to the preferential income tax policy for high-tech enterprises, its 2019-2021 enterprise income tax rate is reduced to 15%. |
| 3 | Zoomlion Environmental Company | According to the preferential income tax policy for high-tech enterprises, its 2020-2022 enterprise income tax rate is reduced to 15%. |
| 4 | 石门中联环境产业有限责任公司 (Shimen Zoomlion Environmental Industry Co., Ltd.*), 淮安晨洁环境工程有限公司 (Huaian Chenjie Environmental Engineering Co., Ltd.*) | Engage in qualified environmental protection, energy-saving and water-saving projects, it enjoys enterprise income tax exemption in 2016-2018, and enjoys a 50% reduction in income for 2019-2021. |
| 5 | 阜南绿色东方环保能源有限公司 (Funan Green Oriental Environmental Energy Co., Ltd.*), 汉寿中联环境产业有限责任公司 (Hanshou Zoomlion Environmental Industry Co., Ltd.*), 中方县中联环境产业有限责任公司 (Zhongfang County Zoomlion Environmental Industry Co., Ltd.*), 安化县中联环境产业有限公司 (Anhua Zoomlion Environmental Industry Co., Ltd.*), 慈利县中联华宝环境产业有限责任公司 (Cili County Zoomlion Huabao Environmental Industry Co., Ltd.*), 隆回县中联环境产业有限公司 (Longhui County Zoomlion Environmental Industry Co., Ltd.*) | Engage in qualified environmental protection, energy-saving and water-saving projects, it enjoys enterprise income tax exemption in 2017-2019, and enjoys a 50% reduction in income for 2020-2022. |
| 6 | 仙桃绿色东方环保发电有限公司 (Xiantao Green Oriental Environmental Power Generation Co., Ltd.*), 寿县绿色东方新能源有限责任公司 (Shouxian Green Oriental New Energy Co., Ltd.*), 张家界中联环境产业有限责任公司 (Zhangjiajie Zoomlion Environmental Industry Co., Ltd.*), 花垣中联环境产业有限公司 (Huayuan Zoomlion Environmental Industry Co., Ltd.*), 扶绥中峰环境产业有限责任公司 (Fusui Zhongfeng Environmental Industry Co., Ltd.*), 上思中联环境产业有限公司 (Shangsi Zoomlion Environmental Industry Co., Ltd.*), 宁远县中联环境产业有限责任公司 (Ningyuan County Zoomlion Environmental Industry Co., Ltd.*), 连平中联家宝环境产业有限责任公司 (Lianping Zoomlion Jiabao Environmental Industry Co., Ltd.*), 洪江区中峰环境产业有限责任公司 (Hongjiang District Zhongfeng Environmental Industry Co., Ltd.*), 眉山市彭山区中峰环境产业有限责任公司 (Meishan Pengshan Zhongfeng Environmental Industry Co., Ltd.*) | Engage in qualified environmental protection, energy-saving and water-saving projects, it enjoys enterprise income tax exemption in 2018-2020, and enjoys a 50% reduction in income for 2021-2023. |
| 7 | 长沙中联长高环境产业有限责任公司 (Changsha Zoomlion Changgao Environmental Industry Co., Ltd.*), 仙桃盈和环保有限公司 (Xiantao Yinghe Environmental Protection Co., Ltd.*), 凯里市中联重科环境产业有限公司 (Kaili Zoomlion Environmental Industry Co., Ltd.*), 娄底中联华宝环保科技有限公司 (Loudi Zoomlion Huabao | Engage in qualified environmental protection, energy-saving and water-saving projects, it enjoys enterprise income tax exemption in 2019-2021, and enjoys a 50% reduction in income for 2022-2024. |
*
The English names are for identification purpose only.
| No. | Entities | Preferential policies |
| Environmental Protection Technology Co., Ltd.*), 长沙市橘洲中联环境产业有限责任公司 (Changsha Juzhou Zoomlion Environmental Industry Co., Ltd.*), 都昌县中峰环境产业有限公司 (Duchang County Zhongfeng Environmental Industry Co., Ltd.*), 安龙宁和环保科技有限公司 (Anlong Ninghe Environmental Protection Technology Co., Ltd.*), 抚顺市盈峰中联城市环境卫生管理有限公司 (Fushun Yingfeng Zoomlion Urban Environmental Sanitation Management Co., Ltd.*), 仁寿盈峰中联城市环境服务有限公司 (Renshou Infore Zoomlion Urban Environmental Service Co., Ltd.*), 宜春盈联城市环境服务有限公司 (Yichun Yinglian Urban Environmental Service Co., Ltd.*), 松原市中联欣雨环境服务有限公司 (Songyuan Zoomlion Xinyu Environmental Service Co., Ltd.*), 赣州蓉江新区中峰环境科技有限公司 (Ganzhou Rongjiang New Area Zhongfeng Environmental Technology Co., Ltd.*), 曲阳县盈联环境服务有限公司 (Quyang Yinglian Environmental Service Co., Ltd.*), 成都盈联环境管理有限公司 (Chengdu Yinglian Environmental Management Co., Ltd.*), 祁县盈联城市环境服务有限公司 (Qixian Yinglian Urban Environmental Service Co., Ltd.*), 福建省南安市盈峰城市环境服务有限公司 (Fujian Nan’an Yingfeng Urban Environmental Service Co., Ltd.*), 故城盈联城市环境服务有限责任公司 (Gucheng Yinglian Urban Environmental Service Co., Ltd.*), 淮北市盈联城市环境服务有限公司 (Huaibei Yinglian Urban Environmental Service Co., Ltd.*), 淮北市中峰城市环境服务有限公司 (Huaibei Zhongfeng Urban Environmental Service Co., Ltd.*), 稷山县盈联城市环境服务有限公司 (Jishan County Yinglian Urban Environmental Service Co., Ltd.*), 唐山曹妃甸区盈联环境服务有限公司 (Tangshan Caofeidian District Yinglian Environmental Service Co., Ltd.*), 安义县中峰环境产业有限公司 (Anyi County Zhongfeng Environmental Industry Co., Ltd.*), 长沙中峰环保科技有限责任公司 (Changsha Zhongfeng Environmental Protection Technology Co., Ltd.*), 醴陵市盈峰中联环境产业有限公司 (Liling Yingfeng Zoomlion Environmental Industry Co., Ltd.*), 深圳市盈联城市环境服务有限公司 (Shenzhen Yinglian Urban Environmental Service Co., Ltd.*) | ||
| 8 | 铜仁市碧江区中峰环境产业有限公司 (Tongren Bijiang District Zhongfeng Environmental Industry Co., Ltd.*), 百色市盈联城市环境服务有限公司 (Baise Yinglian Urban Environmental Service Co., Ltd.*), 重庆盈联城市环卫服务有限公司 (Chongqing Yinglian City Sanitation Service Co., Ltd.*), 东兰盈联城市环境服务有限公司 (Donglan Yinglian Urban Environmental Service Co., Ltd.*), 仙桃盈联环保技术有限公司 (XiantaoYinglian Environmental Technology Co., Ltd.*), 安化盈胜环境卫生服务有限公司 (Anhua Yingsheng Environmental Sanitation Service Co., Ltd.*), 深圳宝安盈联城市服务有限公司 (Shenzhen Bao’an Yinglian City Service Co., Ltd.*), 宾川中盈环境服务有限公司 (Binchuan Zhongying Environmental Service Co., Ltd.*), | Engage in qualified environmental protection, energy-saving and water-saving projects, it enjoys enterprise income tax exemption in 2020-2022, and enjoys a 50% reduction in income for 2023-2025. |
*
The English names are for identification purpose only.
| No. | Entities | Preferential policies |
| 邵阳县中峰环境产业有限公司 (Shaoyang County Zhongfeng Environmental Industry Co., Ltd.*), 汤阴县盈联环境服务有限公司 (Tangyin County Yinglian Environmental Service Co., Ltd.*), 西安盈联城市环境服务有限公司 (Xi’an Yinglian Urban Environmental Service Co., Ltd.*), 漾濞中盈环境服务有限公司 (Yangbi Zhongying Environmental Services Co., Ltd.*), 容城县盈联城市环境服务有限公司 (Rongcheng County Yinglian Urban Environmental Service Co., Ltd.*), 盈峰中联城市环境服务有限公司 (Infore Zoomlion City Environmental Service Co., Ltd.*), 肇源县锦城环境卫生管理服务有限公司 (Zhaoyuan County Jincheng Environmental Sanitation Management Service Co., Ltd.*), 吉安中峰环境科技有限公司 (Ji’an Zhongfeng Environmental Technology Co., Ltd.*), 鞍山市盈联城市环境卫生管理有限公司 (Anshan Yinglian Urban Environmental Sanitation Management Co., Ltd.*), 菏泽盈胜环境卫生服务有限公司 (Heze Yingsheng Environmental Sanitation Service Co., Ltd.*), 滦南县盈联环境管理有限公司 (Luannan County Yinglian Environmental Management Co., Ltd.*), 广西桂平市盈合环境卫生管理有限公司 (Guangxi Guiping Yinghe Environmental Sanitation Management Co., Ltd.*), 神农架林区盈合环境卫生管理有限公司 (Shennongjia Forest Area Yinghe Environmental Sanitation Management Co., Ltd.*), 佛山市顺德区盈合城市环境服务有限公司 (Foshan Shunde District Yinghe Urban Environmental Service Co., Ltd.*), 和平县合胜环境卫生服务有限公司 (Heping County Hesheng Environmental Sanitation Service Co., Ltd.*), 佛山市顺德区联盈环境发展有限公司 (Foshan Shunde District Lianying Environmental Development Co., Ltd.*), 佛山市盈顺城市环境服务有限公司 (Foshan Yingshun Urban Environmental Service Co., Ltd.*), 宿迁市联盈城市服务有限公司 (Suqian Lianying City Service Co., Ltd.*), 枣庄市盈联城市环境服务有限公司 (Zaozhuang Yinglian Urban Environmental Service Co., Ltd.*), 枣庄市中盈城市环境服务有限公司 (Zaozhuang Zhongying Urban Environmental Service Co., Ltd.*), 大庆市萨尔图区中联重科环境发展有限公司 (Daqing Saertu District Zoomlion Environmental Development Co., Ltd.*), 吉林中峰绿洲环境发展有限公司 (Jilin Zhongfeng Oasis Environmental Development Co., Ltd.*), 来安县中峰环境科技有限公司 (Lai’an Zhongfeng Environmental Technology Co., Ltd.*), 香河盈联环保科技有限公司 (Xianghe Yinglian Environmental Technology Co., Ltd.*), 祁县同盈环境卫生服务有限公司 (Qixian Tongying Environmental Sanitation Service Co., Ltd.*), 兰陵中联环境服务有限公司 (Lanling Zoomlion Environmental Service Co., Ltd.*), 运城市中盈城市环境服务有限公司 (Yuncheng Zhongying City Environmental Service Co., Ltd.*) |
*
The English names are for identification purpose only.
*
The English names are for identification purpose only.
| No. | Entities | Preferential policies |
| 9 | Foshan Shunde Huabo Environmental Water Co., Ltd., Dingnan Zoomlion Environmental Industry Co., Ltd., Huichang Zoomlion Environmental Industry Co., Ltd., Fengyun IoT Technology Co., Ltd., Leiyang Zhongfeng Environmental Industry Co., Ltd., Huachuan Zhongfeng Urban Environmental Service Co., Ltd., Shenzhen Yinglian Environmental Industry Co., Ltd. | Pursuant to the Circular on the Implementation of the Inclusive Tax Relief Policy for Small and Micro Enterprises by State Taxation Administration (STA), from January 1, 2019 to December 31, 2021, the enterprise income tax for the portion of the taxable income within 1 million yuan is levied at 20% based on 25% of that portion of income; the enterprise income tax for the portion of the taxable income exceeding 1 million yuan but within 3 million yuan is levied at 20% based on 50% of that portion of income. |
| 10 | Foshan Shunde Huaqingyuan Environmental Protection Co., Ltd., 佛山市顺德区华盈环保水务有限公司 (Foshan Shunde District Huaying Environmental Water Co., Ltd.*), 佛山市顺德区源润水务环保有限公司 (Foshan Shunde District Yuanrun Water Environmental Protection Co., Ltd.*), 佛山市顺德区华博环保有限公司 (Foshan Shunde District Huabo Environmental Protection Co., Ltd.*) | Revenue from the production of non-restricted and non-prohibited products that meet the relevant national and industry standards using resources specified in the “Resources Comprehensive Utilization of Enterprise Income Tax Preferential Catalogue (2008 Edition)” as the main raw material will be reduced to 90% as taxable income for enterprise income tax. |
| 11 | 大荔县中联环境产业有限公司 (Dali County Zoomlion Environmental Industry Co., Ltd.*), 柳城县盈联环境卫生管理有限公司 (Liucheng County Yinglian Environmental Sanitation Management Co., Ltd.*) | Engaged in qualified environmental protection, energy-saving and water-saving projects, it enjoys three-year-exemption and three-year-half-reduction policy for enterprise income tax since the year in which it generates its first income. |
2. VAT
(1) According to the “Notice of MOF and STA on VAT Preferential Policies for Promoting Employment ofPersons with Disabilities” (Cai Shui [2016] No. 52), taxpayers who meet the conditions for enjoying preferentialtax policies shall be entitled to enjoy VAT refund upon collection within limit according to the number of personswith disabilities employed by taxpayer. In 2020, the subsidiary 辽宁东港电磁线有限公司 (Liaoning DonggangMagnet Wire Co., Ltd.
*, hereinafter referred to as Donggang Magnet Wire Company) enjoys the preferentialpolicy of VAT refund upon collection at the amount of 57,600 yuan per year for each person with disabilities, andthe refunded VAT upon collection totaled 8,297,977.38 yuan.
