Untitled

As time enriches value, collaboration enhances efficiency.

With 26 years of experience in cross-border investment and

asset management, CEL remains steadfast, resonating with the era and

advancing in harmony with diverse sectors.

Our journey is marked by resilience and a commitment

to excellence, steering us towards new horizons

in cross-border asset management.

COVER STORY

UNITED IN EXCELLENCE

MOVING IN TANDEM WITH THE ERA

93 Independent Auditor’s Report

99 Consolidated Statement of Profit or Loss

100 Consolidated Statement of Comprehensive Income

101 Consolidated Statement of Financial Position

103 Consolidated Statement of Changes in Equity

104 Consolidated Statement of Cash Flows

105 Notes to the Financial Statements

190 Financial Summary

191 Particulars of Major Properties

192 Corporate Information

TABLE OF CONTENTS

FINANCIAL

SECTION

Company Overview

Chairman’s

Statement

Risk Management

Report

2023 Business

Development Highlights

Management Discussion

and Analysis

Directors’ Report

2023 Review

Corporate Governance

Report

Directors and

Senior Management

MOVING IN HARMONY

WITH THE TIMES

In step with the times, CEL proactively engages with the

new development trend, nurturing innovative productive

forces to fuel high-quality growth with dynamic energy.

UNITY

AND COLLABORATION

Leveraging high-efficiency teamwork and extensive

investment experience, CEL’s esteemed business team

creates enduring value for shareholders and investors.

ADVANCING

TOWARDS EXCELLENCE

With robust strategic determination and a visionary

investment approach, CEL focuses on its core business,

navigating through industry cycles and embarking on a

new journey in cross-border asset management.

COMPANY OVERVIEW

China Everbright Limited (“CEL” or the “Company”, together with its subsidiaries, collectively the

“Group”) is a leading cross-border asset management and Private Equity (“PE”) investment company in

China, and a listed company in Hong Kong with asset management and investment of private funds as the

core businesses. With more than 26 years of experience in cross-border asset management and PE

investment, CEL has been assessed as one of the top PE firms in China several times. China Everbright

Group Ltd. (“Everbright Group”) is the largest shareholder of the Company, indirectly holding 49.74% of

the shares of CEL.

For Fund Management Business, as at 31 December 2023, total assets under management (“AUM”)

CEL reached approximately HK$126.2 billion with 73 funds. CEL has a diverse assets management

product portfolio covering primary market funds, secondary market funds, Fund of Funds and Secondary

Funds, nurturing many promising enterprises with high growth potential alongside with investors. CEL is

positioned to serve the “Dual Circulation” new development pattern, leveraging its competitive edge on

equity investment to provide direct financing and contribute to the development of the real economy.

For Principal Investments Business, CEL has nurtured China Aircraft Leasing Group Holdings Limited

(“CALC”), the largest independent aircraft operating lessor in China; nurtured China Everbright Senior

Healthcare Company Limited (“Everbright Senior Healthcare”), a renowned senior healthcare industrial

group in China with consolidating multiple mid-to-high-end senior healthcare enterprises; and invested in

Chongqing Terminus Technology Co., Ltd. (“Terminus”), a company cultivating in the Artificial Intelligence

(“AI”) and Internet of Things (“IoT”) industry. Meanwhile, CEL also invests in financial assets to achieve a

balance in return and liquidity in its Principal Investments Business in due course. In addition, CEL holds a

portion of the equity interests of China Everbright Bank Company Limited (“China Everbright Bank”) and

Everbright Securities Company Limited (“Everbright Securities”) as Cornerstone Investments.

Total assets under management refer to the committed capital of fund investors (including CEL as an investor) in the case of

primary market investment and Fund of Funds market investment, and refer to the net asset value of funds in the case of

secondary market investment.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

49.74%

Divesied funds including primary market funds (including

real estate private funds under EBA Investments),

secondary market funds and Fund of Funds

Invests in both domestic and overseas markets, including

USD and RMB-denominated products

Total assets under management amounting to

approximately HK$126.2 billion, of which seed capital

committed by CEL accounts for approximately 27%, with an

amount of approximately HK$33.6 billion

Key Investee Companies: focusing on aircraft full life-cycle

services, senior healthcare services and AIoT

Financial Investments: nancial investments in equity,

debts and structured products

Cornerstone Investments: a portion of the equity interests

in China Everbright Bank and Everbright Securities

The total asset value of the Principal Investments Business

amounting to approximately HK$32.1 billion

2023 BUSINESS DEVELOPMENT HIGHLIGHTS

REVIEW OF BUSINESS HIGHLIGHTS IN 2023

In 2023, China’s private equity continued to slump under pressures. Amid a complex and volatile internal and external

environment, foreign capital outflow accelerated due to various factors, including high interest rates, and a lack of investor

confidence, resulting in a historic low in the overall market valuation. The slump in the capital market affected the overall

performance of the Company, especially unrealised losses from valuation declines. Despite the depressed market, the

Company actively addressed adverse factors, conducted strategic transformation and advanced layout for future business, and

therefore achieved stabilization and improvements in many aspects. During the reporting period, CEL continued to accelerate

its transformation towards an “Asset-light” strategy, steadily furthering the establishment and fundraising of new funds. CEL

successfully completed the establishment of CEL Yixing Fund () and the registration of CEL Kunshan Fund (

) . Meanwhile, CEL fully exited from projects with exceptional exit opportunities, exiting HK$7.458 billion in aggregate and

recorded overall gains of approximately HK$2.776 billion. Among these, exits from the CEL Global Investment Fund and the

Walden CEL Global Fund brought in performance fee of HK$153 million and HK$175 million, respectively. During the year under

review, with a focus on core responsibilities and business, the Company optimised its investment layout with its principle of

“grasping new developing opportunities, implementing new development concepts, constructing new development patterns

and promoting high-quality development” ( ). As such, CEL was able to adjust its existing portfolio and optimise

incremental investments. During the reporting period, the Company’s Fund Management Business turned losses into profits

due to the improvement in performance and increased valuation of some investment projects. As of the end of 2023, there are

235 post-investment projects among the primary market funds under management, covering high-growth industries such as

healthcare, new energy, semiconductors and high-end manufacturing.

During the reporting period, CEL focused on its core responsibilities and businesses, reinforced in fundraising, investment,

management and exit business, strengthened internal control and continued to improve risk resistance capacity. CEL also

promoted its high-quality development through gradual transformation and achieved significant progress in the following areas:

Core business

Proceeding fundraising steadily: Despite difficulties in fundraising, CEL Yixing Fund

was newly established and raised funds of HK$1.324 billion successfully. The new

fund will mainly focus on industries including energy conservation, environmental

protection, integrated circuit, and new energy, with a vision to serving the economy of

the Yangtze River Delta region.

Achieving a notable gain from exits: Recouped HK$7.458 billion in total from the exit

business including Ambrx, Henan BCCY Environmental Energy, Reactor

Microelectionics, Haitai New Energy, Three’s Company Media and XPENG Motors,

realising an overall gain of approximately HK$2.776 billion against costs, and recorded

a multiple on invested capital (MOIC) of approximately 1.6 x.

Winning multiple authoritative awards: CEL secured several annual industry awards,

including “TOP8 Best Return State-Owned Direct Investment Institutions of 2023”

(2023 TOP8), “TOP10 Private Equity Investment Institutions

Most Coveted by LPs in China”( LP TOP10), “TOP30

Best PE Institutions in the Guangdong-Hong Kong-Macao Greater Bay Area”(

PE TOP30), and “TOP20 Best Market-oriented Fund of Funds in China”

(TOP20).

Project reserves

Supporting the development of innovation and technology in Hong Kong: The

incubator at China Everbright Hong Kong Innovation Centre introduced 7 new

enterprises and attracted the first foreign enterprise, exceeding the annual target. It

also successfully held the “New Opportunities in Hong Kong’s Innovation and

Technology & Everbright’s New Development Strategy” seminar.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

Serving key regional development: CEL strengthened its layouts in key industries

in line with major regional developments. Continuous efforts were made to deepen

the layouts in the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the

Guangdong-Hong Kong-Macao Greater Bay Area, driving the high-quality

development of these regions.

Serving national strategies: CEL placed an emphasis on major national strategic

areas such as technology, green development, manufacturing, and strategic

emerging industries, increased investment in the real economy. CEL further

promoted the deep integration of business chains and expanded new economic

growth opportunities.

Operational capability

Optimizing debt structure: In the third quarter of 2023, CEL successfully issued the

first and second tranches of medium-term notes with a total issuance scale of RMB6

billion. The second tranche of medium-term notes represented the Company’s first

perpetual bonds issued domestically, completing the replacement of overseas US

dollar-denominated perpetual capital securities, continuously optimising the capital

structure.

Enhancing corporate governance: CEL strengthened and improved various risk

control and corporate governance frameworks, aimed at building a more robust and

effective corporate governance structure. CEL also enhanced efficiency and safety

during decision-making and business processes, ensuring the long-term stable

development of the enterprise.

Environmental, social and

governance (ESG)

Fulfilling social responsibilities: Focused on Hong Kong’s “grassroots families” and

“youth groups”, CEL organised volunteer activities such as “Grassroots School

Sports Fun Day” ( ), “Grassroots Schools STEM Day” (

STEM ), Mid-Autumn Festival gift bag distribution under the theme of “A Joyful

Mid-Autumn Festival for Family Reunion” (), and “Everbright’s Care

for the Community” ( ). CEL fully supported the Hong Kong

delegation’s participation in the first National Student (Youth) Games held in Guangxi,

promoting the development of sports in Hong Kong.

Improving ESG management policy continuously: CEL continued improving and

optimising the ESG management policy by issuing separate and self-contained ESG

reports to disclose information in relation to responsible investment and TCFD. CEL’s

MSCI ESG rating was promoted to BBB level, achieving continuous improvement in

ESG ratings.

The Company’s Panda Bonds insurance terms during the year in 2023 are set out in the table below:

Issuance date Financing arrangements and uses of proceeds Issuance size

(RMB)

September 2023 Issuance of 2023 perpetual medium term notes, the proceeds from which

after deducting the underwriting fees for the first year were used to

redeem the US$300 million senior perpetual capital securities of the

Company.

2 billion

August 2023 Issuance of 2023 first tranche medium term notes, the proceeds from

which (after deducting the underwriting fee for the first year) were used

for the repayment of the Company’s indebtedness and the related interest

expenses.

4 billion

2023 Business Development Highlights | Continued

TOTAL AMOUNT OF INCOME

(HK$ hundred million)

(LOSS)/INCOME FROM INVESTMENTS

(HK$ hundred million)

INCOME FROM CONTRACTS

WITH CUSTOMERS

(HK$ hundred million)

DIVIDEND PAYOUT RATIO

(%)

2019 2020 2021 2022

55.19

55.92

59.85

(44.84)

2023

16.61

2019 2020 2021 2022

6.12

5.40

6.59

8.43

2023

7.92

2019 2020 2021 2022

36.2%

36.5%

38.0%

2023

N/A

2019 2020 2021 2022

37.24

43.38

43.15

(58.86)

2023

(4.89)

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

BASIC (LOSS)/EARNINGS PER SHARE

(HK$)

(LOSS)/PROFIT ATTRIBUTABLE TO

SHAREHOLDERS OF THE COMPANY

(HK$ hundred million)

GEARING RATIO

(%)

TOTAL EQUITY ATTRIBUTABLE TO

SHAREHOLDERS OF THE COMPANY

(HK$ hundred million)

2019 2020 2021 2022

70.7%

63.9%

68.4%

86.9%

2023

95%

2019 2020 2021 2022

415.91

454.37

469.36

344.89

2023

309.90

Note:

It is calculated as interest-bearing debt (including bank loans + notes payable + bonds payable)/total equity.

2019 2020 2021 2022

1.33

1.34

1.53

(4.42)

2023

(1.14)

2019 2020 2021 2022

22.7

22.64

25.73

(74.43)

2023

(19.23)

2023 REVIEW

BUSINESS DEVELOPMENT

In 2023, in the face of complex internal and

external environment, CEL took the initiative to

respond and actively develop, achieving stability

while making progress, showing a trend of

stabilization and recovery in many aspects, and

the Company’s foundation for high-quality

development has been further consolidated.

Important Business Developments

Xiao i Robot, a leading Chinese cognitive intelligence company

invested by the Venture Capital and New Energy Fund Department

of CEL, was officially listed on NASDAQ in the United States.

The first phase of Fund-of-Funds (that is Investment Series

Fund-of-Funds) has been fully funded, reflecting a substantial progress of the

cooperation between CEL and the Yixing Municipal Government in the field of funds.

Guangzhou CEL Guangzhou-Hong Kong-Macao Youth Venture

Fund “Guangzhou CEL Fund-of-Funds” managed by CEL Fund-

of-Funds jointly organized the Guangzhou Government and

Enterprise Seminar, “Working Together to Develop the Future

with Technologies”, with the Guangzhou Science and

Technology Bureau, which helped accurately connecting

investment projects with the government investment promotion

policies, implementing the national strategy of the Guangdong-

Hong Kong-Macao Greater Bay Area, and assisting the high-

quality development of Guangzhou.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

CEL successfully issued the first and second tranches of medium-term notes in 2023 and continued to

optimize its capital structure.

“Kunshan Fund”, a fund of ( ) under CEL in Kunshan Development

Zone, has completed the first paid-in capital contribution and registration with the Asset Management

Association of China, marking the completion of the establishment of Kunshan Fund.

4Paradigm, China’s largest platform-centric artificial intelligence solution provider invested by CEL’s New

Economy Fund, was officially listed on the Hong Kong Stock Exchange.

Dekon Food and Agricultural Group invested by CEL’s

Consumer Fund was officially listed on the Mainboard of the

Hong Kong Stock Exchange.

MSCI, the international authoritative index agency, announced the 2023

ESG (environmental, social and governance) rating results of CEL. With

its continued excellent performance in ESG, CEL’ s MSCI ESG jumped to

BBB level, achieving continuous improvement.

CEL sponsored the activity organized by the Hong

Kong Young Scientists Association, “Millions of

Youths Seeing the Motherland — Thousands of

Doctors Travel to China”.

2023 REVIEW | Continued

CEL organized employee representatives to visit the

“Photo Exhibition to Commemorate the 45th Anniversary

of Reform and Opening Up and the 10th Anniversary of

the Joint Construction of the Belt and Road Initiative”

held in the Hong Kong Convention and Exhibition Center.

CEL actively responded to the call of the Hong Kong SAR

government and actively participated in the youth

development program, “Strive and Rise Programme” by

inviting 100 students and mentors to watch the Hong Kong

Ballet’s “La Bayadère” performance to promote art and

culture and expand the horizons of Hong Kong youth.

CEL and HandsOn, a local social enterprise,

organized the first “Grassroots School Sports

Fun Day” and the second “Grassroots Schools

STEM Fun Day” to encourage students to

exercise and study hard, cultivate their interest in

science, and grow up actively and healthily.

CEL continues to care for the community and grassroots

families, and organized a volunteer team to donate

material packages to households in subdivided housing in

Kwun Tong District.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

AWARDS AND HONOURS IN 2023

In 2023, CEL and its professional funds won a

number of authoritative awards and honours in

the industry, affirming CEL’ s status as an

industry-leading cross-border asset

management and investment institution.

Awards Received by the Company

CEL was awarded the title of “Top 8 State-owned Direct

Investment Institutions in 2023” by China-fof.com.

CEL was awarded the titles of “Top 30 Private Equity Funds in the

Guangdong-Hong Kong-Macao Greater Bay Area” and “Top 100

State-owned Investors” by ChinaVenture for 2023.

CEL was selected among the “Top 50 Influential PE Investment

Institutions in China”, “Top 50 Influential State-owned Investment

Institutions in China” and “Top 100 Influential Investment

Institutions in China” by China Venture Capital Research Institute

(“CVCRI”) for2023.

2023 REVIEW | Continued

CEL was ranked the 7th in “Top 10 Investment Institution Soft Power GP in 2023” by

FOFWEEKLY.

Received the title of “2023 Best Returns State-owned Market-oriented

FoFs Top 7” by china-fof.com.

Awards Received by CEL’s Professional Funds

CEL Fund-of-Funds (“FoF”):

Received the titles of “Top 20 Chinese FoFs”, “Top

30 Most Popular FoFs Among GPs” and “Top 30

Venture Capital LPs in China” from ChinaVenture

in 2023.

Received the title of “China’s most GP-focused market-based

FoF” from 36kr.com.

Received the title of “Top 20 Best Market-Based FoFs in

China in 2022-2023” from Chinese Venture.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

CEL New Economy Fund received the title of “Soft Power Ranking

of Investment Institutions — New Economy TOP20” from

FOFWEEKLY.

Funds managed by China Everbright Assets Management Limited, a secondary market fund

management platform:

Everbright Convertible Opportunities Fund received the “Best Asian (excluding Japan) Fixed-

income Hedge Fund (3-year)”, “Best Asian (excluding Japan) Fixed-income Hedge Fund (5-

year)” and “Asian (excluding Japan) Fixed-income Hedge Fund (5-year)” awards from Insights

& Mandates.

Corporate Social Responsibility and Human Resources Awards

CEL and China Everbright Charitable Foundation were

awarded the “Caring Company” and “Caring

Organisation” logos for the 13th consecutive year.

Awarded the “Happy Company 5 years+”

logo for the 9th consecutive year.

Awarded the “Sport-Friendly Action”

Decal for the 4th consecutive year.

Won the Bronze Award of the “Privacy-Friendly Awards 2023” from

the Office of the Privacy Commissioner for Personal Data, Hong Kong

for the first time.

CHAIRMAN’S STATEMENT

decided to transform towards engaging in fund management

business in 2010. This decision enabled the Company to

record a rapid growth as it diligently consolidated its resilient

development cornerstone. In 2023, China’s private equity

investment industry encountered various challenges in terms

of fundraising, investment and exit, with increasing entry

barriers and accelerating sector differentiation and

realignment. Against this backdrop, the operations of the

Company improved compared to 2022, although overall

profitability was still materially impacted. Facing difficulties

and challenges such as insufficient demand from the

macroeconomy and a complex and volatile external

environment, the Company remained confident and

committed. With a focus on its principal asset management

business, the Company adhered to its prudent approach for

serving the “Dual-Circulation” new development pattern,

promoting high-quality development of investee companies

and fully supporting the national strategies and the real

economy. After years of rapid growth, CEL is at a critical

period of adjustment characterised by multiple overlapping

phases. This adjustment involves reviewing and optimising

the sustainable development of existing businesses, and

exploring the inherent and potential expansion of asset

management business.

In 2023, affected by the dampened and unbalanced economic

recovery around the world amidst complicated and ever-

changing regional situations, the global economic

development decelerated for the third consecutive year. It

remains a significant challenge for the world’s major

economies to effectively strike a balance between “curbing

inflation” and “sustaining economic stability”. At the annual

meeting of the World Economic Forum in 2024, Børge

Brende, the president of the World Economic Forum, stated

that China, with its enormous market capacity, would

continue to be a major engine for global economic growth.

Looking back on 2023, China’s economy picked up a steady

development momentum, with stable improvement in supply

and demand, efficient transformation and upgrade, overall

stability in employment and prices, effective protection of

people’s livelihood, and solid progress in high-quality

development. The GDP achieved a year-on-year growth of

5.2%, successfully meeting the main anticipated target.

Being a cross-border asset management and private equity

investment company growing alongside Hong Kong, CEL has

weathered many market cycles and challenges over the past

26 years and continued to enhance its core competitiveness,

laying a solid foundation for its development. The Company

has embarked on the private equity business since 2004 and

Laying the foundation for

development, steering the course of

transformation steadily,

and advancing firmly on the path of

high-quality development

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

FACILITATING STRATEGIC TRANSFORMATION TO

STIMULATE A VARIETY OF DEVELOPMENT

FORCES

A robust development foundation is key to the Company’s

continuous growth and resilience against market fluctuations.

In 2023, the entire staff of CEL made arduous efforts as the

Company maintained its strategic direction and further

promoted innovations with an aim to remain stable amidst

cyclical changes of the industry. The Company concentrated

its efforts on its asset management business while expanding

its development concepts in 2023. Focusing on developing

fund business, raising proceeds, identifying highlight

performance and branding, the Company strived to refine,

strengthen and optimise its asset management business.

Efforts were made to explored light asset business directions

with development foundations and potential. The Company

also deepened its reforms in the asset management sector

and explored ways to increase the asset management scale

of primary and secondary markets at home and abroad.

Leveraging its advantages in venture capital and equity

investments, the Company expanded the reserve of projects

with core competitiveness. It also guided more financial

resources towards promoting technological innovation,

advanced manufacturing, green development and other areas,

enabling its investment portfolio to focus on industries that

feature competitive advantages and potential for growth.

Operating fundamentally within the asset management

sector, the Company carried out in-depth research on industry

investment strategies and bolstered its analysis of business,

industries and enterprises to enhance its investment and

research capabilities. This approach enabled the Company to

seize long-term investment yields while mitigating risks

associated with cross-cycle investments. Committed to

supporting the implementation of both “bringing in” and

“going out” policies, the Company captured major

opportunities presented by the high level of financial liberation

and the internationalisation of Renminbi. This commitment

was part of a continuous drive of the Company to enhance its

comprehensive financial service capabilities.

ANCHOR IN ASSET MANAGEMENT TO PROMOTE

EFFICIENT FINANCIAL DEVELOPMENT

Despite the adverse conditions of the asset management

sector, the Company was able to achieve several major

accomplishments. Firstly, the Company overcame significant

fundraising pressure and launched new funds with proceeds

of approximately HK$1.324 billion. It steadily promoted the

establishment of several new funds including the Zhejiang

Manufacturing Sub-Fund and CEL Infrastructure Investment

Fund II. Secondly, the Company prudently captured the

windows of investing in new energy, semiconductors and

other industries and identified high-quality investment

projects such as IOPSILION and Ganzhou HPY, which were

awarded national awards. Thirdly, its three investee

companies, namely Dekon Food and Agriculture, Fourth

Paradigm and Xiao-i Robot, were successfully listed,

strengthening the effectiveness of its financial services for

the real economy. Fourthly, the Company was presented with

a number of authoritative industry awards and continuously

received recognition from the industry, including 2023 Top 8

Best Returns State-owned Direct Investment Institutions,

2023 Top 50 Influential State-owned Investment Institutions

in China and 2023 Top 100 Influential Investment Institutions

in China. Its FoFs business also received the honour of

“China’s most GP-focused market-based FoF”.

In terms of strategic layout in China, CEL has also recorded

satisfactory performance. In the Guangdong-Hong Kong-

Macao Greater Bay Area, China Everbright Hong Kong

Innovation Centre surpassed its annual objective for corporate

integration, which marked a significant milestone with the

settlement of the first foreign enterprise within the zone. The

Company successfully co-hosted the Hong Kong Science and

Technology Seminar ( ) and the Guangzhou

Government and Enterprise Seminar (). It also

established the Hengqin project group, promoting the

construction of the talent training base of China Everbright in

the South China region. In the Yangtze River Delta region, the

CEL Yixing Industrial Investment FoFs (

) was established in collaboration with the Yixing

Government, successfully securing the initial phase of funding

amounting to RMB1.2 billion. The first closing of CEL

Kunshan Fund was also completed, with the initial phase of

funding amounting to RMB300 million. In the central and

western regions, investment deployment for new materials,

lithium batteries, advanced manufacturing and other sectors

was expedited. Along the “Belt and Road” region, CALC, a

key investee company of CEL, delivered two ARJ21 aircraft

from COMAC to Indonesia, supporting the international

business expansion of China’s domestic aircraft industry.

Chairman’s Statement | Continued

SUPPORTING PUBLIC WELFARE INITIATIVES AND

ACTIVELY PARTICIPATING IN CHARITABLE

ACTIVITIES TO BENEFIT THE COMMUNITY

For the benefit of the community and with a commitment to

public welfare, CEL coordinates charitable activities and fulfills

its social responsibilities. In terms of charitable activities for

the community, CEL focuses its efforts on grassroots families

and youth groups in Hong Kong. Volunteer teams of the

Company are gathered on a quarterly basis to visit grassroots

schools and communities. Their volunteer activities include

“Grassroots School Sports Fun Day” ( ),

“Grassroots School STEM Day” ( STEM ), Mid-

Autumn Festival gift bag distribution under the theme of “A

Joyful Mid-Autumn Festival for Family Reunion” (“

” ) and “Everbright’s Care for the

Community” ( ). The Company actively

participates in the Strive and Rise Programme, a youth

development campaign, in which it has recommended its

employees to take part as mentors and invited Hong Kong

students and teachers to watch performances by the Hong

Kong Ballet. It fully supported the Hong Kong delegation

participating in the 1st National Student (Youth) Games held

in Guangxi in November, promoting the development of

sports in Hong Kong. In terms of social responsibility, the

Company continuously deepens assistance for targeted

groups and supports rural revitalisation. Further building on its

achievements in poverty alleviation, the Company has

launched and promoted various rural revitalisation measures,

and organised activities to facilitate the distribution of

agricultural products and enhance the income of farmers.

Regarding its care for employees, the Company organises

cultural activities such as craft making, parent-child activities,

cultural heritage campaigns and other special cultural events

in celebration of major festivals such as Spring Festival,

Women’s Day, Mother’s Day, Youth Day, Children’s Day and

Mid-Autumn Festival. To mark the “919” CEL Day (“919”

), the Company hosted celebration activities across

offices in five regions to foster an entrepreneurial spirit.

DEEPENING ESG STRATEGIES TO APPLY

CONCEPTS TO PRACTICE

CEL has always placed great emphasis on sustainable

development and social responsibility. It has published

reports regarding its sustainable development for 12

consecutive years since 2011. Based on the concept of long-

term sustainable development, the Company has established

an ESG committee with a top-down structure to carry out

ESG governance work in an integrated and systematic

manner and incorporate ESG principles into the business

decision-making process of the Company. The ESG

committee also fully participates in fulfilling the goal of

“Green Everbright” of Everbright Group and implementing

the “carbon peak and neutrality” strategy of China. As a

leading cross-border asset management enterprise in China,

the Company has gradually incorporated ESG principles into

its management decision-making process and further

enhanced its ESG management level. Highly recognised by

rating agencies, the Company achieved a two-notch upgrade

in MSCI ESG ratings to BBB. This reflects that the ESG

management of CEL has been regarded highly by the capital

market, and affirms the long-term investment value of the

Company.

STEPPING UP RISK PREVENTION EFFORTS WITH

PRUDENT MEASURES TO MITIGATE POTENTIAL

RISKS

In 2023, the Company continued to improve its compliance

management capabilities and took the initiative to adapt to

more rigorous and stringent financial regulations in general.

Its structure was further streamlined for better internal

control and compliance management to ensure that its

business development complies with regulations. The

Company strengthened and refined various risk control and

corporate governance frameworks, aiming to build a more

robust corporate governance structure while improving its

decision-making efficiency and the security of its business

procedures. In addition, with optimised organisational

structure, well-established work mechanisms and more

effective information technology initiatives, the Company

maintained an efficient decision-making and organisational

operation mechanism. Project exit measures were also

bolstered to maximise cash flow and increase cash reserves.

strengthen asset-liability maturity alignment management,

develop contingency plans in a timely manner, and enhance

risk resistance capabilities.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

2023 was an extraordinary year. The Company has made its

utmost effort to deliver remarkable and hard-earned track

record. Recently, several international organisations and

commercial institutions have successively raised their growth

forecasts for China, casting a “vote of confidence” in the

economy of the China. CEL firmly believes that with the

steady improvement of the Chinese economy and the

continuous optimisation of the capital market environment,

the private equity industry in China will successfully navigate

through the current difficult period. CEL, with its professional

investment team, unique cross-border platform advantages,

sophisticated investment experience in industry and project

reserves, will continue to strictly follow market rules and

policy directions. Striving to closely align with national

strategies, the Company insists on serving the national

strategies and the real economy. It will further enhance its

project management and risk control capabilities in order to

capture opportunities during in the industry’s recovery phase

and achieve high-quality development.

