二零二零年年報 ANNUAL REPORT 2020 ANNUAL REPORT 2020 年報 CONTENTS 2 Chairman’s Statement 68 Combined Income Statement 3 General Manager’s Report 70 Combined Statement of Cash Flows 5 Corporate Profile 72 Combined Statement of Changes in Equity 6 Financial Summary 74 Statement of Financial Position of Parent Company 7 Management Discussion and Analysis 76 Income Statement of Parent Company 23 Report of the Directors 78 Statement of Cash Flows of Parent Company 40 Report of the Supervisory Committee 80 Statement of Changes in Equity of Parent Company 42 Corporate Governance Report 82 Notes to Financial Statements 53 Directors, Supervisors and Senior Management 245 Definitions 61 Auditor’s Report 247 Corporate Information 66 Combined Statement of Financial Position 2 JILIN PROVINCE CHUNCHENG HEATING COMPANY LIMITED ANNUAL REPORT 2020 CHAIRMAN’S STATEMENT Dear Shareholders, In 2020, China achieved significant results in coordinating the prevention and control of the pandemic and the economic and social development. The building of a new development landscape was accelerated and high-quality development was further implemented. The PRC is the first among the world’s major economies to achieve positive economic growth in 2020, with gross domestic product reaching a new high of RMB100 trillion. As the PRC’s economy continues to grow and its policies gradually opening up, the nation’s heat supply industry maintains a strong momentum of development. Demand for heat in cities and towns of the PRC continues to grow in line with the progress of urbanisation, heat supply technology gradually integrates with actual production, heat supply concepts gradually converge with environmental protection, and quality of heat supply is improving in tandem with public’s access, with the overall heat supply market showing a good development trend. The development potential of the heat supply market remains huge with a focus on such development elements such as area expansion, technological innovation and environmental standard improvement. Throughout the past year, the Group had always regarded its corporate mission of “leading the development of the industry and sincerely serving the society (引領行業發展，真誠服務社會)” as its inner driving force, and has been fulfilling its social responsibility as well as sincerely serving the community. At the height of the pandemic in the region, the Group made every effort to ensure the stability of heat supply in its service area to protect and safeguard people’s work and livelihood. In recent years, as the nation vigorously promotes clean energy heating methods and deploys environment plans aiming to “win the war on keeping the skies blue (打贏藍天保衛戰)”, the Group has actively seized the opportunity of industry reform, actively explored clean heating models, comprehensively promoted scientific and innovative technologies, and contributed positively to the prosperous development of the heat supply industry. From research and development of every practical heating technology, to application and upgrade of the “smart heating network (智慧熱網)”, and exploration of the “China Clean Heating 2025 (中國清潔供熱2025)” model, the Group strives to drive production with technology and reward society with blue skies. In 2020, the Group achieved steady growth for its operating results and continued to enhance its brand value. On 3 December, the Group was awarded the “Most Valuable Listed Company for Investment (最具投資價值上市公司)” in the 10th China Securities Golden Bauhinia Awards (中國證券金紫荊獎). In the future, the Group intends to make a push for the A-share market, with a view to enabling more investors, both domestic and overseas, to share the benefits of the Group’s development. In 2021, the world economy is expected to fully recover and the PRC’s economy will continue to grow steadily. Demand for heat will continue to grow, driven by eco-environmental protection, the concept of green development and environmental policies such as the construction of “beautiful rural areas”. The Group will continue to upgrade its smart heating technology and deepen the concept of ultra-low emission to further enhance energy efficiency and promote the stable and orderly development of the Group. With the support of all Shareholders, I believe that the management team of the Company is poised to achieve better results and create greater value for our Shareholders and society. Liu Changchun Chairman 3 JILIN PROVINCE CHUNCHENG HEATING COMPANY LIMITED ANNUAL REPORT 2020 GENERAL MANAGER’S REPORT Dear Shareholders, In 2020, the Group fully analysed the development trend of China’s heating industry and, under the leadership of the Board of Directors, refined the management of heating services, vigorously developed technological innovation, continuously increased safety investment, effectively controlled the impact of the COVID-19 pandemic and achieved steady growth in operating results. 