(2) According to the “Notice of MOF and STA on VAT Policies for Software Products” (Cai Shui [2011] No. 100),general VAT taxpayers who sell software products developed and produced by themselves are subject to VATrefund upon collection for the amount exceeding 3% of their actual VAT burdens. In 2020, the subsidiariesZoomlion Environmental Company and Infore Technology Company are entitled to enjoy the VAT refund uponcollection policy for its development and sale of their self-developed software products, and the VAT refundsreceived in the current period are 16,098,711.21 yuan and 85,336.07 yuan respectively.
(3) According to the “Announcement of MOF, STA, and the General Administration of Customs (GAC) onPolicies Deepening the VAT Reform” (Announcement No. 39, 2019 of MOF, STA and GAC), eligible taxpayerscan apply to their competent tax authorities for refund of the incremental retained tax credit. In 2020, thesub-subsidiaries Kaili Zoomlion Environmental Industry Co., Ltd. and Changsha Zoomlion ChanggaoEnvironmental Industry Co., Ltd. received tax refund of 1,480,436.23 yuan and 10,453,410.02 yuan respectively.
(4) According to Article 5 of the “Notice of MOF and STA on Printing and Distributing the ‘VAT Preferential
*The English names are for identification purpose only.
Catalogue of Products and Services for Comprehensive Utilization of Resources’” (Cai Shui [2015] No. 78), sinceJuly 1, 2015, sewage treatment services are entitled to enjoy 70% VAT refund upon collection. In 2020, thesub-subsidiaries Foshan Shunde Huaqingyuan Environmental Protection Co., Ltd., Foshan Shunde DistrictHuaying Environmental Water Co., Ltd., Foshan Shunde District Yuanrun Water Environmental Protection Co.,Ltd., and Foshan Shunde District Huabo Environmental Protection Co., Ltd. received VAT refund upon collectionof 1,930,690.82 yuan, 1,025,296.26 yuan, 1,215,817.61 yuan and 151,148.80 yuan respectively.
(5) Pursuant to the “Measures for the Implementation of the Pilot Implementation of VAT Reform for theTransportation Industry and Certain Modern Service Industries” (Cai Shui [2011] No. 111), revenue fromtechnology transfer, technology development, and related technical consulting, and technical service businesses isexempt from VAT. In 2020, the sub-subsidiary 深圳市鼎铸环保技术有限公司 (Shenzhen DingzhuEnvironmental Technology Co., Ltd.
*) meets the condition and is exempt from VAT.
3. Urban land use tax
(1) According to the “Notice of MOF and STA on the Urban Land Use Tax and Other Policies for Entities withEmployment of Persons with Disabilities” (Cai Shui [2010] No. 121), the subsidiary Donggang Magnet WireCompany, as a social welfare company, meets the temporary exemption of land use tax. After confirmation withBeijingzi Local Taxation Bureau of Donggang Local Taxation Bureau, it is exempt from land use tax in 2020.
(2) According to the “Notice on the Policy Opinions on Deepening the Reform of ‘Heroes in Each Acre’ andImplementing the Differential Allocation of Resource Elements” issued by the Office of the People’s Governmentof Shangyu District, Shaoxing City (Yu Zheng Ban Fa [2020] No. 73), the Company’s subsidiary ShangfengIndustrial Company meets the conditions of tax incentives and enjoys 100% exemption for land use tax in 2020.
(3) According to Article 1 of the “Announcement of STA, Xiantao Taxation Office on Implementing the RelevantMatters Concerning the Reduction and Exemption of Housing Property Tax and Urban Land Use Tax During theNew Coronavirus Pneumonia Epidemic”, taxpayers who have suspended production or business due to the impactof the epidemic may apply for a reduction or exemption of housing property tax and urban land use tax forself-use real estate and land in the first quarter of 2020. The sub-subsidiary Xiantao Green Oriental EnvironmentalPower Generation Co., Ltd. meets the above regulations and the urban land use tax for the first quarter is reducedby 74,665.92 yuan in 2020.
(4) According to the “Announcement on Preferential Policies for Housing Property Tax and Urban Land Use Taxin Response to the Impact of the New Coronavirus Pneumonia Epidemic” (Su Cai Shui [2020] No. 8), taxpayersin hospitality, entertainment, transportation, tourism, etc. are temporarily exempted from housing property tax andurban land use tax in the first half of 2020. The Company’s sub-subsidiary Huaian Chenjie EnvironmentalEngineering Co., Ltd. meets the conditions and the urban land use tax is reduced by 58,572.00 yuan in the firsthalf of 2020.
4. Housing property tax
(1) According to Article 1 of the “Announcement of STA, Xiantao Taxation Office on Implementing the Relevant
*The English name is for identification purpose only.
Matters Concerning the Reduction and Exemption of Housing Property Tax and Urban Land Use Tax During theNew Coronavirus Pneumonia Epidemic”, taxpayers who have suspended production or business due to the impactof the epidemic may apply for a reduction or exemption of housing property tax and urban land use tax forself-used real estate and land in the first quarter of 2020. The sub-subsidiary Xiantao Green OrientalEnvironmental Power Generation Co., Ltd. meets the above regulations and the housing property tax for the firstquarter is reduced by 202,425.81 yuan in 2020.
V. Notes to items of consolidated financial statements
Note: “Opening balance” in this report refers to balances as at January 1, 2020 after the adjustment on balances as at December 31,2019 under the revised revenue standard.(I) Notes to items of the consolidated balance sheet
1. Cash and bank balances
(1) Details
| Items | Closing balance | Opening balance |
| Cash on hand | 147,826.76 | 62,621.19 |
| Cash in bank | 5,334,320,758.07 | 2,606,269,825.38 |
| Other cash and bank balances | 569,659,386.02 | 554,435,177.83 |
| Total | 5,904,127,970.85 | 3,160,767,624.40 |
| Including: Deposited overseas | 4,585,104.79 | 36,521,872.96 |
(2) Other remarks
1) Closing balance of cash in bank included certificate of deposits in amount of 709,048,611.10 yuan, funds frozen due to lawsuits inamount of 2,837,968.00 yuan, and engineering escrow accounts that are not available for separate use in amount of 22,891.63 yuan,which was with use restriction.
2) Closing balance of other cash and bank balances included deposit for notes in amount of 458,086,264.82 yuan, deposit for lettersof guarantee in amount of 75,383,801.54 yuan, and deposit for migrant workers’ wages in amount of 922,334.53 yuan, which waswith use restriction.
2. Held-for-trading financial assets
(1) Details
| Items | Closing balance | Opening balance |
| Financial assets classified as at fair value through profit or loss | 128,017,735.11 | 217,189,146.28 |
| Including: Debt instrument investments | ||
| Equity instrument investments | 127,192,985.11 | 217,138,046.28 |
| Derivative financial assets | 824,750.00 | 51,100.00 |
| Total | 128,017,735.11 | 217,189,146.28 |
3. Notes receivable
(1) Details
1) Details on categories
| Categories | Closing balance | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion (%) | ||
| Receivables with provision for bad debts made on an individual basis | |||||
| Receivables with provision for bad debts made on a collective basis | 67,804,653.12 | 100.00 | 3,141,108.14 | 4.63 | 64,663,544.98 |
| Including: Trade acceptance | 67,804,653.12 | 100.00 | 3,141,108.14 | 4.63 | 64,663,544.98 |
| Total | 67,804,653.12 | 100.00 | 3,141,108.14 | 4.63 | 64,663,544.98 |
(Continued)
| Categories | Opening balance | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion (%) | ||
| Receivables with provision for bad debts made on an individual basis | |||||
| Receivables with provision for bad debts made on a collective basis | 40,493,712.20 | 100.00 | 40,493,712.20 | ||
| Including: Trade acceptance | 40,493,712.20 | 100.00 | 40,493,712.20 | ||
| Total | 40,493,712.20 | 100.00 | 40,493,712.20 | ||
2) Notes receivable with provision for bad debts made on a collective basis
| Items | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| Bank acceptance portfolio | |||
| Trade acceptance portfolio | 67,804,653.12 | 3,141,108.14 | 4.63 |
| Subtotal | 67,804,653.12 | 3,141,108.14 | 4.63 |
(2) Changes in provision for bad debts
1) Details
| Items | Opening balance | Increase | Decrease | Closing balance | ||||
| Accrual | Recovery | Others | Reversal | Write-off | Others | |||
| Bank acceptance | ||||||||
| Trade acceptance | 3,141,108.14 | 3,141,108.14 | ||||||
| Subtotal | 3,141,108.14 | 3,141,108.14 | ||||||
2) No provision is collected or reversed in the current period
(3) No balance is written off in the current period
(4) No balance is pledged at the balance sheet date
(5) Endorsed or discounted but undue notes at the balance sheet date
| Items | Closing balance derecognized | Closing balance not yet derecognized |
| Trade acceptance | 8,193,775.64 | |
| Subtotal | 8,193,775.64 |
(6) Notes receivable transferred to accounts receivable due to non-performance of issuer
| Items | Amount transferred |
| Trade acceptance | 720,000.00 |
| Subtotal | 720,000.00 |
4. Accounts receivable
(1) Details
1) Details on categories
| Categories | Closing balance | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion (%) | ||
| Receivables with provision made on an individual basis | 13,881,143.78 | 0.23 | 13,881,143.78 | 100.00 | |
| Receivables with provision made on a collective basis | 5,965,218,384.23 | 99.77 | 400,383,520.19 | 6.71 | 5,564,834,864.04 |
| Total | 5,979,099,528.01 | 100.00 | 414,264,663.97 | 6.93 | 5,564,834,864.04 |
(Continued)
| Categories | Opening balance [Note] | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion (%) | ||
| Receivables with provision made on an individual basis | |||||
| Receivables with provision made on a collective basis | 5,255,708,371.27 | 100.00 | 343,140,364.97 | 6.53 | 4,912,568,006.30 |
| Total | 5,255,708,371.27 | 100.00 | 343,140,364.97 | 6.53 | 4,912,568,006.30 |
Note: Please refer to section III (XXXIV) 1 of notes to financial statements for details on the difference between the opening balanceof current period and the closing balance of preceding period (i.e. December 31, 2019).
2) Accounts receivable with provision made on an individual basis
| Debtors | Book balance | Provision for bad debts | Provision proportion (%) | Reasons |
| 深圳市为民生态技术有限公司 (Shenzhen Weimin Ecological Technology Co., Ltd.?) | 10,304,640.00 | 10,304,640.00 | 100.00 | Expected to be irrecoverable |
| 马鞍山市瑞恒物资贸易有限公司 (Ma’anshan Ruiheng Material Trading Co., Ltd.*) | 2,137,100.00 | 2,137,100.00 | 100.00 | Expected to be irrecoverable |
| 徐州伟天化工有限公司 (Xuzhou Weitian Chemical Co., Ltd.*) | 400,000.00 | 400,000.00 | 100.00 | Expected to be irrecoverable |
| 建德新越置业有限公司 (Jiande Xinyue Real Estate Co., Ltd.*) | 377,496.00 | 377,496.00 | 100.00 | Expected to be irrecoverable |
| Other entities | 661,907.78 | 661,907.78 | 100.00 | Expected to be irrecoverable |
?
The English names are for identification purpose only.
| Debtors | Book balance | Provision for bad debts | Provision proportion (%) | Reasons |
| Subtotal | 13,881,143.78 | 13,881,143.78 | 100.00 |
3) Accounts receivable with provision made on a collective basis
① Parent company and electrotechnical equipment manufacturing industry under age analysis method
| Ages | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| 1-180 days | 612,769,602.54 | ||
| 180 days - 1 year | 188,806.71 | 3,776.13 | 2.00 |
| Subtotal | 612,958,409.25 | 3,776.13 | |
② Ventilation equipment manufacturing industry and environmental integrated industry under age analysismethod
| Ages | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| Within 1 year | 4,237,483,272.06 | 211,874,163.61 | 5.00 |
| 1-2 years | 631,257,697.72 | 63,125,769.77 | 10.00 |
| 2-3 years | 170,701,666.83 | 51,210,500.05 | 30.00 |
| 3-5 years | 77,168,884.29 | 38,584,442.15 | 50.00 |
| Over 5 years | 32,333,849.41 | 32,333,849.41 | 100.00 |
| Subtotal | 5,148,945,370.31 | 397,128,724.99 | 7.71 |
③ Commercial factoring portfolio grouped by five-level classification
| Five-level classification | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| Pass | 189,894,604.67 | 2,848,419.07 | 1.50 |
| Special-mention | 13,420,000.00 | 402,600.00 | 3.00 |
| Subtotal | 203,314,604.67 | 3,251,019.07 | 1.60 |
(2) Changes in provision for bad debts
| Items | Opening balance | Increase | Decrease | Closing balance | ||||
| Accrual | Recovery | Others | Reversal | Write-off | Others | |||
| Receivables with provision made on an individual basis | 13,881,143.78 | 13,881,143.78 | ||||||
| Receivables with provision made on a collective basis | 343,140,364.97 | 59,264,181.99 | 2,021,026.77 | 400,383,520.19 | ||||
| Subtotal | 343,140,364.97 | 73,145,325.77 | 2,021,026.77 | 414,264,663.97 | ||||
(3) Accounts receivable written off in current period
1) Accounts receivable actually written off in current period totaled 2,021,026.77 yuan.