Laying the foundation for development means remaining

resilient amidst changes, staying clear-headed in the face of

challenges, and maintaining sharpness in competition. This

foundation represents the past of CEL and also sets the tone

for future development. The focus of the Company is on

stability, establishing a solid base before making

breakthroughs, adhering to core responsibilities and

businesses, and continuously advancing its transformation

towards light-asset, high-quality development. As a participant

in the capital market, CEL remains firmly optimistic about

China’s economy. It will actively contribute to the financial

strength of the new era and place an emphasis on cross-

border investment and asset management. In pursuit of long-

term growth potential of specific industries from the

perspective of China, the Company will strive to integrate its

business and finance to serve the high-quality development

of China’s economy, share the development benefits of

China, and continuously create greater value for shareholders.

Yu Fachang

CHAIRMAN

22 March 2024

MANAGEMENT DISCUSSION & ANALYSIS

In 2023, CEL actively addressed complex and

volatile market, focused on core

responsibilities and businesses, reinforced in

fundraising, investment, management and

exit, strengthened internal control, improved

risk resistance capacity and conducted

strategic transformation actively, so as to

promote high-quality development.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

REVIEW AND ANALYSIS

Macro-economic and Industry Review

Global economy experienced a downshift of growth rate in 2023, with a declining growth rate for two consecutive years.

Developed economies saw a significant slowdown, while growth rates of emerging economies remained at a similar level

compared to 2022. Under the spillover effect of the Federal Reserve’s interest rate hikes, the spot exchange rate of the

Renminbi (“RMB”) against the US dollar (“USD”) fell by 1,406 points in 2023, representing a decline of 2.02%. Benefiting from

the post-pandemic recovery of the supply chain, global inflation is cooling down in an orderly manner. Although the economic

growth has slowed, it remains resilient. Faced with a complex and volatile internal and external environment, China has

tightened its macro-control, adhering to the overall principle of seeking progress while maintaining stability. With various

measures in place, the economic recovery in China has gradually improved. The growth rate of export-oriented economies such

as the Asia-Pacific region has gradually stabilized, providing important support for the global economic recovery. As the effects

of macroeconomic policies gradually unfold, China shows an ongoing economic recovery, driving a revival in trade with relevant

partners with major anticipated goals achieved. The Gross Domestic Product (GDP) reached RMB126 trillion, representing an

increase of 5.2% compared to 2022.

Reviewing the performance of major global stock markets in 2023, the Nasdaq index showed a gain of 44.2%, the highest

among major global stock indices; the Nikkei 225 gained 28.2% during the year, ranking second with the largest annual increase

since 2013; the Italian FTSE MIB index gained 28.0%, ranking third. The Chinese capital market was relatively weak, affected

by multiple factors such as the Federal Reserve’s monetary policy, geopolitical situations, and expectations of internal and

external economic. The Shanghai Composite Index fell by 3.7% during the year, and the ChiNext Index fell by more than 19.4%

during the year; the Hong Kong Hang Seng Index fell by 13.8% for the fourth consecutive year; the Hang Seng Technology

Index fell by 8.8% for the third consecutive year.

The China’s equity investment market continued to slump in 2023 due to macroeconomic influences. According to China

Venture (), the number of funds decreased by 4.7% year-on-year, with the fundraising market continuing its downturn

for years, with the subscribed capital of newly established funds decreasing by 9.4% year-on-year. The expansion and

penetration for the Government guiding funds was accelerated. Investment activities also slowed, decreasing by 12% year-on-

year in 2023. As for sectors that remained active, electronic information segment saw a 35% increase in investment cases. In

terms of exits, 415 Chinese enterprises successfully went public domestically and abroad through IPOs, while the exit rate of

return dropped to 374%.

Management Discussion & Analysis | Continued

FINANCIAL PERFORMANCE IN 2023

Income

Key income items

(in HK$ hundred million) 2023 2022 Change

Income from contracts with customers,

mainly including: 7.92 8.43 (6%)

— Management fee income 1.82 2.66 (32%)

— Performance fee and

consultancy fee income 3.77 3.90 (3%)

Net loss from investments,

mainly including: (4.89) (58.86) 92%

— Interest income 6.60 5.64 17%

— Dividend income 9.92 21.24 (53%)

— Realised (loss)/gain on investments (0.13) 0.46 N/A

— Unrealised loss on investments (21.28) (86.34) 75%

Income/(loss) from other sources 11.02 (0.75) N/A

Share of profits less losses of associates 2.31 6.17 (63%)

Share of profits less losses of joint ventures 0.25 0.17 47%

Total amount of income 16.61 (44.84) N/A

During the reporting period, the Group’s income from contracts with customers decreased by 6% as a result of, among others,

a decrease in net asset value of secondary market funds and certain funds entering into the exit period. In addition, total

amount of income

of HK$1,661 million in 2023 turned around since net loss from investments decreased significantly, whereas

a loss of HK4,484 million was recorded over the same period last year.

The year-on-year change in income was mainly due to the following factors:

(1) In 2023, the Group’s income from contracts with customers was HK$792 million, representing a decrease of HK$51

million when compared with the same period last year. Specifically, management fee income was HK$182 million,

representing a decrease of HK$84 million when compared with the same period last year. It was mainly because of

newly established funds still in fundraising stage, cessation of management fee from certain funds since entering into

exit period, redemption of secondary market funds from certain investors, and exit of certain funds, leading to the decline

in AUM as well as the decline in management fee income. Additionally, performance fee and consultancy fee income

were HK$377 million, representing a decrease of HK$13 million when compared with the same period last year.

Total amount of income is calculated as income from contracts with customers + net loss from investments + income/(loss) from other

sources + share of profits less losses of associates + share of profits less losses of joint ventures. “Total amount of income” is a measure

used by the management of the Group for monitoring business performance and financial position. It may not be comparable to similar

measures presented by other companies.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

(2) The Group’s net loss from investments was HK$489 million, whereas net loss from investments of HK$5,886 million

was recorded during the same period last year. Specifically, dividend income was HK$992 million, representing a year-on-

year decrease of HK$1,132 million, which was mainly due to a non-recurring dividend income of approximately of HK$812

million incurred from exit in early 2022. Realised loss on investments was HK$13 million, whereas realised gain from

investments of HK$46 million was recorded during the same period last year. Unrealised loss on investments was

HK$2,128 million, representing a significant reduction of loss by HK$6,506 million as compared with the same period last

year. The loss was mainly because (i) in Principal Investments Business, the unrealised loss of HK$1,799 million recorded

from financial investments (as at the end of 2022, the carrying value of financial investments was HK$8,640 million)

mainly due to valuation decline of certain investment projects; and recorded an unrealised loss of HK$448 million from

the decrease in valuation of Key Investee Companies (as at the end of 2022, the carrying value of the Key Investee

Companies was HK$2,793 million); (ii) in Fund Management Business, unrealised loss on primary market investments

was HK$93 million which was mainly as a result of decrease in market value or valuation of certain projects invested (as

at the end of 2022, the carrying value of primary market investment was HK$15.509 billion); as affected by the increase

in market price, the secondary market investments recorded an unrealised gain of approximately HK$150 million (as at

the end of 2022, the carrying value of secondary market investments was HK$4,054 million); unrealised gain on FoFs

investments was HK$62 million (as at the end of 2022, the carrying value of FoFs investments was HK$7,646 million).

(3) During the reporting period, the Group’s share of profits less losses of associates was HK$231 million, representing a

decrease of HK$386 million when compared with the same period last year. The loss attributable to Everbright Jiabao

increased by HK$601 million when compared with the same period last year, while the profit attributable to Everbright

Securities increased by HK$193 million when compared with the same period last year.

Income from Key Business Segments

Income from key business segments

(in HK$ hundred million) 2023 2022

— Income/(loss) from Fund Management Business 10.01 (23.49)

— Income/(loss) from Principal Investments Business 6.60 (21.35)

Total amount of income/(loss) 16.61 (44.84)

By business segment, the income from Fund Management Business of the Group during the reporting period was HK$1,001

million, whereas a loss of HK$2,349 million was recorded during 2022. Compared with a floating loss of HK$5,047 million in

2022, an unrealised gain of Fund Management Business of HK$119 million was recorded in 2023, due to the good performance

and increased valuation of certain investment projects held by the funds. Thus the income from Fund Management Business

improved significantly. The income from Principal Investments Business was HK$660 million (a loss of HK$2,135 million in

2022), in which the unrealised loss decreased to approximately HK$2,247 million from HK$3,587 million in 2022, it was

principally due to the further decline in market value and annual valuation of principal investment projects compared with last

year affected by market. In addition, the dividend income from China Everbright Bank and share of profit of Everbright Securities

in 2023 was HK$1,212 million in aggregate, representing an increase of HK$151 million as compared with the same period last

year.

Management Discussion & Analysis | Continued

Earned Management

Fee Income

(in HK$ hundred million)

presented in

the financial

report

Elimination

of management

fee income from

consolidated

funds

Management

fee income

received by

associates/joint

ventures

Other

accounting

adjustments

Earned

Management

Fee Income

(a) (b) (c)

Primary market 1.56 0.73 1.57 0.10 3.96

Secondary market 0.13 0.25 – 0.06 0.44

FoFs 0.13 1.11 – 0.07 1.31

Management fee income 1.82 2.09 1.57 0.23 5.71

For the purpose of resource allocation and business performance evaluation, the management of the Group adopts Earned

Management Fee Income as an additional financial measurement indicator. Earned Management Fee Income refers to the

management fee income received by the Group as a fund manager in accordance with relevant agreements of fund

management.

During the reporting period, management fee income as presented in the financial report was HK$182 million. After making

adjustments

between the Earned Management Fee Income recognised by the Group for the reporting period and the

management fee income presented in accordance with the Hong Kong Financial Reporting Standards (the total amount of three

adjustments was HK$389 million), Earned Management Fee Income of the Group was HK$571 million, representing a year-on-

year decrease of 26.8%. Specifically, Earned Management Fee Income of primary market was HK$396 million, representing a

year-on-year decrease of 32%; Earned Management Fee Income of secondary market was HK$44 million, representing a year-

on-year decrease of 38%; and Earned Management Fee Income of FoFs was HK$131 million, representing a year-on-year

increase of 6%. The decrease in management fee income was mainly due to combined factors, such as newly established

funds still in fundraising stage, cessation of management fee from those funds entering into exit period, decline in AUM of

secondary market funds as a result of decrease in net assets, and the exit of certain funds.

Profit in Key Business Segments

(in HK$ hundred million) 2023 2022 Change

Profit/(loss) from Fund Management Business 2.76 (38.10) N/A

Loss from Principal Investments Business: (1.89) (31.93) 94%

— Key investee companies (5.41) (12.23) 56%

— Financial investments (8.60) (30.45) 72%

— Cornerstone investments 12.12 10.75 13%

Less: Unallocated corporate expenses, taxes and profit

attributable to holders of senior perpetual capital securities (20.10) (4.40) >100%

Loss attributable to shareholders of the Company (19.23) (74.43) 74%

The Earned Management Fee Income is a measure used by the management of the Group for monitoring business performance and

financial position. It may not be comparable to similar measures presented by other companies.

The adjustments between the Earned Management Fee Income recognised by the Group for the current reporting period and the

management fee income presented in accordance with the Hong Kong Financial Reporting Standards include (a) elimination of

management fee income from consolidated funds: the Group acts as both the fund manager and the major limited partner in certain funds,

where the management fee paid by the fund and the management fee income received by the fund manager is eliminated when

consolidating into the Group’s consolidated financial statements; (b) management fee income received by associates/joint ventures: (i) the

Group acts as the joint fund manager through the establishment of a joint venture with a third party, and the management fees received

by such joint venture are presented as the Group’s share of profits from the joint venture; (ii) Everbright Jiabao, an associate of the Group,

holds 51% interest in EBA Investments, which is included in Everbright Jiabao’s scope of consolidation. The Group holds the remaining

49% interest in EBA Investments through another subsidiary and such interest is accounted for as financial assets. The management fee

income of EBA Investments is reflected in the share of profits of associates of the Group; and (c) other accounting adjustments.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

During the reporting period, the loss attributable to shareholders of the Company was HK$1,923 million, whereas loss of

HK$7,443 million was recorded last year. Reasons for loss:

(1) Gain from Fund Management Business was HK$276 million, whereas loss of HK$3,810 million was recorded last year,

mainly because the income of investment projects held by funds turned around and amounted to HK$119 million

compared with the floating loss of HK$5.047 billion in the same period of 2022 due to increase in the valuation of such

projects.

(2) Loss from Principal Investments Business was HK$189 million, whereas loss of HK$3,193 million was recorded last year.

It was mainly due to the decrease of HK$1.340 billion in the unrealised loss of investment projects held by the end of

2023 compared with the same period last year, and an increase in the profit and income contribution from the Group’s

equity interests of Everbright Securities and China Everbright Bank respectively, offsetting the decrease in the valuation

of certain projects invested.

Dividends

Per share

(HK$) 2023 2022 Change

Loss per share (1.14) (4.42) 74%

Interim dividend per share 0.15 0.15 –

Final dividend per share 0.10 0.15 (33%)

Total dividend per share 0.25 0.30 (17%)

Loss after tax attributable to shareholders of the Company for the period was HK$1,923 million, and net cash inflow from

operating activities and investing activities was HK$3,177 million and HK$1,704 million, respectively. In the reporting period, the

Group recorded a significant reduction on loss, while the liquidity being sufficient and the overall financial, business and

operating conditions remaining solid. Following the practice of sharing the Company’s operating results with shareholders, the

Board declared final dividend of HK$0.10 per share for 2023 (2022 final dividend: HK$0.15 per share).

Management Discussion & Analysis | Continued

Key Financial Ratios

Key Financial Data

2023 2022 Change

Gearing ratio

95.0% 86.9% +8.1 ppt

Net gearing ratio

86.4% 81.2% +5.2 ppt

Debt-to-asset ratio

57.1% 55.2% +1.9 ppt

Current ratio

109.5% 109.8% -0.3 ppt

The Group executed refined cost control to reduce carbon emissions at the operation level and boosted operating efficiency

through technological and electronic methods. Operating costs

for 2023 amounted to HK$907 million, representing a year-on-

year decrease of 1.4%.

As at the end of December 2023, the gearing ratio of the Group was 95.0%, representing an increase of 8.1 ppt compared to

the end of 2022. This was mainly attributable to, among others, the exchange difference arising from the translation of financial

statements due to the depreciation of RMB against the HKD, the decline in share price of its holdings in China Everbright Bank

and the distribution of dividends. As at the end of December 2023, cash reserve of the Group increased. If netting off the

available cash of HK$2,927 million (HK$2,143 million of available cash as at the end of 2022), net gearing ratio increased by 5.2

ppt to 86.4% as compared with the end of 2022. As at the end of December 2023, the Group’s total equity decreased to

HK$34.1 billion from HK$37.9billion as at the end of last year, leading to an increase in the gearing ratio passively. Total interest-

bearing liability at the end of December 2023 was HK$32.4 billion, representing a decrease of HK$500 million from HK$32.9

billion at the end of last year.

As at the end of December 2023, the Group had cash and cash equivalents of approximately HK$9.6 billion and unutilised

available bank facilities of approximately HK$14.1 billion, representing sufficient liquidity and a solid financial condition.

Gearing ratio, debt-to-asset ratio and current ratio are the measures used by the management of the Group for monitoring business

performance and financial position. These may not be comparable to similar measures presented by other companies

The gearing ratio is calculated as interest-bearing debt (including bank loans + bonds payable)/total equity x 100%

Net gearing ratio is calculated as (interest-bearing debt – available cash)/total equity

Debt-to-asset ratio is calculated as total liabilities/total assets x 100%

The current ratio is calculated as current assets/current liabilities x 100%

Operating costs include staff costs, depreciation and amortisation expenses and other operating expenses

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

BUSINESS PERFORMANCE IN 2023

Fund Management Business

The total AUM of CEL’s funds reached approximately HK$126.2 billion as at 31 December 2023, representing a decrease of

approximately HK$39.2 billion compared to the end of last year. During the reporting period, one new fund was established,

with proceeds of approximately HK$1.324 billion. The decrease in AUM was mainly attributable to, firstly, the adjustment of

statistical criteria and withdrawal due to maturity of certain funds; secondly, the AUM of secondary market funds decreased

due to the impact of redemptions and the decrease in net asset value; and thirdly, the decline in the exchange rate of RMB

against HKD, resulting in a decrease in AUM in Hong Kong dollar terms.

The source of funding of CEL’s funds is extensive, where external investors are primarily institutional investors, with a

diversified institutions covering commercial banks, insurance companies, family offices, government agencies and others. In

terms of currency, funds denominated in RMB and non-RMB currencies were equivalent to approximately HK$98.832 billion

and HK$27.388 billion, accounting for 78% and 22% of the total amount, respectively. In terms of the nature of funds, the

Company’s Fund Management Business included 43 primary market funds, 21 secondary market funds and discretionary

accounts, and 9 FoFs products.

During the reporting period, CEL tailored to the circumstances to make prudent investment decisions to exit from prevailing

projects. The Fund Management Business made capital contributions of approximately HK$420 million to a total of 17 projects,

and exited, fully or partially, from 82 projects, recording a cash inflow of approximately HK$4.584 billion.

78% 73%

27%22%21%

74%

Primary market fund

Secondary market fund

FoFs

AUM denominated in RMB External capital

CEL’s seed capital

BY FUND

BUSINESS SEGMENTS

BY CURRENCY BY SOURCE OF CAPITAL

AUM denominated in

non-RMB currencies

Management Discussion & Analysis | Continued

Primary Market Funds

As at 31 December 2023, 43 primary market fund products were under the management of CEL, with an aggregate AUM

equivalent to approximately HK$93.3 billion, investing in various industries including semiconductors, industrial internet and

high-end manufacturing. CEL also actively explored potential opportunities in AI, new materials and other sectors. By currency,

amounts equivalent to approximately HK$71.5 billion and approximately HK$21.8 billion were denominated in RMB and other

currencies, accounting for 77% and 23% of the total amount, respectively. During the reporting period, CEL combined transfer,

IPO and other diversified exit channels, exiting projects including Ambrx, Henan BCCY Environmental Energy, Reactor

Microelectronics, Haitai New Energy, Three’s Company Media and XPENG Motors to generate a favorable return on investment

and cash inflow for the Company.

Leveraging the diversified fund structure and leading full value chain capabilities, CEL’s primary market fund maintained a cross-

border portfolio from the “Perspective of China”, and invested in new industries and fields with relative low risk and high

efficiency by collaborating with multiple GPs. During the reporting period, CEL was honored with various awards, including

“2023 TOP50 Influential PE Investment Institutions in China” by China Venture Capital Research Institute, the “TOP50 Best

Hard-Tech Private Equity Investment Institutions ( TOP50)” by Jiazi Gravity, and the “2023 China

Best State-owned investment institutions TOP100” by China Venture.

Secondary Market Funds

As at 31 December 2023, CEL’s secondary market business managed a total of 21 funds and discretionary accounts with AUM

in terms of net worth of approximately HK$6.1 billion. In terms of product categories, fixed-income products and equity

products accounted for 95% and 5% of the total AUM respectively.

By leveraging on its investment capabilities, CEL’s secondary market funds have built a one-stop portfolio with years of cross-

border experience, which covers Asian credit bond hedge funds, Asian convertible bond hedge fund, offshore Greater China

equity hedge fund, onshore A+H shares long-only strategies funds (including private fund managers and institutional investors)

and investment advisory business. CEL has a well diversified fixed income products covering offshore funds, QFII managed

accounts, offshore managed accounts and asset securitization products. Everbright Convertible Opportunities Fund, a flagship

Asian convertible bond product, delivered sound results during the reporting period. The fund received the “Best Asian Ex-

Japan Hedge Fund (5-year)”, “Best Asian Ex-Japan Fixed-Income Hedge Fund (3-year)”, and “Best Asian Ex-Japan Fixed-

Income Hedge Fund (5-year)” awards by the 2023 I&M Professional Investment Award, demonstrating the recognition of the

Company’s investment capability and comprehensive strength by independent ranking agencies. Everbright Income Focus

Fund, a public bond fund in Hong Kong being an investment advisor, which was awarded a five-star rating (the highest rating)

by an authoritative fund rating agency, for overall rating and in five-year rating, for its superior performance and risk-adjusted

returns.

Fund of Funds

CEL’s FoFs not only invested in external funds with proven track records and robust governance, but also invested in funds

launched and managed by the Company, and co-invested or directly invested in equity projects. As at 31 December 2023, the

FoFs team managed 9 FoFs with an AUM equivalent to approximately HK$26.816 billion. The Company’s FoFs business has

established an investment matrix primarily targeting information technology, biopharmaceuticals, consumption and

entertainment, and technology manufacturing, with active collaborations with well-established major (white horse) managers,

emerging and promising (dark horse) managers, and leading managers in specialized sectors across both domestically and

internationally. As at 31 December 2023, there were 95 invested projects (sub-funds and direct investment projects) under the

FoFs, and a total of 147 investees in the underlying projects of invested sub-funds and direct investment projects under the

FoFs were listed. During the reporting period, 19 new enterprises were listed, all of which came from the underlying projects of

sub-funds. CEL’s FoFs team also promoted the listing declaration and exit of direct investment projects, dedicating to bring

excellent returns to investors.

CEL’s FoFs won industry recognition and various awards, further enhancing its brand and influence in the industry. During the

reporting period, the Company’s FoFs were awarded the “Most Popular LP among Equity Investment Institutions” by the 7th

Equity Investment Golden Bull Award, “2023 Best Returns State-owned Market-oriented FoFs TOP20” China FoF, “2022-2023

Best Market-Oriented Chinese FoFs TOP20” by China Bridge, and “2023 TOP20 Best Chinese FoFs”, “TOP30 Most Popular

Chinese FoFs Among GPs” and “2023 TOP30 Venture Capital LPs in China” by ChinaVenture.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

Real Estate Investment and Asset Management Business

As at 31 December 2023, CEL held 29.17% equity interest in Everbright Jiabao, an A-share listed company (stock code:

600622.SH), as its largest shareholder. Everbright Jiabao managed 54 projects through EBA Investments, including 21

investment management projects with a managed fund scale of approximately RMB24.443 billion (equivalent to approximately

HK$26.97 billion) and AUM of approximately RMB46.756 billion (equivalent to approximately HK$51.59 billion). In 2023,

Everbright Jiabao/EBA Investments adhered to the overall strategy of stable operation and continued to optimise the operating

condition of projects under management and endeavoured to boost the operating and management standards of projects. As at

the end of 2023, EBA Investments and its subsidiaries managed a total of 21 consumption infrastructure projects of IMIX Parks

in mainland China through fund investment or entrusted management, primarily located in consumption center cities in various

municipalities and provinces in China. In addition, EBA Investments continued to expand the business of real estate

construction and management projects under the brand of “”, and expanded and reserved a number of projects during

the year.

In 2023, EBA Investments was ranked first in the “Top 10 Enterprises in terms of Comprehensive Strength among China Real

Estate Funds” jointly appraised by the China Enterprise Evaluation Association, Property Research Institute of Tsinghua

University and Beijing China Index Academy for the ninth consecutive years. It was also honoured as one of the “China’s TOP

10 Real Estate Funds in terms of Competitive Strengthens” by the BRICS Forum for the eighth consecutive years. EBA (Beijing)

Investment Management Co., Ltd. ( ( ) ), a wholly-owned subsidiary of EBA Investments, was

listed for the third time on the Class A list of private equity fund managers by the Insurance Asset Management Association of

China.

Principal Investments Business

CEL strives to achieve the following 3 objectives through its principal investments: (1) Key Investee Companies: investing in

and fostering enterprises with synergy between industry and finance and promising development prospects; (2) Financial

Investments: maintaining flexible liquidity management through investment in structured financing products and obtaining

stable interest income; capitalizing on the co-investment opportunities brought by the Fund Management Business and

participating in equity and related financial investments to obtain investment returns; (3) Cornerstone Investments: holding a

portion of the equity interest in China Everbright Bank and Everbright Securities to obtain stable dividends and investment

returns.

As at 31 December 2023, the Principal Investments Business managed 62 post-investment projects with an aggregate carrying

amount of approximately HK$32.1 billion. Among these projects, the total carrying amount of equity interest held in CALC,

Everbright Senior Healthcare and Terminus was approximately HK$4.7 billion; the fair value of Financial Investments was

approximately HK$9.2 billion; the fair value of the Cornerstone Investments in China Everbright Bank was HK$5.0 billion, and

the carrying amount of Everbright Securities accounted as an associate was HK$13.2 billion.

Principal investments

(in HK$ hundred million) 2023 2022

— Key Investee Companies 47 55

— Financial Investments 92 113

— Cornerstone Investments 182 181

Total 321 349

Management Discussion & Analysis | Continued

Key Investee Companies

CALC

As at 31 December 2023, CEL held 38.08% of the equity interest in CALC (stock code: 1848.HK), as the largest shareholder.

CALC is a one-stop full life-cycle solutions provider for global airlines. CALC’s scope of business includes regular operations

such as aircraft operating leasing, leaseback after purchase, aircraft asset portfolio transactions and asset management, and

value-added services such as fleet planning, fleet upgrading, aircraft maintenance, repair and overhaul, aircraft disassembling

and recycling and aircraft parts selling. It also elevates aircraft asset value through flexible aircraft asset management. At the

same time, CALC has the advantages of dual-platform financing, leasing and transaction channels, as well as a strong capability

and rich experience in financing both domestically and abroad. As at 31 December 2023, CALC had a fleet of 192 aircraft with

an increase of 16 aircraft from the end of 2022, consisting of 165 owned aircraft and 27 managed aircraft. CALC’s owned and

managed aircraft are leased to 41 airlines in 20 countries and regions.

Everbright Senior Healthcare

Everbright Senior Healthcare seized the development opportunities in China’s healthcare industry. In addition to effectively

responding to the epidemic and fully safeguarding the health of the elderly residents and staff, it constantly optimised the three-

level elderly service model featuring institutional, community-based, and home-based elderly services, improved the ability of

“Medical + Senior Healthcare”, “Insurance + Senior Healthcare” and “Service + Senior Healthcare”, and became a first-class

healthcare service provider in China with strong presence and competitiveness in the senior healthcare segment. During the

reporting period, Everbright Senior Healthcare has 190 institutional and community service centers covering more than 50 cities

across the country, forming a deployment covering the Beijing-Tianjin-Hebei region, Yangtze River Delta, and Chengdu-

Chongqing Economic Circle, with approximately 32,000 beds under management. Everbright Senior Healthcare has a good

brand reputation in the market in terms of professional senior healthcare services, stringent quality control, convenient services,

and diversified senior healthcare experiences, has been highly acclaimed by its customers, its peers and the government.

According to the “Integrated Business Enterprises in the Impactful Healthcare Industry for 2023” published by Guandian in

2023, it continued to rank the top position in the industry.

Terminus

During the reporting period, Terminus focused on high-growth business opportunities, continuously exploring new business

scenarios and models. Its three laboratories made breakthrough research progress, with over twenty papers being included in

top international academic conferences such as CVPR, ICCV and T-PAMI. It also released two new international and group

standards. Furthermore, it joined hands with the Hong Kong University of Science and Technology (Guangzhou) to establish the

Joint Research Center for Digital World, aiming to promote the major research and applications of Artificial Intelligence of things

(AIoT). In partnership with the Chongqing Institute of Green and Intelligent Technology, Chinese Academy of Sciences,

Terminus established the Chongqing key laboratory of big data and intelligent computing. The laboratory focuses on basic and

key technological researches based on an application-oriented approach, driven by the major technological needs of national

and Chongqing’s economic and social development. Terminus was recognised as one of the Top 100 IoT Enterprises in 2023 by

the China Internet Weekly, a key academic journal supervised by the Chinese Academy of Sciences, in collaboration with the

eNet Research Institute (eNet). It topped the list of the most commercially promising companies in the new energy and

carbon neutrality sector released by the Jazz Year (), a technological business think tank in China. It was also named

among the “Top 50 AIGC Application Scenario Innovations of 2023” ( 2023 AIGC Top50 ) by EqualOcean (

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

Financial Investments

CEL’s financial investments funded by its own capital cover the following aspects: (1) based on the investment/co-investment

opportunities brought by the Group’s funds and extensive business network, investing in the equity or debt of unlisted

companies; (2) investing in structured financing products with a balance in return and liquidity. As at 31 December 2023, CEL’s

financial investments amounted to HK$9.2 billion in various sectors including real estate, new economy and technology, artificial

intelligence, high-end manufacturing, and green investments, with the aggregate carrying value of the top 10 projects

amounting to HK$6.5 billion.