1. Business Operations As at 31 December 2020, the revenue from heat supply business amounted to RMB1,427.83 million, representing a year-on-year increase of 48.62%. The revenue from construction, maintenance and design services amounted to RMB469.12 million, representing a year-on-year decrease of 21.90%. Liquidity and cash flow of the Group remained healthy. 2. Production Safety The Group attaches great importance to work safety. The Group has invested RMB8.15 million in safety production for the year, representing a year-on-year increase of 58.25%. 5 safety committee meetings and 7 production safety meetings were held; 48 safety trainings and 68 emergency drills were organized; and 22 inspections on grassroot level led by the management and 182 inspections led by the safety management department were conducted with a potential hazard rectification rate of 100%. There were no production safety incidents throughout the year. 3. Scientific and Technological Innovation In 2020, the Group focused on strengthening the transformation of scientific and technological achievements and continued to strengthen the upgrading of the smart heating network system by enhancing the innovation capability of the Group, and is currently focusing on two research and development projects, namely the “Smart Heating Network System (智慧熱網系統)” and the “3D Pipeline System (三維管線系統)”. The Group had obtained a total of 20 invention patents, utility model patents and appearance patents issued by the National Intellectual Property Administration and 63 computer software copyright certificates issued by the National Copyright Administration during the year. 4. Cost Control The Group has adopted aggressive and effective cost control measures to improve the optimisation level of cost management. Through the monitoring and management of the annual operating plan, costs, including production costs, procurement costs and labor costs, were effectively controlled. In 2020, the inspection and maintenance work for a total of 13,900 heat-supply facilities and the repair and renovation work of primary distribution pipelines of 3.6 km were conducted. Meanwhile, the improvement of internal management and training together with the application of innovative technologies such as the “Smart Heating and Energy Saving Monitoring Platform (智慧供 熱節能監控平台)” have effectively enhanced employee productivity and further reduced labor costs. 5. Merger and Acquisition In 2020, the Group successfully completed two major acquisitions in line with its corporate development plan: the acquisition of 50% equity interest in Xixing Energy and the acquisition of 100% equity interest in Yatai Heating. Upon completion of the acquisitions, Xixing Energy and Yatai Heating became wholly-owned subsidiaries of the Group, enabling the Group to rapidly expand the scale of its principal business, increasing its heating area to 60.2 million sq.m. which represented an increase of 52.41%, increasing its heat supply customers to 505,788 households which represented an increase of 57.89%, and significantly enhance its overall corporate strength and brand influence. 6. User Services The Group has always adhered to the concept of comfortable heating and implemented a grid-based management model for the heat service areas to further enhance the quality and efficiency of heating services. As at the end of 2020, a total of 886 WeChat heat supply service accounts were created, covering approximately 212,500 users. Moreover, the Group proactively carried out home visit activities and visited over 300,000 household users throughout the year. The combination of online and offline channels has enhanced service quality with an overall decrease in user complaint rate by 18.8%, which indicates a significant improvement in society’s recognition. 4 JILIN PROVINCE CHUNCHENG HEATING COMPANY LIMITED ANNUAL REPORT 2020 GENERAL MANAGER’S REPORT 7. Construction, Maintenance and Design Services In recent years, our nation’s fixed asset investment has gradually shifted its focus towards municipal infrastructure construction, and infrastructure construction have been steadily increasing for public service industries. By leveraging on this opportunity, the Group’s construction, maintenance and design services business shall grew steadily in 2020. In addition to the overall closeout of works related to the “three supplies and property management (三供一業)” projects, the Group actively competed in the market and was awarded a number of municipal projects on heat supply maintenance and renovation and heat pipeline relocation, which helped enhance our project management level and brand image while generating revenue