2) Significant accounts receivable written off in current period
| Debtors | Nature of receivables | Amount written off | Reasons for write-off | Write-off procedures performed | Whether arising from related party transactions |
| Debtors | Nature of receivables | Amount written off | Reasons for write-off | Write-off procedures performed | Whether arising from related party transactions |
| Jingyi Freight Service Center, Jiancaoping District, Taiyuan City | Goods payment | 600,000.00 | Expected to be irrecoverable | Under the approval by the Management | No |
| 安徽万豪物业管理有限公司 (Anhui Wanhao Property Management Co., Ltd.?) | Goods payment | 520,000.00 | Expected to be irrecoverable | Under the approval by the Management | No |
| Public Affairs Management Office of Tongliao Economic and Technological Development Zone | Goods payment | 150,834.00 | Expected to be irrecoverable | Under the approval by the Management | No |
| Jingmen Administration of City Appearance and Environmental Sanitation | Goods payment | 150,000.00 | Expected to be irrecoverable | Under the approval by the Management | No |
| Housing and Urban-Rural Development and Urban Management Bureau of Jiang’an County | Goods payment | 109,856.58 | Expected to be irrecoverable | Under the approval by the Management | No |
| Subtotal | 1,530,690.58 |
(4) Details of the top 5 debtors with largest balances
| Debtors | Book balance | Proportion to the total balance of accounts receivable (%) | Provision for bad debts |
| No. 1 | 138,694,988.13 | 2.32 | 7,089,710.51 |
| No. 2 | 117,833,115.80 | 1.97 | 5,891,655.79 |
| No. 3 | 101,061,055.56 | 1.69 | 1,515,915.83 |
| No. 4 | 85,846,357.20 | 1.44 | 4,292,317.86 |
| No. 5 | 50,436,411.79 | 0.84 | 2,521,820.59 |
| Subtotal | 493,871,928.48 | 8.26 | 21,311,420.58 |
5. Receivables financing
(1) Details
Details on categories
| Items | Closing balance | |||||
| Initial cost | Interest adjustment | Interest accrued | Changes in fair value | Carrying amount | Provision for impairment | |
| Notes receivable | 520,429,874.86 [Note] | 520,429,874.86 | ||||
| Total | 520,429,874.86 | 520,429,874.86 | ||||
(Continued)
| Items | Opening balance | |||||
| Initial cost | Interest adjustment | Interest accrued | Changes in fair value | Carrying amount | Provision for impairment | |
| Notes receivable | 683,999,481.60 | 683,999,481.60 | ||||
| Total | 683,999,481.60 | 683,999,481.60 | ||||
Note: The acceptor of receivables financing with closing balance of 109,968,904.97 yuan was a finance company with low credit riskand financial qualification.
(2) Pledged notes at the balance sheet date
?
The English name is for identification purpose only.
| Items | Closing balance of pledged notes |
| Bank acceptance | 306,145,249.74 |
| Subtotal | 306,145,249.74 |
(3) Endorsed or discounted but undue notes at the balance sheet date
| Items | Closing balance derecognized |
| Bank acceptance | 686,352,514.35 |
| Subtotal | 686,352,514.35 |
Due to the fact that the acceptor of bank acceptance is commercial bank, which is of high credit level, there is very little possibility offailure in recoverability when it is due. Based on this fact, the Company derecognized the endorsed or discounted bank acceptance.However, if any bank acceptance is not recoverable when it is due, the Company still holds joint liability on such acceptance,according to the China Commercial Instrument Law.
6. Advances paid
(1) Age analysis
| Ages | Closing balance | Opening balance | ||||||
| Book balance | % to total | Provision for impairment | Carrying amount | Book balance | % to total | Provision for impairment | Carrying amount | |
| Within 1 year | 134,718,034.94 | 97.79 | 134,718,034.94 | 64,279,616.58 | 90.47 | 64,279,616.58 | ||
| 1-2 years | 1,328,399.29 | 0.96 | 1,328,399.29 | 4,843,587.16 | 6.82 | 4,843,587.16 | ||
| 2-3 years | 1,621,900.20 | 1.18 | 1,621,900.20 | 1,928,881.01 | 2.71 | 1,928,881.01 | ||
| Over 3 years | 100,864.10 | 0.07 | 100,864.10 | |||||
| Total | 137,769,198.53 | 100.00 | 137,769,198.53 | 71,052,084.75 | 100.00 | 71,052,084.75 | ||
(2) Details of the top 5 debtors with largest balances
| Debtors | Book balance | Proportion to the total balance of advances paid (%) |
| No. 1 | 19,650,774.39 | 14.27 |
| No. 2 | 11,135,988.03 | 8.08 |
| No. 3 | 5,881,147.77 | 4.27 |
| No. 4 | 3,954,000.00 | 2.87 |
| No. 5 | 3,681,661.72 | 2.67 |
| Subtotal | 44,303,571.91 | 32.16 |
7. Other receivables
(1) Details
1) Details on categories
| Categories | Closing balance | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion (%) | ||
| Receivables with provision made on an individual basis | |||||
| Receivables with provision made on a collective basis | 287,548,686.45 | 100.00 | 29,877,688.17 | 10.39 | 257,670,998.28 |
| Total | 287,548,686.45 | 100.00 | 29,877,688.17 | 10.39 | 257,670,998.28 |
(Continued)
| Categories | Opening balance | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion (%) | ||
| Receivables with provision made on an individual basis | |||||
| Receivables with provision made on a collective basis | 246,792,240.61 | 100.00 | 21,926,324.89 | 8.88 | 224,865,915.72 |
| Total | 246,792,240.61 | 100.00 | 21,926,324.89 | 8.88 | 224,865,915.72 |
(2) Other receivables with provision made on a collective basis
1) Parent company and electrotechnical equipment manufacturing industry under age analysis method
| Ages | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| 1-180 days | 17,962,594.27 | ||
| 180 days - 1 year | 5,197,653.69 | 103,953.07 | 2.00 |
| 1-2 years | 14,686,598.17 | 1,468,659.82 | 10.00 |
| 2-3 years | 17,833,863.75 | 5,350,159.13 | 30.00 |
| 3-5 years | 87,216.46 | 43,608.23 | 50.00 |
| Over 5 years | 404,856.00 | 323,884.80 | 80.00 |
| Subtotal | 56,172,782.34 | 7,290,265.05 | 12.98 |
2) Ventilation equipment manufacturing industry and environmental integrated industry under age analysismethod
| Ages | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| Within 1 year | 181,722,834.68 | 9,086,141.76 | 5.00 |
| 1-2 years | 29,686,959.35 | 2,968,695.94 | 10.00 |
| 2-3 years | 10,166,980.58 | 3,050,094.17 | 30.00 |
| 3-5 years | 4,633,276.50 | 2,316,638.25 | 50.00 |
| Over 5 years | 5,165,853.00 | 5,165,853.00 | 100.00 |
| Subtotal | 231,375,904.11 | 22,587,423.12 | 9.76 |
(3) Changes in provision for bad debts
| Items | Phase I | Phase II | Phase III | Subtotal |
| 12?month expected credit losses | Lifetime expected credit losses (credit not impaired) | Lifetime expected credit losses (credit impaired) | ||
| Opening balance | 13,184,692.17 | 4,735,356.98 | 4,006,275.74 | 21,926,324.89 |
| Opening balance in the current period | ||||
| --Transferred to phase II | -4,437,355.76 | 4,437,355.76 | ||
| --Transferred to phase III | -4,735,356.98 | 4,735,356.98 | ||
| --Reversed to phase II | ||||
| --Reversed to phase I | ||||
| Provision made in the current period | 442,758.42 | 14,008,604.86 | 14,451,363.28 | |
| Provision recovered in current period | ||||
| Provision reversed in current period | ||||
| Provision written off in current period | 6,500,000.00 | 6,500,000.00 | ||
| Other changes | ||||
| Closing balance | 9,190,094.83 | 4,437,355.76 | 16,250,237.58 | 29,877,688.17 |
(4) Other receivables written off in current period
Other receivables actually written off in current period totaled 6,500,000.00 yuan.
(5) Other receivables categorized by nature
| Nature of receivables | Closing balance | Opening balance |
| Security deposits | 155,500,083.80 | 114,939,229.61 |
| Temporary advance payment receivable and petty cash | 79,760,368.16 | 64,158,614.66 |
| Call loans | 48,442,016.60 | 50,530,932.83 |
| Equity transfer payments | 9,500,000.00 | |
| Others | 3,846,217.89 | 7,663,463.51 |
| Total | 287,548,686.45 | 246,792,240.61 |
(6) Details of the top 5 debtors with largest balances
| Debtors | Nature of receivables | Book balance | Ages | Proportion to the total balance of other receivables (%) | Provision for bad debts |
| No. 1 | Call loans | 30,165,333.33 | [Note 1] | 10.49 | 6,395,734.82 |
| No. 2 | Security deposits | 14,261,550.00 | Within 1 year | 4.96 | 713,077.50 |
| No. 3 | Call loans and security deposits | 13,048,263.59 | [Note 2] | 4.54 | 1,633,347.22 |
| No. 4 | Security deposits | 7,751,515.52 | [Note 3] | 2.70 | 28,294.78 |
| No. 5 | Security deposits | 7,000,000.00 | Within 1 year | 2.43 | 350,000.00 |
| Subtotal | 72,226,662.44 | 25.12 | 9,120,454.32 |
Note 1: Of which, 165,333.33 yuan was with age of 1 to 180 days, 1,927,522.33 yuan was with age of 180 days to 1 year,10,322,794.66 yuan was with age of 1 to 2 years, and 17,749,683.01 yuan was with age of 2 to 3 years.Note 2: Of which, 11,429,582.76 yuan was with age within 1 year, 618,680.83 yuan was with age of 1 to 2 years, and 1,000,000.00yuan was with age over 5 years.Note 3: Of which, 6,336,776.52 yuan was with age of 1 to 180 days, 1,414,739.00 yuan was with age of 180 days to 1 year.
8. Inventories
(1) Details
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for write-down | Carrying amount | Book balance | Provision for write-down | Carrying amount | |
| Raw materials | 171,456,835.82 | 11,347,353.70 | 160,109,482.12 | 164,384,151.44 | 13,206,657.73 | 151,177,493.71 |
| Work in process | 243,622,797.51 | 12,052,957.06 | 231,569,840.45 | 217,354,425.22 | 1,954,250.96 | 215,400,174.26 |
| Goods on hand | 920,639,142.87 | 23,583,555.13 | 897,055,587.74 | 787,587,870.43 | 18,308,463.42 | 769,279,407.01 |
| Products on consignment for sales | 4,463,263.89 | 4,463,263.89 | 3,394,638.35 | 3,394,638.35 | ||
| Packages | 600,215.41 | 600,215.41 | 785,235.30 | 785,235.30 | ||
| Low-value consumables | 33,051.67 | 33,051.67 | 97,647.20 | 97,647.20 | ||
| Cost to fulfill a contract | 11,345,966.57 | 11,345,966.57 | 4,866,134.18 | 4,866,134.18 | ||
| Total | 1,352,161,273.74 | 46,983,865.89 | 1,305,177,407.85 | 1,178,470,102.12 | 33,469,372.11 | 1,145,000,730.01 |
(2) Provision for inventory write-down
1) Details
| Items | Opening balance | Increase | Decrease | Closing balance | ||
| Accrual | Others | Reversal or write-off | Others | |||
| Raw materials | 13,206,657.73 | 2,964,417.49 | 4,823,721.52 | 11,347,353.70 | ||
| Work in process | 1,954,250.96 | 11,004,254.24 | 905,548.14 | 12,052,957.06 | ||
| Goods on hand | 18,308,463.42 | 22,302,262.62 | 17,027,170.91 | 23,583,555.13 | ||
| Subtotal | 33,469,372.11 | 36,270,934.35 | 22,756,440.57 | 46,983,865.89 | ||
2) Determination basis of net realizable value and reasons for the reversal or write-off of provision for inventorywrite-down
| Items | Determination basis of net realizable value | Reasons for write-off of provision for inventory write-down |
| Raw materials, work in process | Estimated selling price of relevant finished goods less cost to be incurred upon completion, estimated selling expenses, and relevant taxes and surcharges | Inventories with provision for inventory write-down made in preceding period were used/sold in current period |
| Goods on hand | Estimated selling price of relevant finished goods less estimated selling expenses, and relevant taxes and surcharges | Inventories with provision for inventory write-down made in preceding period were sold in current period |
(3) Cost to fulfill a contract
| Items | Opening balance | Increase | Amortization | Closing balance |
| Urban garbage classification EPC project of Changgao Project | 1,240,097.04 | 1,486,796.07 | 2,726,893.11 | |
| Nanliu Bobai Project | 2,445,242.48 | 2,445,242.48 | ||
| Foshan Shunde Project | 1,767,838.14 | 1,767,838.14 | ||
| Yunli Software Project | 1,319,009.81 | 1,319,009.81 | ||
| Urban classification construction project of Baoan Project | 1,310,653.98 | 1,310,653.98 | ||
| Urban and rural domestic waste sanitation integration project in Nan’an City | 691,168.25 | 2,849,387.20 | 2,857,744.09 | 682,811.36 |
| Huayuan Township Sewage Project | 824,363.96 | 7,650,581.60 | 8,474,945.56 | |
| Jiangxi Poyang Leachate Project | 14,601.77 | 2,647,000.45 | 2,661,602.22 | |
| Others | 2,095,903.16 | 3,132,764.49 | 4,135,149.96 | 1,093,517.69 |
| Subtotal | 4,866,134.18 | 24,609,274.22 | 18,129,441.83 | 11,345,966.57 |
9. Contract assets
(1) Details
| Items | Closing balance | Opening balance [Note] | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Quality guarantee deposit receivable | 179,821,458.38 | 8,980,802.76 | 170,840,655.62 | 209,005,983.19 | 11,718,967.68 | 197,287,015.51 |
| Total | 179,821,458.38 | 8,980,802.76 | 170,840,655.62 | 209,005,983.19 | 11,718,967.68 | 197,287,015.51 |
Note: Please refer to section III (XXXIV) 1 of notes to financial statements for details on the difference between the opening balanceof current period and the closing balance of preceding period (i.e. December 31, 2019).
