ANNUAL REPORT 2015 Annual Report 2015 .suntien.com w ww Contents Chairman’s Statement 2 Corporate Profile 4 Financial Highlights and Major Operational Data 13 Management Discussion and Analysis 16 Human Resources 33 Biographies of Directors, Supervisors and Senior Management 35 Report of the Board of Directors 41 Corporate Governance Report 59 Report of the Board of Supervisors 72 Independent Auditors’ Report 75 Consolidated Statement of Profit or Loss and Other Comprehensive Income 77 Consolidated Statement of Financial Position 78 Consolidated Statement of Changes in Equity 80 Consolidated Statement of Cash Flows 81 Notes to Financial Statements 83 Definitions 180 Corporate Information 183 China Suntien Suntien Green Green Energy Energy Corporation Corporation Limited Limited Annual AnnualReport 2015 Report 2015 Chairman’s Statement 2 China Suntien Green Energy Corporation Limited Annual Report 2015 Chairman’s Statement Dear Shareholders, In 2015, due to the continual weakening of the global economic recovery and complicated economic situation, international trade contracted and financial risks increased. China’s economy was also at an unfavourable stage of “triple transition”, during which the economic growth decelerated with mounting downward pressure. In the meantime, the Company also faced with complicated and severe situations such as price reduction in wind power, declining demand of natural gas and difficulties encountered by infrastructure projects. The Board of Directors of the Company strived for making progress while maintaining stability, proactively responding to market changes and making preparations and plans so as to direct all employees to unite together and forge ahead. We also continued to speed up the process to seize market resources inside and outside the province, accelerated the progress of project construction and expanded the domestic and overseas financing channels, which greatly enhanced internal management and steadily optimized the business structure of the Company. In 2015, the Group realized total sales of wind and photovoltaic power generation of 2,974 million kWh; sold 1,127 million cubic meters of natural gas; realized revenue of RMB4,224 million, total profit of RMB200 million and net profit of RMB189 million, of which the net profit attributable to the owners of the Group amounted to RMB168 million. Looking forward to 2016, the Group will continue to vigorously develop clean energy businesses such as gas, wind power and solar energy so as to consolidate and expand its market structure of diversified business; speed up the professional management of project construction and promote the production and operation of Approved Projects as soon as possible; expand the domestic and overseas financing channels and attract low-cost capital to be used for project construction; continue to optimize internal management and promote the construction of “informative and standardized” operation and maintenance; strive to become a listed company with more solid foundation in basic management, more reasonable business structure, more diversified sources of profit growth and healthier and more sustainable development capacity to create greater values for shareholders and partner. Cao Xin Chairman Shijiazhuang, PRC, 24 March 2016 3 China Suntien Green Energy Corporation Limited Annual Report 2015 Corporate Profi le China Suntien Green Energy Corporation Limited was established on 9 February 2010 with contribution made by the promoter shareholders HECIC and HECIC Water. The Company was listed on the Main Board of the Hong Kong Stock Exchange on 13 October 2010. The Group is a leading company in the development and utilization of clean energy in northern China and is the largest natural gas distributor in Hebei Province, as well as the largest wind power operator in the province. The Group is primarily engaged in the exploration and utilization of clean energy and new energy, with two major business segments: the natural gas business and the wind power business. The Group possesses natural gas transmission and ancillary facilities in Hebei Province, and sells natural gas through natural gas distribution channels. As at 31 December 2015, the Group owned 3 long-distance natural gas transmission pipelines, 8 high-pressure branch pipelines, 27 urban gas projects, 14 distribution stations, 8 gate stations, 7 CNG refilling stations, 5 CNG primary filling stations. In 2015, the sales volume of natural gas of the Group was 1,127 million cubic meters. Engaged in the planning, development and operation of wind farms as well as the sale of electricity, the Group owns wind power projects in the regions of Hebei, Shanxi, Xinjiang, Shandong, Yunnan and Inner Mongolia, etc. Based in Hebei, the Group has invested