Cornerstone Investments

As at 31 December 2023, the carrying amount of a certain portion of equity interests in Everbright Securities and China

Everbright Bank held by the Group as cornerstone investments each accounted for more than 5% of the Group’s total assets

and the two investments were regarded as significant investments of the Group. These two cornerstone investments held by

the Group accounted for in aggregate 53.3% and 22.9% of the Group’s net assets and total assets, respectively.

Everbright Securities (601788.SH)

Established in 1996 with headquarters in Shanghai, Everbright Securities is one of the first 3 innovative pilot securities firms

approved by the China Securities Regulatory Commission. As at 31 December 2023, the Group held 956 million A-shares in

Everbright Securities, representing 20.73% of its total share capital, with an investment cost of HK$1,497 million. Everbright

Securities is accounted for as an associate of the Group. The carrying value of the shares held by the Group was HK$13.2

billion, accounting for 38.6% and 16.5% of the Group’s net assets and total assets respectively. Based on the closing price of

RMB15.42 per share as at 31 December 2023, the fair value of the shares in Everbright Securities held by the Group was

HK$16.3 billion. During the reporting period, the Group’s share of profit from Everbright Securities as an investment in associate

was HK$881 million, representing a year-on-year increase of 28.0%.

China Everbright Bank (601818.SH)

Established in August 1992, China Everbright Bank is a national joint-stock commercial bank approved by the State Council and

the People’s Bank of China. As at 31 December 2023, the Group held 1.57 billion A-shares in China Everbright Bank,

representing 2.66% of the total share capital of China Everbright Bank, with an investment cost of HK$1,407 million. The shares

in China Everbright Bank held by the Group are accounted for as equity investments designated at fair value through other

comprehensive income. Based on the closing price of RMB2.90 per share as at 31 December 2023, the carrying amount and

fair value of the shares in China Everbright Bank held by the Group amounted to HK$5.0 billion, accounting for 14.8% and 6.3%

of the Group’s net assets and total assets respectively. During the reporting period, the Group’s income from China Everbright

Bank was HK$331 million, representing a year-on-year decrease of 11.2%.

OUTLOOK

Looking forward to 2024, as the adverse effects of supply disruption subsiding, the economy is less likely to face a hard landing.

The global economy is expected to demonstrate greater resilience subject to a balanced risk. However, due to factors such as

the slow exit from tight monetary policies, sluggish global trade and intensified geopolitical risks, economic growth is expected

to remain slow. Macroeconomic outlook reports for 2024 from various international institutions generally predict a slowdown in

global economic development. According to latest World Economic Outlook released by the International Monetary Fund in

January, China’s economic growth rate is estimated to be 4.6% for 2024, representing an upward revision of 0.4 percentage

points from its previous forecast. It also reflects the carry-over effect of stronger-than-expected economic growth of China in

2023. This is underpinned by the sustained effects of macroeconomic policies, full implementation of the “14th Five-Year

Plan”, support for the private economy, the development of emerging industries such as new energy, as well as other

favourable factors which may alleviate the downward pressure on China’s macroeconomy. Overall demand of China is expected

to recover and expand while the macroeconomic environment will continue to be subject to relatively relaxed policies, resulting

in the likelihood of normalised growth performance across all sectors. As external and internal positive factors for the currency

market continue to emerge, it may lay the basis and conditions for the appreciation of RMB against the USD. With the

deepening of the new development pattern and the continuous focus on new industry momentum, industries are expected to

enter a phase of balanced growth, driving to an optimistic expectation and promoting a positive economic cycle.

Management Discussion & Analysis | Continued

In light of the above, CEL will capitalise on the favourable conditions in 2024 to further promote its high-quality growth. With a

focus on its asset management business, the Company will develop in line with the “Dual Circulation” new development

pattern, consistently bolster the core competitiveness of asset management, and persist in transitioning towards “Asset-light”

strategy.

In terms of fundraising, CEL’s focus will be on establishing a multi-channel financing mechanism catering to

advantageous industries to enhance the quality of fundraising. By establishing diversified sources of funds, optimising the

proportion of paid-in capital and management fee, CEL will be able to improve the efficiency, quality and stability of fundraising.

Expanding the cross-market operations of both USD funds and RMB funds as a strategic priority will lay a solid foundation for

the growth of the CEL’s AUM and revenue, forming a strong market competitiveness. In terms of investments, CEL will

further develop specialised industries, strengthen industry researches and place CEL emphasis on long-term value. With

a focus on industries with competitive advantages, particularly technological innovation companies, specialised and new

enterprises, consumption and environmental companies, CEL will concentrate on the core business growth potential of

investees and conduct in-depth research on policies, business and industries to align with national strategies. Efforts will be

made to enhance research on market trends, improve sensitivity to industry dynamics and expand the project resource pool.

CEL will also step up the due diligence of investment projects to ensure that investment decisions are made in an scientific and

efficient manner in order to capture and nurture enterprises with sustainable growth potential. In terms of management, CEL

will strengthen post-investment management and build solid lines of defence against risks. CEL will refine the

management of investees and invested projects while improving asset management efficiency and transparency, so as to

ensure investment projects to be “clear, manageable and rewarding”. Through regular risk assessment and monitoring, CEL

will effectively prevent and control risks to ensure stable business development and avoid major risks. In terms of exit, CEL

will continue to optimise exit strategies and expedite exit initiatives. Based on market conditions and asset characteristics,

flexible exit choices for IPOs, mergers and acquisitions and equity transfers will be made available to exit from existing

investment projects so as to recover funds. Focusing on the core value of each project and based on professional market

analysis, CEL will capitalise on the long investment cycle of the private equity industry to formulate optimal exit plans.

In the future, CEL will continue to pursue its core business of asset management and PE investment, while actively exploring

the coverage of asset management services. Based on the principle of “grasping new developing opportunities, implementing

new development concepts, constructing new development patterns and promoting high-quality development” (), CEL

will optimise investment layout with a key focus on developing priority areas such as technological innovation, high-end

manufacturing and green development. CEL will fully leverage the adjustment period under the industry policy to carry out

business transformation and upgrade, with a view to facilitating the high-quality development of cross-border asset

management. With entire staff working together with cohesion, CEL will maintain stable development and perseverance to

make progress in the challenging market environment, striving to share the fruits of growth of the Company with shareholders.

FINANCIAL POSITION

As at 31 December 2023, the Group’s total assets amounted to HK$79.588 billion (31 December 2022: HK$84.477 billion) with

net assets amounting to HK$34.106 billion (31 December 2022: HK$37.877 billion). Equity attributable to the Company’s

shareholders was HK$30.990 billion (31 December 2022: HK$34.489 billion) and equity attributable to shareholders of the

Company per share was HK$18.39 (31 December 2022: HK$20.47).

FINANCIAL RESOURCES

The Group adopts a prudent approach in liquidity management to ensure liquidity risk control and reduce the cost of funds. The

Group finances its operations primarily with internally generated cash flow and loan facilities from banks. As at 31 December

2023, the Group had cash and bank balances of HK$9.588 billion (31 December 2022: HK$8.236 billion). Currently, most of the

Group’s cash is denominated in Hong Kong dollars and Renminbi.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

BORROWING

As at 31 December 2023, the Group’s interest-bearing borrowings amounted to HK$32.397 billion (31 December 2022:

HK$32.914 billion). The Group will review and ensure sufficient banking facilities to reserve resources to support its business

development. As at 31 December 2023, the Group had banking facilities of HK$32.694 billion (31 December 2022: HK$32.875

billion), of which HK$14.090 billion (31 December 2022: HK$11.958 billion) had not been utilised. The banking facilities were of

one to twelve years terms. The Group had an outstanding bank loan of HK$18.604 billion (31 December 2022: HK$20.917

billion), which decreased by HK$2.313 billion compared with 31 December 2022, of which HK$16.442 billion (31 December

2022: HK$18.591 billion) was unsecured. The Group had issued corporate bonds with an outstanding principal amount of

HK$13.793 billion (31 December 2022: HK$11.997 billion). The interest bearing borrowings were denominated in Renminbi,

Hong Kong dollars and United States dollars, representing 48%, 45%, 7% of the total respectively. As at 31 December 2023,

approximately 56% of the Group’s total principal amount of borrowing were at floating rates and the remaining 44% were at

fixed rates. The maturity profile of the Group’s borrowings is set out in note 35 of the Notes to the Financial Statements in this

report.

PLEDGE OF ASSETS

As at 31 December 2023, no restricted deposits were pledged to a bank to secure a banking facility granted to the Group (31

December 2022: HK$664 million). Restricted bank balances of HK$57 million (31 December 2022: HK$46 million) were pledged

to the banks for sales of mortgaged properties to customers and interest reserve account on borrowings, and no restricted

bank balances were used to secure certain bonds payable of the Group (31 December 2022: HK$244 million). Investment

properties, inventories and stocks with carrying values of HK$4,542 million (31 December 2022: HK$4,362 million), HK$230

million (31 December 2022: HK$383 million) and HK$1,475 million (31 December 2022: HK$1,563 million), respectively, and

were mortgaged to secure certain bank loans granted to the Group. Pursuant to the prime brokerage agreements entered with

the prime brokers of a fund held by the Group, cash and securities deposited with the prime brokers were secured against

liabilities to the prime brokers. As at 31 December 2023, assets deposited with the prime brokers included HK$1,417 million (31

December 2022: HK$1,514 million) and HK$16.4 million (31 December 2022: HK$0.5 million) which formed part of the Group’s

trading securities and debtors respectively. Analysis on collateral of the Group’s bank loans and bonds payable is set out in note

26 and note 28 of the Notes to the Financial Statements in this report.

EMPLOYEES

As at 31 December 2023, the Group’s headquarters and wholly owned subsidiaries had 255 (31 December 2022: 273) full-time

employees. The Group ensures that the remuneration packages for employees are fair and competitive and are determined by

position, duties, experience and performance of employees. Other benefits to employees include medical insurance, retirement

scheme and training programmes.

Management Discussion & Analysis | Continued

EBA YIDA

In August 2020, Zhuhai EBA Yida Management Centre, L.P. (“EBA Yida”) was established by EBA Investments to use

appropriate channels and methods to invest in real estate projects, primarily for urban renewal, focusing on investing in first-tier

cities in China as well as second- and third-tier cities with a healthy and well-developed real estate market in China. The

following table sets forth information on the major projects invested by EBA Yida during the reporting period:

Name of Key Project Business Type Location Investment Type

Beijing Zhongguancun Project Commercial complex Beijing Convertible bonds

Chongqing Chaotianmen Project Commercial complex Chongqing Fund interest investment

EBA Centre Project Office and integrated commercial Shanghai Fund interest investment

Parkview Place Office and integrated commercial Beijing Fund interest investment

EBA Centre Hongqiao Project Commercial complex Shanghai Fund interest investment

PRINCIPAL RISKS AND UNCERTAINTIES

Risk management is of fundamental importance to the business operation of the Group. The major types of risk inherent in the

Group’s business are credit risk, liquidity risk, interest rate risk, currency risk and equity price risk. The Group’s risk

management objectives are to maximise shareholders’ value and to reduce volatility in earnings while maintaining risk

exposures within acceptable limits.

The Group’s work in the area of risk management is executed by the Risk Management, Legal and Compliance Department and

is led by the Vice President of the Group in charge of Risk Management, Legal and Compliance Department. This functional

structure can assess, identify and document the Group’s risk profile to ensure that the business units focus, control and

systematically avoid potential risks in various business areas. The following is a brief description of the Group’s approach in

managing these risks.

(a) Credit risk

The Group’s credit risk is primarily attributable to advances to customers, accounts receivable, debt investments and

unlisted derivative financial instruments.

Credit risk management framework

The Group has formulated a comprehensive set of credit risk management policies and procedures, and appropriate

credit risk limits to manage and control credit risk that may arise. These policies, procedures and credit risk limits are

regularly reviewed and updated to cope with the changes in market conditions and business strategies.

The Group’s organisational structure establishes a clear set of authority and responsibility for monitoring compliance with

policies, procedures and limits.

The Vice President of the Group in charge of Risk Management, Legal and Compliance who reports directly to the Audit

and Risk Management Committee, takes charge of credit risk management and is also responsible for the control of

credit risk exposures of the Group in line with the credit risk management principles and requirements set by the Group.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

Credit risk management is embedded within all business units of the Group. The first line of defense against undesirable

outcomes is the business function and the respective line managers. Department heads of their own business areas take

the lead role with respect to implementing and maintaining appropriate credit risk controls. Risk Management, Legal and

Compliance Department, which is independent from the business units, is responsible for the management of credit

risks and it is an ongoing process for identifying, measuring, monitoring and controlling credit risk to ensure effective

checks and balances, as well as drafting, reviewing and updating credit risk management policies and procedures. It is

also responsible for the design, development and maintenance of the Group’s internal rating system and it ensures that

the system complies with the relevant regulatory requirements. Credit risk is approved by the Vice President of the

Group in charge of Risk Management, Legal and Compliance Department and reported to Audit and Risk Management

Committee quarterly.

For advances to customers, the Group requires collateral from customers before advances are granted. The amount of

advances permitted depends on the quality and value of collateral provided by the customer. Any subsequent change in

value as well as quality of collateral is closely monitored in order to determine whether any corrective action is required.

Accounts receivable mainly arise from the Group’s investment activities. Receivables from brokers and counterparties

are normally repayable on demand. The Group has established procedures in the selection of brokers/counterparties with

sound credit ratings and/or reputation.

Investments in debt instruments and unlisted derivative financial instruments are also governed by whether the issuers

and the trade counterparties respectively have sound credit ratings.

The Group has well-defined policies in place on the setting and approval of trading, credit and investment position limits

in order to manage its credit risk exposure and concentration. As at the end of the reporting period, the Group did not

have a significant concentration of credit risk.

The maximum exposure to credit risk without taking into account any collateral held is represented by the carrying

amount of each financial asset, including derivative financial instruments, at the end of the reporting period, deducting

any impairment allowance.

(b) Liquidity risk

The Group’s policy is to regularly assess current and expected liquidity requirements and to ensure that it maintains

reserves of cash, readily realisable marketable securities and adequate committed lines of funding from major financial

institutions to meet its liquidity requirements in the short and longer term.

For subsidiaries with statutory liquidity requirements, the Group closely monitors their liquidity positions. To ensure strict

compliance, the Group maintains adequate cash reserves to prepare for immediate fund injection if required. If there is a

medium to long-term operational need, management would also consider adjusting those subsidiaries’ capital structure.

Subsidiaries with external equity stakeholders are generally responsible for their own liquidity management.

Management Discussion & Analysis | Continued

The Group monitors its interest rate exposure regularly to ensure that the underlying risk is monitored within an

acceptable range.

The Group’s interest rate positions arise from treasury and operating activities. Interest rate risk arises from treasury

management, customer financing and investment portfolios. Interest rate risk primarily results from the timing

differences in the repricing of interest-bearing assets, liabilities and commitments. Interest rate risk is managed by the

Finance and Accounting Department under the delegated authority of the Board and is monitored by the Risk

Management, Legal and Compliance Department. The instruments used to manage interest rate risk include time

deposits and interest rate linked derivatives, if necessary.

The Group is exposed to the risk that the fair value or future cash flows of its financial instruments will fluctuate as a

result of changes in market interest rates. In respect of the Group’s interest-bearing financial instruments, the Group’s

policy is to mainly transact in financial instruments that mature or reprice in the short to medium term. Accordingly, the

Group would be subject to limited exposure to fair value or cash flow interest rate risk due to fluctuations in the prevailing

levels of market interest rates.

(d) Currency risk

The Group’s exposure to currency risk primarily stems from holding of monetary assets and liabilities denominated in

foreign currencies, other than Hong Kong dollars and net investment in foreign operations. As most of the Group’s

monetary assets and liabilities and net investment in foreign operations are denominated in Hong Kong dollars, Renminbi,

United States dollars and Singapore dollars, management is aware of the likely increase in volatility in these currencies

and takes a balanced view when considering the management of currency risk.

Overall, the Group monitors its currency exposure closely and would consider hedging significant currency exposure

should the need arise.

(e) Equity price risk

The Group is exposed to equity price changes arising from equity investments classified as trading securities, equity

investments designated at fair value through other comprehensive income (note 18) and financial assets at fair value

through profit or loss (note 19). Other than unlisted securities held for medium to long-term purposes, all of these

investments are listed.

The Group’s investments in listed equity instruments are mainly listed on the Stock Exchange of Hong Kong, the

Shanghai Stock Exchange, the Shenzhen Stock Exchange, Nasdaq and the New York Stock Exchange. Decisions to buy

or sell trading securities rest with assigned investment team professionals and each investment portfolio is governed by

specific investment and risk management guidelines. Independent daily monitoring of each portfolio against the

corresponding guidelines is carried out by the Risk Management, Legal and Compliance Department. Listed equity

instruments held in the equity investments designated at fair value through other comprehensive income and financial

assets at fair value through profit or loss portfolio have been chosen based on their medium to long-term growth potential

and are monitored regularly for performance against expectations.

The performance of the Group’s investments in unquoted equity instruments is assessed periodically, based on the

information available to the Group.

CORPORATE GOVERNANCE REPORT

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

Through comprehensive corporate

governance and risk management,

CEL is laying a solid foundation for its

sustainable development.

Corporate Governance Report | Continued

GOVERNANCE PRINCIPLES AND STRUCTURE

China Everbright Limited (“CEL” or the “Company”) and its subsidiaries (the “Group”) always aim to comply with established

corporate governance best practices, and the core value of the Company is to protect the interests of its shareholders,

customers, staff and other stakeholders. It is committed to strictly abiding by the laws and regulations of Hong Kong and

observing the rules and guidelines issued by the relevant regulatory authorities such as the Securities and Futures Commission

of Hong Kong and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The Company also constantly reviews

its corporate governance practices to meet international and local best practices including the Corporate Governance Code (the

“Code”) as set out in Appendix C1 of the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”).

One of the core values of the Company is that the highest standard of integrity is essential to business development.

The Company recognises the importance of high standards of corporate governance and maintains an effective corporate

governance framework which contributes to the long-term success of CEL. The Company is also strongly committed to

embracing and enhancing sound corporate governance principles and practices. The established and well-structured corporate

governance framework directs and regulates the business ethical conduct of the Company, thereby protecting and upholding

the value of its shareholders and stakeholders as a whole in a sustainable manner.

The Company’s board (the “Board”) of directors (the “Director(s)”) would like to confirm that, following careful examination and

review, the Company has complied with all code provisions of the Code for the year ended 31 December 2023.

CORPORATE CULTURE AND STRATEGY

CEL has set out its Purpose, Vision and Values, details of which are available on the Company’s website. The Company’s

purpose is to be “China’s cross-border asset management industry pioneer”. With over 25 years’ experience in cross-border

asset management and PE investments, the Board is committed to maintaining the development requirements of the Company

and promoting a positive and progressive culture to its stakeholders to achieve its purpose. The Company’s Vision is “To

innovate the asset management industry by creating leading-edge investment solutions”. CEL’s understanding of clients’

experience and its long-term investment philosophy provides favourable conditions to achieve higher returns. The Company’s

Value (Corporate Philosophy) is “The Power to Transform – Focus and long-term drive, Transforming challenge into

opportunities”. With a firm footing in Hong Kong – a true bridge between East and West – an international platform, and

specialised sector focused teams, CEL is well-positioned to take advantage of the long-term opportunities presented by

changes in the global markets, to respond flexibly, and to become a pioneer in Chinese cross- border investment and asset

management.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

BOARD

Composition of the Board

The Company is led by the Board that is effective and of quality. The Board is charged with promoting the success of CEL by

directing and supervising its affairs in a responsible and effective manner. Each Director has a duty to act in good faith in the

best interests of the Company, so as to bring maximum value to the shareholders of the Company (the “Shareholder(s)”) in the

long term and practically fulfill its obligations to the stakeholders of the Group. The Directors are aware of their collective and

individual responsibilities to all Shareholders for the manner in which the affairs of the Company are managed, controlled and

operated. As at the date of this report, the Board currently has ten Directors, made up of four Executive Directors and six Non-

executive Directors, including four Independent Non-executive Directors (“INED(s)”). The Board members are set out as

follows:

EXECUTIVE DIRECTORS

Mr. Lin Chun (President) (appointed on 4 January 2024)

Mr. An Xuesong (appointed on 5 April 2024)

Ms. Wang Yun (appointed on 5 May 2023)

Mr. Yin Yanwu

Mr. Zhang Mingao (resigned on 4 January 2024)

Mr. Wang Hongyang (resigned on 5 May 2023)

NON-EXECUTIVE DIRECTORS

Mr. Yu Fachang (Chairman)

Dr. Qin Hongyuan (appointed on 4 January 2024)

Ms. Pan Wenjie (resigned on 22 March 2024)

Mr. Fang Bin (resigned on 4 January 2024)

INDEPENDENT NON-EXECUTIVE DIRECTORS

Dr. Lin Zhijun

Dr. Chung Shui Ming Timpson

Mr. Law Cheuk Kin Stephen

Mr. Wong Chun Sek Edmund (appointed on 22 March 2024)

All Directors possess extensive experiences in the financial industry. They have abundant professional expertise to fully

understand our business and the necessary skills to deal with our business matters. Each of them is prudent, objective and

diligent and has devoted sufficient time and efforts to handle the Company’s affairs. Each Director confirms to the Company

yearly he/she has spent sufficient time to perform his/her responsibilities as a Director of the Company. Each Director discloses

to the Company (at the time of appointment and in a timely manner for any changes) the numbers and nature of office held in

public companies or organisations and other significant commitments. The relevant content will also be disclosed in the

announcements in relation to his/her appointment and the annual reports of the Company.

With the assistance of the Nomination Committee, the Board reviews its structure, size and composition (including skills,

expertise, experiences and gender diversity) on an annual basis. The Board considers the composition and proportion of its

members reasonable and appropriate, which can fully leverage balance of powers such that the interests of the Company, the

Shareholders and the stakeholders are protected to the maximum extent.

All the existing Directors (including Non-executive Directors and INEDs) have been appointed through formal service contracts

or letters of appointment setting out the key terms and conditions of their appointment.

The appointment of a new Director is a matter for consideration by the Nomination Committee and decision by the full Board.

Pursuant to the Articles of Association of the Company (the “Articles”), all Directors shall retire by rotation at least once every

three years at annual general meetings and be eligible for re-election. All new Directors appointed by the Board are subject to

re-election by Shareholders at the next general meeting. At every annual general meeting of the Company, re-election of each

Director has been assigned as a separate resolution for Shareholders’ approval.

Corporate Governance Report | Continued

If any substantial Shareholder or Director has a potential conflict of interest in a matter to be considered by the Board, which

the Board has determined to be material, the matter will be dealt with by a physical meeting (rather than a written resolution),

the relevant Directors shall abstain from voting and a Board meeting attended by INEDs who have no material interest in the

matter shall be held to discuss and vote on the resolution. There are no relationships (including financial, business, family or

other material/relevant relationship(s)) among the Board members. Any Director concerned should declare the nature and

extent of his/her interest prior to the relevant meeting agenda of the Board or the Board committees.

Board and Workforce Diversity

According to the Board Diversity Policy of the Company, the Board recognises the importance of having a diverse Board for

enhancing the board effectiveness and corporate governance. A diverse Board should possess and make good use of

differences in the skills, industry knowledge and experience, education, race, age, gender, background and other qualities of

directors. These differences are taken into account in determining the optimum composition of the Board and when possible

should be balanced appropriately.

According to the Nomination Policy of the Company, the Nomination Committee has the responsibility of identifying and

nominating directors for approval by the Board. It takes the responsibility in assessing the appropriate mix of experience,

expertise, skills and diversity required by the Board, assessing the extent to which the required skills are represented on the

Board and overseeing Board succession. It is also responsible for reviewing and reporting to the Board in relation to Board

diversity on an annual basis.

As at 31 December 2023, the Board comprised seven males and two females and the senior management of the Group

(excluding the Executive Directors) comprised one male and one female; and among the 255 full-time employees of the Group’s

headquarters and wholly-owned subsidiaries, the ratio of male to female staff was 1:0.98. The Board considers that the Board,

the Group’s senior management and workforce are all diverse in terms of gender. At present, the Company has not set any

measurable objectives for implementation of the diversity policies in relation to the Board members and the workforce of the

Group (including gender diversity). However, the Company will review the Board Diversity Policy from time to time and will

consider setting of any measurable objectives for achieving gender diversity (if applicable).

Under the current Board structure, all Directors possess extensive experience in financial industry and management, of whom

some are experts in strategic development, financial and/or risk management. Biographical details with the professional

experience, skills and knowledge of the Directors are available in the section of “Directors and Senior Management” on pages

88 to 92 of this Annual Report.

The Board considers that diversity of the Board and the workforce is a vital asset to the business of the Group. Board

appointments and employee recruitments are based on merit, and candidates are considered against objective criteria, having

due regard to the benefits of diversity, including but not limited to gender diversity. Selection of candidates of different genders

depends on the pool of candidates of each gender with the necessary knowledge, experience, skills and educational

background. The final decision is based on merit and contribution that the chosen candidate will bring to the Board or the

Group.

Role of Independent Non-executive Directors

The Board believes that the INEDs play an important role in corporate governance. They provide the necessary checks and

balances to ensure that CEL operates in a safe and sound manner and that its interests are protected. The INEDs also bring

external experience and make judgment objectively. They are particularly important in performing a monitoring role. The Board

has received from the INEDs written annual confirmations of their independence pursuant to the requirement under Rule 3.13

of the Listing Rules and considers all the INEDs to be independent. The appointments of Non-executive Directors, including

INEDs, are for a fixed term and all of them are subject to retirement by rotation at least once every three years in accordance

with the Articles and the Listing Rules.

Every year, the Board reviews and assesses the independence of any INED who is in office for more than nine years. His/her

further appointment is subject to a separate resolution to be approved by general meeting. The reasons why the Board believes

that the individual is still independent and should be re-elected, in so far as the independence of each of the Directors is

concerned, this is a matter of fact and the Board is committed to assessing this on an ongoing basis with regard to all relevant

factors concerned and not just limited to where a director whose length of service exceeds 9 years.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

Mechanisms to Ensure Independent Views and Input

The Board establishes mechanism(s) to ensure independent views and input are available to the Board. The Nomination

Committee is delegated the responsibility to review the implementation and effectiveness of such mechanism on an annual

basis.

The number of INEDs represents not less than one-third of the Board as required under the Listing Rules. All the INEDs

possess appropriate professional qualifications and accounting or related financial management expertise.

INEDs provide CEL with diversified expertise and experience. Their views and participation in the meetings of the Board and

the Board committees bring objective and independent judgments and advice on issues relating to CEL’s strategies,

performance, conflicts of interest and management processes, which ensure that the interests of all Shareholders are taken

into account.

The Company has multiple mechanisms in place to ensure independent views and input are available to the Board. These

include but are not limited to, when reviewing the structure, size and composition of the Board, the Nomination Committee

puts emphasis on whether the composition of Executive and Non-Executive Directors (including INEDs) is balanced and

ensures that there is a strong independent element on the Board. All INEDs should be of sufficient calibre and number for their

views to carry weight. All Directors (including INEDs) are given opportunities to include matters in the agenda for regular Board

meetings. If any Director makes a reasonable request, the Company should provide separate independent professional advice

upon request, at the Company’s expense, to the Director(s) to assist such Director(s) or the Board in performing directors’

duties to the Company. Besides, a controversial matter is required to be discussed at a Board meeting rather than being dealt

with by a written resolution so as to ensure that Directors (including INEDs) are given opportunities to exchange their views

instantly with each other. The Chairman at least annually holds a meeting with the INEDs without the presence of other

Directors. Based on the above, the Board considers that the implementation of above mechanisms is effective.

Directors’ Liability Insurance

The Company has in place an appropriate directors’ and officers’ liability insurance policy for each member of the Board to cover

their liabilities on damages arising out of corporate activities. The coverage and the sum insured under the policy are reviewed

on an annual basis by the Company.