(2) Details on provision for impairment of contract assets
1) Details
| Items | Opening balance | Increase | Decrease | Closing balance | |||
| Accrual | Others | Reversal | Write-off | Others | |||
| On an individual basis | |||||||
| On a collective basis | 11,718,967.68 | -2,738,164.92 | 8,980,802.76 | ||||
| Subtotal | 11,718,967.68 | -2,738,164.92 | 8,980,802.76 | ||||
2) Contract assets with provision for impairment made on a collective basis
① Parent company and electrotechnical equipment manufacturing industry under age analysis method
| Ages | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| 1-180 days | 205,403.46 | ||
| Subtotal | 205,403.46 | ||
② Ventilation equipment manufacturing industry and environmental integrated industry under age analysismethod
| Ages | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| Within 1 year | 179,616,054.92 | 8,980,802.76 | 5.00 |
| Subtotal | 179,616,054.92 | 8,980,802.76 | 5.00 |
10. Non-current assets due within one year
| Items | Closing balance | ||||
| Book balance | Unrecognized finance income | Provision for bad debts | Carrying amount | Discount rate range (%) | |
| Quality guarantee deposit receivable | 3,117,560.29 | 575,338.66 | 2,542,221.63 | N/A | |
| Sales of goods in installments | 590,525,742.54 | 13,507,469.77 | 29,526,287.13 | 547,491,985.64 | 4.75 |
| Guaranteed collection amount for BOT projects | 3,396,226.40 | 2,697,240.24 | 169,811.32 | 529,174.84 | 4.75 |
| Payments for finance lease | 101,710,631.53 | 2,985,183.62 | 1,564,473.52 | 97,160,974.39 | 4.75 |
| Equity transfer payments received in installments [Note 1] | 366,128,123.00 | 28,979,514.04 | 337,148,608.96 | 4.75 | |
| Financial factoring of accounts receivable | 190,903,684.69 | 18,706,828.72 | 5,062,991.90 | 167,133,864.07 | 4.75 |
| Long-term call loans with payment of interest by installments and principal at the maturity date | 6,130,000.00 | 139,500.00 | 5,990,500.00 | N/A | |
| Total | 1,261,911,968.45 | 66,876,236.39 | 37,038,402.53 | 1,157,997,329.53 | |
(Continued)
| Items | Opening balance [Note 2] | ||||
| Book balance | Unrecognized finance income | Provision for bad debts | Carrying amount | Discount rate range (%) | |
| Quality guarantee deposit receivable | 3,965,544.65 | 1,092,648.34 | 2,872,896.31 | N/A | |
| Sales of goods in installments | 616,399,938.50 | 14,169,089.88 | 30,819,996.92 | 571,410,851.70 | 4.75 |
| Guaranteed collection amount for BOT projects | 3,396,226.40 | 2,775,665.95 | 169,811.32 | 450,749.13 | 4.75 |
| Payments for finance lease | 7,689,937.75 | 374,747.24 | 115,349.07 | 7,199,841.44 | 4.75 |
| Equity transfer payments received in installments | 198,815,157.09 | 17,030,615.08 | 181,784,542.01 | 4.75 | |
| Total | 830,266,804.39 | 34,350,118.15 | 32,197,805.65 | 763,718,880.59 |
Note 1: The difference in book balance amounting to 381,000,000.00 yuan compared with opening balance was due to the earlypayment in the current period.Note 2: Please refer to section III (XXXIV) 1 of notes to financial statements for details on the difference between the openingbalance of current period and the closing balance of preceding period (i.e. December 31, 2019).
11. Other current assets
| Nature of receivables | Closing balance | Opening balance |
| Input tax to be credited and tax credits | 524,859,055.94 | 330,975,304.91 |
| Hedging instruments | 639,250.00 | |
| Total | 524,859,055.94 | 331,614,554.91 |
12. Long-term receivables
(1) Details
| Items | Closing balance | ||||
| Book balance | Unrecognized finance income | Provision for bad debts | Carrying amount | Discount rate range (%) | |
| Sales of goods in installments | 788,025,663.31 | 39,476,135.13 | 100,750,766.12 | 647,798,762.06 | 4.75 |
| Guaranteed collection amount for BOT projects | 205,977,431.75 | 42,828,397.21 | 10,298,871.59 | 152,850,162.95 | 4.75 |
| Payments for finance lease | 42,916,937.55 | 922,675.24 | 667,631.54 | 41,326,630.77 | 4.75 |
| Equity transfer payments received in installments | 21,800,446.27 | 520,511.10 | 21,279,935.17 | N/A | |
| Financial factoring of accounts receivable | 236,684,800.68 | 33,097,600.97 | 3,550,272.01 | 200,036,927.70 | 4.75 |
| Total | 1,295,405,279.56 | 116,324,808.55 | 115,788,052.36 | 1,063,292,418.65 | |
(Continued)
| Items | Opening balance [Note] | ||||
| Book balance | Unrecognized finance income | Provision for bad debts | Carrying amount | Discount rate range (%) | |
| Sales of goods in installments | 675,059,396.84 | 29,938,554.77 | 79,011,316.52 | 566,109,525.55 | 4.75 |
| Guaranteed collection amount for BOT projects | 199,356,036.32 | 44,203,351.95 | 9,967,801.92 | 145,184,882.45 | 4.75 |
| Payments for finance lease | 27,712,057.53 | 64,288.43 | 772,836.41 | 26,874,932.69 | 4.75 |
| Equity transfer payments received in installments | 381,000,000.00 | 25,877,277.30 | 355,122,722.70 | 4.75 | |
| Long-term call loans with payment of interest by installments and principal at the maturity date | 60,618,680.83 | 3,030,934.04 | 57,587,746.79 | N/A | |
| Total | 1,343,746,171.52 | 100,083,472.45 | 92,782,888.89 | 1,150,879,810.18 | |
Note: Please refer to section III (XXXIV) 1 of notes to financial statements for details on the difference between the opening balance
of current period and the closing balance of preceding period (i.e. December 31, 2019).
(2) Changes in provision for bad debts
| Items | Opening balance | Increase | Decrease | Closing balance | ||||
| Accrual | Recovery | Others | Reversal | Write-off | Others | |||
| Provision made on an individual basis | 2,542,185.00 | -2,542,185.00 | ||||||
| Provision made on a collective basis | 90,240,703.89 | 25,547,348.47 | 115,788,052.36 | |||||
| Subtotal | 92,782,888.89 | 23,005,163.47 | 115,788,052.36 | |||||
13. Long-term equity investments
(1) Categories
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Investments in associates | 318,243,332.69 | 318,243,332.69 | 303,292,231.01 | 303,292,231.01 | ||
| Total | 318,243,332.69 | 318,243,332.69 | 303,292,231.01 | 303,292,231.01 | ||
(2) Details
| Investees | Opening balance | Increase/Decrease | |||
| Investments increased | Investments decreased | Investment income recognized under equity method | Adjustment in other comprehensive income | ||
| Associates | |||||
| 廉江市绿色东方新能源有限公司 (Lianjiang Green Oriental New Energy Co., Ltd.?) | 33,534,934.15 | 7,286,539.03 | |||
| 天健创新（北京）监测仪表股份有限公司 (Tengine Innovation (Beijing) Monitoring Instrument Co., Ltd.*) | 25,988,232.54 | 839,195.26 [Note 1] | 2,735,747.26 | ||
| 广东顺控环境投资有限公司 (Guangdong Shunkong Environmental Investment Co., Ltd.*) | 154,058,623.77 | 26,842,351.03 | |||
| 广东天枢新能源科技有限公司 (Guangdong Tianshu New Energy Technology Co., Ltd.*) [Note 2] | |||||
| 重庆中联弘峰环卫有限公司 (Chongqing Zoomlion Hongfeng Sanitation Co., Ltd.*) [Note 3] | 15,275,736.13 | 15,617,403.15 | 341,667.02 | ||
| 汕头市中联瑞康环境卫生服务有限公司 (Shantou Zoomlion Ruikang Environmental Sanitation Service Co., Ltd.*) | 14,105,443.32 | 920,745.64 | |||
| 汕头市潮阳区中联瑞康环境卫生服务有限公司 (Shantou Chaoyang District | 5,473,688.30 | 6,800,000.00 | 4,301,745.88 | ||
?
The English names are for identification purpose only.
| Investees | Opening balance | Increase/Decrease | |||
| Investments increased | Investments decreased | Investment income recognized under equity method | Adjustment in other comprehensive income | ||
| Zoomlion Ruikang Environmental Sanitation Service Co., Ltd.*) | |||||
| 长沙酷哇中联智能科技有限公司 (Changsha Cowa Zoomlion Intelligent Technology Co., Ltd.*) | 8,215,692.49 | -1,644,743.20 | |||
| 宜春发投联峰环境产业有限公司 (Yichun Development Investment Lianfeng Environmental Industry Co., Ltd.?) | 9,835,677.00 | 9,758,372.39 | -77,304.61 | ||
| 广东亮科环保工程有限公司 (Guangdong Liangke Environmental Engineering Co., Ltd.*) | 36,804,203.31 | -1,125,180.13 | |||
| Total | 303,292,231.01 | 7,639,195.26 | 25,375,775.54 | 39,581,567.92 | |
(Continued)
| Investees | Increase/Decrease | Closing balance | Closing balance of provision for impairment | |||
| Changes in other equity | Cash dividend/Profit declared for distribution | Provision for impairment | Others | |||
| Associates | ||||||
| Lianjiang Green Oriental New Energy Co., Ltd. | 40,821,473.18 | |||||
| Tengine Innovation (Beijing) Monitoring Instrument Co., Ltd. | 29,563,175.06 | |||||
| Guangdong Shunkong Environmental Investment Co., Ltd. | 6,893,885.96 | 174,007,088.84 | ||||
| Guangdong Tianshu New Energy Technology Co., Ltd. | ||||||
| Chongqing Zoomlion Hongfeng Sanitation Co., Ltd. | ||||||
| Shantou Zoomlion Ruikang Environmental Sanitation Service Co., Ltd. | 15,026,188.96 | |||||
| Shantou Chaoyang District Zoomlion Ruikang Environmental Sanitation Service Co., Ltd. | 16,575,434.18 | |||||
| Changsha Cowa Zoomlion Intelligent Technology Co., Ltd. | 6,570,949.29 | |||||
| Yichun Development Investment Lianfeng Environmental Industry Co., Ltd. | ||||||
| Guangdong Liangke Environmental Engineering Co., Ltd. | 35,679,023.18 | |||||
?
The English names are for identification purpose only.
| Investees | Increase/Decrease | Closing balance | Closing balance of provision for impairment | |||
| Changes in other equity | Cash dividend/Profit declared for distribution | Provision for impairment | Others | |||
| Total | 6,893,885.96 | 318,243,332.69 | ||||
Note 1: In the current period, the Company increased investments in amount of 839,195.26 yuan in Tengine Innovation (Beijing)Monitoring Instrument Co., Ltd. As the former management of Tengine Innovation (Beijing) Monitoring Instrument Co., Ltd. failedto achieve the performance targets committed at the time of accepting the Company’s investments, the Company receivedcompensation for performance commitment of 839,195.26 yuan in June 2020, which was used to directly acquire the equity ofTengine Innovation (Beijing) Monitoring Instrument Co., Ltd. through block transactions and call auction transactions at the stockexchange.Note 2: Due to the long-term losses of Guangdong Tianshu New Energy Technology Co., Ltd., the Company adjusted the carryingamount of related long-term equity investments as 0 yuan. No investment income or loss is recognized in the current period asGuangdong Tianshu New Energy Technology Co., Ltd. still suffers losses.Note 3: It is renamed as 重庆三峰城市环境服务有限公司 (Chongqing Sanfeng Urban Environmental Service Co., Ltd.
*
) inAugust 2020.
14. Other equity instrument investments
| Items | Closing balance | Opening balance | Dividend income | Accumulated amount of gains or losses transferred from other comprehensive income to retained earnings | |
| Amount | Reasons | ||||
| 浙江上虞农商商业银行股份有限公司 (Zhejiang Shangyu Rural Commercial Bank Co., Ltd.*) | 800,000.00 | 800,000.00 | 414,960.00 | ||
| 深圳市盈峰环保产业基金管理有限公司 (Shenzhen Infore Environmental Protection Industry Fund Management Co., Ltd.*) | 270,000.00 | 270,000.00 | |||
| 深圳市盈峰环保产业并购基金 (Shenzhen Infore Environmental Protection Industry M&A Fund *) | 25,000,000.00 | 25,000,000.00 | |||
| Subtotal | 26,070,000.00 | 26,070,000.00 | 414,960.00 | ||
15. Investment property
(1) Details
| Items | Buildings and structures | Total |
| Cost | ||
| Opening balance | 845,691.00 | 845,691.00 |
| Increase | 2,171,093.43 | 2,171,093.43 |
| 1) Others | 2,171,093.43 | 2,171,093.43 |
| Decrease | 267,550.00 | 267,550.00 |
| 1) Disposal | 267,550.00 | 267,550.00 |
| Closing balance | 2,749,234.43 | 2,749,234.43 |
| Accumulated depreciation and amortization |
*
The English names are for identification purpose only.
