B_table indent_3.5 mm N_table indent_3 mm Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. (a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 3898) 2019 ANNUAL RESULTS ANNOUNCEMENT The board of directors (the “Board”) of Zhuzhou CRRC Times Electric Co., Ltd. (the “Company” together with its subsidiaries, the “Group”) is pleased to announce the audited results of the Group for the year ended 31 December 2019. This announcement, containing the main text of the 2019 annual report of the Company, complies with the relevant requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) in relation to information to accompany preliminary announcements of annual results. The 2019 annual report of the Company will be despatched to the H-Share holders of the Company and will also available for viewing on the website of the Stock Exchange at http://www.hkex.com.hk and on the website of the Company at http://www.tec.crrczic.cc on or before 30 April 2020. By order of the Board Zhuzhou CRRC Times Electric Co., Ltd. Li Donglin Chairman Zhuzhou, China, 27 March 2020 As at the date of this announcement, our chairman of the Board and executive director is Li Donglin, our vice chairman of the Board and executive director is Yang Shouyi, our other executive directors are Liu Ke’an and Yan Wu, our non-executive director is Zhang Xinning, and our independent non-executive directors are Chan Kam Wing, Clement, Pao Ping Wing, Liu Chunru, Chen Xiaoming and Gao Feng. Contents 2 | Financial Highlights 3 | Chairman’s Report 5 | Management Discussion and Analysis 12 | Directors, Supervisors and Senior Management 23 | Corporate Governance Report 39 | Directors’ Report 58 | Supervisory Committee’s Report 60 | Auditors’ Report 65 | Consolidated Statement of Financial Position 67 | Consolidated Statement of Profit or Loss and Other Comprehensive Income 69 | Consolidated Statement of Changes in Equity 71 | Consolidated Statement of Cash Flows 73 | Company’s Statement of Financial Position 75 | Company’s Statement of Profit or Loss and Other Comprehensive Income 76 | Company’s Statement of Changes in Equity 78 | Company’s Statement of Cash Flows 80 | Notes to the Financial Statements 278 | Glossary 284 | Basic Corporate Information Notes: 1. The financial data in this Annual Report are prepared under PRC Accounting Standards; 2. This Annual Report is prepared in Chinese and English. In the event of any inconsistency between the Chinese version and the English version, the Chinese version shall prevail. Financial Highlights Financial Highlights CONSOLIDATED STATEMENT OF PROFIT OR LOSS HIGHLIGHTS Year ended 31 December 2019 2018 2017 2016 2015 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Revenue 16,304,207 15,657,900 15,143,709 14,657,820 14,800,035 Operating profit 2,901,285 2,942,893 2,816,361 2,971,620 3,270,376 Total profit 2,932,613 2,967,131 2,874,309 3,320,250 3,456,495 Net profit 2,657,559 2,650,535 2,562,210 2,902,686 2,978,237 Net profit attributable to shareholders of the Parent 2,659,164 2,612,488 2,523,471 2,893,142 2,965,278 Net profit attributable to non-controlling interests (1,605) 38,047 38,739 9,544 12,959 Basic earnings per share (RMB Yuan/share) 2.26 2.22 2.15 2.46 2.52 CONSOLIDATED STATEMENT OF FINANCIAL POSITION HIGHLIGHTS As at 31 December 2019 2018 2017 2016 2015 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Total assets 32,985,615 29,034,522 26,649,648 23,735,276 22,932,182 Total liabilities 10,789,336 8,911,008 8,593,083 7,664,369 8,914,713 Net assets 22,196,279 20,123,514 18,056,565 16,070,907 14,017,469 2 ZHUZHOU CRRC TIMES ELECTRIC CO., LTD. 2019 Annual Report Chairman’s Report Chairman’s Report Dear Shareholders, I am pleased to present the annual report of the Company for the year ended 31 December 2019. On behalf of the Board of Directors, I would like to express my sincere gratitude to all shareholders for your continual support and care. PERFORMANCE REVIEW The Group’s revenue in 2019 amounted to RMB16,304.2 million (2018: RMB15,657.9 million), representing an increase of 4.1% year-on-year. Net profit attributable to Shareholders of the Parent Company amounted to RMB2,659.2 million (2018: RMB2,612.5 million), representing an increase of 1.8% year-on-year. Basic earnings per share amounted to RMB2.26 (2018: RMB2.22), representing an increase of 1.8% year-on-year. The Board considered and approved the profit distribution plan for 2019 to distribute cash dividends of RMB529.0 million in total to all Shareholders, equivalent to the distribution of RMB0.45 per share (tax inclusive) based on the total number of 1,175,476,637 shares of the Company. The proposed dividend to be distributed is subject to the