Responsibilities of the Board

The Board is at the core of the Company’s corporate governance framework, and there is a clear division of responsibilities

between the Board and the management of the Group (the “Management”). The Board is responsible for providing high-level

guidance and effective oversight of the Management. In general, duties of the Board include:

setting CEL’s values and standards and approving CEL’s long term strategy and monitoring its implementation;

establishing and maintaining the purpose and strategic direction of CEL, and satisfy itself that CEL’s purpose, values and

strategy are aligned with the culture of the Company;

monitoring and controlling CEL’s operations, financial and environmental, social and governance (“ESG”) performance

through reviewing and approving its business plan and financial budget, and ensures CEL has adequate resources, staff

qualification and experience in accounting, financial reporting and internal audit functions, as well as those relating to

CEL’s ESG performance and reporting;

ensuring timely and accurate disclosure to and communication with stakeholders;

approving the annual and interim results to ensure the integrity of CEL’s accounting and financial reporting system and

compliance with the relevant laws and standards;

reviewing and monitoring risk management and internal control of CEL to ensure that appropriate internal control

systems are in place, including systems for risk management, financial and operational control;

Corporate Governance Report | Continued

maintaining an effective governance and oversight of ESG affairs, as well as assessment and management of material

ESG risks, ESG strategy and reporting;

overseeing the management of the business and affairs of CEL, ensuring that a framework of prudent and effective

controls is in place to enable risks to be assessed and managed with due regard to maximizing Shareholders’ value; and

monitoring the performance of the Management, ensuring the financial statements are prepared to give a true, complete

and accurate view of the Company.

The Board authorises the Management to specifically carry out the approved strategies. The Management is responsible for the

day-to-day operation of the Company and is required to report to the Board regularly. The Board has formulated the “Terms of

Reference of the Board” and the “Mandate”, which set out the circumstances under which the Management should report to

and obtain prior approval from the Board before making decisions or entering into any commitments on behalf of the Group.

The Board regularly reviews the Mandate, and will update and amend the Mandate when appropriate.

Non-executive Directors are independent from the Management. Their responsibilities include:

(a) participating in Board meetings and provide independent opinions on matters involving strategy, policies, performance,

accountability, resources, appointment of key personnel and standards of conduct;

(b) promoting strict review and monitoring of management procedures;

(d) serving on the Board committees such as the Audit and Risk Management Committee, Nomination Committee,

Remuneration Committee, Strategy Committee, and ESG Committee by invitation;

(e) contributing to the Board and its Board committees by regularly attending meetings and actively participating, making

good use of their skills, expertise, different backgrounds and qualifications;

(f) attending general meetings and also fully understanding Shareholders’ opinions; and

(g) contributing to the formulation of company strategies and policies, monitor the Company’s performance against

established corporate goals and objectives, and focus on performance reporting.

Corporate Governance Functions

The Board is responsible for performing the corporate governance duties as set out below:

to develop and review the Company’s policies and practices on corporate governance;

to review and monitor the training and continuous professional development of the Directors and senior management;

to review and monitor the Company’s policies and practices on compliance with legal and regulatory requirements;

to develop, review and monitor the code of conduct and compliance manual applicable to employees and Directors;

to review the Company’s compliance with the Code and disclosure in the “Corporate Governance Report” under

Appendix C1 to the Listing Rules; and

to review the contribution of Directors in performing their duties to the Company.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

During the year, the Board had performed the above duties, including review of the following documents relating to the

corporate governance policies and practices:

Terms of Reference of the Board;

Mandate;

Risk Management Policy;

Corporate Governance Report;

Internal Control Report;

Risk Management Report; and

ESG Report.

Chairman and President

The positions of the Chairman of the Board and the President are held by Mr. Yu Fachang, a non-executive Director, and Mr. Lin

Chun, an executive Director, respectively. The roles of the Chairman and the President are clearly established and stipulated in

the terms of reference of the Board. As the Chairman of the Board, Mr. Yu leads the Board in order to ensure that the Board

discharges its formal responsibilities and conforms to good corporate governance practices and procedures. Besides, the

Chairman is also responsible for making sure that all Directors are properly informed of important issues on which the Company

is focusing and that all Directors receive accurate, timely and clear information. The Chairman also leads the Board in

formulating business objectives and their related strategies. He is also responsible for organising the business of the Board,

setting its agenda to take full account of the important issues facing CEL and the concerns of all Directors, ensuring that

adequate time is available for thorough discussion of critical and strategic issues, and ensuring its effectiveness with the

assistance of the Company Secretary. The Chairman is also taking primary responsibility for ensuring that good corporate

governance practices and procedures are in place. Through the Company Secretary, the Chairman oversees the implementation

of the practices and procedures set out in the Code. The Chairman facilitates the effective contribution of the Directors and the

effective communication with the stakeholders, ensures that timely and adequate information, which must be accurate, clear,

complete and reliable, is delivered to the Directors to fulfill their duties. The Chairman is also overseeing and giving guidance to

the Management in order to enhance the functions of the Board for ensuring the decision of Board are in the best interest of

the Company. Subject to those matters expressly reserved or otherwise stipulated by the Board, the Board grants its powers

and delegates its responsibilities to the Management Decision Committee for the daily administration, operation and

management of the business and affairs of the Group. The Management Decision Committee is the ultimate owner of

responsibilities of daily administration, operation and management of the business and affairs of the Group and is accountable

to the Board. Mr. Lin Chun, the President, serves as the Chairman of the Management Decision Committee. The Vice

Presidents and other Management Decision Committee members assist the President in carrying out the work and are

responsible for the relevant daily management matters of the Group.

The Terms of Reference of the Board, as updated from time to time, are published on the Company’s website

www.everbright.com and the website of the Stock Exchange. The Terms of Reference of the Board clearly define the terms of

reference of the Board as well as all the Board committees. The Board committees make recommendations to the Board on

relevant matters within their terms of reference, or make decisions under appropriate circumstances within the power

delegated by the Board. Designated secretaries are assigned to all Board committees to provide professional company

secretarial services in order to ensure that the Board committee members have adequate resources to discharge their

responsibilities properly and effectively. According to the Terms of Reference of the Board, the Board and the Board

committees review and evaluate their respective work processes and effectiveness on an annual basis. The Board shall also

promptly update and revise the Terms of Reference according to its needs, and the updated Terms of Reference of the Board

will also be uploaded timely to the Company’s website and the website of the Stock Exchange for public inspection.

Corporate Governance Report | Continued

Training and Support for Directors

The Listing Rules require directors to understand their responsibilities as directors of listed companies. To ensure that newly

appointed Directors have adequate understanding of the responsibilities as directors of listed companies as well as the

operations and business of CEL, the Board has set up an induction system for new Directors. The Company Secretary conducts

the induction programme for each of the newly appointed Directors, and the induction includes a description of directors’

duties, the Listing Rules, introduction of the Board and the Board committees’ composition together with the corporate

governance structure, and the introduction of business of the Company. Mr. Lin Chun and Dr. Qin Hongyuan attended the

director induction training of no less than 3 hours on 15 January 2024. Mr. An Xuesong and Mr. Wong Chun Sek Edmund also

attended the director induction training of no less than 2 hours on 21 March 2024. The Company received written confirmation

from each of the newly appointed Directors that he understood his obligations as a director of a listed company.

To ensure that all Directors can constantly update their knowledge and make informed recommendations and advice to the

Board, the Board has established a guideline on directors’ training. In addition to arranging appropriate directors’ training on an

annual basis, the Company issues “monthly circulars” to the Board members, contents of which include the monthly financial

statements of CEL, to give Directors a balanced and understandable assessment of the Company’s performance, position and

prospects, together with reports to the Directors about latest information on the Company’s operation, investor relations, and

information and training materials in relation to directors’ responsibilities. The said reading materials are mainly used for

providing the Board members with information on significant changes in the regulatory requirements applicable to both the

Directors and the Company, the latest developments in the industry and the latest development in corporate governance

practices in a timely manner, which can update their knowledge and skills associated with directors’ duties. The contents and

information contained in the “monthly circulars” to the Board members are of sufficient details to enable the Directors to

perform the Directors’ duties under Rule 3.08 and Chapter 13 of the Listing Rules.

Apart from the regular Board meetings, the Company Secretary also arranges meetings between the Board members and front-

line business teams in a timely manner, which enable the Board members to enhance understanding of the front-line business

development of the Company and enable Directors obtaining first hand information of the operation of the business of the

Company. In addition to arranging training to Directors regularly, the Board members are also encouraged to participate in

professional training programmes as they consider appropriate, with a view to developing and updating their knowledge and

skills.

Apart from the above training offered by the Company, based on the training records provided to the Company by the Directors,

the Directors also participated in the following training during 2023:

DIRECTORS TYPE OF TRAINING

EXECUTIVE DIRECTORS

Zhang Mingao (resigned on 4 January 2024) A, B, C

Wang Yun (appointed on 5 May 2023) A, C

Yin Yanwu A, C

NON-EXECUTIVE DIRECTORS

Yu Fachang A, B, C

Pan Wenjie (resigned on 22 March 2024) A, C

Fang Bin (resigned on 4 January 2024) A, C

INDEPENDENT NON-EXECUTIVE DIRECTORS

Lin Zhijun A, B, C

Chung Shui Ming Timpson A, C

Law Cheuk Kin Stephen A, C

A: attending seminars and/or conferences and/or forums

B: delivering talks at seminars and/or conferences and/or forums

C: reading information, newspapers, journals and materials relating to the latest requirements of the Listing Rules and Stock

Exchange, responsibilities of directors, economy, fiscal and financial matters, investment and business of the Company

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

Attendance of the Directors at Board, Board Committee and General Meetings

A total of five Board meetings were held during the year. The regular Board meetings and the regular Board committee

meetings were scheduled and approved by the Board in the preceding year. Unscheduled supplementary meetings (if any) may

also take place as and when necessary with reasonable notice. Formal notices have been sent to all Directors at least 14 days

before the regular meetings being held. All Directors are given an opportunity to include matters to be discussed in the agenda

for the Board meeting. In general, the Board agenda and meeting materials have been dispatched to all Board or relevant

committee members for review at least 3 working days before the meetings. According to Article 111 of the Articles of

Association, the Board/Board committee members may participate in Board/Board committee meetings through telephone

conferencing or similar communication equipment.

The agenda has been prepared after sufficient consultation with the Board/Board committee members and the Management

and are then approved by the respective chairmen. The Company Secretary is responsible for submitting the papers of Board

meetings and relevant information to the Directors, who can capture the adequate information timely which is complete and

reliable and which will enable Directors to make an informed decision on matters placed before them. The Board ensures that

Directors, especially Non-executive Directors and INEDs, are provided with sufficient resources in the furtherance of their

duties as Board/Board committee members, including obtaining further information if necessary or seeking independent

professional advice accordingly at the cost of the Company.

The minutes of the Board/Board committee meetings record in sufficient detail of all the issues considered and the decisions

reached, including any concerns raised by the Directors or dissenting view expressed, made by the Directors/respective Board

committee members. The minutes, upon reviewed by all the Directors/respective Board committee members and signed by

the Chairman of the Board/chairman of the respective Board committees in next meeting, are properly kept by the office of the

Company Secretary or the designated secretary. The Company Secretary or the designated secretary has reported matters

arising from the previous Board/Board committees meeting and the relevant follow-up actions taken.

All the Board members can also seek the advice and services from the Company Secretary or the designated secretaries of the

respective Board committees. The Company Secretary is also responsible for ensuring compliance of the procedures of the

Board as well as the applicable laws, rules and regulations. Apart from the regular Board meetings, the Company Secretary also

at least arranges one meeting annually for the Chairman of the Board to meet the INEDs in the absence of other Directors and

the Management. Directors have separate and independent access to the senior management and employees.

Corporate Governance Report | Continued

Attendance Rate

The attendance rate of the Directors at Board meetings and various Board committees meetings as well as the general

meetings of the Company in 2023 is set out below:

DIRECTORS/MEMBERS

BOARD

MEETING

AUDIT & RISK

MANAGEMENT

COMMITTEE

MEETING

NOMINATION

COMMITTEE

MEETING

REMUNERATION

COMMITTEE

MEETING

ESG

COMMITTEE

MEETING

GENERAL

MEETING

Yu Fachang 5/5 N/A 2/2 2/2 N/A 1/1

Zhang Mingao 5/5 N/A N/A N/A 1/2 1/1

Wang Yun

3/3 N/A N/A N/A 0/1 1/1

Yin Yanwu 5/5 N/A N/A N/A N/A 1/1

Pan Wenjie 5/5 N/A N/A N/A N/A 1/1

Fang Bin 5/5 N/A N/A N/A 1/2 1/1

Lin Zhijun 5/5 7/7 2/2 2/2 N/A 1/1

Chung Shui Ming Timpson 5/5 7/7 2/2 2/2 N/A 1/1

Law Cheuk Kin Stephen 5/5 7/7 2/2 2/2 2/2 1/1

Wang Hongyang

1/1 N/A N/A N/A 1/1 N/A

Notes:

Ms. Wang Yun was appointed as an Executive Director and a member of the ESG Committee with effect from 5 May 2023.

Mr. Wang Hongyang resigned as an Executive Director and also ceased to be a member of the ESG Committee with effect from 5 May

2023.

Every Director performs his/her duties as a Director at all times in good faith, objectively, with diligence and in the best interest

of CEL. The Directors have to spend substantial time for the meetings of the Board and the Board committees, including

reading the meeting papers before the meetings, allowing sufficient discussion of the issues in the meetings and having in-

depth understanding of the follow-up issues under the agenda after the meetings. Directors disclosed to the Company each

year the number and nature of offices they held in other public companies or organisations and other significant commitments,

with an indication of the time involved. The Board believes all Directors devoted sufficient time and efforts to deal with matters

of the Group, and other commitments would not affect the effectiveness of their contribution to or the time available for CEL.

BOARD COMMITTEES

Taking into account the market practices and international best practices in corporate governance, the Board established six

Board committees to assist it in carrying out its relevant responsibilities, including the Executive Board Committee, the Audit

and Risk Management Committee, the Nomination Committee, the Remuneration Committee, the ESG Committee and the

Strategy Committee. In addition, the Board will, if necessary, authorise an independent board committee comprising only

INEDs to review, approve and monitor the connected transactions (including continuing connected transactions) in accordance

with the requirements of the relevant laws and regulations. The Terms of Reference of the Board clearly define the terms of

reference of the Board committees. The Board committees can make recommendations to the Board on relevant matters

within their terms of reference, or make decisions under appropriate circumstances within the power as delegated by the

Board. The Board committees submit their reports on their work semi-annually. As mentioned, the Terms of Reference of the

Board, which set out the terms of references of all the Board committees, are published on the Company’s website and the

website of the Stock Exchange.

The Management is responsible for providing the Board and Board committees with adequate and timely information which is

complete and reliable and which will enable Directors to make an informed decision on matters placed before them. Where any

Director requires more information than those provided by the Management themselves, he will make further enquiries, to

which the Management must respond quickly and effectively. The Board and individual Directors have separate and

independent access to the senior management.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

Executive Board Committee

The Executive Board Committee currently consists of all of the four Executive Directors, including Mr. Lin Chun, Mr. An

Xuesong, Ms. Wang Yun and Mr. Yin Yanwu. Mr. Lin Chun, the President, is the chairman of the Executive Board Committee.

Upon delegation by the Board, the Executive Board Committee makes decisions as delegated by the Board through interactive

communications from time to time, including:

(a) to approve the corporate objectives and business development plans proposed by the management;

(b) to approve material transactions of the Company which are not required to be disclosed under the Listing Rules;

Securities in Mainland China;

(d) to approve bank account opening, change of authorised signatory and other relevant resolutions;

(e) to approve the renewal of bank loan/facilities, replacement of bank loan/facilities and other relevant resolutions;

(f) to propose to the Board the establishment or abolishing of any Board committees; and

(g) to approve other regular procedural matters that the Board agrees to delegate to the Executive Board Committee.

The resolutions passed by the Executive Board Committee have same effect as the resolutions of the Board.

Audit and Risk Management Committee

The Audit and Risk Management Committee (the “Committee”) currently comprises four members, and all members including

the chairman are INEDs. The Committee is chaired by Dr. Chung Shui Ming Timpson and the other members are Dr. Lin Zhijun,

Mr. Law Cheuk Kin Stephen and Mr. Wong Chun Sek Edmund. All of them possess appropriate professional qualifications and

experiences in financial matters. Further to the terms of reference required to be performed by the audit committee under the

Listing Rules, it also assists the Board in formulating and monitoring the risk management strategy and related framework and

policy of the Company. The Vice President of the Group in charge of Risk Management, Legal and Compliance affairs assists

the Committee in performing the daily risk management function of the Company in order to ensure that the risk management

and internal control systems have been implemented and complied with. The Committee assists the Board in fulfilling its

responsibilities relating to the supervision of the financial statements, internal control, risk management (including but not

limited to the risks relating to ESG), internal audit and external audit of the Company. The written terms of reference of the

Committee, which were prepared with reference to “A Guide for Effective Audit Committees” published by the Hong Kong

Institute of Certified Public Accountants and updated with reference to the requirement of the Code, were approved and

properly authorised by the Board. The Terms of Reference of the Committee is available for inspection on the Company’s

website. The Committee mainly assists the Board in performing its role in the Company in the following areas, among others:

Internal Audit Function

to supervise the Internal Audit Department implementing the annual audit planning reviews, at the time of which the

Internal Audit Department will review the general adequacy of the accounting system and internal control system and

will outline the indicated internal audit programme in respect of the Company and its subsidiaries for review and guidance

by the Committee;

to discuss and study the highlight of significant events and findings from the Internal Audit Department of which, in their

opinion, require the Committee’s knowledge and/or attention. Representative of Internal Audit Department will be invited

to attend the Committee meetings and present the internal audit reports in respect of the Company and its subsidiaries

for the Committee’s discussion. The Committee will discuss the reports and report the summary of reports as

appropriate to the Board;

Corporate Governance Report | Continued

to ensure that co-ordination between the Internal Audit Department and External Auditor is adequate and that the internal

audit function has adequate resources and appropriate standing within the Company, and to review and monitor its

effectiveness; and

to review and monitor the effectiveness of the internal control system and the internal audit function based on a risk

methodology process.

In addition, pursuant to code provisions D.2 and D.3.3 of the Code, the Committee conducted an annual review of the

effectiveness of the risk management and internal control systems of the Company with the assistance of the Vice President of

the Group in charge of Risk Management, Legal and Compliance and the Internal Audit Department. The internal control review

of the Group covered all material aspects, including financial, operational and compliance controls as well as risk management.

Upon completion of the review, the Committee agreed with the review results of the Internal Audit Department that the key

areas of the Company’s risk management and internal control systems were reasonably implemented and were able to prevent

material misstatements or losses, safeguard the Company’s assets, maintain appropriate accounting records, ensure

compliance with applicable laws and regulations, and generally the internal control requirements of the Code have been fulfilled.

Such views were recommended to the Board. Please refer to the section headed “Internal Control” for details about the said

review.

External Auditor

to appoint, retain, dismiss and replace the Company’s External Auditor, subject to endorsement by the Board and final

approval and authorisation by the Shareholders in general meetings, and to approve the remuneration and terms of

engagement of the External Auditor, and any questions of its resignation or dismissal; and monitor the associated fees

and independence of the External Auditor to ensure that the performance of non-audit services does not impair the

independence of the External Auditor in connection with their audit. The non-audit service to be performed by the

External Auditor shall be separately identified in connection with its pre-approval if the total amount of fees exceeds the

annual caps authorised by the Committee;

to meet the External Auditor at least annually, in the absence of the Management, to discuss matters relating to any

issues arising from the audit and any accounting, financial reporting or internal control matters the External Auditor may

wish to raise;

to review and monitor the effectiveness of the audit process in accordance with applicable standards and discuss with

the External Auditor the nature and scope of the audit and reporting obligations before the audit commences;

to review the work of the External Auditor (including the resolution of any disagreement between the Management and

the External Auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work,

the scope of their audit and any other services, and approve the fees for and terms of their services;

review with the External Auditor recent or anticipated developments in accounting principles or reporting practices that

may affect the Company or the scope of the audit; and discuss major anticipated audit problems, if any;

to review results of audits performed by the External Auditor including any changes in accounting procedures and/or the

system of internal controls noted or developed during the audit examination along with matters of controversy, if any,

with the Management, determine appropriate actions required on significant control weaknesses, and recommend such

actions to the Board; and

to review the External Auditor’s management letter, any material queries raised by the External Auditor to the

Management about accounting records, financial statements or systems of control and the Management’s response.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

Financial Reporting

to review and monitor the completeness, accuracy and fairness of half-year and annual financial statements before

submission to the Board with particular regard to changes in accounting policies and practices, major judgmental areas,

adequacy of disclosure, consistency within the financial statements and with prior disclosures, any significant audit

adjustments, the going concern assumption and any qualifications, compliance with any applicable legal requirements

and accounting standards and compliance with the requirements of the Listing Rules and other legal requirements in

relation to financial reporting.

The Committee invites the Group’s Vice President in charge of Finance, Vice President in charge of Risk Management, Legal

and Compliance, Head of Internal Audit Department and External Auditor to attend all its meetings.

The Committee considers any significant and unusual items that are, or may need to be, reflected in the report and financial

statements, and gives due consideration to any matters that have been raised by the Company’s staff responsible for the

accounting and financial reporting function, compliance officer or auditors.

Risk Management

Pursuant to code provisions D.2.3 and D.2.4 of the Code, with assistance of the Vice President of the Group in charge of Risk

Management, Legal and Compliance, the Committee considers and reports to the Board for its review of:

(a) the changes, since the last review, in the nature and extent of significant risks (including ESG risks), and how the

Company responds to changes in its business and the external environment;

(b) the scope and quality of the Management’s ongoing monitoring of risks (including ESG risks) and of the internal control

system and the work of internal audit;

(d) significant control failings or weaknesses identified (if any) and the extent that they have caused unforeseen outcomes or

contingencies that could have material impact on the Company’s financial performance or condition; and

(e) the effectiveness of the processes for financial reporting and Listing Rules compliance.

In addition, the Committee monitors the Company to disclose the following in the Risk Management Report:

(a) the process used to identify, evaluate and manage significant risks;

(b) additional information to explain its risk management processes and internal control system;

(c) an acknowledgement by the Board that it is responsible for the internal control system and reviewing its effectiveness;

(d) the process used to review the effectiveness of the internal control system; and

(e) the process used to resolve material internal control defects for any significant problems disclosed in its annual reports

and financial statements.

A comprehensive analysis of the risks affecting the businesses of the Company and the associated mitigation measures is set

out in the Risk Management Report on pages 67 to 75 in this Annual Report.

Corporate Governance Report | Continued

Corporate Governance

reviewing and dealing with the Company’s accounting, financial reporting and internal audit functions, the effectiveness

of the Company’s corporate governance structures and its implementation;

overseeing the Company to abide by any applicable laws and comply with regulations of the relevant regulators and

maintain its business ethics; and

making recommendations to the Board where necessary, and carrying out duties within the delegated authority of the

Board.

Whistleblowing

The Committee is responsible for monitoring the use and effectiveness of the whistleblowing policy for employees and third

parties who deal with the Group, such as the Group’s clients and suppliers that provide products or services to the Group, to

raise concerns, in confidence and anonymity, with the senior management of the Group or the Committee about possible

improprieties in any matter related to the Group, including but not limited to breach of legal or regulatory requirement, breach of

policy or code of conduct of the Group, illegal activity, misconduct or fraud involving internal control, accounting, audit and

financial matters, and misconduct or immoral behavior that may prejudice the reputation of the Group, etc. When employees

and third parties reasonably suspect any misconduct in the Group, they can notify the Vice President of the Group in charge of

Risk Management, Legal and Compliance, who shall investigate the matter and report to the Committee if a prima facie case is

established. If, for any reason, the whistleblower does not wish to report to the Vice President of the Group in charge of Risk

Management, Legal and Compliance, then the whistleblower can report to the chairman of the Committee. The Committee

shall then decide how the investigation is to be proceeded, and ensure that proper arrangements are in place for fair and

independent investigation of these matters for appropriate follow-up action. The Vice President of the Group in charge of Risk

Management, Legal and Compliance and the Company Secretary of the Company shall report to the Committee annually at the

Committee’s meeting in respect of all whistleblowing cases received during the year under the whistleblowing policy and the

respective status of handling. The Group’s whistleblowing policy is available on the Company’s website under the

“Sustainability” column.

Seven Committee meetings were held during the year with an attendance rate of 100%. The work performed by the

Committee in 2023 included the review and, where applicable, approval of:

the Company’s financial statements for the year ended 31 December 2022 and the annual results announcement thereof,

which were recommended to the Board for approval;

the Company’s interim financial statements for the six months ended 30 June 2023 and the interim results

announcement thereof, which were recommended to the Board for approval;

the audit report and management letter submitted by the external auditor;

the quarterly risk assessment report submitted by the risk management function;

the quarterly internal audit report submitted by the Internal Audit Department;

the re-appointment of external auditor, and the audit fees and non-audit fees payable to external auditor for the annual

audit, interim review and other non-audit services; and

CEL’s internal audit plan and key areas of the internal audit work focus for 2024.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

In addition, the Committee also assisted the Board in performing the internal control and risk management function, including:

to review the systems of financial control, internal control and risk management;

to discuss the internal control system with the Management to ensure that the Management has performed its duty to

have an effective internal control system. This discussion should include:

(a) to review annually the adequacy of resources, staff qualifications and experience, training programmes and budget

of accounting, internal audit and financial reporting function, as well as those relating to CEL’s ESG performance

and reporting;

(b) to consider major investigation findings on internal control matters as delegated by the Board or on its own

initiative and the Management’s response to these findings of CEL;

chairman or the request of senior management to review significant control or financial issues;

(d) to review the annual general representation letter from the Management; and

(e) to review the effectiveness of internal audit function of the Company and monitor its results.

The Company Secretary will ensure that the Committee is provided with sufficient resources to perform its duties according to

the instruction of the Chairman of the Committee.

Nomination Committee

The Nomination Committee currently has five members comprising Mr. Yu Fachang, the Chairman of the Board and a Non-

executive Director, and four INEDs, namely Dr. Lin Zhijun, Dr. Chung Shui Ming Timpson, Mr. Law Cheuk Kin Stephen and Mr.

Wong Chun Sek Edmund. Dr. Lin Zhijun, an INED, is the chairman of the Nomination Committee. The Nomination Committee is

responsible for assisting the Board in nominating the right candidates for directorship and senior management positions as well

as for evaluating the competence of the candidates to ensure that they are in line with the Company’s overall development

directions and related requirements under the Listing Rules. The Nomination Committee assists the Board in fulfilling its

supervisory role over the Company in the following areas, among others:

to review the structure, size and composition (including the skills, knowledge and experience) of the Board at least

annually and make recommendations on any proposed changes to the Board to complement the Company’s corporate

strategy;

to identify individuals suitably qualified to become Board members and select or make recommendations to the Board on

the selection of individuals nominated for directorships;

to assess the independence of INEDs annually;

to make recommendations to the Board on the appointment or re-appointment of Directors and succession planning for

Directors, in particular the Chairman and the President;

to make recommendations to the Board on the appointment or re-appointment of the senior management;

to review the policy for nomination of Directors and make recommendation of amendments to the Board when needed;

to monitor the implementation of Board Diversity Policy of the Company and review and report Board diversity related

matters to the Board annually;

to advise the Board on potential director succession planning to achieve gender diversity on the Board; and

to review the implementation and effectiveness of mechanisms to ensure independent views and input annually.

Corporate Governance Report | Continued

For the recruitment of Directors and senior management, the Nomination Committee first takes into account the skills,

knowledge and experiences of the Board and Board committees, and the business requirements of the Company in order to

determine the key requirements for the candidates and objective criteria for selection. Such criteria include relevant expertise,

integrity, industry experiences and independence, etc., taking into account the benefits of diversity, including but not limited to

gender diversity.

The provisions set out in the above paragraphs are the key nomination criteria and principles of the Company for nomination of

directors, and these constitute the Nomination Policy of the Company adopted by the Nomination Committee during the year.