| Items | Buildings and structures | Total |
| Opening balance | 277,664.61 | 277,664.61 |
| Increase | 526,105.96 | 526,105.96 |
| 1) Accrual or amortization | 113,598.31 | 113,598.31 |
| 2) Others | 412,507.65 | 412,507.65 |
| Decrease | 63,543.12 | 63,543.12 |
| 1) Disposal | 63,543.12 | 63,543.12 |
| Closing balance | 740,227.45 | 740,227.45 |
| Provision for impairment | ||
| Opening balance | ||
| Increase | ||
| Decrease | ||
| Closing balance | ||
| Closing carrying amount | 2,009,006.98 | 2,009,006.98 |
| Opening carrying amount | 568,026.39 | 568,026.39 |
(2) Investment property with certificate of titles being unsettled
| Items | Carrying amount | Reasons for unsettlement |
| Wanda real estate | 1,957,820.99 | In processing |
| Subtotal | 1,957,820.99 |
16. Fixed assets
(1) Details
| Items | Buildings and structures | General equipment | Special equipment | Transport facilities | Other equipment | Total |
| Cost | ||||||
| Opening balance | 674,424,894.25 | 52,621,187.11 | 617,079,685.39 | 38,933,113.79 | 44,746,033.27 | 1,427,804,913.81 |
| Increase | 515,885,415.23 | 72,601,863.87 | 190,818,797.96 | 16,968,159.45 | 3,010,656.12 | 799,284,892.63 |
| 1) Acquisition | 5,761,419.84 | 57,620,776.55 | 70,563,064.01 | 16,968,159.45 | 3,010,656.12 | 153,924,075.97 |
| 2) Transferred in from construction in progress | 510,123,995.39 | 14,981,087.32 | 86,823,555.19 | 611,928,637.90 | ||
| 3) Transferred in from inventories | 33,432,178.76 | 33,432,178.76 | ||||
| Decrease | 5,160,225.21 | 3,929,194.64 | 46,788,453.94 | 16,054,667.27 | 4,953,781.97 | 76,886,323.03 |
| 1) Disposal/ Scrapping | 5,160,225.21 | 3,929,194.64 | 46,788,453.94 | 16,054,667.27 | 4,953,781.97 | 76,886,323.03 |
| Closing balance | 1,185,150,084.27 | 121,293,856.34 | 761,110,029.41 | 39,846,605.97 | 42,802,907.42 | 2,150,203,483.41 |
| Accumulated depreciation | ||||||
| Opening balance | 150,821,721.30 | 28,550,539.48 | 211,296,310.11 | 18,631,345.18 | 23,823,412.08 | 433,123,328.15 |
| Increase | 30,581,236.65 | 10,499,842.01 | 84,137,347.68 | 3,153,924.85 | 6,295,548.74 | 134,667,899.93 |
| 1) Accrual | 30,581,236.65 | 10,499,842.01 | 84,137,347.68 | 3,153,924.85 | 6,295,548.74 | 134,667,899.93 |
| Decrease | 1,497,905.52 | 3,695,048.71 | 36,160,558.87 | 12,075,247.58 | 4,705,731.66 | 58,134,492.34 |
| 1) Disposal/ Scrapping | 1,497,905.52 | 3,695,048.71 | 36,160,558.87 | 12,075,247.58 | 4,705,731.66 | 58,134,492.34 |
| Closing balance | 179,905,052.43 | 35,355,332.78 | 259,273,098.92 | 9,710,022.45 | 25,413,229.16 | 509,656,735.74 |
| Items | Buildings and structures | General equipment | Special equipment | Transport facilities | Other equipment | Total |
| Provision for impairment | ||||||
| Opening balance | ||||||
| Increase | 1,336,643.39 | 1,336,643.39 | ||||
| 1) Accrual | 1,336,643.39 | 1,336,643.39 | ||||
| Decrease | 1,336,643.39 | 1,336,643.39 | ||||
| 1) Disposal/ Scrapping | 1,336,643.39 | 1,336,643.39 | ||||
| Closing balance | ||||||
| Carrying amount | ||||||
| Closing balance | 1,005,245,031.84 | 85,938,523.56 | 501,836,930.49 | 30,136,583.52 | 17,389,678.26 | 1,640,546,747.67 |
| Opening balance | 523,603,172.95 | 24,070,647.63 | 405,783,375.28 | 20,301,768.61 | 20,922,621.19 | 994,681,585.66 |
(2) No fixed assets temporarily idle at the balance sheet date
(3) Fixed assets leased out under finance leases at the balance sheet date
| Items | Cost | Accumulated depreciation | Provision for impairment | Carrying amount |
| Special equipment | 2,642,248.17 | 55,046.84 | 2,587,201.33 | |
| Subtotal | 2,642,248.17 | 55,046.84 | 2,587,201.33 |
(4) No fixed assets leased out under operating leases at the balance sheet date
(5) Fixed assets with certificate of titles being unsettled
| Items | Carrying amount | Reasons for unsettlement |
| Shunde Environmental Protection Industrial Park | 484,310,105.38 | In processing as a new property |
| Lueryuan Exhibition Center and auxiliary works | 102,683,908.90 | In processing |
| Subtotal | 586,994,014.28 |
17. Construction in progress
(1) Details
| Projects | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Shunde Environmental Protection Industrial Park | 392,494,295.41 | 392,494,295.41 | ||||
| Biyang Waste Incineration BOT Project | 219,772,333.93 | 219,772,333.93 | 34,179,399.20 | 34,179,399.20 | ||
| Poyang Waste Incineration BOT Project | 305,691,397.30 | 305,691,397.30 | 99,134,242.08 | 99,134,242.08 | ||
| Jiayu Xingzhou Sewage Treatment BOT Project | 199,194,392.46 | 199,194,392.46 | 176,767,886.50 | 176,767,886.50 | ||
| Tongshan Xingzhou Sewage Treatment BOT Project | 182,492,675.47 | 182,492,675.47 | 153,467,367.40 | 153,467,367.40 | ||
| Tongshan Tongda | 59,219,329.12 | 59,219,329.12 | 42,597,586.07 | 42,597,586.07 | ||
| Projects | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Wastewater Treatment BOT Project | ||||||
| Maoming Sewage Treatment BOT Project | 97,112,573.45 | 97,112,573.45 | 78,770,642.99 | 78,770,642.99 | ||
| Bahrain Right Banner Sewage Treatment BOT Project | 43,350,467.66 | 43,350,467.66 | 42,465,394.81 | 42,465,394.81 | ||
| Yinghe PPP project | 219,613,167.96 | 219,613,167.96 | 100,861,556.23 | 100,861,556.23 | ||
| Construction of employee dormitory in Lueryuan | 47,031,231.64 | 47,031,231.64 | ||||
| West plot construction of Lueryuan North Plant | 335,590.56 | 335,590.56 | 8,248,813.78 | 8,248,813.78 | ||
| Lu’an Kitchen Project | 78,929,760.49 | 78,929,760.49 | ||||
| Changde Zelian PPP Project | 40,884,396.22 | 40,884,396.22 | ||||
| Liling Waste Incineration Project | 60,911,841.93 | 60,911,841.93 | 47,952,884.79 | 47,952,884.79 | ||
| Liling Urban-Rural Sanitation Integrated Project | 36,110,864.53 | 36,110,864.53 | 17,622,404.28 | 17,622,404.28 | ||
| Liling Landfill Project | 15,287,765.22 | 15,287,765.22 | 8,867,794.14 | 8,867,794.14 | ||
| Huayuan Wastewater Treatment Project | 25,632,744.05 | 25,632,744.05 | 1,063,286.00 | 1,063,286.00 | ||
| Tongren Sanitation Integrated PPP Project | 17,434,225.72 | 17,434,225.72 | 148,296,315.67 | 148,296,315.67 | ||
| Jishan Sanitation Integrated PPP Project | 13,485,660.35 | 13,485,660.35 | 8,385,681.60 | 8,385,681.60 | ||
| Bao’an Sanitation Integrated PPP Project | 12,999,292.20 | 12,999,292.20 | ||||
| Anlong Sanitation Integrated PPP Project | 12,272,607.28 | 12,272,607.28 | 10,874,590.34 | 10,874,590.34 | ||
| Foshan Yingshun PPP Project | 8,882,882.68 | 8,882,882.68 | ||||
| Kaili Garbage Station Construction Project | 62,827,728.16 | 62,827,728.16 | ||||
| Loudi Garbage Station Construction Project | 20,811,090.87 | 20,811,090.87 | ||||
| Piecemeal PPP projects | 41,062,933.72 | 41,062,933.72 | 49,745,832.73 | 49,745,832.73 | ||
| Piecemeal projects | 16,218,948.06 | 16,218,948.06 | 35,132,593.18 | 35,132,593.18 | ||
| Equipment to be installed | 28,602,005.95 | 28,602,005.95 | 9,895,056.25 | 9,895,056.25 | ||
| Total | 1,782,529,087.95 | 1,782,529,087.95 | 1,550,462,442.48 | 1,550,462,442.48 | ||
(2) Changes in significant projects
| Projects | Budgets | Opening balance | Increase | Transferred to fixed assets | Transferred to intangible assets | Closing balance |
| Shunde Environmental Protection Industrial Park | 500,000,000.00 | 392,494,295.41 | 84,249,863.98 | 476,744,159.39 | ||
| Biyang Waste Incineration BOT Project | 314,692,600.00 | 34,179,399.20 | 185,592,934.73 | 219,772,333.93 | ||
| Poyang Waste Incineration BOT | 413,059,342.00 | 99,134,242.08 | 206,557,155.22 | 305,691,397.30 |
| Projects | Budgets | Opening balance | Increase | Transferred to fixed assets | Transferred to intangible assets | Closing balance |
| Project | ||||||
| Jiayu Xingzhou Sewage Treatment BOT Project | 196,216,800.00 | 176,767,886.50 | 22,426,505.96 | 199,194,392.46 | ||
| Tongshan Xingzhou Sewage Treatment BOT Project | 197,819,400.00 | 153,467,367.40 | 29,025,308.07 | 182,492,675.47 | ||
| Tongshan Tongda Wastewater Treatment BOT Project | 132,085,538.20 | 42,597,586.07 | 16,621,743.05 | 59,219,329.12 | ||
| Maoming Sewage Treatment BOT Project | 227,465,447.66 | 78,770,642.99 | 18,341,930.46 | 97,112,573.45 | ||
| Bahrain Right Banner Sewage Treatment BOT Project | 75,617,000.00 | 42,465,394.81 | 885,072.85 | 43,350,467.66 | ||
| Yinghe PPP project | 423,744,954.13 | 100,861,556.23 | 137,293,079.88 | 18,541,468.15 | 219,613,167.96 | |
| Construction of employee dormitory in Lueryuan | 65,000,000.00 | 47,031,231.64 | 47,031,231.64 | |||
| West plot construction of Lueryuan North Plant | 44,484,704.00 | 8,248,813.78 | 16,943,017.64 | 24,856,240.86 | 335,590.56 | |
| Lu’an Kitchen Project | 112,000,000.00 | 78,929,760.49 | 78,929,760.49 | |||
| Changde Zelian PPP Project | 172,483,700.00 | 40,884,396.22 | 40,884,396.22 | |||
| Liling Waste Incineration Project | 500,000,000.00 | 47,952,884.79 | 12,958,957.14 | 60,911,841.93 | ||
| Liling Urban-Rural Sanitation Integrated Project | 100,000,000.00 | 17,622,404.28 | 22,469,825.97 | 3,981,365.72 | 36,110,864.53 | |
| Liling Landfill Project | 117,000,000.00 | 8,867,794.14 | 6,419,971.08 | 15,287,765.22 | ||
| Huayuan Wastewater Treatment Project | 53,897,600.00 | 1,063,286.00 | 24,999,617.35 | 430,159.30 | 25,632,744.05 | |
| Tongren Sanitation Integrated PPP Project | 246,433,496.10 | 148,296,315.67 | 42,209,659.74 | 173,071,749.69 | 17,434,225.72 | |
| Jishan Sanitation Integrated PPP Project | 38,745,300.00 | 8,385,681.60 | 6,514,273.35 | 1,414,294.60 | 13,485,660.35 | |
| Bao’an Sanitation Integrated PPP Project | 519,727,300.00 | 337,364,374.38 | 324,365,082.18 | 12,999,292.20 | ||
| Anlong Sanitation Integrated PPP Project | 70,205,700.00 | 10,874,590.34 | 6,677,763.06 | 5,279,746.12 | 12,272,607.28 | |
| Foshan Yingshun PPP Project | 23,000,000.00 | 8,882,882.68 | 8,882,882.68 | |||
| Kaili Garbage Station Construction Project | 110,285,248.02 | 62,827,728.16 | 21,317,665.09 | 84,145,393.25 | ||
| Loudi Garbage Station Construction Project | 40,749,163.35 | 20,811,090.87 | 805,654.39 | 21,616,745.26 | ||
| Piecemeal PPP projects | 49,745,832.73 | 171,735,719.10 | 180,418,618.11 | 41,062,933.72 | ||
| Piecemeal projects | 35,132,593.18 | 68,164,485.97 | 87,078,131.09 | 16,218,948.06 | ||
| Equipment to be installed | 9,895,056.25 | 50,637,517.03 | 23,250,106.56 | 8,680,460.77 | 28,602,005.95 | |
| Total | 1,550,462,442.48 | 1,665,940,366.52 | 611,928,637.90 | 821,945,083.15 | 1,782,529,087.95 |
(Continued)
| Projects | Accumulated input to budget (%) | Completion percentage (%) | Accumulated amount of borrowing cost capitalization | Amount of borrowing cost capitalization in current period | Annual capitalization rate (%) | Fund source |
| Shunde Environmental Protection Industrial Park | 100.00 | 100.00 | 9,466,988.21 | 6,534,169.99 | 5.70 | Self-raised funds and loans from financial institutions |
| Biyang Waste Incineration BOT Project | 74.03 | 73.90 | Self-raised funds | |||
| Poyang Waste Incineration BOT Project | 74.01 | 74.01 | Self-raised funds | |||
| Jiayu Xingzhou Sewage Treatment BOT Project | 100.00 | 100.00 | Self-raised funds | |||
| Tongshan Xingzhou Sewage Treatment BOT Project | 100.00 | 100.00 | 3,888,246.23 | 1,979,986.20 | 5.77 | Self-raised funds and loans from financial institutions |
| Tongshan Tongda Wastewater Treatment BOT Project | 44.83 | 44.83 | Self-raised funds | |||
| Maoming Sewage Treatment BOT Project | 93.40 | 93.00 | 15,406,029.57 | 5,168,545.31 | 4.90 | Self-raised funds and loans from financial institutions |
| Bahrain Right Banner Sewage Treatment BOT Project | 96.00 | 96.00 | Self-raised funds | |||
| Yinghe PPP project | 56.66 | 54.50 | Self-raised funds | |||
| Construction of employee dormitory in Lueryuan | 72.36 | 72.36 | Self-raised funds | |||
| West plot construction of Lueryuan North Plant | 98.00 | 98.00 | Self-raised funds | |||
| Lu’an Kitchen Project | 70.55 | 70.55 | Self-raised funds | |||
| Changde Zelian PPP Project | 23.70 | 23.70 | Self-raised funds | |||
| Liling Waste Incineration Project | 12.18 | 12.18 | Self-raised funds | |||
| Liling Urban-Rural Sanitation Integrated Project | 36.03 | 36.03 | Self-raised funds | |||
| Liling Landfill Project | 85.72 | 85.72 | Self-raised funds | |||
| Huayuan Wastewater Treatment Project | 48.36 | 48.36 | Self-raised funds | |||
| Tongren Sanitation Integrated PPP Project | 77.31 | 77.31 | Self-raised funds | |||
| Jishan Sanitation Integrated PPP Project | 72.63 | 72.63 | Self-raised funds | |||
| Bao’an Sanitation Integrated PPP Project | 70.75 | 70.75 | Self-raised funds | |||
| Anlong Sanitation Integrated PPP Project | 66.02 | 66.02 | Self-raised funds | |||
| Foshan Yingshun PPP Project | 38.62 | 38.62 | Self-raised funds | |||
| Kaili Garbage Station Construction Project | 87.75 | 87.75 | Self-raised funds | |||
| Loudi Garbage Station Construction Project | 54.17 | 54.17 | Self-raised funds | |||