and developed wind power projects across the country, and actively seeks suitable investment projects overseas. As at 31 December 2015, the Group had wind power consolidated installed capacity of 2,093.6 MW as well as interests in installed capacity of 1,922 MW. In 2015, the gross wind power generation of the Group was 3,161 million kWh with 1,887 utilization hours. In 2015, China has experienced a slowdown in economic growth and was under downward pressure. However, the government constantly promulgated a series of measures to actively support the development of clean energy and new energy. In the critical period that requires for the urgent need for air pollution control, structural upgrade of domestic industries and energy structure adjustment, the Group will be in line with the direction of government policies at the right time to actively develop its business, expand the industrial scale, focus on the development of natural gas and wind power, and to explore any other clean energy and new energy, with a view to constantly improving the profitability of the Group. 4 China Suntien Green Energy Corporation Limited Annual Report 2015 Corporate Profi le 5 China Suntien Green Energy Corporation Limited Annual Report 2015 Corporate Profi le 1. CORPORATE STRUCTURE As at 31 December 2015, the corporate structure of the Group was as follows1: 100% 100% 100% 100% 100% Junan Suntien Wind Hebei Fengning CIC Wuming Suntien Jianshui Suntien Wind Ruoqiang Suntien Energy Co., Ltd. New-Energy Co., Ltd. Green Energy Co., Ltd. Energy Co., Ltd. Green Energy Co., Ltd. 100% 100% 100% 100% 100% Suntien Green Energy Suntien Green Energy Chaoyang Suntien Shenzhen Suntien Green Investment Energy Investment Co., Ltd. HECIC New-energy Co., Ltd. (Hong Kong) New Energy Co., Ltd. Corporation Limited (Beijing) Co., Ltd. 51% 50% 55% 51% Shandong Suntien Yuanjian Hebei Suntien Guohua Hebei Natural Huludao Liaohe Oil Field Wind Energy Co., Ltd. Gas Co., Ltd.2 Gas Company Limited Gas Co., Ltd. 6 China Suntien Green Energy Corporation Limited Annual Report 2015 Corporate Profi le 100% 100% 100% 100% 100% Fuhai Suntien Green Xingyang Suntien Wind Weihui Suntien Green Tongdao Suntien Wulian County Suntien Energy Co., Ltd.6 Energy Co., Ltd. Energy Co., Ltd. Green Energy Co., Ltd. Wind Energy Co., Ltd. 70% 92% 88.64% 70% Yunnan Pushi Natural Suntien Green Energy Heilongjiang Suntien Suntien Liquefied Natural Gas Co., Ltd. (Fengning) Co., Ltd. Hadian New Energy Gas Shahe Co., Ltd. Investment Co., Ltd. 69% 30% 20% 10% Suntien Hebei Solar Hebei Jinjianjia Natural Heibei Fengning Pumped HECIC Group Energy Development 5 Gas Co., Ltd.3 Storage Co., Ltd.4 Finance Company Limited Co., Ltd. Notes: (1) Please note that the corporate structure chart covers first-tier subsidiaries of the Company only. Subsidiaries on second-tier and below are not listed. Details of subsidiaries of the Company and material associates and material joint ventures of the Group are set out in Notes 1, 17 and 18 of the Financial Statements. (2) Hebei Suntien Guohua Gas Co., Ltd. is a joint venture of the Company (3) Hebei Jinjianjia Natural Gas Co., Ltd. is a joint venture of the Company (4) Hebei Fengning Pumped Storage Co., Ltd. is an associated company of the Company (5) HECIC Group Finance Company Limited is a long-term investment company of the Company (6) Fuhai Suntien Green Energy Co., Ltd. was incorporated in Fuhai County, Altay Prefecture, Xinjiang on 1 June 2015, with a registered capital of RMB1,000,000, which mainly operates the new energy projects of wind power, solar power and nuclear energy and is not financed by the Company 7 China Suntien Green Energy Corporation Limited Annual Report 2015 Corporate Profi le 2. NATURAL GAS AND WIND POWER PROJECTS OF THE GROUP (1) Summary of the major natural gas projects of the Group Ownership Project Project held by Hebei type location Natural Gas Project summary Long-distance Zhuozhou City to Handan 100% Transmits natural gas from our natural gas supplier transmission City 1 to our various branch pipelines and city gas pipeline pipeline networks Gaoyi County to Qinghe 100% Supplies natural gas by our natural gas supplier to County 2 pipelines from Gaoyi County to Qinghe County and surrounding cities Suning County to Shenzhou 100% Supplies natural gas by our natural gas supplier to City 3 pipelines from Suning County to Shenzhou City and surrounding cities City gas project Shahe City 100% Distributes natural gas to retail customers of Shahe City and surrounding areas Qinghe County 80% Distributes natural gas to retail customers of the area under the administration of Qinghe County Xinji City 100% Distributes natural gas to retail customers of the area under the administration of Xinji City Jinzhou City 100% Distributes natural gas to