The Nomination Committee monitors and reviews the Nomination Policy annually.

The Nomination Committee held two meetings in the year and passed one resolution in writing to transact its business for

making recommendations to the Board on the appointment of Chairman, Non-executive Director and Vice President, reviewing

the structure, size and composition (including skills, experience and knowledge) of the Board and the Board committees,

reviewing the Board Diversity Policy and the Nomination Policy, assessing the independence of the INEDs and making

recommendations to the Board on the re-election of the retiring Directors at the annual general meeting of the Company, etc.

The attendance rate of the Nomination Committee meetings was 100%.

Remuneration Committee

The Remuneration Committee currently has five members comprising Mr. Yu Fachang, the Chairman of the Board and a Non-

executive Director, and four INEDs, namely Dr. Lin Zhijun, Dr. Chung Shui Ming Timpson, Mr. Law Cheuk Kin Stephen and Mr.

Wong Chun Sek Edmund. The Remuneration Committee is chaired by Dr. Lin Zhijun, an INED. The Remuneration Committee,

as delegated by the Board, is responsible for assisting the Board in overseeing the Group’s human resources and remuneration

policies. The Remuneration Committee assists the Board in fulfilling its supervisory role over the Company in the following

areas, among others:

to make recommendations to the Board on the Company’s policy and structure for all Directors’ and senior managements

remuneration and on the establishment of a formal and transparent procedure for developing remuneration policy;

to review and approve the management’s remuneration proposals with reference to the Board’s corporate goals and

objectives;

to determine, with delegated responsibility, remuneration packages of individual Executive Directors and senior

management, including benefits in kind, pension rights and compensation payments, including any compensation payable

for loss or termination of their office or appointment;

to assess the performance of Executive Directors and to approve the terms of Executive Directors’ services contracts;

to ensure the fairness and reasonableness of the overall human resources and remuneration policies of the Company;

to make recommendations to the Board on the remuneration of Non-executive Directors and INEDs;

to consider salaries paid by comparable companies, time commitment and responsibilities and employment conditions

elsewhere in the Company;

to review and approve compensation payable to Executive Directors and senior management for any loss or termination

of office or appointment to ensure that it is consistent with contractual terms and is otherwise fair and not excessive;

to review and approve compensation arrangements relating to dismissal or removal of Directors for misconduct to ensure

that they are consistent with contractual terms and are otherwise reasonable and appropriate;

to ensure that no Director or any of his associates is involved in deciding his own remuneration; and

if the Shareholders approve and adopt the share schemes in accordance with Chapter 17 of the Listing Rules, the

Remuneration Committee, in accordance with the requirement of the Listing Rules, will be authorized to review and/or

approve matters relating to the share schemes (if applicable).

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

A total of two meetings were held by the Remuneration Committee during the year with an attendance rate of 100%. The work

performed by the Remuneration Committee in 2023 included the review and, where applicable, approval of:

the performance appraisal of the Executive Directors and senior management for the year 2022;

the proposal on staff bonus (including the senior management) for the year 2022 and salary adjustments for the year

2023 for the Company; and

the remuneration package of newly appointed Executive Director.

Directors’ Remuneration Policy

To ensure that the Directors receive remuneration commensurate with the time and effort they dedicate to the Company,

Directors and senior management’s remuneration should be appropriate and reflect their duty and responsibility to fulfill the

expectations of the Shareholders and meet regulatory requirements. The Board is authorised by a resolution passed at the

annual general meeting each year to fix the remuneration of Directors. The Remuneration Committee, as delegated by the

Board, in proposing the remuneration of Directors, makes reference to companies of comparable business type or scale, and

the nature and quantity of work at both Board and Board committees (including frequency of meetings and nature of agenda

items). The Remuneration Committee also determines the specific remuneration package of Executive Directors and senior

management, including share options and benefits in kind. The Board, based on the recommendations of the Remuneration

Committee, approves the remuneration policy of the Company. Currently the principal components of the Company’s

remuneration package for Executive Directors and senior management include the basic salary, a discretionary bonus and other

benefits in kind. According to the directors’ remuneration policy of the Company, Executive Directors and Non-executive

Directors shall not receive any directors’ emolument and salary for their office of Directors. For the employment of an Executive

Director in any executive position of the Group, such Executive Director is entitled to a basic salary and allowance and a

discretionary bonus, which are determined by the Remuneration Committee with reference to his/her duties and

responsibilities, his/her performance, the performance of the Group and the market conditions. A significant portion of the

Executive Directors’ or senior management’s discretionary bonus is based on the Company’s and the individual’s performance

during the year in order to achieve an appropriate compensation level. INEDs are entitled to a Director’s fee and basic allowance

as well as an allowance for attending each meeting of Board and Board committees, which are determined by the Board with

reference to the market conditions. None of the Directors is entitled to determine his/her own remuneration package. The

Remuneration Committee reviews and approves the annual and long term performance targets for senior management with

reference to corporate goals and objectives approved by the Board from time to time. The Remuneration Committee also

reviews the performance of the senior management against the targets set on an ongoing basis, and reviews and approves the

specific performance- based remuneration of the senior management. The Remuneration Committee seeks professional advice

in appropriate circumstance at the cost of the Company.

The remuneration received by each of the Directors in 2023 is listed in note 8(a) to the financial statements in this Annual

Report. The current Directors’ remuneration approved by the Board as authorised by Shareholders at the general meeting is as

follows:

There is no Director’s fee for Executive Directors and Non-executive Directors. The Director’s fee is HK$200,000 per annum for

each INED who has served for one full year and pro-rated for INED who did not serve for one full year. There is no standard fee

for INEDs for acting as member(s) of the Remuneration Committee, Audit and Risk Management Committee, Nomination

Committee, ESG Committee and Strategy Committee. However, an allowance is to be paid to INEDs for attending the following

meetings:

(a) HK$12,000 for attending a Board meeting;

(b) HK$7,000 for attending a meeting of the Remuneration Committee, Nomination Committee, ESG Committee and

Strategy Committee; and

other members.

A basic allowance in a total amount of HK$100,000 is to be paid to each INED every year, which will be distributed in two equal

installments by 30 June and 31 December of each year.

Corporate Governance Report | Continued

Remuneration of Directors and Senior Management

The remuneration of the members of the senior management (including Executive Director) by band for the year ended 31

December 2023 is set out below:

REMUNERATION BANDS (HK$) NUMBER OF PERSONS

Less than HK$500,000 1

HK$1,000,001 to HK$1,500,000 1

HK$1,500,001 to HK$2,000,000 4

Further particulars regarding Directors’ remuneration and the five highest paid employees as required to be disclosed pursuant

to Appendix D2 to the Listing Rules are set out in note 8 to the financial statements.

Environmental, Social and Governance Committee

In 2021, the ESG Committee was established by the Board and aims to integrate ESG principles into business decision- making

and keep pace with other international enterprises on ESG. The ESG Committee currently has five members comprising three

Executive Directors, namely Mr. Lin Chun, Mr. An Xuesong and Ms. Wang Yun, a non-executive Director, Dr. Qin Hongyuan,

and an INED, Mr. Law Cheuk Kin Stephen. Mr. Lin Chun is the chairman of the ESG Committee. The ESG Committee is

responsible for assisting the Board in and reporting to the Board on the following areas, among others:

to formulate and review the Group’s ESG vision, strategies, targets, governance structure and policies, and to monitor

the incorporation of ESG principles into the business decision-making procedures;

to identify and assess material ESG issues involving the business of the Group and/or other significant stakeholders and

their priority, and to formulate the policy for communication with stakeholders;

to review and monitor the implementation of the Group’s ESG policies and measures and the ESG-related risk

management and internal control system;

to monitor the Group’s ESG performance and effectiveness; and

to review the ESG reports prepared in accordance with the requirements of the Listing Rules or other applicable laws and

regulations, and to make recommendations to the Board for approval and confirming the issuance of ESG statements of

the Board.

The ESG Committee held two meetings during the year to review the work plan of the ESG working group and adopt the ESG

policies, including the Climate Change Policy, of the Group, etc. The attendance rate of the ESG Committee meeting was

62.5%.

Strategy Committee

The Strategy Committee is responsible for studying the long term strategy and planning of the Group and making

recommendations to the Board for the middle and long term development strategies of the Group. The Strategy Committee

currently has seven members comprising, the Chairman of the Board and a Non-executive Director, Mr. Yu Fachang, two

Executive Directors, Mr. Lin Chun and Mr. An Xuesong, and four INEDs Mr. Law Cheuk Kin Stephen, Dr. Lin Zhijun, Dr. Chung

Shui Ming Timpson and Mr. Wong Chun Sek Edmund. Mr. Law Cheuk Kin Stephen, an INED, is the chairman of the Strategy

Committee.

Independent Board Committee

An Independent Board Committee will be formed from time to time to make recommendation and give advice to the

independent Shareholders on voting on the Company’s connected transactions and continuing connected transactions or other

transactions of the Group that require independent Shareholders’ approval at general meetings.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

ACCOUNTABILITY AND AUDIT

CEL aims to ensure that the disclosures provide meaningful information and do not give a misleading impression. As part of the

Company’s system of internal control, the Management Decision Committee formed by the Management submits a

“Representation Letter” to the Board, in which they give their confirmation on the competence of the accounting records, the

compliance of financial reporting, the accuracy of the fair value of the investment projects and that the information provided to

the External Auditor and Board members are of full range, complete, correct and without omission, covering financial and

relevant non-financial information. The letter forms the supporting documents for the Board to sign off the Representation

Letter to the External Auditor.

INTERNAL CONTROL

The Board has the responsibility of ensuring that the Company maintains sound and effective internal control to safeguard the

Company’s assets. The internal control system is designed to provide reasonable, but not absolute, assurance against material

misstatement or loss; to manage, but not completely eliminate, the risks of system failure; and to assist in achieving the

Company’s objectives. In addition to safeguarding the Company’s assets, it also ensures the maintenance of proper accounting

records and compliance with relevant laws and regulations.

The Company’s risk management and internal control systems include several different functions: business units, operations,

risk management, legal and compliance, institutional sales, brand management, company secretarial, finance and accounting,

human resources, information technology, administration, internal audit, etc., which constitute a comprehensive operating

system for the Company. Riding on the concept of comprehensive risk management and internal control systems, the

Management establishes detailed governing procedures in all levels, which are monitored by qualified professionals with

extensive management experience and continuously updated according to the Company’s latest business development.

The Group’s monitoring structure

In order to fully control the level of risk and to monitor the internal management effectively, the Company integrates the

requirements of risk management and internal control into the corporate management and business processes by setting up

“three lines of defense”:

1st. The risk management performed by frontline departments

In response to the business conditions and its development, the business units perform systematic analysis, verification,

management and monitoring on risk factors from different perspectives, such as strategic risk, market risk, financial risk,

operational risk and ESG risk, etc. The Management sets business goals and the overall risk limits at both the business

unit level and the Company level. Based on the nature of the business activities, the Management sets up approval,

verification and monitoring processes to ensure the business development and risk management complement each

other, and to ensure that the business goals can be achieved by managing risk effectively. By adopting a comprehensive,

systematic and proactive framework of risk management and internal control, the Company’s business can be developed

more effectively and efficiently.

2nd. Continuously monitoring by middle and back office

The middle and back offices, including Finance and Accounting, Operations, Risk Management, Legal and Compliance,

Company Secretary, etc., must set up relevant internal control and management systems to monitor the risk exposures,

supplement and update the internal control and management procedures based on the latest business development and

changes of risk. Meanwhile, middle and back offices and business units work independently to perform financial,

operational and compliance monitoring as well as risk management functions within the Company.

Corporate Governance Report | Continued

3rd. The independent review of internal audit

Internal audit is an independent department carrying out objective review and providing advisory service. It uses

systematic and standardised approach to evaluate whether the operating activities, risk management and internal control

are appropriate and effective. The Head of Internal Audit Department reports directly to the Audit and Risk Management

Committee on its work while the daily administrative and human resource matters of the department are reported to the

President of the Group.

Based on the risk oriented principle, Internal Audit compiles annual audit plan and rolling audit plan to make sure that its

audit covers all business and operation processes and their related risks. In accordance with the annual audit plan

approved by the Audit and Risk Management Committee, Internal Audit reviews the effectiveness of the Company’s risk

management and internal control systems, and prepares internal audit reports quarterly for the Audit and Risk

Management Committee to review and the relevant management to follow up. Internal Audit also submits the audit

follow-up reports quarterly to ensure that the management and relevant departments have taken appropriate actions

towards the audit suggestion which aims at improving the risk management and internal control procedures.

Based on the results of the relevant internal audit and assessment of internal control, Internal Audit develops,

implements and updates the internal audit strategy so as to improve the quality of audit.

The review of risk management and internal control by the Board

Risk Management, Legal and Compliance Department prepares the risk management report on a quarterly basis and submits it

to the Audit and Risk Management Committee for review. The report outlines the risks faced by CEL, changes in business

activities, compliance issues and recommendations. In addition, the Board reviews the effectiveness of CEL’s risk management

and internal control systems with the assistance of the Audit and Risk Management Committee, which covers all material

control including financial, operational and compliance control, and the risk management (included but not limited to the risk in

relation to ESG) system. The results of the annual review of the effectiveness of the Company’s risk management and internal

control systems were reported to the Audit and Risk Management Committee and the Board by the Internal Audit Department.

The Board acknowledged that the risk management and internal control systems of the Company during the review period

were effective and adequate.

The Board acknowledges that it has the ultimate responsibility to ensure that there are sound and effective financial control,

internal audit and accounting functions. The Board delegates the Audit and Risk Management Committee with the responsibility

of reviewing the adequacy of the resources of accounting and financial report, and internal audit functions, as well as those

relating to ESG performance and reporting on an annual basis, with the assistance of the Management and the Internal Audit

Department. The scope of the review covers the staffing and back-up resources, their relevant working experiences and years

served, recognised professional qualifications, the adequacy of budget for training and the corresponding training. The results of

the annual review were reported to the Audit and Risk Management Committee and the Board.

The Audit and Risk Management Committee and the Board consider that the material aspects of the Company’s risk

management and internal control systems are reasonably implemented and are able to prevent significant misstatements or

losses, whilst safeguarding the Group’s assets, maintaining appropriate accounting records and complying with applicable laws

and regulations. Such internal control system has basically fulfilled the requirements of the Code as set out in Appendix C1 of

the Listing Rules regarding risk management and internal control systems in general.

In addition, CEL has established and implemented the following internal control system:

The Management established an organisational structure with different hierarchies of duties, authorities and

responsibilities of personnel; formulated written policies and procedures to provide checks and balances for the

authorities of different departments; reasonably safeguarded the assets and the implementation of the internal control

measures of the Company; and operated in compliance with laws and regulations under effective risk control.

The Management formulated and continually monitored the implementation of the Company’s development strategies,

business plans and financial budgets. The accounting and management systems were also in place to provide the basis

for evaluating the financial and operational performance.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

The Company formulated various risk management and human resource management policies. Specific units and

personnel were responsible for identifying, assessing and managing each of the major risks types. These include

reputation, strategic, legal, compliance, credit, market, operation, liquidity and interest rate risk.

The Vice President of the Group in charge of Risk Management, Legal and Compliance is responsible for the routine risk

management work of the Company and for supporting and assisting the Management in defining and evaluating the risk

exposures of the Company’s businesses and conducting the co-ordination thereof. He assesses, identifies and records

the risk structure of the Company and ensures the relevant business units are aware of such issues. He regularly reports

to the Audit and Risk Management Committee and the Management Decision Committee. The Risk Management, Legal

and Compliance Department assists him in carrying out his duties.

The Audit and Risk Management Committee reviews the letter of recommendation submitted by the External Auditor to

the Management in connection with the annual audit. The Internal Audit Department is responsible for ensuring that the

recommendations are promptly followed, and also periodically reports the status of the implementation thereof to the

Audit and Risk Management Committee and keep the Management informed with updated information.

Anti-corruption

The Group has established policies and systems that promote and support anti-corruption laws and regulations. Please refer to

the paragraphs headed “Anti-Corruption” in the separate ESG Report for 2023. The ESG report is published on the websites of

the Company at www.everbright.com (by clicking “Environmental, Social and Governance Report” under “Sustainability”) and

the Stock Exchange at www.hkexnews.hk at the same time as the publication of this Annual Report in compliance with the

ESG Reporting Guide as set out in Appendix C2 to the Listing Rules.

RISK MANAGEMENT

With assistance of the Audit and Risk Management Committee, the Board is responsible for evaluating and determining the

nature and extent of the risks that it is willing to take in achieving the Company’s strategic objectives. With assistance of the

Risk Management, Legal and Compliance Department and the Management, the Audit and Risk Management Committee is

responsible for ensuring that the Company establishes and maintains appropriate and effective risk management and internal

control systems. The Management’s written confirmation on the effectiveness of the risk management and internal control

system’s structure, their implementation and monitoring to the Board has been set out in the Risk Management Report on

pages 67 to 75 in this Annual Report.

DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted its own “Code for Securities Transactions by Directors and Relevant Employees” (the “Code”) on

terms no less exacting than the required standard set out in the Model Code for Securities Transactions by Directors of Listed

Issuers (the “Model Code”) contained in Appendix C3 of the Listing Rules to govern the securities transactions of the Directors

and relevant employees of the Company. Following a specific enquiry made by the Company, all Directors confirmed that they

have complied with the required standard set out in both the Code and the Model Code throughout the year ended 31

December 2023.

CONSTITUTIONAL DOCUMENTS

During the year, there is no change in the Company’s constitutional documents.

Corporate Governance Report | Continued

EXTERNAL AUDITOR

Pursuant to the responsibility delegated by the Board, the Audit and Risk Management Committee had reviewed and monitored

the independence, objectivity and effectiveness of Ernst & Young (“EY”), the Group’s External Auditor, on their audit

procedures, and the results were satisfactory. Upon the recommendation of the Audit and Risk Management Committee, the

Board had proposed that EY be re-appointed as auditor of the Group for the year of 2023. The re-appointment of EY as auditor

of the Group for the year of 2023 and the authorization of the Board to determine the remuneration for EY were approved at the

Company’s annual general meeting held on 15 June 2023.

For 2023, EY charged total fees of HK$16,000,000 for audit services, HK$2,547,000 for non-audit services (including

HK$1,844,000 for the review of the interim financial statements and HK$703,000 for tax and other services). For 2022, EY

charged total fees of HK$16,129,000 for audit services, HK$2,555,000 for non-audit services (including HK$1,844,000 for the

review of interim financial statements and HK$706,000 for tax and other services).

According to the relevant regulations issued by the Ministry of Finance of the People’s Republic of China and the State-owned

Assets Supervision and Administration Commission of the State Council of the People’s Republic of China regarding the audit

work on financial statements of central state-owned enterprises, there are restrictions in respect of the years of audit services

that an accounting firm can continuously provide to a central state-owned enterprise. The Company is a subsidiary of China

Everbright Group Ltd. which is a central state-owned enterprise. Since the number of years that the Company has continuously

engaged its existing independent auditor, EY, is approaching the prescribed time limit and in order to maintain good corporate

governance and enhance the independence of the auditor, EY will retire as the auditor of the Company with effect from the

conclusion of the 2024 annual general meeting, and will not be re-appointed.

The Company has received a written confirmation letter dated 22 March 2024 from EY confirming that there are no

circumstances connected with its retirement that need to be brought to the attention of the Shareholders. The Board and the

Audit and Risk Management Committee of the Board further confirmed that there are no disagreements or unresolved matters

between the Company and EY and there are no other matters in connection with the retirement of the auditor that need to be

brought to the attention of the Shareholders.

The Audit and Risk Management Committee has considered a number of factors when recommending KPMG as the auditor of

the Company to the Board. The Board, with the recommendation from the Audit and Risk Management Committee, proposed

to appoint KPMG as the auditor of the Company for the year ending 31 December 2024 following the retirement of EY, and to

hold office until the conclusion of the next annual general meeting of the Company to be held in 2025, subject to the approval

of the Shareholders at the 2024 annual general meeting.

DIRECTORS’ RESPONSIBILITIES IN RESPECT OF FINANCIAL STATEMENTS

The following statement should be read in conjunction with the auditor’s statement of its responsibilities as set out in the

Independent Auditor’s Report contained in the 2023 Annual Report of the Company. The statement sets out for the

Shareholders the respective responsibilities of the Directors and the auditors in relation to the financial statements.

The Directors are required by the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) (the “Companies Ordinance”)

to prepare financial statements which give a true and fair view of the state of affairs of the Company. The financial statements

should be prepared on a going concern basis unless it is inappropriate to do so. The Directors have the responsibility of ensuring

that the Company keeps accounting records which disclose with reasonable accuracy the financial position of the Company and

which enable them to ensure that the financial statements comply with the requirements of the Companies Ordinance. The

Directors also have general responsibilities for taking such steps as are reasonably open to them to safeguard the assets of the

Company and to prevent and detect fraud and other irregularities.

The Directors consider that in preparing the financial statements in the 2023 Annual Report, the Company has adopted

appropriate accounting policies which have been consistently applied with the support of reasonable and prudent judgments

and estimates, and that all accounting standards which they consider to be applicable have been followed. Directors ensure

that the financial statements are prepared so as to give a true and fair view of the financial status, results and cash flow status

of the reporting period.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

EFFECTIVE DISCLOSURE MECHANISM AND HANDLING OF INSIDE INFORMATION

The Board reviews and monitors from time to time the effectiveness of the Company’s disclosure process for reports,

announcements and inside information. It encourages and takes necessary steps to disclose information in a timely manner and

to ensure the information concerning the Company is expressed and communicated in a clear and objective manner that

enables the Shareholders and the public to appraise the position of the Company to make informed investment decisions.

The Company’s “Inside Information Policy” maintains procedures and internal control for the handling and dissemination of its

inside information. The Board is aware of its obligations under the Listing Rules. The overriding principle is that information

which is expected to be inside information should be announced immediately when it is the subject of a decision. The Company

has stated in its “Inside Information Policy” that it has a strict prohibition on the unauthorised use of confidential or inside

information and has established and implemented procedures for responding to external enquiries about the Company’s affairs.

COMMUNICATION WITH SHAREHOLDERS AND SHAREHOLDERS’ RIGHTS

Annual General Meeting

The Board attaches a high degree of importance to non-interrupted communications with Shareholders, especially direct

dialogue with them at the Company’s annual general meetings. Shareholders are encouraged to actively participate in such

meetings. Directors, including the Chairman and INEDs, and representatives of EY were present at the Company’s 2023 annual

general meeting held on 15 June 2023 to address to questions and comments raised by Shareholders.

In addition, the Company also provided further information on the 2023 annual general meeting in a circular to Shareholders.

This includes background information to the proposed resolutions and information on the retirement and re-election of Directors

in order to enable all Shareholders to understand their rights at the annual general meeting and to make decisions with

sufficient information.

Through the Company Secretary, the Chairman ensures that appropriate steps are taken to provide effective communication

with Shareholders and that their views are communicated to the Board as a whole. All INEDs attended the annual general

meeting. Shareholders could express their concerns to the INEDs. The opinions of INEDs have significant influence on the

Board in the process of making decisions.

Shareholders’ Communication Policy

The Company always advocates that all Shareholders shall be provided with ready, equal and timely access to balanced and

easy-to-understand information about the Company (including its financial summary, business introduction, corporate profile,

introduction of corporate governance, business and contact information of investor relations), which allow the Shareholders to

exercise their rights in an informed manner, and also improve communications between the Shareholders, potential investors

and other stakeholders with the Company.

The Company has adopted a formal Shareholders’ communication policy. The Company believes that communicating with the

Shareholders and investors by electronic means (in particular through the Company’s website (www.everbright.com )) is an

efficient way of delivering information in a timely and convenient manner. The “Investor Relations” section is available on the

Company’s website. Information published on the Company’s website is updated from time to time. Information released by

the Company on the Stock Exchange is also posted on the Company’s website immediately thereafter. Such information

includes financial statements (annual report and interim report), result announcements, circulars, notices of general meetings,

announcements and monthly returns on movements in securities, etc. The briefing materials provided in the annual general

meeting and the result announcement of the Company are posted on the website of the Company as soon as possible once

the materials are published. The contents published by the Company regarding all press releases, corporate profiles, corporate

structure, biographical information of the Directors and the Management, service philosophy and corporate social responsibility

are posted on the website of the Company. Corporate communications are provided to the Shareholders and the public in plain

language and in both English and Chinese versions to facilitate understanding of the Shareholders and other stakeholders of the

Group. Web-casting services are provided on the meetings announcing the interim and final results of the Company.

Corporate Governance Report | Continued

Physical or online investor briefings and one-on-one meetings, roadshows (both domestic and international), media interviews,

marketing activities for investors and specialist industry forums are available on a regular basis in order to facilitate

communications between the Company and the Shareholders and other stakeholders.

The general meeting is the principal opportunity and ideal venue for Shareholders to exchange views on the Company’s

business with the Directors and the Management. The Board therefore encourages Shareholders to attend the annual general

meeting, exercise their right to speak and vote, and give valuable advice on the Company’s operational and governance matters.

A Q&A session is held at each general meeting to give opportunities to Shareholders to raise questions and share their views in

relation to the Group’s affairs. Directors (including the Chairman of the Board, the INEDs and the chairman of the Board

committees, or their duly appointed delegates) and the Management should be available at general meetings to respond to the

Shareholders’ questions and comments. The Company also ensures that the representative of the External Auditor attend the

Company’s annual general meetings to answer questions about the conduct of the audit, the preparation and content of the

auditors’ report, the accounting policies and auditor independence, etc.

The Shareholders should direct their questions about their shareholdings to the Company’s Share Registrar, Tricor Secretaries

Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong with contact number of (+852) 2980 1333. The

Company shall ensure effective and timely dissemination of information to the Shareholders and the public at all times. The

Shareholders, potential investors and other stakeholders of the Group may direct their questions to the Corporate

Communications Team by email to [email protected] or by phone at (+852) 2528 9882.

Upon reviewing the implementation and effectiveness of the Shareholders’ communication policy of the Company, the Board

considers the policy and its implementation are effective as the policy has provided effective channels for Shareholders,

potential investors and other stakeholders of the Group to communicate their views with the Company and the Company has

complied with the principles and required practices as set out in the policy as described above during the year.

Dividend Policy

The Board has adopted a dividend policy for the Company. In principle, the policy allows the Shareholders to share the profits of

the Company to obtain reasonable, stable and sustainable dividend returns whilst retaining an adequate cash level to meet

general working capital and future development requirements. Based on the above principle, the Company intends to distribute

an appropriate amount of annual dividends, part of which may be declared in the form of an interim dividend, subject to the

Articles, the Companies Ordinance and other applicable laws and regulations and taking into account any factor that the Board

considers relevant. The dividend policy of the Company is subject to periodic review by the Board. The dividend policy does not

form any commitment on distribution of dividends to the Shareholders and there is no assurance that dividends will be paid in

any particular amount for any given period.

Shareholders’ Rights

Shareholders are entitled to convene an extraordinary general meeting, make any proposals at Shareholders’ meetings and

propose a person for election as a Director. Please see the detailed procedure as follows:

the way in which Shareholders can convene a general meeting:

Shareholder(s) representing at least 5 per cent of the total voting rights of all Shareholders having a right to vote at

general meetings can make a request to call a general meeting pursuant to Section 566 of the Companies Ordinance.

The request –

(a) must state the general nature of the business to be dealt with at the meeting;

(b) may include the text of a resolution that may properly be moved and is intended to be moved at the meeting;

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

(d) may be sent in hard copy form or in electronic form to the Company Secretary at the Company’s registered office

(46th Floor, Far East Finance Centre, 16 Harcourt Road, Hong Kong) or by way of email to [email protected] ; and

(e) must be authenticated by the person or persons making it.