| Piecemeal PPP projects | Self-raised funds | |||||
| Piecemeal projects | Self-raised funds | |||||
| Equipment to be installed | Self-raised funds | |||||
| Total | 28,761,264.01 | 13,682,701.50 |
18. Intangible assets
(1) Details
| Items | Land use right | Franchise | Patent technology | Software | Total |
| Cost | |||||
| Opening balance | 629,024,287.79 | 2,322,292,134.15 | 458,002,651.66 | 24,698,381.65 | 3,434,017,455.25 |
| Increase | 13,489,245.00 | 833,889,756.35 | 9,433,487.53 | 5,434,772.29 | 862,247,261.17 |
| 1) Acquisition | 13,489,245.00 | 2,549,720.44 | 16,038,965.44 | ||
| 2) Transferred in from construction in progress | 819,060,031.30 | 2,885,051.85 | 821,945,083.15 | ||
| 3) Internal research and development | 9,433,487.53 | 9,433,487.53 | |||
| 4) Repurchased assets | 14,829,725.05 | 14,829,725.05 | |||
| Decrease | 1,061.95 | 48,946,213.87 | 168,044.00 | 49,115,319.82 | |
| 1) Disposal/Scrapping | 1,061.95 | 48,946,213.87 | 168,044.00 | 49,115,319.82 | |
| Closing balance | 642,513,532.79 | 3,156,180,828.55 | 418,489,925.32 | 29,965,109.94 | 4,247,149,396.60 |
| Accumulated amortization | |||||
| Opening balance | 61,555,061.12 | 490,679,080.07 | 159,327,805.98 | 11,557,438.33 | 723,119,385.50 |
| Increase | 13,172,299.20 | 269,265,691.86 | 49,737,048.73 | 3,155,032.52 | 335,330,072.31 |
| 1) Accrual | 13,172,299.20 | 263,369,795.68 | 49,737,048.73 | 3,155,032.52 | 329,434,176.13 |
| 2) Due to repurchase | 5,895,896.18 | 5,895,896.18 | |||
| Decrease | 663.72 | 19,976,545.74 | 131,769.20 | 20,108,978.66 | |
| 1) Disposal/Scrapping | 663.72 | 19,976,545.74 | 131,769.20 | 20,108,978.66 | |
| Closing balance | 74,727,360.32 | 759,944,108.21 | 189,088,308.97 | 14,580,701.65 | 1,038,340,479.15 |
| Provision for impairment | |||||
| Opening balance | 24,687,522.85 | 24,687,522.85 | |||
| Increase | 20,185,580.19 | 20,185,580.19 | |||
| 1) Accrual | 20,185,580.19 | 20,185,580.19 | |||
| Decrease | |||||
| 1) Disposal/Scrapping | |||||
| Closing balance | 24,687,522.85 | 20,185,580.19 | 44,873,103.04 | ||
| Carrying amount | |||||
| Closing balance | 567,786,172.47 | 2,371,549,197.49 | 209,216,036.16 | 15,384,408.29 | 3,163,935,814.41 |
| Opening balance | 567,469,226.67 | 1,806,925,531.23 | 298,674,845.68 | 13,140,943.32 | 2,686,210,546.90 |
At the balance sheet date, intangible assets formed through internal research and development account for 0.69% of total closingbalance of intangible assets.
(2) Land use right with certificate of titles being unsettled
| Items | Carrying amount | Reasons for unsettlement |
| Lot 4 in Cao’e Street | 13,466,762.93 | In processing as a new land |
| Subtotal | 13,466,762.93 |
19. Development expenditures
(1) Details
| Items | Opening balance | Increase | Decrease | Closing |
| Internal development expenditures | Others | Recognized as intangible assets | Transferred to profit or loss | balance | ||
| Development expenditures | 7,861,260.14 | 6,021,294.07 | 9,433,487.52 | 4,449,066.69 | ||
| Total | 7,861,260.14 | 6,021,294.07 | 9,433,487.52 | 4,449,066.69 |
(2) Other remarks
| Projects | Capitalization progress | Commencement date | Certificate of capitalization | Closing balance |
| Project A | 100% | 07/19/2019 | Project proposal, project assignment paper, staged summary report | |
| Project B | 100% | 07/01/2019 | Project proposal, project assignment paper, staged summary report | |
| Project C | 40% | 03/15/2020 | Project proposal, project assignment paper, staged summary report | 1,763,287.72 |
| Project D | 30% | 03/28/2020 | Project proposal, project assignment paper, staged summary report | 1,024,782.18 |
| Project E | 50% | 03/05/2020 | Project proposal, project assignment paper, staged summary report | 1,592,468.75 |
| Project F | 10% | 06/25/2020 | Project proposal, project assignment paper, staged summary report | 68,528.04 |
| Total | 4,449,066.69 |
20. Goodwill
(1) Cost
| Investee or events resulting in goodwill | Opening balance | Due to business combination in current period | Decrease due to disposal of subsidiaries | Closing balance |
| Zoomlion Environmental Company | 5,714,428,315.99 | 5,714,428,315.99 | ||
| Green Oriental Company | 78,074,688.12 | 78,074,688.12 | ||
| 佛山市盈峰环境水处理有限公司 (Foshan Yingfeng Environmental Water Treatment Co., Ltd.*) | 316,465,481.91 | 316,465,481.91 | ||
| Shangfeng Industrial Company | 100,455,813.40 | 100,455,813.40 | ||
| Donggang Magnet Wire Company | 14,818,794.95 | 14,818,794.95 | ||
| Total | 6,224,243,094.37 | 6,224,243,094.37 |
(2) Provision for impairment
| Investee or events resulting in goodwill | Opening balance | Increase | Decrease due to disposal of subsidiaries | Closing balance |
| Zoomlion Environmental Company [Note] | 13,209,901.26 | 25,405,362.30 | 38,615,263.56 | |
| Donggang Magnet Wire Company | 14,818,794.95 | 14,818,794.95 |
*
The English name is for identification purpose only.
| Investee or events resulting in goodwill | Opening balance | Increase | Decrease due to disposal of subsidiaries | Closing balance |
| Subtotal | 28,028,696.21 | 25,405,362.30 | 53,434,058.51 |
Note: For impairment loss of goodwill of Zoomlion Environmental Company, as the goodwill of 92,031,026.04 yuan was included inthe acquisition of Zoomlion Environmental Company, which corresponded to the original deferred tax liabilities that recognized dueto appraisal appreciation as at the date of business combination not under common control, provision for impairment of25,405,362.30 yuan was made along with changes in deferred tax liabilities in the current period.
(3) Impairment test process
1) Related information of asset groups or asset group portfolios which include goodwill
| Asset groups or asset group portfolios | Legal entities | Carrying amount of goodwill allocated to the asset groups or asset group portfolios | Carrying amount of asset groups or asset group portfolios | Carrying amount of asset groups or asset group portfolios that include goodwill |
| Sanitation vehicles and equipment manufacturing and sales asset group | Zoomlion Environmental Company (manufacturing and sales of sanitation vehicles and equipment), 长沙中标环境产业有限公司 (Changsha Zhongbiao Environmental Industry Co., Ltd.?) | 11,051,393,640.78 | 1,385,391,437.05 | 12,436,785,077.83 |
| Urban-rural sanitation integrated operation asset group portfolio | Zoomlion Environmental Company (sanitation integrated operation), Green Oriental Company, Huaian Chenjie Environmental Engineering Co., Ltd., and 泌阳县丰和新能源电力有限公司 (Biyang County Fenghe New Energy Power Co., Ltd.*) | 306,455,386.89 | 3,277,373,056.32 | 3,583,828,443.21 |
| Water governance operation asset group | Foshan Yingfeng Environmental Water Treatment Co., Ltd. | 316,465,481.91 | 224,733,923.37 | 541,199,405.28 |
| Fan manufacturing and sales asset group | Shangfeng Industrial Company | 159,547,374.49 | 141,836,086.96 | 301,383,461.45 |
| Subtotal | 11,833,861,884.07 | 5,029,334,503.70 | 16,863,196,387.77 |
Note 1: Goodwill of sanitation vehicles and equipment manufacturing and sales asset group and urban-rural sanitation integratedoperation asset group portfolio included the portion attribution to non-controlling shareholders.Note 2: In December 2018, Zoomlion Environmental Company, which was acquired under business combination under commoncontrol by the Company, had two asset groups, i.e. sanitation vehicles and equipment manufacturing and sales asset group andurban-rural sanitation integrated operation asset group (including waste transfer, landfill and disposal).The assessment on thegoodwill of Zoomlion Environmental Company was based on the fair value of the identifiable net assets as at the end of June 2017under asset-based method in the appraisal report numbered Zhong Rui Ping Bao Zi [2017] 110731042, without considering thesynergy between the urban-rural sanitation integrated operation asset group of Zoomlion Environmental Company and the wasteincineration power generation operation asset group of former Green Oriental Company. After the business combination of ZoomlionEnvironmental Company, as its urban-rural sanitation integrated operation asset group and the waste incineration power generationoperation asset group of Green Oriental Company were similar in terms of business acquisition, production and operation activities,and cash return realization methods, and the Management had started to carry out integrated management, these two asset groupswere identified as the urban-rural sanitation integrated operation asset group portfolio.
?The English names are for identification purpose only.
The original goodwill of Zoomlion Environmental Company in amount of 5.714 billion was re-allocated to the sanitation vehiclesand equipment manufacturing and sales asset group and urban-rural sanitation integrated operation asset group portfolio based on thegross profit ratio contributed by the two businesses, in amount of 5.636 billion yuan and 78 million yuan, respectively.
2) Impairment test process, method and conclusion
① Significant assumptions and basis
a. It is assumed that the assessed entity is a going concern, and there is no significant change in key aspects that affect production andoperation such as business scope, sales model and channels, and the management;b. It is assumed that neither the social and economic environment of the assessed entity nor the relevant laws, regulations, andpolicies of the country and the region where the entity is located have significant changes;c. It is assumed that the business scope, business methods, management models, etc. of the assessed entity are continuously improvedon the basis of consistency, and can be adjusted and innovated with the development of the economy in a timely manner;d. It is assumed that the various products provided by the assessed entity can adapt to market demand, the goals and measuresformulated can be achieved on schedule according to the schedule, and expected benefits will be achieved;e. It is assumed that interest rates, exchange rates, tax bases and tax rates have no major changes within the normal range prescribedby the state.
② Determination method of recoverable amount
The recoverable amount of asset groups and asset group portfolios is estimated based on the business characteristics of different assetgroups or asset group portfolios, which is based on the five-year budget approved by the Management. The revenue growth rate ofthe product production and sales asset group in 2020 is based on the existing orders, historical data and operating budget, while theexpense rate is based on the average expense rate of the previous three years, in combination with the reasonable income growth,capital depreciation and labor cost growth in the future; for operation asset groups or asset group portfolios, due to the largedifference in income and gross profit margin between the investment period and period of maturity of PPP operating projects, theexpected growth rate, stable period growth rate and profit rate of the asset groups and asset group portfolios show an irregulardistribution when multiple projects are run in parallel, and the income, costs and expenses are estimated based on the time to matureoperation and design capacity of each specific project.The recoverable amount of groups and asset group portfolios is calculated based on the discounted expected future operating cashflows of operating long-term assets excluding non-operating assets and liabilities, initial working capital, surplus assets andinterest-bearing liabilities.
③ Key parameter information for adopting future cash flow discount method
| Asset groups or asset group portfolios | Forecast period | Forecast period growth rate | stable period growth rate | Profit margin | Pre-tax discount rate |
| Sanitation vehicles and equipment manufacturing and sales asset group | 5 years | [Note 1] | 0.00% | 15.48%-17.16% | 12.76% |
| Urban-rural sanitation integrated operation asset group portfolio | [Note 2] | [Note 2] | [Note 2] | [Note 2] | 11.63%- 12.16% |
| Water governance operation asset group | [Note 2] | [Note 2] | [Note 2] | [Note 2] | 11.36% |
| Fan manufacturing and sales asset group | 5 years | [Note 3] | 0.00% | 5.91%-6.96% | 11.32% |
Note 1: The revenue growth rate of sanitation vehicles and equipment manufacturing and sales asset group during the forecast periodfrom 2021 to 2025 is 6.58%, 7.12%, 5.25%, 4.07% and 2.81%, respectively (unit price is expected to be stable with a decline, andsales volume changes lead to different growth rates).
Note 2: Please refer to the above determination method of recoverable amount for details.Note 3: The revenue growth rate of fan manufacturing and sales asset group during the forecast period from 2021 to 2025 is 10.10%,
7.19%, 5.29%, 2.99% and 2.00%, respectively.