approval of the Shareholders at the general meeting. BUSINESS REVIEW AND OUTLOOK Business Review Year 2019 was a critical year for the 13th Five-Year Plan. China Railway Corporation was restructured, and China State Railway Group Co., Ltd. was established. As the reform continued, fixed asset investment in China’s railway industry remained at high level, and passenger and cargo volumes continued to increase. The Company thoroughly implemented the “Three-year Action Plan” (2018-2020) to steadily improve the operation efficiency and benefits. In respect of the business of railway equipment, the Company maintained a stable market position for major railway equipment products and launched new products and technologies to the market. In particular, the Company consolidated its position in locomotive traction system market with increase in market shares, and achieved outstanding results for products of power head EMUs. It also delivered the bulk orders of China’s standard electric multiple units with a speed of 350km/h, and achieved whole-platform assembling of traction system and ancillary system for electric multiple units with a speed of 250km/h. The Company received the first order for LKJ-15C and launched new products such as intelligent driving system into the market. With the founding of Taiyuan Times, the Company steadily consolidated the railway engineering resources of CRRC. In respect of the business of urban railway equipment, our market share continued to have a leading position in the traction system market. The Company made breakthrough in products supplied by third parties for orders of repair and maintenance of traction system at later stage of product life cycle. It also smoothly expanded the business of non-traction system products, achieved breakthrough for high-end urban rail engineering vehicle, and received orders for various new products and technologies. Changsha Metro Line 4, which adopted the Company’s self-developed CBTC signal system, was opened for operation with outstanding performance. In respect of the business of new industry, the Company smoothly expanded in new energy vehicle market for its semi-conductor products, implemented corporate operation for semi-conductor assets, and commenced construction of automotive parts assembly project. The Company also launched the electric drive ROV, a marine engineering product, into the market, and made a breakthrough in development of new technology for underwater mining. The smart valley factory for electric drive system for EVs was completed and commenced operation, and received its first overseas order. 2019 Annual Report ZHUZHOU CRRC TIMES ELECTRIC CO., LTD. 3 Chairman’s Report In the past year, the Company continued to consolidate its business operation and steadily increased the scale and benefit of business development. It also continued to put efforts in technology research and development, which significantly enhanced the vitality and motivation of technology innovation. The Company implemented refined management to improve operation quality and efficiency, and continuously enhanced the awareness and effectiveness of collaborative management and control. Outlook China issued the Outline for Developing China’s Strength in Transportation (《交通強國建設綱要》) and proposed a major strategic decision to develop China’s strength in transportation. Year 2020 is critical for facilitating the development of China’s strength in transportation, and transportation industry will maintain stable development with favourable momentum. In 2020, the Group will adhere to the development idea of “operating with high quality and high efficiency”, capture opportunities in the strategic period of national development and the period of the “Double-Hundred Actions”, strengthen the refined management, and develop competitive advantages with intelligent and integrative “big system”, thereby strengthening concentric and diversified businesses and forming new driver for the Group’s development. In respect of the business of railway equipment, the Company will strive to ensure the bulk delivery of major products such as power head EMUs and standard EMUs with a speed of 250km/h, and put great efforts in expansion in inter-city rail market and new railway markets. In respect of the business of urban railway equipment, the Company will deeply implement the philosophy of “operating cities”, carry out targeted marketing initiatives, develop in emerging industries, and expand the scope of cross-platform repair and maintenance business. The Company will also facilitate the promotion of CBTC systems in order to achieve the rapid and sustainable development of signal and communication business.