Pursuant to Section 567 of the Companies Ordinance, Directors must call a general meeting within 21 days after the date

on which they become subject to the requirement and the meeting so called must be held on a date not more than 28

days after the date of the notice convening the meeting. If the Directors do not do so, the Shareholders who requested

the meeting, or any of them representing more than one half of the total voting rights of all of them, may themselves

convene a general meeting pursuant to Section 568 of the Companies Ordinance, but the meeting must be called for a

date not more than 3 months after the date on which the Directors become subject to the requirement to call a general

meeting. The Company will reimburse any reasonable expenses incurred by the Shareholders requesting the meeting by

reason of the failure of the Directors duly to call a general meeting.

the procedures for making proposals at Shareholders’ meetings:

The following Shareholders are entitled to put forward a proposal (which may properly be put to the meeting) for

consideration at a general meeting of the Company:

(a) Shareholders representing not less than 2.5% of the total voting rights of all Shareholders who have a right to vote

on the resolution at the general meeting to which the requests relate; or

(b) not fewer than 50 Shareholders who have a right to vote on the resolution at the general meeting to which the

requests relate.

The requisition specifying the proposal, duly signed by the Shareholders concerned, together with a statement of not

more than 1,000 words with respect to the matter referred to in the proposal, must be deposited at the registered office

of the Company (46th Floor, Far East Finance Centre, 16 Harcourt Road, Hong Kong) not less than six weeks before the

general meeting. The Company will take appropriate actions and make necessary arrangements, and the Shareholders

concerned will be responsible for the expenses incurred in giving effect thereto in accordance with the requirements

under Sections 615 and 616 of the Companies Ordinance once valid documents are received.

the procedure for Director’s nomination and election by Shareholders:

If a Shareholder wishes to propose a person other than a retiring Director for election as a Director at a general meeting,

the Shareholder should lodge at the registered office of the Company (46th Floor, Far East Finance Centre, 16 Harcourt

Road, Hong Kong) by reference to the “Procedures for Shareholders to Propose a Person for Election as a Director”

posted on the website of the Company, (a) a notice signed by such Shareholder (other than the proposed person) duly

qualified to attend and vote at the meeting of his/her intention to propose such person for election; and (b) a notice

signed by the proposed person indicating his/her willingness to be elected. The period during which the aforesaid notices

may be given will be at least seven days. Such period will commence on the day after the despatch of the notice of the

general meeting for which such notices are given and end no later than seven days prior to the date of such general

meeting. The Company will take appropriate actions and make necessary arrangements in accordance with the

requirements under Article 122 of the Articles once valid notices are received, and the Shareholder concerned will be

responsible for the expenses incurred in giving effect thereto. Shareholders are welcome to send any written enquiries

to the Board for the attention of the Company Secretary either by post to the registered office of the Company at 46th

Floor, Far East Finance Centre, 16 Harcourt Road, Hong Kong or by way of email to [email protected] . The Company

Secretary will direct enquiries received to appropriate Board member(s) or the chairman of the Board Committee(s) who

is in charge of the areas of concern referred therein for further handling. The Board, assisted by the Company Secretary,

would make its best efforts to ensure that all such enquiries are addressed in a timely manner.

Corporate Governance Report | Continued

SUSTAINABLE CORPORATE SOCIAL RESPONSIBILITY

The Company attaches great importance to corporate social responsibility. The Board is committed to undertaking corporate

social responsibility by strengthening relationship with its stakeholders with a view to contributing to the sustainable

development of the economy, society and environment. The Company consistently supports and participates in activities that

are beneficial to the community. A separate ESG report for 2023 is published on the websites of the Company at

www.everbright.com (by clicking “Environmental, Social and Governance Report” under “Sustainability”) and the Stock

Exchange at www.hkexnews.hk at the same time as the publication of this Annual Report in compliance with the

Environmental, Social and Governance Reporting Guide as set out in Appendix C2 to the Listing Rules.

COMPANY SECRETARY

Ms. Wan Kim Ying Kasina, the Company Secretary of the Company, is a full time employee of the Company who is familiar with

the daily operation of the Company. She is a Fellow of The Hong Kong Chartered Governance Institute and The Chartered

Governance Institute of the United Kingdom, thereby possessing the relevant professional qualifications as stipulated by the

Listing Rules. In addition, she holds a Master of Business Administration degree of Murdoch University, Western Australia and

a Master of Corporate Governance degree of the Hong Kong Polytechnic University, and also has more than 15 years of

practical experience in corporate governance and company secretarial practices in listed companies. The Company Secretary is

responsible for advising the Board on all corporate governance matters. The Directors have access to the services provided by

the Company Secretary. The Company Secretary confirmed that during the year, she has taken no less than 15 hours of

relevant professional training.

The Articles states that the appointment and removal of the Company Secretary is a matter for the Board. Changes and

appointment of Company Secretary are dealt with by a physical Board meeting rather than a written resolution.

The Company Secretary plays an important role in supporting the Board and Board Committees by ensuring good information

flow within the Board and that Board policy and procedures are followed. All Directors have access to the advice and services

of the Company Secretary to ensure that Board procedures, and all applicable laws, rules and regulations, are followed. The

Company Secretary also plays an essential role in the relationship between the Company and Shareholders, including by

assisting the Board in the discharge of its obligations to Shareholders pursuant to the Listing Rules. The Company Secretary

also ensures that the Board and Board committee members are provided with sufficient resources and have access to all

employees, Directors, agents or consultants for information, and are able to obtain independent professional opinions at the

cost of the Company to discharge their duties properly.

RISK MANAGEMENT REPORT

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

THE SCOPE OF RISK MANAGEMENT & INTERNAL CONTROLS

The Board seeks to achieve an appropriate balance between taking risk and generating returns for shareholders and is

accountable for the Group’s ongoing monitoring of risk and of the internal controls. It considers the most significant risks facing

the Group and the relevant risk management.

INEDs’ overseeing of the risk management process is exercised through the Audit and Risk Management Committee with

respect to standards of integrity, financial reporting, risk management and internal controls.

The Vice President of the Group in charge of Risk Management, Legal and Compliance, who reports directly to the Audit and

Risk Management Committee, has responsibility for the risk and control framework of the Group and the independent

monitoring and reporting of risk reporting and controls.

Risk Management Framework:

The Group’s risk management framework is designed to support the delivery of the Group’s strategic objectives. The key

principles that underpin risk management in the Company are:

the Board and the Management Decision Committee promote a culture in which risks are identified, assessed and

reported in an open, transparent and objective manner; and

the over-riding priority is to protect the Group’s long-term viability and reputation and produce sustainable, medium to

long-term returns.

Risk management is embedded within all areas of the business. The Group expects individual behaviours to mirror the culture

and core values of the Company. All employees undertake the responsibility of upholding the Company’s risk and control

culture and supporting effective risk management to enable the Company to deliver its strategy.

Internal Control Framework:

The Group operates a “three lines of defence” framework for identifying, preventing and controlling risks.

The first line of defence against undesirable outcomes is the business unit and the respective line managers. Department

heads of their own business areas take the lead role with respect to implementing and maintaining appropriate controls.

Line management is supplemented by overseeing unit, such as Risk Management, Legal and Compliance, Operations, Finance

and Accounting, Company Secretarial, which constitute the second line of defence.

Internal Audit can provide retrospective, independent auditing over the operation of controls and is the third line of defence. The

internal audit duty includes reviews of risk management and internal control processes and provides recommendations to

improve the control environment.

RISK & INTERNAL CONTROL REVIEW

Risk events are captured by the business will assess and report through a workflow by the second and third lines of defence,

with continuous follow-up on subsequent improvements. When control failings and inefficient processes are identified, the

second and third line of defence teams also conduct deep dive analyses and reviews to identify potential risks and make or

supervise remediations.

The Audit and Risk Management Committee holds a regular meeting quarterly for assessing internal control of the Group and

the effectiveness of risk management.

Risk Management Report | Continued

The Vice President of the Group in charge of Risk Management, Legal and Compliance, supported by Risk Management, Legal

and Compliance Department and other internal control relevant departments mentioned above, identifies Company’s risk and

internal control profile, continuously supervises and promotes enhancements and improvements to the mechanisms of the risk

control system, and reports to the Audit and Risk Management Committee on the major risks and internal control profile of the

Company on a quarterly basis. Committee members contribute views and raise questions at its meeting to ensure risk

management and internal controls are effective and in place. For further details, please refer to the relevant contents of the

Corporate Governance Report.

EFFECTIVENESS OF FINANCIAL REPORTING & LISTING RULES COMPLIANCE

With support and input from the External Auditor, the Audit and Risk Management Committee has considered, challenged and

reviewed financial reporting of the Group, assessed whether suitable accounting policies have been adopted, whether

management have been made appropriate estimates and judgments and whether disclosures in published financial statements

are fair, balanced and understandable.

The compliance of regulatory requirements (including Listing Rules) is supported by Company Secretarial Department/Board

Office. The Audit and Risk Management Committee has considered and assessed the relevant regulatory compliance through

the compliance review section in the quarterly risk and internal control review report. The compliance review has summarised

the status of regulatory and compliance matters, corrective actions and the recommendation to the Committee for the

enhancements of the relevant compliance matters.

In regard to the above, the Audit and Risk Management Committee considers the Group’s processes for financial reporting and

Listing Rules’ compliance are effective.

PROCESS OF ASSESSMENT AND MANAGEMENT OF SIGNIFICANT RISKS

The Group re-examines its risk appetite annually taking into consideration factors such as strategy and financial goals, and

adjusts and revises the nature and degree of various risks willing to assume in order to achieve business development

strategies and goals, and implements them after evaluation and approval by the Board. The Risk Management, Legal and

Compliance Department implements relevant risk monitoring mechanisms to monitor market, operational, legal and compliance

risks on a daily basis, and uses scientific and professional skills to examine whether the overall operation of the Company

meets the standards set by its risk appetite.

Specifically, risk identification and assessment are conducted using both a top down approach and a bottom up approach to

ensure a thorough risk assessment at the macro and micro levels. The top down approach mainly considers the objective

external factors and the strategic planning of the Company to identify and assess the risks having the most significant impact to

the Group resulting from the relevant factors. The bottom up approach ensures that the Company can carry out a

comprehensive examination of internal risks, conduct data analysis to verify key trends, identify and set priorities for key risks,

and provide management with opinions and recommendations on matters that could impact operational development and

business results.

The Group uses the above methods to identify significant risks, evaluates the likelihood and impact of each significant risk, with

reference to associated measures and performance of key indicators, and uses qualitative and quantitative approaches to

describe and report on such risks. Meanwhile, the Group will assess the adequacy of its risk mitigation measures, and review

and formulate additional measures if necessary. The Vice President of the Group in charge of Risk Management, Legal and

Compliance oversees the overall risk management and reports to the Audit and Risk Management Committee on a quarterly

basis.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

MAIN FEATURES OF RISK MANAGEMENT AND INTERNAL CONTROL

Terms of Reference

The Board operates within clearly defined terms of reference, and it reserves certain matters for its own consideration and

decision. It has established appropriate committees, such as the Executive Board Committee, the Audit and Risk Management

Committee, the Nomination Committee, the Remuneration Committee, the Environmental, Social and Governance Committee

and the Strategy Committee, to oversee risk and control activities.

These committees also have clearly defined terms of reference. The Board and committee processes are fundamental to the

effectiveness of the Group’s risk management and internal control.

Risk Management & Internal Control

The Group maintains a comprehensive risk management and internal control framework and has clearly defined procedures for

identifying and handling risks and internal control concerns throughout the organisation. This framework helps the Group to

safeguard client assets, protect the interests of all stakeholders and meet the Group’s responsibilities as a Hong Kong listed

company and parent of a number of regulated entities.

The risk management and internal control framework also forms the basis upon which the Board reaches its conclusions on the

effectiveness of the Group’s risk management and internal control.

BOARD RESPONSIBILITY ON RISK MANAGEMENT & INTERNAL CONTROL

The Board has overall responsibility for the Group’s system of internal control framework, the ongoing monitoring of risk

management and internal control and reviewing their effectiveness periodically.

The system of control is designed to manage rather than eliminate the risk of failure to achieve the Group’s business objectives

and can only provide reasonable and not absolute assurance against material misstatement or loss.

PROCESS OF REVIEWING THE EFFECTIVENESS OF RISK MANAGEMENT & INTERNAL CONTROL

On behalf of the Board, the Audit and Risk Management Committee (“the Committee”) carried out the annual assessment of

the effectiveness of the risk management and internal control during 2023, including those related to the financial reporting

process. In addition, the Committee considered the adequacy of the Group’s risk management arrangements in the context of

the Group’s business and strategy.

In carrying out its assessment, the Committee considered reports from the Vice President in charge of Finance, the Internal

Audit Department and also from the External Auditor which enabled an evaluation of the effectiveness of the Group’s risk

management and internal control, and no significant failings or weaknesses were identified.

The Committee keeps reviewing the Group’s risk management arrangements and internal control through quarterly reports.

The risk and internal control review report sets out changes in the level or nature of the risks faced by the Group, developments

in risk management and operational events, including significant errors and omissions (if any). The report also outlines key

compliance issues and recommendations for the enhancement of regulatory risk mitigation. This independent report allowed

the Committee to consider the key risks and internal control matters faced by the Group and assessments of risk tolerance.

Key topics discussed by the Committee included operational, investment, surveillance & control, legal, counterparty credit,

acquisition integration, technology and financial risks, contingent liabilities and internal control.

Risk Management Report | Continued

Internal Audit Department reviews progress against a rolling plan of internal audits approved by the Committee, and reports

significant findings from audits and their subsequent remediation, and provides recommendations to improve the control

environment to the Committee on a quarterly basis. The Committee has authority to appoint or remove the Department Head

of Internal Audit, who reports directly to the Committee. The Committee is accountable for approving the objectives set by the

Department Head of Internal Audit, appraising his/her performance against those objectives and for recommending his/her

remuneration to the Group. The Committee also has responsibility for approving the Internal Audit budget and being satisfied

that the Internal Audit function has appropriate resources and continues to be effective.

REVIEW OF KEY RISKS

The following table summarises the key risks and uncertainties that are inherent within both the Group’s business model and

the market in which the Group operates along with the sophisticated level of controls and processes through which the Group

aims to mitigate them. The risk factors mentioned below do not purport to be exhaustive as there may be additional risks that

the Group has not yet identified or has deemed to be immaterial and not having a material adverse effect on the business.

KEY RISK CHANGES IN 2023 MITIGATING FACTORS

FINANCIAL

Liquidity Risk

Risk of failing to meet the

Group’s contractual or payment

obligations in a timely manner.

Key risk that arises from high

financial leverage occurs when a

company’s return on asset does

not exceed the interest on the

loan, which greatly diminishes a

company’s return on equity and

profitability.

Additionally, high financial

leverage may raise the risk of

failing to fulfil the relevant

requirements from loan

covenants (if any) and result in

technical default.

The Group has continued

to hold sufficient bank

credit facilities and can use

these facilities appropriately

to maintain liquidity, based

on fund utilisation and cash

inflow conditions.

The Group monitors &

control liquidity risk through

methods such as financial

budgets and stress tests.

Under the objective

circumstances of the

adverse market

environment, the leverage

of the Group has increased,

but liquidity remaining

normal.

The Group forecasts the firm-wide cash flows,

return and profitability at least annually. After

consideration from the perspective on financial

control and risk management, the Management

advises the Board regarding the optimised

financial leverage ratio and relevant limits for

approval.

The approved financial leverage ratio and

relevant limits are closely monitored by Finance

Department and Risk Management and Legal

Compliance Team regularly.

Finance department closely monitors the

Group’s cash position, available facilities and

performs cash flow forecasting under the

overseeing of Risk Management and Legal

Compliance Team.

The Group regularly performs long term

forecasts and uses stress tests to assess future

liquidity and short term forecasts to closely

monitor any change of liquidity need, and

formulates corresponding plans to ensure the

capability of the Group regarding long and short

term liquidity.

The Group has further enhanced its cash

reserves by stepping up efforts to exit existing

projects and conducting prudent evaluation on

new investment projects.

Key: Risk level increased Risk level decreased No significant change in risk level

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

KEY RISK CHANGES IN 2023 MITIGATING FACTORS

Exchange Rate Risk

Risk that the Group’s financial

position is exposed to adverse

movements in exchange rates.

The impact of the

fluctuations in the

exchange rate of RMB

against Hong Kong dollars

on the Group’s financial

position has been reduced.

The Group controls

exchange rate risk through

the counter balancing

method to reduce the

impact of exchange rate

fluctuations on the

Company.

Monitor asset exposures by currency and the

foreign currency rate movement regularly.

Improve currency matching between asset and

liability, reducing currency mismatch risk.

Perform stress test and sensitivity analysis on

the effect of change in foreign currency rates.

Interest Rate Risk

Change of the interest rate will

have negative impact on the

Group and its relevant portfolios

if there is an interest rate

mismatch of the assets and

liabilities.

There has been an overall

rise in borrowing costs due

to rising USD/HKD interest

rates.

As Panda bonds accounted

for a considerable portion

in the Company’s debt

structure, the impact of

changes in USD/HKD

interest rates on borrowing

costs is under control.

Monitoring on interest rate mismatch and

sensitivity test are performed regularly.

The Group has managed to decrease overall

loan borrowing cost by adjusting the whole loan

structure by monitoring interest rate trends of

USD/HKD and RMB.

The interest rate risk of the Group is expected

to lower gradually as the interest rate cutting

cycle of USD is expected to begin

INVESTMENT

Market Risk

Risk arises from market

movements, which can cause a

fall in the value of investment

assets.

Affected by various factors

such as the

macroeconomic landscape,

geopolitical conflicts and

fluctuations in the capital

market, the value of the

Group’s assets invested is

subject to short-term

volatility. However, the

impact of this volatility is

diminished to a certain

extent.

Analysing and estimating market risks on a

forward-looking basis.

Limits on the aggregate amount of seed capital

investment and enhance investment

diversification.

The Group actively develops fee-based business

so that our return and profitability will be more

stable. The Group continues to strengthen

capital market research and judgement and

tracking of corporate operating conditions, and

strengthens risk control effectively through

various means such as monitoring of market

value.

Key: Risk level increased Risk level decreased No significant change in risk level

Risk Management Report | Continued

KEY RISK CHANGES IN 2023 MITIGATING FACTORS

Credit Risk

Risk exposed to credit losses if

borrowers are unable to repay

loans and outstanding interest

and fees.

In addition, the Group has

exposure to counterparties with

which it places deposits or

trades, and derivative contracts.

The Group’s provision on

loan in 2023 has increased,

but the overall credit risk is

within controllable level.

The Group’s counterparty

risks are broadly

unchanged.

The Group seeks to minimize our credit risk from

its lending by:

Mainly lending on a secured basis with

significant emphasis placed on quality control of

the underlying security.

Manage to maintain consistent and conservative

loan to value ratios and short-term tenor.

Operating strong control and governance both

within business units and with overseeing by

Risk Management and Legal Compliance Team.

Enhance credit management, expedite the

collection of loan assets, and exercise caution in

extending new loans

The Group’s exposures to counterparties are

mitigated by:

Seek to diversify our exposures across different

counterparties.

Continuous monitoring of credit quality of our

counterparties.

Operational Risk

Risk of losses through

inadequate or failed internal

processes, people or systems or

through external events.

The Group’s Operations

Centre set up in 2015 has

expanded rapidly and the

identification, control and

management on operational

risks enhanced

continuously.

The Group continuously

boosts employees’

awareness of operational

risk and strengthens

system implementation

through various educational

interactions such as training

on systems and case

sharing.

The Group’s control systems are designed to

ensure operational risks are mitigated to an

acceptable level.

Three lines of defence model mentioned above

is the key point.

Risk and control assessments are used to

identify and assess key operational risks.

Associated controls are assessed with regard to

their design and performance. Where required,

processes and controls are enhanced/optimized

to improve the supervision and control.

The Group manages risk events through

identification, evaluation, reporting, risk

mitigating resolution and continuous monitoring

with the aim of preventing major operational

risk.

Relevant trading/settlement/investment

operation management systems/information

management systems are implemented, and

automation procedures are enhanced and

strengthened continuously to mitigate relevant

operational risks.

Key: Risk level increased Risk level decreased No significant change in risk level

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

KEY RISK CHANGES IN 2023 MITIGATING FACTORS

Legal and Regulatory Risk

Changes to the existing legal,

regulatory and tax environments

and failure to comply with

existing requirements may

materially impact the Group.

Failing to treat customers fairly,

safeguard client assets or provide

advice/products that contrary to

clients’ best interest may

damage the Group’s reputation

and may lead to legal or

regulatory consequences

including litigation, regulatory

condemnation and customer

redress. This applies to current,

past and future business.

The changes in legal and

regaulatory requirements in

recent years have led

to additional reporting

requirements, operational

complexity and cost to the

Group.

The Group has continued

to improve its legal risk

prevention and control

system, continuously

enhanced the compliance

review process, and

comprehensively prevented

and controlled legal

compliance risk.

Risk Management and Legal Compliance

Department tracks developments of regulatory

matters to offer professional advice to the Group

on the related changes in relevant laws and

regulations, and to advise on developing

policies, delivering training and performing

monitoring checks and to provide advice to

other departments to ensure compliance with

regulatory compliance requirements.

To advise on the approval, monitoring and

review of existing and new funds/products/

investments.

Training for relevant staff regarding the

regulatory compliance requirements.

Continuous monitoring of key regulatory

compliance requirements.

Information Technology Risk

Risk of failure to keep up with

changing client expectations or

manage upgrades to existing

technology may impact the

Group’s performance.

The Company continued to

invest and upgrade its IT

infrastructure and systems,

including corporate data

warehouse, investment

management system and

order management system.

The Group continues to invest in its IT

infrastructure, data management system,

reporting system and other software/systems.

The Group has sound governance in place to

oversee our major IT projects.

The Group has in place business continuity and

disaster recovery plans.

Key: Risk level increased Risk level decreased No significant change in risk level

Risk Management Report | Continued

KEY RISK CHANGES IN 2023 MITIGATING FACTORS

Loss of Key Personnel Risk

Risk of failure to recruit or retain

appropriately skilled and

experienced staff may have a

material adverse effect on the

Group’s operations and

implementation of its strategy.

The Group has continued

to employ professionals in

the field of asset

management to carry out

investment and risk

management.

The Group seeks to develop, attract, motivate

and retain staff through comprehensive human

resource policies.

Comprehensive, systematic and highly

transparent evaluation policies are used to

evaluate staff performance.

Maintains loyalty through appropriate

remuneration and benefit packages.

Contracts for relevant roles have restrictive

covenants and enhanced notice periods are in

place for key staff.

Comprehensive training is offered to all staff to

promote individual and team development.

In order to avoid reliance on any one individual

staff, teams are required to ensure each

individual has another staff as alternative

backup.

We have set up promotion policy so that

employees have clear career path to pursue and

are motivated to stay for long term

development.

REPUTATIONAL

Reputational Risk

Risk that negative publicity

regarding the Group will lead to

client redemptions and a decline

in AUM and revenue.

The risk of damage to the

Group’s reputation is more likely

as a result from one of the other

key risks but a standalone risk.

Adhering to the principle of

active prudence, the Group

has strengthened

monitoring of public

opinions and maintained a

stable environment in

terms of public opinions.

High standards of conduct and a principled

approach to regulatory compliance are integral

to the Group’s corporate culture and values. The

Group considers reputational risks as a key

factor when initiating changes in strategy or

operating model.

Maintain effective monitoring and guidance of

public opinion, while enhancing the

management and oversight of the Company’s

brand usage.

Reputational risk is primarily mitigated through

the effective mitigation of the other key risks.

The Group’s risk appetite, risk and compliance

policies, governance structures and reward

mechanism include significant focus on issues

and behaviours that could positively affect the

Group’s reputation.

Key: Risk level increased Risk level decreased No significant change in risk level

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

ESG RISK MANAGEMENT

ESG risks refer to the risks to which an enterprise is exposed in environmental, social and governance terms, which may have

an adverse impact on the Group’s mid- and long-term financial position and enterprise value. The ESG risk control structure

adopted by the Group is as follows:

The Group’s risk management work is mainly led by the Vice President in charge of Risk Management, Legal and

Compliance, and monitored by the Audit and Risk Management Committee. ESG risks are managed by the ESG

Committee under, and overseen by, the Board.

The ESG Committee, under the authorization of the Board, is responsible for formulating the Group’s ESG responsibilities,

policies, strategies and objectives, supervising the performance and effectiveness of the implementation of ESG-related

responsibilities, and regularly reporting to the Board on relevant matters.

The ESG Task Force under the ESG Committee is responsible for the implementation of the responsibilities, policies and

resolutions formulated by the ESG Committee, reporting the work results to the ESG Committee, and proposing work

adjustments and improvements.

Investment teams implement the Group’s ESG policies in daily activities of investment and management.

During the reporting period, the Group effectively managed ESG risks through continuous implementation of policies and

measures related to ESG risk management. In 2023, there were no significant ESG risk events impacting the Group.

DIRECTORS’ REPORT

The board of directors (the “Director(s)”) (the “Board”) of China Everbright Limited (the “Company”) hereby presents to

shareholders the Annual Report together with the audited financial statements of the Company and its subsidiaries (collectively

the “Group”) for the year ended 31 December 2023.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEW

The Group is principally engaged in investment holdings and the provision of financial services. The principal activities of the

subsidiaries are set out in note 15 to the financial statements. Further discussion and analysis of these activities and business

review as required by Schedule 5 to the Companies Ordinance, including a discussion of the principal risks and uncertainties

facing the Group and an indication of likely future developments in the Group’s business, can be found in the Management

Discussion and Analysis set out on pages 24 to 40 and the Risk Management Report set out on pages 67 to 75 respectively of

this Annual Report. The discussion on the Group’s environmental policies and performance, the Group’s key relationships with

employees, customers, suppliers and other stakeholders, and the Group’s compliance with the relevant laws and regulations

that have a significant impact on the Group, can be found in the separate Environmental, Social and Governance Report for

2023 which is published on the websites of the Company at www.everbright.com (by clicking “Environmental, Social and

Governance Report” under “Sustainability”) and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) at

www.hkexnews.hk at the same time as the publication of this Annual Report in compliance with the Environmental, Social and

Governance Reporting Guide as set out in Appendix C2 to the Rules Governing the Listing of Securities on the Stock Exchange

(the “Listing Rules”) . These discussions form part of this Directors’ Report.

TURNOVER AND CONTRIBUTION TO GROUP RESULTS

The turnover and contribution to operating results of the Group by principal activity and geographical location are set out in

notes 4 and 42 to the financial statements.

RESULTS AND APPROPRIATIONS

The results of the Group for the year ended 31 December 2023 are set out on page 99 of this Annual Report.

The Board has recommended the payment of a final dividend of HK$0.10 per share for the year ended 31 December 2023

(2022: HK$0.15 per share).

MAJOR CUSTOMERS AND SUPPLIERS

Turnover from operations represents the aggregate of service fee income, sales of inventories, interest income, dividend

income, rental income from investment properties, rental income from finance lease and gross sale proceeds from disposal of

trading securities of secondary market investments. Accordingly, it is not practicable to state the percentage of the sales

attributable to the Group’s largest customers and percentage of the purchases attributable to the Group’s largest suppliers.

FINANCIAL SUMMARY

A summary of the results and assets and liabilities of the Group for the past five financial years is set out on page 190 of this

Annual Report.

PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTIES

Movements in property, plant and equipment and investment properties during the year are set out in note 14 to the financial

statements.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

PROPERTIES

Particulars of major properties held by the Group as at 31 December 2023 are set out on page 191 of this Annual Report.

CHARITABLE DONATIONS

Charitable donation made by the Group for the year ended 31 December 2023 amounted to HK$38,200.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

Details of the Company’s principal subsidiaries, associates and joint ventures as at 31 December 2023 are set out in notes 15,

16 and 17 to the financial statements respectively.

BANK LOANS

Particulars of bank loans of the Group as at 31 December 2023 are set out in note 26 to the financial statements.

BONDS PAYABLE

Particulars of bonds payable of the Group as at 31 December 2023 are set out in note 28 to the financial statements.

SHARE CAPITAL

Details of the movement in share capital of the Company during the year are set out in note 31 to the financial statements.

SENIOR PERPETUAL CAPITAL SECURITIES

Details of the senior perpetual capital securities issued by the Company are set out in note 32 to the financial statements.