④ Conclusion of goodwill impairment test
| Asset group or asset group portfolios | Recoverable amount asset group or asset group portfolios that include goodwill | Carrying amount of asset group or asset group portfolios that include goodwill | Goodwill impairment loss attributable to the Company |
| Sanitation vehicles and equipment manufacturing and sales asset group | 12,738,100,000.00 [Note 1] | 12,436,785,077.83 | |
| Urban-rural sanitation integrated operation asset group portfolio | 4,521,775,000.00 [Note 2] | 3,583,828,443.21 | |
| Water governance operation asset group | 542,320,000.00 [Note 3] | 541,199,405.28 | |
| Fan manufacturing and sales asset group | 350,279,688.48 | 301,383,461.45 | |
| Subtotal | 18,152,474,688.48 | 16,863,196,387.77 |
Note 1: The present value of estimated future cash flows (recoverable amount) of sanitation vehicles and equipment manufacturingand sales asset group was based on the appraisal report numbered Zhong Rui Ping Bao Zi [2021] 000413 issued by 中瑞世联资产评估集团有限公司 (HG Shilian Assets Appraisal Group Co., Ltd.
?
).Note 2: The present value of estimated future cash flows (recoverable amount) of urban-rural sanitation integrated operation assetgroup portfolio was based on the appraisal report numbered Zhong Rui Ping Bao Zi [2021] 000408 issued by HG Shilian AssetsAppraisal Group Co., Ltd. and the appraisal report numbered Zhong Guang Xin Ping Bao Zi [2021] 003 issued by 广东中广信资产评估有限公司 (Guangdong Zhongguangxin Assets Appraisal Co., Ltd.
?).Note 3: It is based on the appraisal report numbered Zhong Guang Xin Ping Bao Zi [2021] 002 issued by Guangdong ZhongguangxinAssets Appraisal Co., Ltd.
3) Completion of performance commitment and its effect on goodwill impairment test
From 2018 to 2020, the audited net profit of Zoomlion Environmental Company after non-recurring profit or loss attributable toshareholders of the parent company amounted to 1.105 billion yuan, 1.264 billion yuan, and 1.409 billion yuan, respectively, totaling
3.778 billion yuan, 56 million yuan higher than the commitment, which means the Company fulfilled its performance commitment(calculated based on the accumulated amount for 3 years as agreed).
21. Long-term prepayments
| Items | Opening balance | Increase | Amortization | Closing balance |
| Expenditures on improvement of leased-in fixed assets | 15,131,380.10 | 251,103.07 | 3,648,898.94 | 11,733,584.23 |
| Others | 978,558.78 | 822,043.99 | 830,384.35 | 970,218.42 |
| Total | 16,109,938.88 | 1,073,147.06 | 4,479,283.29 | 12,703,802.65 |
22. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets before offset
| Items | Closing balance | Opening balance |
?
The English name is for identification purpose only.
?
The English name is for identification purpose only.
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Provision for impairment of assets | 589,067,868.14 | 90,264,437.69 | 484,841,437.43 | 74,098,839.50 |
| Unrealized profit from internal transactions | 13,119,836.20 | 1,886,494.71 | 25,068,470.62 | 3,678,789.87 |
| Deductible losses | 20,799,666.14 | 3,119,949.91 | ||
| Total | 622,987,370.48 | 95,270,882.31 | 509,909,908.05 | 77,777,629.37 |
(2) Deferred tax liabilities before offset
| Items | Closing balance | Opening balance | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Accelerated depreciation of fixed assets | 5,789,343.84 | 1,447,335.96 | ||
| Changes in fair value of derivative financial instruments | 639,250.00 | 159,812.50 | ||
| Changes in fair value of financial assets at fair value through profit or loss | 123,048,000.00 | 30,762,849.39 | 212,230,500.00 | 46,963,875.00 |
| Assets appraisal appreciation due to business combination not under common control | 405,268,960.11 | 46,674,772.03 | 454,980,514.43 | 72,919,489.91 |
| Total | 534,106,303.95 | 78,884,957.38 | 667,850,264.43 | 120,043,177.41 |
(3) Details of unrecognized deferred tax assets
| Items | Closing balance | Opening balance |
| Deductible temporary difference | 146,931,501.30 | 119,860,075.63 |
| Deductible losses | 141,639,237.32 | 130,784,839.99 |
| Unrealized profit from internal transactions | 339,581,837.11 | 129,902,841.95 |
| Subtotal | 628,152,575.73 | 380,547,757.57 |
(4) Maturity years of deductible losses of unrecognized deferred tax assets
| Maturity years | Closing balance | Opening balance | Remarks |
| Year 2021 | 35,765.88 | 7,548,263.10 | |
| Year 2022 | 27,961,103.28 | 65,505,274.76 | |
| Year 2023 | 57,039,954.82 | 57,482,722.13 | |
| Year 2024 | 56,602,413.34 | ||
| Subtotal | 141,639,237.32 | 130,536,259.99 |
23. Other non-current assets
(1) Details
| Items | Closing balance | Opening balance [Note] | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Contract assets | 49,013,589.27 | 9,175,693.26 | 39,837,896.01 | 58,262,533.48 | 6,640,238.50 | 51,622,294.98 |
| Advances for long-term assets | 45,933,089.17 | 45,933,089.17 | 35,842,204.27 | 35,842,204.27 | ||
| Receivables for agent construction | 8,518,174.25 | 8,518,174.25 | 8,518,174.25 | 8,518,174.25 | ||
| Total | 103,464,852.69 | 9,175,693.26 | 94,289,159.43 | 102,622,912.00 | 6,640,238.50 | 95,982,673.50 |
Note: Please refer to section III (XXXIV) 1 of notes to financial statements for details on the difference between the opening balanceof current period and the closing balance of preceding period (i.e. December 31, 2019).
(2) Contract assets
1) Details
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Quality guarantee deposit receivable | 49,013,589.27 | 9,175,693.26 | 39,837,896.01 | 58,262,533.48 | 6,640,238.50 | 51,622,294.98 |
| Subtotal | 49,013,589.27 | 9,175,693.26 | 39,837,896.01 | 58,262,533.48 | 6,640,238.50 | 51,622,294.98 |
2) Details on provision for impairment of contract assets
① Details
| Items | Opening balance | Increase | Decrease | Closing balance | |||
| Accrual | Others | Reversal | Write-off | Others | |||
| On an individual basis | |||||||
| On a collective basis | 6,640,238.50 | 2,535,454.76 | 9,175,693.26 | ||||
| Subtotal | 6,640,238.50 | 2,535,454.76 | 9,175,693.26 | ||||
② Contract assets with provision for impairment made on a collective basisVentilation equipment manufacturing industry and environmental integrated industry under age analysis method
| Portfolios | Closing balance | ||
| Book balance | Provision for impairment | Provision proportion (%) | |
| Within 1 year | 23,955,836.31 | 1,197,791.81 | 5.00 |
| 1-2 years | 14,433,576.28 | 1,443,357.63 | 10.00 |
| 2-3 years | 5,041,402.60 | 1,512,420.78 | 30.00 |
| 3-5 years | 1,121,302.08 | 560,651.04 | 50.00 |
| Over 5 years | 4,461,472.00 | 4,461,472.00 | 100.00 |
| Subtotal | 49,013,589.27 | 9,175,693.26 | 18.72 |
24. Short-term borrowings
| Items | Closing balance | Opening balance |
| Credit borrowings | 800,921,295.96 | 638,320,346.15 |
| Guaranteed borrowings | 518,446,764.98 | 222,329,086.77 |
| Mortgaged borrowings | 72,104,019.96 | 62,091,002.69 |
| Guaranteed and mortgaged borrowings | 260,430,637.32 | 330,480,351.87 |
| Guaranteed and pledged borrowings | 4,000,000.00 | 4,000,000.00 |
| Mortgaged and pledged borrowings | 2,002,658.33 | |
| Pledged borrowings | 349,453,030.00 | |
| Total | 1,657,905,376.55 | 1,606,673,817.48 |
25. Held-for-trading financial liabilities
(1) Details
| Items | Opening balance | Increase | Decrease | Closing balance |
| Held-for-trading financial liabilities | 866,300.00 | 810,300.00 | 866,300.00 | 810,300.00 |
| Including: Derivative financial liabilities | 866,300.00 | 810,300.00 | 866,300.00 | 810,300.00 |
| Total | 866,300.00 | 810,300.00 | 866,300.00 | 810,300.00 |
(2) Other remarks
Held-for-trading financial liabilities were the floating losses of metal futures contracts held by the sub-subsidiary Anhui WeiqiElectrical Materials Co., Ltd.
26. Notes payable
| Items | Closing balance | Opening balance |
| Bank acceptance | 3,377,701,187.77 | 2,597,981,590.26 |
| Trade acceptance | 475,474,206.32 | 343,712,590.88 |
| Total | 3,853,175,394.09 | 2,941,694,181.14 |
(2) Other remarks
At the balance sheet date, balances of notes due but unpaid, which were not presented for payment by the holders, totaled 313,659.68yuan.
27. Accounts payable
(1) Details
| Items | Closing balance | Opening balance |
| Payments for goods | 2,983,456,990.78 | 2,210,599,443.61 |
| Payments for engineering and equipment | 342,985,351.65 | 221,909,224.20 |
| Others | 78,382,742.60 | 53,669,184.18 |
| Total | 3,404,825,085.03 | 2,486,177,851.99 |
(2) No significant balance with age over one year.
28. Advances received
(1) Details
| Items | Closing balance | Opening balance [Note] |
| Payments for goods | ||
| Total |
Note: Please refer to section III (XXXIV) 1 of notes to financial statements for details on the difference between the opening balanceof current period and the closing balance of preceding period (i.e. December 31, 2019).
(2) No significant balance with age over one year.
29. Contract liabilities
| Items | Closing balance | Opening balance [Note] |
| Items | Closing balance | Opening balance [Note] |
| Advanced goods payments | 181,051,683.90 | 150,983,008.42 |
| Total | 181,051,683.90 | 150,983,008.42 |
Note: Please refer to section III (XXXIV) 1 of notes to financial statements for details on the difference between the opening balanceof current period and the closing balance of preceding period (i.e. December 31, 2019).
30. Employee benefits payable
(1) Details
| Items | Opening balance | Increase | Decrease | Closing balance |
| Short-term employee benefits | 221,403,931.32 | 1,125,108,045.53 | 1,028,003,858.06 | 318,508,118.79 |
| Post-employment benefits - defined contribution plan | 3,708,506.55 | 19,654,010.40 | 20,008,646.10 | 3,353,870.85 |
| Termination benefits | 3,913,031.07 | 3,913,031.07 | ||
| Total | 225,112,437.87 | 1,148,675,087.00 | 1,051,925,535.23 | 321,861,989.64 |
(2) Details of short-term employee benefits
| Items | Opening balance | Increase | Decrease | Closing balance |
| Wage, bonus, allowance and subsidy | 217,765,407.19 | 1,030,739,891.66 | 938,895,359.19 | 309,609,939.66 |
| Employee welfare fund | 188,802.51 | 38,852,001.13 | 38,183,756.31 | 857,047.33 |
| Social insurance premium | 107,872.67 | 23,255,633.55 | 23,023,052.90 | 340,453.32 |
| Including: Medicare premium | 64,428.17 | 21,016,749.34 | 20,741,190.39 | 339,987.12 |
| Occupational injuries premium | 38,875.63 | 1,670,697.64 | 1,709,376.02 | 197.25 |
| Maternity premium | 4,568.87 | 568,186.57 | 572,486.49 | 268.95 |
| Housing provident fund | 1,285,988.97 | 22,735,531.46 | 22,636,369.71 | 1,385,150.72 |
| Trade union fund and employee education fund | 2,055,859.98 | 9,524,987.73 | 5,265,319.95 | 6,315,527.76 |
| Subtotal | 221,403,931.32 | 1,125,108,045.53 | 1,028,003,858.06 | 318,508,118.79 |
(3) Details of defined contribution plan
| Items | Opening balance | Increase | Decrease | Closing balance |
| Basic endowment insurance premium | 3,322,704.67 | 18,738,874.59 | 19,071,333.80 | 2,990,245.46 |
| Unemployment insurance premium | 385,801.88 | 915,135.81 | 937,312.30 | 363,625.39 |
| Subtotal | 3,708,506.55 | 19,654,010.40 | 20,008,646.10 | 3,353,870.85 |
31. Taxes and rates payable
| Items | Closing balance | Opening balance |
| VAT | 180,356,026.72 | 73,783,692.90 |
| Enterprise income tax | 163,408,107.06 | 101,451,575.83 |
| Individual income tax withheld for tax authorities | 6,099,807.10 | 7,085,391.75 |
| Urban maintenance and construction tax | 11,172,773.45 | 3,999,418.16 |
| Housing property tax | 1,747,769.26 | 811,081.30 |
| Land use tax | 278,724.12 | 433,967.55 |
| Stamp tax | 1,853,506.57 | 1,644,718.29 |
| Items | Closing balance | Opening balance |
| Education surcharge | 4,603,782.22 | 1,746,535.21 |
| Local education surcharge | 2,980,941.01 | 1,118,755.00 |
| Others | 13,505.15 | 44,920.49 |
| Total | 372,514,942.66 | 192,120,056.48 |
32. Other payables
(1) Details
| Items | Closing balance | Opening balance |
| Dividend payable | 9,450,000.00 | |
| Other payables | 443,477,082.48 | 365,423,715.69 |
| Total | 443,477,082.48 | 374,873,715.69 |
(2) Dividend payable
1) Details
| Items | Closing balance | Opening balance |
| 曹国路 (Cao Guolu) | 1,050,000.00 | |
| 绍兴路巧贸易有限公司 (Shaoxing Luqiao Trading Co., Ltd.?) | 4,200,000.00 | |
| 绍兴智赢企业管理有限公司 (Shaoxing Zhiying Enterprise Management Co., Ltd.*) | 2,100,000.00 | |
| 绍兴和盈企业管理合伙企业（有限合伙） (Shaoxing Heying Enterprise Management Partnership (LP)*) | 2,100,000.00 | |
| Subtotal | 9,450,000.00 |
2) No significant balance with age over one year.