PURCHASE, SALE OR REDEMPTION OF LISTED EQUITY SECURITIES

On 27 October 2023, the Company completed the redemption of all of the senior perpetual capital securities in the aggregate

principal amount of US$300,000,000 (the “Securities”). The Securities were issued in October 2020 and listed on the Stock

Exchange and Chongwa (Macao) Financial Asset Exchange Co., Limited.

Save for the redemption of the Securities as disclosed herein, there was no purchase, sale or redemption of the Company’s

listed securities by the Company or any of its subsidiaries during the year ended 31 December 2023.

RESERVES

Distributable reserves of the Company as at 31 December 2023 as calculated under the Companies Ordinance amounted to

HK$2,198,856,000 (2022: HK$1,373,693,000). The movement in the Company’s reserves are set out in note 34 to the financial

statements.

BORROWINGS AND INTEREST CAPITALISED

Bonds payable and bank loans repayable within one year or on demand are classified as current liabilities in the financial

statements. Bonds payable and bank loans repayable over one year are classified as non-current liabilities. No interest was

capitalised by the Group during the year.

Directors’ Report | Continued

EQUITY-LINKED AGREEMENTS

Save as disclosed in this Annual Report, no equity-linked agreements were entered into during the year or subsisted at the end

of the year.

CONNECTED TRANSACTIONS

The connected transactions disclosed in accordance with Chapter 14A of the Listing Rules during the year are as follows:

On 4 August 2023, the Company as the issuer, and (i) Bank of China Limited (“BOC”), (ii) China Construction Bank

Corporation (“CCB”), (iii) Agricultural Bank of China Limited (“ABOC”), (iv) China Everbright Bank Company Limited

(“Everbright Bank”), (v) Shanghai Pudong Development Bank Co., Ltd. (“SPD Bank”), (vi) Ping An Bank Co., Ltd. (“Ping

An Bank”), (vii) Everbright Securities Company Limited (“Everbright Securities”) and (viii) China Minsheng Banking Corp.,

Ltd. (“Minsheng Bank”) entered into the underwriting agreement (as amended and supplemented by a supplemental

agreement signed by the Company, Everbright Bank and Everbright Securities on the same date) (the “Underwriting

Agreement”). Pursuant to the Underwriting Agreement, the Company has engaged BOC, CCB, ABOC, Everbright Bank,

SPD Bank, Pingan Bank, Everbright Securities and Minsheng Bank as the lead underwriters in respect of the proposed

issue of the multiple types of debt financing instruments by the Company with the aggregate amount of not more than

RMB20 billion in the PRC to be traded on the China Interbank Bond Market.

China Everbright Group Ltd.* ( ) (“CE Group”), through its wholly-owned subsidiaries, was

interested in approximately 49.74% of the total number of issued shares of the Company and was the controlling

shareholder of the Company. Everbright Bank and Everbright Securities were non-wholly owned subsidiaries of CE

Group, therefore each of Everbright Bank and Everbright Securities was an associate of CE Group and a connected

person of the Company under Chapter 14A of the Listing Rules. Accordingly, the transactions contemplated under the

Underwriting Agreement (including the payment of any underwriting fee(s) to Everbright Bank and Everbright Securities)

constituted a connected transaction of the Company under Chapter 14A of the Listing Rules.

On 21 November 2023, CEL Management Services Limited (a wholly-owned subsidiary of the Company) as the tenant,

entered into the tenancy agreement with Newepoch Group Limited (“Newepoch”), as the landlord, for the renewal of

the tenancy of Rooms 4101, 4105 and 4106, 41st Floor of Far East Finance Centre, No. 16 Harcourt Road, Hong Kong for

a term of 3 years commencing on 22 November 2023 and expiring on 21 November 2026 (both days inclusive).

China Everbright Holdings Company Limited (“CE Hong Kong”), through its wholly-owned subsidiaries, was interested in

approximately 49.74% of the total number of issued shares of the Company and was the controlling shareholder of the

Company. Newepoch was a wholly-owned subsidiary of CE Hong Kong, therefore was an associate of CE Hong Kong

and a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the entering into of the

tenancy agreement constituted a connected transaction of the Company under Chapter 14A of the Listing Rules.

The aforesaid connected transactions of the Company were subject to the reporting and announcement requirements but

exempt from the independent shareholders’ approval requirement under Chapter 14A of the Listing Rules. Details of the

aforesaid connected transactions of the Company were set out in the announcements of the Company dated 4 August 2023

and 21 November 2023, respectively.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

CONTINUING CONNECTED TRANSACTIONS

Set out below is the information in relation to certain continuing connected transactions involving the Company and/or its

subsidiaries, particulars of which were previously disclosed in the announcements of the Company and are required under the

Listing Rules to be disclosed in the annual report and financial statements of the Company.

CE Group is the holder of 100% of the equity interest in CE Hong Kong. CE Hong Kong is the indirect controlling shareholder of

the Company which indirectly holds approximately 49.74% equity interest in the Company. Accordingly, CE Group is a

controlling shareholder of the Company, and thus CE Group and its associates are connected persons of the Company. The

ongoing arrangements between the Group and CE Group and its associates entered into (including, among other things, deposit

services, asset management services, brokerage services and custodian services) are continuing connected transactions of the

Company.

On 28 December 2020, the Company entered into the following framework agreements (collectively the “Framework

Agreements”) with CE Group:

Deposit services framework agreement;

Asset management services framework agreement;

Brokerage services framework agreement, and;

Custodian services framework agreement

The Framework Agreements set out the basis upon which members of the Group to carry out the transactions contemplated

under the Framework Agreements with CE Group and/or its associates for the three financial years ending 31 December 2023.

The duration of the Framework Agreements was commenced on 28 December 2020 and expires on 31 December 2023. CE

Group, being the controlling shareholder of the Company, is a connected person of the Company under the Listing Rules and

therefore entering into the Framework Agreements by the Company and the transactions contemplated under the Framework

Agreements constitute continuing connected transactions of the Company under the Listing Rules.

(1) Deposit Services

CE Group through its associate Everbright Bank, provides deposit services to the Group, including current and fixed-term

deposits. The deposit services are subject to the standard terms and conditions of CE Group and its associates. The

annual cap for the transactions under the Deposit Services Framework Agreement for the years ended 31 December

2021, 31 December 2022 and 31 December 2023 are all set at HK$850,000,000. During the year ended 31 December

2023, none of the daily aggregate bank balances maintained with Everbright Bank exceeded HK$850,000,000.

Directors’ Report | Continued

(2) Asset Management Services

The Group provides asset management services (including investment advisory services) to relevant members of the CE

Group.

Material terms:

The Group shall provide asset management services (including investment advisory services) to CE Group in

respect of assets in the asset management services accounts designated by CE Group.

The asset management services (including investment advisory services) provided shall be on normal commercial

terms which are arrived at upon arm’s length negotiation and are no less favourable than those available to similar

or comparable independent third parties offered by the Group.

The asset management services (including investment advisory services) provided under the Asset Management

Services Framework Agreement shall be non-exclusive. CE Group is at liberty to obtain asset management

services (including investment advisory services) from third parties and the Group is at liberty to provide third

parties with asset management services (including investment advisory services).

The annual cap for the transactions under the Asset Management Services Framework Agreement for the years ended

31 December 2021, 31 December 2022 and 31 December 2023 are all set at HK$360,000,000. The transaction amount

under the Asset Management Services Framework Agreement for the year ended 31 December 2023 was approximately

HK$442,000.

(3) Brokerage Services

The Group places cash, equity and debt securities in brokerage accounts with CE Group and its associates, and CE Group

and its associates provide brokerage and ancillary services to the Group for customers of the Group, funds established

and/or managed by members of the Group as well as proprietary trading of members of the Group (where such

transactions constitute continuing connected transactions of the Company under the Listing Rules) in accordance with

the relevant rules and regulations, as well as custodianship of the cash, equity and debt securities.

Material terms:

CE Group and its associates shall provide to the Group for customers of the Group, funds established and/or

managed by members of the Group as well as proprietary trading of members of the Group (where such

transactions constitute continuing connected transactions of the Company under the Listing Rules) brokerage and

ancillary services in accordance with the relevant rules and regulations, and custodianship of the cash, equity and

debt securities.

The brokerage services provided shall be on normal commercial terms which are arrived at upon arm’s length

negotiations and are no less favourable than those obtained by the Group from independent third parties, and on

terms no less favourable than the most favourable terms offered by CE Group and its associates to similar or

comparable independent third party customers.

The brokerage services provided under the Brokerage Services Framework Agreement shall be non-exclusive and

the Company is at liberty to obtain brokerage services from third parties.

The annual cap for the transactions under the Brokerage Services Framework Agreement for the years ended 31

December 2021, 31 December 2022 and 31 December 2023 are all set at HK$28,000,000. The transaction amount under

the Brokerage Services Framework Agreement for the year ended 31 December 2023 was approximately HK$28,000.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

(4) Custodian Services

CE Group and its associates provide custodian services to the Group, including the safekeeping of assets in custodian

accounts, monitoring of investment activities, and reporting. The transactions are conducted through custodian accounts

opened with CE Group and its associates in the relevant Group company’s name.

Material terms:

CE Group and its associates shall provide the Group custodian services including safekeeping of assets in

custodian accounts, monitoring of investment activities, and reporting.

The custodian services provided shall be on normal commercial terms which are arrived at upon arm’s length

negotiations and are no less favourable than those obtained by the Group from independent third parties, and on

terms no less favourable than the most favourable terms offered by CE Group and its associates to similar or

comparable independent third party customers.

The custodian services provided under the Custodian Services Framework Agreement shall be non-exclusive and

the Company is at liberty to obtain custodian services from third parties.

The annual cap for the transactions under the Custodian Services Framework Agreement for the years ended 31

December 2021, 31 December 2022 and 31 December 2023 are all set at HK$28,000,000. The transaction amount under

the Custodian Services Framework Agreement for the year ended 31 December 2023 was approximately HK$910,000.

Review by the Company’s independent non-executive directors (“INED(s)”) and auditor

The INEDs had reviewed the above continuing connected transactions for the year ended 31 December 2023 and

confirmed that the transactions were:

(a) entered into in the ordinary and usual course of business of the Group;

(b) conducted on normal commercial terms or on terms no less favorable to the Group than terms available to or from

independent third parties; and

in the interests of the shareholders of the Company as a whole.

The Company’s auditor was engaged to report on the Group’s continuing connected transactions in accordance with

Hong Kong Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or

Reviews of Historical Financial Information” and with reference to Practice Note 740 (Revised) “Auditor’s Letter on

Continuing Connected Transactions under the Hong Kong Listing Rules” issued by the Hong Kong Institute of Certified

Public Accountants. The auditor has issued his unqualified letter containing his findings and conclusions in respect of the

continuing connected transactions disclosed by the Group in accordance with Rule 14A.56 of the Listing Rules.

RELATED PARTY TRANSACTIONS

A summary of the material related party transactions entered into by the Group during the year is contained in note 36 to the

financial statements. Save as disclosed above in the paragraphs headed “Connected Transactions” and “Continuing Connected

Transactions”, no other related party transactions constitute any connected transactions or continuing connected transactions

as defined under the Listing Rules during the year. The Company has complied with the applicable requirements in accordance

with Chapter 14A of the Listing Rules with respect to the connected transactions and continuing connected transactions

entered into by the Group during the year.

Directors’ Report | Continued

DIRECTORS

The Directors during the year and up to the date of this report are as follows:

Executive Directors:

Mr. Lin Chun (appointed on 4 January 2024)

Ms. Wang Yun (appointed on 5 May 2023)

Mr. Yin Yanwu

Mr. Zhang Mingao (resigned on 4 January 2024)

Mr. Wang Hongyang (resigned on 5 May 2023)

Non-executive Directors:

Mr. Yu Fachang

Dr. Qin Hongyuan (appointed on 4 January 2024)

Ms. Pan Wenjie (resigned on 22 March 2024)

Mr. Fang Bin (resigned on 4 January 2024)

Independent Non-executive Directors:

Dr. Lin Zhijun

Dr. Chung Shui Ming Timpson

Mr. Law Cheuk Kin Stephen

Mr. Wong Chun Sek Edmund (appointed on 22 March 2024)

Biographical details of the existing Directors and the senior management of the Company are available in the section of

“Directors and Senior Management” on pages 88 to 92 of this Annual Report.

The Company has received an annual confirmation of independence from each of the three INEDs pursuant to Rule 3.13 of the

Listing Rules and the Company considers all the INEDs to be independent.

According to Articles 120 and 121 of the Company’s Articles of Association (the “Articles”), one-third of the Directors (who

have been longest in office) shall retire from office by rotation at every annual general meeting of the Company provided that

every Director shall retire at least once every three years. A retiring Director shall be eligible for re-election.

In accordance with Articles 120 and 121 of the Articles, Ms. Wang Yun, Mr. Yin Yanwu, Dr. Chung Shui Ming Timpson and Mr.

Law Cheuk Kin Stephen, being the Directors who have been longest in office since their last re-election, will retire by rotation at

the forthcoming annual general meeting. Ms. Wang Yun, Mr. Yin Yanwu and Mr. Law Cheuk Kin Stephen, being eligible, offer

themselves for re-election. Dr. Chung Shui Ming Timpson has informed the Company that as he has been an INED for more

than 9 years and with an aim to promote good corporate governance of the Company and healthy development of the Board,

he will not seek re-election and will therefore retire from his position as a Director at the conclusion of the Annual General

Meeting. Dr. Chung Shui Ming has confirmed that he has no disagreement with the Board and there are no matters with

respect to his retirement that needs to be brought to the attention of the Shareholders and the Stock Exchange nor any

information that needs to be disclosed pursuant to Rule 13.51(2) of the Listing Rules.

In addition, according to Article 87 of the Articles, any Director appointed by the Board either to fill a casual vacancy or as an

addition to the Board shall hold office only until the next following general meeting of the Company and shall then be eligible for

re-election at such meeting.

Mr. Lin Chun and Dr. Qin Hongyuan were appointed by the Board as new Directors on 4 January 2024. Mr. Wong Chun Sek

Edmund was appointed by the Board as a new Director on 22 March 2024. In accordance with Article 87 of the Articles, Mr. Lin

Chun, Dr. Qin Hongyuan and Mr. Wong Chun Sek Edmund, will retire and, being eligible, offer themselves for re-election at the

forthcoming annual general meeting.

Note : Subsequent to the approval of the Directors’ Report, Mr. An Xuesong has been appointed by the Board as a new Director on 5 April 2024

and will, in accordance with Article 87 of the Articles, retire and, being eligible, offer himself for re-election at the forthcoming annual

general meeting.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

DIRECTORS OF SUBSIDIARIES

Other than certain Directors and senior management named in the section headed “Directors and Senior Management” as set

out on pages 88 to 92 of this Annual Report, the names of persons who have served on the board of the subsidiaries of the

Company during the financial year ended 31 December 2023 and up to the date of this Annual Report are available on the

Company’s website under the “Investor Relations” column.

DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING

SHARES AND DEBENTURES

As at 31 December 2023, the interests and short positions of the Directors and chief executives of the Company in the shares,

underlying shares and debentures of the Company or its associated corporations (as defined by Part XV of the Securities and

Futures Ordinance (the “SFO”)) as recorded in the register of directors’ and chief executives’ interests and short positions of

the Company required to be maintained under section 352 of the SFO were as follows:

Long position in shares of the Company:

NAME OF DIRECTORS TOTAL PERSONAL INTEREST OTHER INTEREST

% OF TOTAL

ISSUED SHARES

Zhang Mingao 205,689 205,689 – 0.01%

Chung Shui Ming Timpson 50,000 50,000 – 0.00%

Save as disclosed above, as at 31 December 2023, none of the Directors and chief executives of the Company had interests or

short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (as defined

under Part XV of the SFO) as recorded in the register of directors’ and chief executives’ interests and short positions of the

Company.

MANAGEMENT’S SHAREHOLDING

As disclosed in the Company’s announcement dated 31 October 2019, based on principles of voluntary participation and self-

acceptance of risks, certain senior management members of the Group (including certain Executive Directors) had subscribed

for the non-voting, participating and redeemable shares of an independently managed fund, which invested in shares of the

Company. Voluntary purchase of the Company’s shares by the senior management members of the Group via the fund made

their interest more aligned with the interest of the shareholders of the Company and reflects their confidence in and recognition

of the Group’s development and long-term investment value, as well as the Group’s business position and prospect in the

industry. Due to the expiry of the term of the independently managed fund, the interests in the fund held by the senior

management members of the Group were compulsorily redeemed by the fund and, among others, relevant shares of the

Company were distributed to the respective senior management members of the Group in January 2023.

DIRECTORS’ INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS

Save as disclosed in this Annual Report, no transactions, arrangements or contracts of significance to which the Company, its

holding company, subsidiaries or fellow subsidiaries was a party and in which a Director or his/her connected entities had a

material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

Directors’ Report | Continued

DIRECTORS’ SERVICE CONTRACTS

No Director being offered for re-election at the forthcoming annual general meeting has a service contract with the Company or

any of its subsidiaries which is not terminable by the employing company within one year without payment of compensation

other than the statutory compensation.

DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBENTURES

Save as disclosed above, at no time during the year was the Company or any of its subsidiaries, holding companies or fellow

subsidiaries a party to any arrangements to enable the Directors to acquire benefits by means of the acquisition of shares in, or

debentures of, the Company or any other body corporate.

SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING

As at 31 December 2023, the following persons were recorded in the register kept by the Company under section 336 of the

SFO as having interests in the shares or underlying shares of the Company which would fall to be disclosed to the Company

under the provisions of Divisions 2 and 3 of Part XV of the SFO:

Long Position in Shares and Underlying Shares of the Company:

NAME OF SHAREHOLDERS TOTAL BENEFICIAL OWNER

INTEREST OF

CONTROLLED

CORPORATION

% OF TOTAL

ISSUED SHARES

Central Huijin Investment Ltd. (“Huijin”)

(1)

838,306,207 – 838,306,207 49.74%

CE Group

(2)

838,306,207 – 838,306,207 49.74%

CITIC Group Corporation

(3)

152,088,000 – 152,088,000 9.02%

CITIC Limited

(3)

152,088,000 – 152,088,000 9.02%

Prudential plc

(3)

152,088,000 – 152,088,000 9.02%

CITIC-Prudential Life

Insurance Company Limited

(3)

152,088,000 152,088,000 – 9.02%

Notes:

(1)

Huijin was indirectly wholly-owned by the State Council of the People’s Republic of China and held 63.16% equity interest in CE Group. It

was deemed to be interested in the 838,306,207 ordinary shares indirectly held by CE Group pursuant to the SFO.

(2)

CE Group held 100% of the issued shares of China Everbright Holdings Company Limited (“CE Hong Kong”). CE Hong Kong held (1)

100% of the issued shares of Honorich Holdings Limited (“Honorich”), and (2) 100% of the issued shares of Everbright Investment &

Management Limited (“EIM”), respectively. Out of the 838,306,207 ordinary shares, 832,273,207 ordinary shares were held by Honorich

and the remaining 6,033,000 ordinary shares were held by EIM. Accordingly, CE Group was deemed to be interested in the 832,273,207

ordinary shares held by Honorich and the 6,033,000 ordinary shares held by EIM pursuant to the SFO.

(3)

CITIC-Prudential Life Insurance Company Limited was indirectly owned as to 50% by each of CITIC Limited and Prudential plc. CITIC

Limited was in turn indirectly owned as to 58.13% by CITIC Group Corporation. Accordingly, each of CITIC Group Corporation, CITIC

Limited and Prudential plc was deemed to be interested in the 152,088,000 ordinary shares held by CITIC Prudential Life Insurance

Company Limited pursuant to the SFO.

Save as disclosed above, as at 31 December 2023, the Company had not been notified of any other person (other than the

Directors or chief executives of the Company) having any interest or short position in the shares or underlying shares of the

Company which would fall to be disclosed under Divisions 2 and 3 of Part XV of the SFO, or which would be required, pursuant

to section 336 of the SFO, to be entered in the register referred to therein.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

PERMITTED INDEMNITY PROVISION

The Articles provides that subject to the provisions of the Companies Ordinance, every Director or other officer of the Company

shall be indemnified out of the assets of the Company against all costs, charges, expenses, losses and liabilities which he or

they may sustain or incur in or about the execution of his or their office or otherwise in relation thereto.

The Company has taken out insurance against the liabilities and costs associated with defending any proceedings which may

be brought against the Directors and other officers of the Company and its subsidiaries.

COMPETING INTEREST

As at the date of this Annual Report, and as far as the Directors are aware, none of the Directors or their respective associates

had any interest in a business which competes or may compete, either directly or indirectly, with the business of the Group or

any other conflicts of interest with the Group.

CORPORATE GOVERNANCE

The Company believes that upholding good corporate governance measures is important to ensuring effective internal control

and protecting the long term interest of the shareholders, customers, staff and the Company. The Company strictly complies

with the applicable laws and regulations and codes and guidelines of the regulatory authorities, and strives to follow the best

international and local corporate governance practices and to develop and improve the corporate governance practices of the

Company.

Further details are set out in the “Corporate Governance Report” in this Annual Report.

AUDIT AND RISK MANAGEMENT COMMITTEE

The Audit and Risk Management Committee currently comprises Dr. Chung Shui Ming Timpson, Dr. Lin Zhijun, Mr. Law Cheuk

Kin Stephen and Mr. Wong Chun Sek Edmund. The committee is chaired by Dr. Chung Shui Ming Timpson. All members of the

committee are INEDs.

The Audit and Risk Management Committee and the Management have reviewed the accounting policies and practices

adopted by the Group and discussed auditing, internal control and financial reporting matters including the review of the audited

financial statements of the Group for the year ended 31 December 2023. The terms of reference of the Audit and Risk

Management Committee and a summary of the duties discharged in 2023 have been set out in the “Corporate Governance

Report” in this Annual Report.

RETIREMENT SCHEMES

The Company provides retirement benefits to all local eligible employees under an approved defined contribution provident fund

(the “ORSO Scheme”). The ORSO Scheme is administered by trustees, the majority of whom are independent, with its assets

held separately from those of the Company. The ORSO Scheme is funded by contributions from employees and employers at

5% each based on the monthly salaries of employees. Forfeited contributions may be used to reduce the existing level of

contribution by the Company.

Since 1 December 2000, the Group has also operated a Mandatory Provident Fund Scheme (the “MPF Scheme”) under the

Hong Kong Mandatory Provident Fund Schemes Ordinance for employees employed under the jurisdiction of the Hong Kong

Employment Ordinance and not previously covered by the ORSO Scheme. The MPF Scheme is a defined contribution

retirement scheme administered by independent trustees. Under the MPF Scheme, the employer and its employees are each

required to make contributions to the scheme at 5% of the employees’ relevant income, subject to a monthly relevant income

cap of HK$30,000.

Directors’ Report | Continued

The employees of the subsidiaries of the Company established in the People’s Republic of China are members of the

retirement schemes operated by the local authorities. The subsidiaries are required to contribute a percentage of their payroll to

these schemes to fund the benefits. The only obligation of the Group with respect to these schemes is the required

contributions under the schemes.

The Group’s total contributions to these schemes charged to the consolidated statement of profit or loss during the year ended

31 December 2023 amounted to approximately HK$2,074,210 (2022: HK$2,408,000).

SUFFICIENCY OF PUBLIC FLOAT

Based on the information that is publicly available to the Company and within the knowledge of the Directors as at the date of

this Annual Report, the Company has maintained the prescribed public float under the Listing Rules throughout the year.

FINAL DIVIDEND

The Board has resolved to recommend the payment of a final dividend of HK$0.10 per share for the year ended 31 December

2023 (2022: HK$0.15 per share). Together with the interim dividend of HK$0.15 per share already paid, the aggregate amount

of dividends for the year is HK$0.25 per share (2022: HK$0.3 per share).

The final dividend, subject to approval at the forthcoming annual general meeting, is expected to be paid on Friday, 14 June

2024 to those shareholders whose names appear on the register of members of the Company on Friday, 31 May 2024.

ANNUAL GENERAL MEETING

The annual general meeting of the Company will be held on Thursday, 23 May 2024.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Monday, 20 May 2024 to Thursday, 23 May 2024, both days

inclusive, during which no transfer of shares will be registered. Shareholders are reminded that, in order to qualify for

attendance of the annual general meeting, all completed transfer forms accompanied by the relevant share certificates must be

lodged for registration at the Company’s Share Registrar, Tricor Secretaries Limited, at 17/F, Far East Finance Centre, 16

Harcourt Road, Hong Kong, not later than 4:30 p.m. on Friday, 17 May 2024.

The register of members of the Company will also be closed from Thursday, 30 May 2024 to Friday, 31 May 2024, both days

inclusive, during which no transfer of shares will be registered. Shareholders are reminded that, in order to qualify for the

proposed final dividend, all completed transfer forms accompanied by the relevant share certificates must be lodged for

registration at the Company’s Share Registrar, Tricor Secretaries Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road,

Hong Kong, not later than 4:30 p.m. on Wednesday, 29 May 2024.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

CHANGES OF DIRECTORS’ INFORMATION

The changes of Directors’ information required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules are as follows:

1. Ms. Wang Yun, an Executive Director, resigned as a non-executive director of Everbright Grand China Assets Limited

(stock code: 3699.HK) with effect from 12 December 2023.

2. Dr. Lin Zhijun, an INED, has ceased to be an independent non-executive director of Dali Foods Group Company Limited

(stock code: 3799.HK, delisted on the Stock Exchange by privatization) with effect from 1 September 2023. He also

resigned as an independent non-executive director of Sinotruk (Hong Kong) Limited (stock code: 3808.HK) with effect

from 12 March 2024.

In respect of the changes in emoluments of Directors, please refer to note 8 to the financial statements.

AUDITOR

Ernst & Young (“EY”) will retire as the auditor of the Company upon expiration of its term of office at the conclusion of the

forthcoming annual general meeting of the Company and will not be re-appointed. The Board, with the recommendation from

the Audit and Risk Management Committee, proposed to appoint KPMG as the new auditor of the Company following the

retirement of EY and such proposed appointment is subject to the approval of the shareholders of the Company at the

forthcoming annual general meeting.

There has been no change in auditors of the Company in any of the preceding three years.

By order of the Board

China Everbright Limited

Yu Fachang

Chairman

Hong Kong, 22 March 2024

DIRECTORS AND SENIOR MANAGEMENT

DIRECTORS

Mr. Yu Fachang

Chairman and Non-executive Director

Mr. Yu Fachang, aged 58, is the Chairman of the Board and a Non-executive Director. He is also a member of the Nomination

Committee, the Remuneration Committee and the Strategy Committee of the Board. Mr. Yu is currently the Deputy General

Manager of China Everbright Group Ltd. and the Chairman and the President of China Everbright Holdings Company Limited,

the controlling shareholders of the Company. He had served as the Secretary of the Communist Youth League and the Director

of the Advertising Administration Division of the Department of Advertising Supervision of the State Administration for Industry

and Commerce, the Deputy Director-general of the Administration for Industry and Commerce of Tibet Autonomous Region,

the Deputy Director-general of the Department of Market Standard Management of the State Administration for Industry and

Commerce, the Secretary General of China Society of Administration for Industry and Commerce, the Director-general of the

Department of International Cooperation (Office of Hong Kong, Macao and Taiwan Affairs) and the Director-general of the

General Affairs Office of the State Administration for Industry and Commerce and the Director-general of the General Affairs

Office of the State Administration for Market Regulation. Mr. Yu holds a Bachelor’s degree of Laws in legal studies from Peking

University and a Master’s degree from the Central Party School of the Chinese Communist Party. He joined the Board in June

2022.

Mr. Lin Chun

Executive Director and President

Mr. Lin Chun, aged 53, is an Executive Director and the President. He is also the Chairman of the Executive Board Committee,

the Chairman of the Environmental, Social and Governance Committee and a member of the Strategy Committee of the Board.