(3) Other payables
1) Details
| Items | Closing balance | Opening balance |
| Factoring financing of accounts receivable with recourse right [Note] | 49,160,385.66 | 101,147,928.04 |
| Temporary receipts payable | 208,719,173.08 | 110,738,395.22 |
| Temporary receipts of the employee stock ownership plan phase I | 92,370,003.00 | |
| Security deposits | 72,880,746.04 | 27,827,224.46 |
| Others | 112,716,777.70 | 33,340,164.97 |
| Total | 443,477,082.48 | 365,423,715.69 |
Note: The balance refers to the factoring financing of account receivable made by Zoomlion Environmental Company to thenon-bank financial institutions under the control of Zoomlion Heavy Industry Co., Ltd. However, as non-bank financial institutionshave the right to request Zoomlion Environmental Company to repurchase the accounts receivable if they are overdue, the accountsreceivable shall not be derecognized upon the receipts of corresponding factoring, and the receipts shall be presented under otherpayables (non-bank financial institutions are listed as risk exposures)
2) No significant balance with age over one year.
?
The English names are for identification purpose only.
33. Non-current liabilities due within one year
| Items | Closing balance | Opening balance |
| Long-term borrowings due within one year | 150,862,201.57 | 86,554,242.52 |
| Total | 150,862,201.57 | 86,554,242.52 |
34. Other current liabilities
| Items | Closing balance | Opening balance [Note] |
| Hedging instruments | 7,415,450.00 | |
| Output tax to be debited | 22,448,466.02 | 19,627,791.10 |
| Customer rebates | 25,242,123.71 | 9,879,816.88 |
| Total | 55,106,039.73 | 29,507,607.98 |
Note: Please refer to section III (XXXIV) 1 of notes to financial statements for details on the difference between the opening balanceof current period and the closing balance of preceding period (i.e. December 31, 2019).
35. Long-term borrowings
| Items | Closing balance | Opening balance |
| Guaranteed borrowings | 197,500,000.00 | |
| Pledged borrowings | 81,300,000.00 | 54,600,000.00 |
| Guaranteed and mortgaged borrowings | 94,230,491.81 | 109,492,159.87 |
| Guaranteed and pledged borrowings | 234,212,965.97 | 479,751,010.91 |
| Guaranteed, pledged and mortgaged borrowings | 158,400,000.00 | |
| Total | 765,643,457.78 | 643,843,170.78 |
36. Bonds payable
(1) Details
| Items | Closing balance | Opening balance |
| Convertible corporate bonds | 1,199,466,109.60 | |
| Total | 1,199,466,109.60 |
(2) Current period movements (not including other financial instruments such as preferred shares/perpetual bondsclassified as financial liabilities)
| Bonds | Par value | Issuing date | Maturity | Amount outstanding | Opening balance | Current period issuance |
| Infore convertible bonds | 100.00 | 11/04/2020 | 6 years | 1,476,189,600.00 | 1,457,336,184.17 | |
| Subtotal | 1,476,189,600.00 | 1,457,336,184.17 |
(Continued)
| Bonds | Equity component under split | Par value interest | Interest adjustments | Converted to shares | Closing balance |
| Infore convertible bonds | 266,939,831.65 | 461,056.48 | 8,608,700.60 | 1,199,466,109.60 | |
| Subtotal | 266,939,831.65 | 461,056.48 | 8,608,700.60 | 1,199,466,109.60 |
(3) Please refer to section XIV (II) of notes to financial statements for details on converting conditions and time of
convertible bonds.
37. Long-term payables
| Items | Opening balance | Increase | Decrease | Closing balance | Reasons for balance |
| Special funds for treasury bond projects | 3,000,000.00 | 3,000,000.00 | Funds from conversion of treasury bonds into loans | ||
| Special funds for Jiayu Sewage Treatment Project | 103,080,483.16 | 19,935,291.42 | 123,015,774.58 | Special government funds for PPP projects | |
| Special funds for Tongshan Sewage Treatment Project | 82,320,040.33 | 47,400,000.00 | 129,720,040.33 | Special government funds for PPP projects | |
| Subtotal | 188,400,523.49 | 67,335,291.42 | 255,735,814.91 |
38. Provisions
| Items | Closing balance | Opening balance | Reasons for balance |
| Pending lawsuit | 1,000,000.00 | Provision was made based on the application of the first-instance judgment by 河北澳晗工程咨询有限公司(Hebei Aohan Engineering Consulting Co., Ltd.?) | |
| Contractual credit guarantees | 461,553.82 | ||
| Total | 1,461,553.82 |
39. Deferred income
(1) Details
| Items | Opening balance [Note] | Increase | Decrease | Closing balance | Reasons for balance |
| Government grants | 40,519,289.35 | 61,828,174.00 | 5,612,643.51 | 96,734,819.84 | Government grants related to assets/income |
| Total | 40,519,289.35 | 61,828,174.00 | 5,612,643.51 | 96,734,819.84 |
Note: Please refer to section III (XXXIV) 1 of notes to financial statements for details on the difference between the opening balanceof current period and the closing balance of preceding period (i.e. December 31, 2019).
(2) Details of government grants
| Items | Opening balance | Increase | Grants included into other income [Note] | Closing balance | Related to assets/income |
| Special subsidies for Xiantao Waste Power Generation Project | 11,389,114.20 | 726,531.48 | 10,662,582.72 | Related to assets | |
| Incremental tax incentives for technological transformation | 9,482,800.00 | 948,280.00 | 8,534,520.00 | Related to assets | |
| Urban sewage and garbage treatment facilities and sewage pipe network engineering projects | 5,351,375.15 | 445,536.32 | 4,905,838.83 | Related to assets | |
| Special funds for air pollution prevention and | 1,000,000.00 | 100,000.00 | 900,000.00 | Related to assets |
?The English name is for identification purpose only.
| Items | Opening balance | Increase | Grants included into other income [Note] | Closing balance | Related to assets/income |
| control | |||||
| The fifth batch of special funds for raising manufacturing power in Hunan Province | 1,000,000.00 | 1,000,000.00 | Related to assets | ||
| Xiantao sludge harmless treatment plant | 17,700,000.00 | 17,700,000.00 | Related to assets | ||
| Shouxian Domestic Waste Incineration Power Plant Project | 15,040,000.00 | 1,002,666.71 | 14,037,333.29 | Related to assets | |
| Urban and rural domestic waste transfer, kitchen waste resource utilization and harmless treatment projects | 11,270,000.00 | 211,034.48 | 11,058,965.52 | Related to assets | |
| No. 2 Sewage Treatment Plant and supporting pipe network projects in Daban Town, Bahrain Right Banner | 7,660,000.00 | 7,660,000.00 | Related to assets | ||
| The second batch of awards for rental housing in the high-tech zone | 5,784,474.00 | 5,784,474.00 | Related to assets | ||
| The third batch of subsidies for technological transformation of industrial enterprises | 2,500,000.00 | 2,500,000.00 | Related to assets | ||
| Key projects of enterprise intelligent transformation of 2018 and 2019 | 819,700.00 | 35,737.38 | 783,962.62 | Related to assets | |
| Subsidies for enterprise technological transformation | 1,000,000.00 | 142,857.14 | 857,142.86 | Related to assets | |
| Central special construction supporting funds for Kaili PPP Project | 10,000,000.00 | 10,000,000.00 | Related to income | ||
| Special funds for green manufacturing system solution supplier projects of 2019 | 2,000,000.00 | 2,000,000.00 | Related to income | ||
| Funds for national key R&D program projects of 2017 | 296,000.00 | 54,000.00 | 350,000.00 | Related to income | |
| Subtotal | 40,519,289.35 | 61,828,174.00 | 5,612,643.51 | 96,734,819.84 |
Note: Please refer to section V (IV) 3 of notes to financial statements for details on grants included into profit or loss.
40. Share capital
(1) Details
| Items | Opening balance | Movements | Closing balance | ||||
| Issue of new shares | Bonus shares | Reserve transferred to shares | Others | Subtotal | |||
| Total share | 3,163,062,146.00 | 3,163,062,146.00 | |||||
41. Other equity instruments
(1) Please refer to section XIV (II) of notes to financial statements for basic information of convertible corporate bonds outstandingas of the balance sheet date
(2) Current period movements of convertible corporate bonds outstanding at the balance sheet date
| Items | Opening balance | Increase | Decrease | Closing balance | ||||
| Quantity | Carrying amount | Quantity | Carrying amount | Quantity | Carrying amount | Quantity | Carrying amount | |
| Convertible corporate bonds | 14,761,896.00 | 266,939,831.65 | 14,761,896.00 | 266,939,831.65 | ||||
| Total | 14,761,896.00 | 266,939,831.65 | 14,761,896.00 | 266,939,831.65 | ||||
42. Capital reserve
(1) Details
| Items | Opening balance | Increase | Decrease | Closing balance |
| Share/capital premium | 9,652,714,085.10 | 4,840,900.20 | 1,636,434.07 | 9,655,918,551.23 |
| Other capital reserve | 45,403,677.65 | 12,859,488.20 | 6,439,840.59 | 51,823,325.26 |
| Total | 9,698,117,762.75 | 17,700,388.40 | 8,076,274.66 | 9,707,741,876.49 |
(2) Other remarks
Current increase of share/capital premium in amount of 4,840,900.20 yuan was due to the transfer-in of other capital reserveoriginally arising from share-based payments upon the expiration of the stock incentive vesting period;Current decrease of share/capital premium was due to the following events: 1) in January 2020, the Company acquired 5.20% equityof the subsidiary Shangfeng Industrial Company, and the difference between the acquisition cost and the proportionate share in netassets of Shangfeng Industrial Company from acquisition date or combination date in amount of -2,225,430.97 yuan was includedinto the Company’s share/capital premium; 2) in November 2020, the Company disposed 39.00% equity of the subsidiary JilinZhongfeng Oasis Environmental Development Co., Ltd, and the difference between the disposal consideration and the proportionateshare in net assets of Jilin Zhongfeng Oasis Environmental Development Co., Ltd from acquisition date or combination date inamount of -314,024.80 yuan was included into the Company’s share/capital premium; 3) in January 2020, the Company acquired
18.86% equity of the subsidiary Xiantao Yinghe Environmental Protection Co., Ltd., and the difference between the acquisition costand the proportionate share in net assets of Xiantao Yinghe Environmental Protection Co., Ltd. from acquisition date or combinationdate in amount of 903,021.70 yuan was included into the Company’s share/capital premium.Current increase of other capital reserve was due to the recognition of incentive expenses based on stock incentive plan in amount of13,624,937.21 yuan, of which, 12,859,488.20 yuan was included into capital reserve – other capital reserve, and 765,449.01 yuanwas included into non-controlling interest. Please refer to section XI of notes to financial statements for details. Current decrease ofother capital reserve was due to the following events: 1) in February 2020, the Company transferred 15,326,208 shares thatrepurchased at the end of 2019 to the Company’s special repurchase securities account of employee stock ownership plan at themarket price of 6.42 yuan per share, totaling 98,394,255.36 yuan. The difference between the transfer price and the repurchaseamount of 99,993,195.75 yuan in 2019 amounting to 1,598,940.39 yuan was used to offset capital reserve; 2) please refer to theabove notes to current increase of share/capital premium for details on other decrease of other capital reserve amounting to4,840,900.20 yuan.
43. Treasury shares
(1) Details
| Items | Opening balance | Increase | Decrease | Closing balance |
| Treasury shares | 99,993,195.75 | 8,920,597.83 | 99,993,195.75 | 8,920,597.83 |
| Total | 99,993,195.75 | 8,920,597.83 | 99,993,195.75 | 8,920,597.83 |
(2) Other remarks
Current increase was due to the Proposal on Share Repurchasing Plan approved by the third extraordinary meeting of the ninthsession of the Board of Directors dated April 13, 2020, which decided to repurchase the Company’s shares through centralizedbidding transactions using self-raised funds. In the current period, the Company repurchased 1,137,524 shares in total throughcentralized bidding transactions, and paid a total amount of 8,920,597.83 yuan (excluding transaction costs).Current decrease was due to the Proposal on the Employee Stock Ownership Plan Phase I (Draft) and its Summary deliberated andapproved by the 31
st
extraordinary meeting of the eighth session of the Board of Directors dated October 23, 2019 and the thirdextraordinary shareholders’ general meeting of 2019 dated November 12, 2019, according to which the Company transferred15,326,208 shares that repurchased at the end of 2019 to the Company’s special repurchase securities account of employee stockownership plan at the consideration of 98,394,255.36 yuan. The difference between the transfer price and the repurchase amount of99,993,195.75 yuan in 2019 amounting to 1,598,940.39 yuan was included into capital reserve.
44. Other comprehensive income (OCI)
| Items | Opening balance | Current period cumulative | Closing balance | |||||
| Current period cumulative before income tax | Less: OCI previously recognized but transferred to profit or loss in current period | Less: OCI previously recognized but transferred to retained earnings in current period | Less: Income tax expenses | Attributable to parent company | Attributable to non-controlling shareholders | |||
| Items to be reclassified subsequently to profit or loss | 479,437.51 | 479,437.51 | -479,437.51 | |||||
| Including: Cash flow hedging reserves | 479,437.51 | 479,437.51 | -479,437.51 | |||||
| Total | 479,437.51 | 479,437.51 | -479,437.51 | |||||
45. Special reserve
| Items | Opening balance | Increase | Decrease | Closing balance |
| Work safety fund | 8,699,413.98 | 8,699,413.98 | ||
| Total | 8,699,413.98 | 8,699,413.98 |
46. Surplus reserve
| Items | Opening balance |