He is also the Chairman of the Management Decision Committee of the Group and responsible for the overall operation of the

Group. Mr. Lin was the chairman of Everbright Financial Holding Asset Management Co., Ltd. from 2021 to 2023. Since 1993,

Mr. Lin had served as a transaction office trader of the international business department, deputy manager of the treasury

division of the international business department, deputy director of the market trading division of the planning and funding

department, director of the transaction office of the international business department, director of the transaction office of the

treasury department, assistant to the general manager of the treasury department, assistant to the general manager of the

investment banking department, deputy general manager of the investment banking department, deputy general manager of

the investment banking department (in charge), general manager of the investment banking department of China Everbright

Bank Company Limited (stock code: 601818.SH, 6818.HK). He had served as the general manager of the investment and

restructuring department of China Everbright Group Ltd., the controlling shareholder of the Company, from 2015 to 2021. He

has 30 years of experience in the financial industry and management. Mr. Lin holds a Bachelor’s degree in international finance

from the Department of International Finance of China Institute of Finance and Banking (now known as China School of Banking

and Finance University of International Business and Economics). He joined the Board in January 2024.

Mr. An Xuesong

Executive Director and Vice President

Mr. An Xuesong, aged 53, is an Executive Director and the Vice President of the Group in charge of finance, a member of the

Executive Board Committee, Strategy Committee and Environmental, Social and Governance Committee of the Board, and also

a member of the Management Decision Committee of the Group. Mr. An was the executive director, vice president and chief

financial officer of China Everbright Environment Group Limited (stock code: 257.HK) from October 2021 to March 2024. He

was the executive director and chief executive officer of China Everbright Water Limited (stock code: U9E.SG, 1857.HK) from

December 2014 to October 2021. Prior to that, Mr. An worked at the Municipal General Office of Jingzhou, Hubei Province and

Guangdong Technology Venture Capital Group Ltd. Mr. An has comprehensive experience in mergers and acquisitions, project

investment and management, financial management and risk management. Mr. An holds a Master’s degree in Business

Administration from Jinan University. He is a Certified Public Accountant in the People’s Republic of China and a Certified

International Internal Auditor. He joined the Board in April 2024.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

Ms. Wang Yun

Executive Director and Vice President

Ms. Wang Yun, aged 55, is an Executive Director and the Vice President of the Group in charge of the businesses such as

proprietary investments management, asset allocation and investment management centre and operations centre. She is also a

member of the Executive Board Committee and the Environmental, Social and Governance Committee of the Board and a

member of the Management Decision Committee of the Group. Ms. Wang is a Non-executive Director of China Aircraft Leasing

Group Holdings Limited (stock code: 1848.HK) and a Non-executive and Non-independent Chairman of Ying Li International Real

Estate Limited (stock code: 5DM.SGX). Ms. Wang was a Non-executive Director of Everbright Grand China Assets Limited

(stock code: 3699.HK) from August 2021 to December 2023. Prior to joining the Company, Ms. Wang worked at the National

Planning Commission of the People’s Republic of China (currently known as the National Development and Reform Commission

of the People’s Republic of China) from September 1991 to July 1992. From July 1992 to March 1993, Ms. Wang worked as

the finance manager at Beijing Fulanka Digital System Co., Ltd. From March 1993 to May 1998, Ms. Wang worked as the

finance supervisor at China Everbright International Economic and Technical Cooperation Corporation. From May 1998 to

November 1999, Ms. Wang worked as the financial manager at China Everbright (South Africa) Company (Proprietary) Limited

(“Everbright South Africa”) and Everbright International Engineering (Proprietary) Company (“Everbright International

Engineering”). From November 1999 to September 2007, Ms. Wang worked as the chief financial officer of Everbright South

Africa and Everbright International Engineering. From September 2007 to October 2012, Ms. Wang worked as the senior

manager of insurance and non-financial audit division of the audit department at China Everbright (Group) Limited (currently

known as China Everbright Group Limited) (“China Everbright Group”). From October 2012 to April 2014, Ms. Wang was

appointed as the division chief of banking division of the audit department at China Everbright Group. From April 2014 to August

2016, Ms. Wang worked as the senior deputy manager of the audit department and the division chief of insurance and non-

financial audit division at China Everbright Group. From August 2016 to November 2017, Ms. Wang worked as the deputy

general manager of the audit department and the senior manager of industrial and other audit offices at China Everbright Group.

Ms. Wang has been the general manager of the financial management department at China Everbright Holdings Company

Limited (“CE Hong Kong”), a controlling shareholder of the Company, from November 2017 to April 2023. Ms. Wang has been

appointed as a director of CE Hong Kong from January 2018 to May 2023. Ms. Wang has been appointed as a chief

representative of China Everbright Group’s representative office in Macau since March 2022. Ms. Wang graduated from the

Central Institute of Finance and Economics (currently known as the Central University of Finance and Economics) specializing in

foreign financial accounting in 1991. Ms. Wang later received a Master of Business Administration from De Montfort University,

De Montfort South Africa, Sandton Campus in March 2006. Ms. Wang is a non-practicing member of the Chinese Institute of

Certified Public Accountants and holds the qualification of Senior Accountant in China. She joined the Board in May 2023.

Mr. Yin Yanwu

Executive Director and Vice President

Mr. Yin Yanwu, aged 50, is an Executive Director and the Vice President of the Group. He is in charge of the Group’s risk

management, legal and compliance matters and deputises for the head of the Asset Management Department. He is also a

member of the Executive Board Committee of the Board, a member of the Management Decision Committee of the Group, as

well as a director of a number of subsidiaries of the Company. Mr. Yin is a Non-executive Director of Everbright Securities

Company Limited (stock code: 601788.SH, 6178.HK). He joined the Group in May 2021. Prior to that, Mr. Yin had served as a

member of the Executive Committee and Business Director of China Galaxy Securities Co., Ltd. (stock code: 601881.SH, 6881.

HK) and concurrently served as the Chairman of the Board, Director of the Executive Committee and Director of the Investment

Decision Committee of Galaxy Jinhui Securities Assets Management Co., Ltd. He had also been responsible for job duties such

as investment analysis and risk management in asset management firms, including China Investment Corporation and

EARNEST Partners, LLC, etc., and had worked in the Economic Crime Investigation Bureau of the Ministry of Public Security of

China. Mr. Yin holds a Master’s degree of Science in quantitative & computational finance from the Georgia Institute of

Technology in the United States, a Master’s degree in Laws from Peking University and a Bachelor’s degree of Engineering

from Beijing University of Aeronautics and Astronautics. He was a member of the 2nd session of the Council and the Vice

Chairman of the Financial Inclusion Cooperation Committee of the Asian Financial Cooperation Association, the Deputy

Secretary-General of China Society for Finance and Banking, a standing member of the 2nd session of the Commission of All-

China Financial System Youth Federation, a member of the International Development Committee of the Shanghai Stock

Exchange as well as the Vice Chairman of the OTC Professional Committee and Beijing Asset Management Committee of the

Securities Association of China. Mr. Yin holds the qualification of fund practitioners from the Asset Management Association of

China. He joined the Board in December 2021.

DIRECTORS AND SENIOR MANAGEMENT | Continued

Dr. Qin Hongyuan

Non-executive Director

Dr. Qin Hongyuan, aged 44, is a Non-executive Director. He is also a member of the Environmental, Social and Governance

Committee. Dr. Qin is currently the Head of Fund Utilization Department and the Deputy General Manager of Investment and

Management Department (in charge) of CITIC-Prudential Life Insurance Co., Ltd. (“CITIC-Prudential Life”). Dr. Qin had served

as a Senior Business Deputy Manager of China Everbright Bank Company Limited (stock code: 601818.SH, 6818.HK), the

Market Risk Manager of the Asset Management Center, the Manager of the Risk Control Department and the Manager of the

Credit Review Department of CITIC-Prudential Life, and the General Manager of the Credit Review Department, the General

Manager of the Financial Institutions Department, and the General Manager of the Product and Marketing Department of CITIC-

Prudential Asset Management Company Ltd.. He has over 15 years of experience in the financial industry and management. Dr.

Qin holds a Bachelor’s degree in computational mathematics and software application from Henan Normal University, a

Master’s degree in computational mathematics from Northwestern Polytechnical University, and a Doctorate degree in applied

economics (financial engineering) from Xiamen University. He joined the Board in January 2024.

Dr. Lin Zhijun

Independent Non-executive Director

Dr. Lin Zhijun, aged 69, is an Independent Non-executive Director and the Chairman of the Nomination Committee and

Remuneration Committee of the Board. He is also a member of the Audit and Risk Management Committee and Strategy

Committee of the Board. Dr. Lin is a Director of Academic Accreditation Office and Professor of Macau University of Science

and Technology. During August 1998 to December 2014, he was a Professor and Head of the Department of Accountancy and

Law in Hong Kong Baptist University. He is also an Independent Non-executive Director of BOCOM International Holdings

Company Limited (stock code: 3329.HK), all of which are listed on The Stock Exchange of Hong Kong Limited. Previously, Dr.

Lin once served as an Independent Non-Executive Director of Sinotruk (Hong Kong) Limited (stock code: 3808.HK), Dali Foods

Group Company Limited (delisted by privatization on 1 September 2023), South Manganese Investment Limited (stock code:

1091.HK) and Springland International Limited (stock code: 1700.HK). Dr. Lin holds a Master’s degree of Science in Accounting

from University of Saskatchewan in Canada and a Doctoral degree in Economics (Accounting) from Xiamen University. Dr. Lin

worked as a Visiting Professor in The University of Hong Kong and Tenured Professor in the Faculty of Management of

Lethbridge University in Canada. He worked at the Toronto office of an international accounting firm (now known as “Deloitte”).

Dr. Lin is also a member of the American Institute of Certified Public Accountants, the Chinese Institute of Certified Public

Accountants and the Australian Institute of Certified Management Accountants. He is a member of various educational

accounting associations. Dr. Lin is also an author of a series of professional articles and books. Dr. Lin joined the Board in

September 2005.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

Dr. Chung Shui Ming, Timpson, Gold Bauhinia Star, Justice of the Peace

Independent Non-executive Director

Dr. Chung Shui Ming, Timpson, GBS, JP, aged 72, is an Independent Non-executive Director and the Chairman of the Audit and

Risk Management Committee of the Board. He is also a member of the Nomination Committee, the Remuneration Committee

and the Strategy Committee of the Board. Dr. Chung is the Pro-Chancellor of City University of Hong Kong. Besides, Dr. Chung

is an Independent Non-Executive Director of China Unicom (Hong Kong) Limited (stock code: 762.HK), Miramar Hotel and

Investment Company, Limited (stock code: 71.HK), China Overseas Grand Oceans Group Limited (stock code: 81.HK), China

Railway Group Limited (stock code: 601390.SH, 390.HK), Orient Overseas (International) Limited (stock code: 316.HK) and

Postal Savings Bank of China Co., Ltd. (stock code: 1658.HK). Dr. Chung had served as an Independent Non-Executive Director

of Henderson Land Development Company Limited (stock code: 12.HK), China Construction Bank Corporation (stock code: 939.

HK), Jinmao (China) Hotel Investments and Management Limited (stock code: 6139.HK) and Glorious Sun Enterprises Limited

(stock code: 393.HK) as well as an Independent Director of China State Construction Engineering Corporation Limited (stock

code: 601668.SH). Previously, Dr. Chung served as member of the National Committee of the 10th to 13th Chinese People’s

Political Consultative Conference. Dr. Chung was also the Chairman of China Business of Jardine Fleming Holdings Limited and

the Deputy Chief Executive Officer of BOC International Limited. He was also the Director-General of Democratic Alliance for

the Betterment and Progress of Hong Kong, the Chairman of the Council of City University of Hong Kong, the Chairman of the

Hong Kong Housing Society, a member of the Executive Council of the Hong Kong Special Administrative Region, the Vice

Chairman of the Land Fund Advisory Committee of the Hong Kong Special Administrative Region, a member of the Managing

Board of the Kowloon-Canton Railway Corporation, a member of the Hong Kong Housing Authority and a member of the

Disaster Relief Fund Advisory Committee. Dr. Chung holds a Bachelor’s degree of Science from The University of Hong Kong

and a Master’s degree in Business Administration from The Chinese University of Hong Kong. He also received an Honorary

Doctoral degree in Social Sciences from City University of Hong Kong in 2010. Dr. Chung is a fellow member of the Hong Kong

Institute of Certified Public Accountants. He joined the Board in August 2012.

Mr. Law Cheuk Kin, Stephen, Justice of the Peace

Independent Non-executive Director

Mr. Law Cheuk Kin, Stephen, JP, aged 61, is an Independent Non-executive Director and the Chairman of the Strategy

Committee of the Board. He is also a member of the Audit and Risk Management Committee, the Nomination Committee, the

Remuneration Committee and the Environmental, Social and Governance Committee of the Board. Mr. Law is an Independent

Non-executive Director of Somerley Capital Holdings Limited (stock code: 8439.HK), China Galaxy Securities Co., Ltd. (stock

code: 601881.SH, 6881.HK), CSPC Pharmaceutical Group Limited (stock code: 1093.HK) and Keymed Biosciences Inc. (stock

code: 2162.HK). Mr. Law served as the Finance Director and a member of the Executive Directorate of MTR Corporation

Limited (stock code: 66.HK) (“MTR”) from July 2013 to July 2016. Prior to joining MTR, he was the Chief Financial Officer of

Guoco Group Limited, Hong Kong. Prior to that, Mr. Law had served as the Managing Director of TPG Growth Capital (Asia)

Limited and had also held various senior positions in the Morningside Group and the Wheelock Group. He was also an

Independent Non-Executive Director of Stealth BioTherapeutics Corp. (stock code: MITO.Nasdaq) and Bank of Guizhou Co., Ltd.

(stock code: 6199.HK). Mr. Law is currently the Managing Director of ANS Capital Limited. He is also currently a council

member of the Hong Kong Institute of Certified Public Accountants, a member of the Board of Directors of SOW (Asia)

Foundation and a council member of Hong Kong Business Accountants Association. He also served as an adjunct professor of

the Hong Kong Polytechnic University from 2015 to 2017. He is currently a member of the Hong Kong Institute of Certified

Public Accountants and a member of the Institute of Chartered Accountants in England and Wales. Besides, Mr. Law has been

appointed by the Ministry of Finance of the People’s Republic of China (the “MOF”) as an expert consultant to provide advice

on finance and management accounting to the MOF. Mr. Law holds a Bachelor’s degree in Science (Civil Engineering) from the

University of Birmingham, the United Kingdom and also received a Master’s degree in Business Administration from the

University of Hull, the United Kingdom. He joined the Board in May 2018.

DIRECTORS AND SENIOR MANAGEMENT | Continued

Mr. Wong Chun Sek Edmund

Independent Non-executive Director

Mr. Wong Chun Sek Edmund, aged 39, is an independent non-executive Director, a member of each of the Audit and Risk

Management Committee, the Nomination Committee, the Remuneration Committee and the Strategy Committee of the Board.

Mr. Wong is an independent non-executive director of Confidence Intelligence Holdings Limited (stock code: 1967.HK), High

Fashion International Limited (stock code: 608.HK), and China Merchants Land Asset Management Co., Limited which is the

manager of China Merchants Commercial Real Estate Investment Trust (stock code: 1503.HK). He served as an independent

non-executive director of Deyun Holding Ltd. (now known as Star Shine Holdings Group Limited) (stock code: 1440.HK) from

December 2020 to September 2022 and as an independent non-executive director of InvesTech Holdings Limited (stock code:

1087.HK) from June 2017 to May 2021. Mr. Wong is currently a member of the Legislative Council, Election Committee and

Disaster Relief Fund Advisory Committee of Hong Kong Special Administrative Region. Mr. Wong has more than 15 years of

experience in accounting, taxation and auditing. He joined Deloitte Touche Tohmatsu as an audit associate in September 2007

and left as an audit senior in November 2011. Mr. Wong has joined Patrick Wong C.P.A. Limited as an audit manager since

February 2012 and has been its practicing director since March 2013. Mr. Wong is a member of the Hong Kong Institute of

Certified Public Accountants, the Institute of Chartered Accountants in England and Wales, Chartered Accountants in Australia

and New Zealand, the Association of Chartered Certified Accountants of the United Kingdom, The Society of Chinese

Accountants and Auditors, The Taxation Institute of Hong Kong, The Hong Kong Independent Non-executive Director

Association, The Hong Kong Chartered Governance Institute and The Chartered Governance Institute. Mr. Wong obtained a

Bachelor’s degree in Accountancy from Hong Kong Baptist University in November 2007, a Master’s degree of Science in

Applied Accounting and Finance from Hong Kong Baptist University in November 2013, a Master’s degree in Business

Administration from Hong Kong Metropolitan University (formerly known as The Open University of Hong Kong) in October

2016, a Master’s degree in Corporate Governance from Hong Kong Metropolitan University in August 2017 and a Master’s

degree in Professional Accounting from The Hong Kong Polytechnic University in 2021. He joined the Board in March 2024.

SENIOR MANAGEMENT

Mr. So Hiu Pang Kevin

Vice President

Mr. So Hiu Pang Kevin, aged 48, is the Vice President and a member of the Management Decision Committee of the Group. He

is responsible for the Group’s Consumption Fund Department, Overseas Infrastructure Fund Department, Fund of Funds

Department, Real Estate Fund Investment and Management Centre, Green Fund Department. He is also the Vice Chairman of

Everbright Jiabao Co., Ltd. (stock code: 600622.SH). Mr. So joined the Group in 2006. Mr. So holds a Master’s degree in

Business Administration from the Hong Kong Polytechnic University and a Bachelor’s degree in Economics from Xiamen

University. He was also a member of the third, the fourth and the fifth Election Committee of Hong Kong Special Administrative

Region and a member of the twelfth session of All-China Youth Federation. Mr. So has extensive knowledge and experience in

the financial industry and management.

INDEPENDENT AUDITOR’S REPORT

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

TO THE MEMBERS OF CHINA EVERBRIGHT LIMITED

(Incorporated in Hong Kong with limited liability)

OPINION

We have audited the consolidated financial statements of China Everbright Limited (the “Company”) and its subsidiaries (the

“Group”) set out on pages 99 to 189, which comprise the consolidated statement of financial position as at 31 December 2023,

and the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated

statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the

consolidated financial statements, including material accounting policy information.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group

as at 31 December 2023, and of its consolidated financial performance and its consolidated cash flows for the year then ended

in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public

Accountants (“HKICPA”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our

responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated

financial statements section of our report. We are independent of the Group in accordance with the HKICPA’s Code of Ethics

for Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the

consolidated financial statements of the current period. These matters were addressed in the context of our audit of the

consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on

these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial

statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of

procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial

statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the

basis for our audit opinion on the accompanying consolidated financial statements.

Independent Auditor’s Report | Continued

KEY AUDIT MATTERS (continued)

Key audit matters How our audit addressed the key audit matters

Valuation of Level 3 financial investments

Refer to material accounting policies in note 2(ac), sources

of estimation uncertainty in note 43(a)(i), and disclosures of

fair values of financial instruments in note 40 to the financial

statements.

The Group has applied valuation techniques to determine

the fair value of financial instruments that are not quoted in

active markets. These valuation techniques, which include

significant unobservable inputs, involve management

making subjective judgements and assumptions. With

different valuation techniques, inputs and assumptions

applied, the valuation results can vary significantly.

As at 31 December 2023, the Group’s financial assets

measured at fair value, categorised within Level 3 of the fair

value hierarchy, amounted to HK$29,552,778,000.

Given the significant amount of financial assets measured at

fair value and the corresponding level of judgement and

assumptions involved in the valuations, we determined this

to be a key audit matter.

The procedures we performed, on a sample basis, with the

assistance of our internal specialist to address the key audit

matter included, but were not limited to those set out

below:

Our risk-based samples were selected with reference to the

value of the investments, prevailing market conditions and

investment specific risk indicators, with a specific focus on

China real estate exposures.

— Evaluated the appropriateness of the financial

instrument valuation policies;

— Evaluated the design and tested the operating

effectiveness of key controls related to the valuation

of financial instruments, including independent

verification on the valuation parameters, independent

model validation and approval;

— Evaluated the valuation techniques adopted through

comparison with those commonly used in the market;

— Evaluated assessments made by the Group, with

respect to the selection of comparable companies,

adjustments to the valuation multiples and other

parameters used in other valuation methods through

independent study, research and back-testing;

— Evaluated the observable inputs with reference to

external market data;

— Evaluated the unobservable inputs and assumptions

for individually significant items such as the discount

rate and volatility adopted by comparing to pricing

information from similar transactions which were

observable and performed independent valuations;

and

— Assessed the adequacy of the disclosures relating to

financial instruments in Level 3 of the fair value

hierarchy in the financial statements.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

Key audit matters How our audit addressed the key audit matters

Accounting for unconsolidated structured entities managed

by the Group

Refer to material accounting policies in note 2(c), critical

accounting judgements in applying the Group’s accounting

policies in note 43(b)(i), and disclosures of involvement with

unconsolidated structured entities in note 38 to the financial

statements.

The Group acts as the general partner or investment

manager of several structured entities (such as investment

funds and collective investment schemes). In these

arrangements, the Group has certain powers to govern the

financing and operating policies of these entities. The Group

is also exposed to the variability of returns from these

structured entities’ performance, through its entitlement to

management fees, performance fees, and its interests in

these entities.

Whether the Group has control over these structured

entities requires significant management judgement.

Given the significant amount of unconsolidated structured

entities managed by the Group and the corresponding level

of judgement involved in assessing the Group’s control over

these structured entities, we determined this to be a key

audit matter.

As at 31 December 2023, the carrying value of the Group’s

interests in unconsolidated structured entities managed by

the Group amounted to HK$5,187,996,000 which is

recorded in financial assets at fair value through profit or

loss in the consolidated statement of financial position.

The procedures we performed to address the key audit

matter included, but were not limited to:

— Reviewed the legal structures and read the relevant

constituent documents of these structured entities to

assess the power held by the Group in making key

operating and financing decisions and its exposure to

variable returns from these structured entities;

— Evaluated the power held by other parties which

allows the removal of the Group as the general

partner or investment manager and assessed whether

the rights held by other parties are substantive;

— Identified if any substantive rights held by any other

parties in the structured entities, in combination with

the Group’s decision-making power and its level of

exposure to the variable returns, constituted control

by the Group over these structured entities on a case-

by-case basis; and

— Assessed the adequacy of the disclosures relating to

the unconsolidated structured entities in the financial

statements.

KEY AUDIT MATTERS (continued)

Independent Auditor’s Report | Continued

KEY AUDIT MATTERS (continued)

Key audit matters How our audit addressed the key audit matters

Impairment of investment in an associate

Refer to material accounting policies in note 2(d), 2(e) and

2(l)(ii), critical accounting judgements in applying the Group’s

accounting policies in note 43(b)(iii), and disclosures of

investments in associates in note 16 to the financial

statements.

As at 31 December 2023, the cumulative impairment

allowance and net carrying value of the Group’s investment

in Everbright Jiabao Co., Ltd (“Everbright Jiabao”), an

associate of the Group, amounted to HK$1,598,827,000 and

HK$1,786,636,000 respectively.

As at 31 December 2023, there was an indication that the

investment in Everbright Jiabao may be impaired as the

carrying value of the net assets of Everbright Jiabao was

more than its market capitalisation.

The Group engaged an external specialist to estimate the

value-in-use of Everbright Jiabao, using a discounted cash

flow model. In carrying out the impairment assessment,

significant judgement and assumptions are required to

estimate the value-in-use based on the forecasted cash

flows of Everbright Jiabao and the discount rate applied.

Given the significant amount of investment in Everbright

Jiabao and the corresponding level of judgement and

assumptions involved in calculating the value-in-use, we

determined the impairment assessment of investment in

Everbright Jiabao to be a key audit matter.

The procedures we performed, with the assistance of our

internal specialist, to address the key audit matter included,

but were not limited to:

— Assessed the competence, capabilities and objectivity

of the external specialist appointed by management

to estimate the value-in-use;

— Understood and challenged the assumptions in the

strategic business plans approved by management of

the associate, including back-testing of the

prospective financial information used in the prior year

against actual results to evaluate the accuracy of

management’s forecasting process;

— Reviewed the appropriateness of the valuation

methodology by critically assessing the key

assumptions, including the discount rates and growth

rates, with reference to market information and the

associate’s historical data;

— Performed a sensitivity analysis on the results of

impairment assessment using multiple reasonable

alternative assumptions;

— Checked the arithmetical accuracy of the value-in-use

calculation; and

— Assessed the adequacy of disclosures relating to the

impairment of investment in the associate in the

financial statements.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT

The directors of the Company are responsible for the other information. The other information comprises the information

included in the Annual Report, other than the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of

assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in

doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our

knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we

conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to

report in this regard.

RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and

fair view in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance, and for such internal

control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from

material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the Group’s

ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern

basis of accounting unless the directors of the Company either intend to liquidate the Group or to cease operations or have no

realistic alternative but to do so.

The directors of the Company are assisted by the Audit and Risk Management Committee in discharging their responsibilities

for overseeing the Group’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Our report

is made solely to you, as a body, in accordance with section 405 of the Hong Kong Companies Ordinance, and for no other

purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs

will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered

material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users

taken on the basis of these consolidated financial statements.

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional skepticism

throughout the audit. We also:

• Identifyandassesstherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherduetofraudor

error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and

appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is

higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

Independent Auditor’s Report | Continued

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

(continued)

• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriatein

the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesand related

disclosures made by the directors.

• Concludeontheappropriatenessofthedirectors’useofthegoingconcernbasisofaccountingand,basedontheaudit

evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt

on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to

draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the

date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going

concern.

• Evaluate theoverallpresentation, structureand contentoftheconsolidatedfinancial statements,includingthe

disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a

manner that achieves fair presentation.

• Obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivitieswithin

the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,

supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit and Risk Management Committee regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during

our audit.

We also provide the Audit and Risk Management Committee with a statement that we have complied with relevant ethical

requirements regarding independence and to communicate with them all relationships and other matters that may reasonably

be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Audit and Risk Management Committee, we determine those matters that were of

most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit

matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter

or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the

adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such

communication.

The engagement partner on the audit resulting in this independent auditor’s report is Hau Liang Ping.

Ernst & Young

Certified Public Accountants

27/F, One Taikoo Place,

979 King’s Road,

Quarry Bay, Hong Kong

22 March 2024

CONSOLIDATED STATEMENT OF

PROFIT OR LOSS

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

For the year ended 31 December 2023

2023 2022

Notes HK$’000 HK$’000

Turnover 6,047,280 7,707,730

Income from contracts with customers 4 792,028 843,075

Net loss from investments 4 (489,491) (5,885,695)

Interest income 659,676 563,722

Dividend income 991,866 2,123,973

Realised (loss)/gain on investments (13,158) 46,194

Unrealised loss on investments (2,127,704) (8,633,890)

Others (171) 14,306

Income/(loss) from other sources 4 1,102,323 (75,407)

Impairment losses 5 (731,691) (982,141)

Operating expenses 6 (907,223) (919,767)

Loss from operating activities (234,054) (7,019,935)

Finance costs 7 (1,643,691) (1,109,315)

Impairment losses on investments in associates 5 (64,151) (1,128,501)

Share of profits less losses of associates 16 230,823 616,886

Share of profits less losses of joint ventures 17 25,183 17,123

Loss before taxation (1,685,890) (8,623,742)

Income tax (expenses)/credit 9 (76,379) 923,427

Loss for the year (1,762,269) (7,700,315)

Attributable to:

Equity shareholders of the Company (1,922,639) (7,443,299)

Holders of perpetual capital securities 32 98,066 89,284

Non-controlling interests 62,304 (346,300)

Loss for the year (1,762,269) (7,700,315)

Basic and diluted loss per share 13 HK$(1.141) HK$(4.417)

The notes on pages 105 to 189 form part of these financial statements. Details of dividends payable to equity shareholders of

the Company attributable to the (loss)/profit for the year are set out in note 11.

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

100

For the year ended 31 December 2023

2023 2022

Notes HK$’000 HK$’000

Loss for the year (1,762,269) (7,700,315)

Other comprehensive loss for the year:

Items that will not be reclassified subsequently to profit or loss

— Net movement in investment revaluation reserve of

equity investments designated at fair value through

other comprehensive income (372,285) (981,160)

Items that may be reclassified subsequently to profit or loss

— Share of other comprehensive loss and effect of

foreign currency translation of associates (145,321) (1,419,859)

— Share of other comprehensive loss and effect of

foreign currency translation of joint ventures (13,376) (84,987)

— Other net movement in exchange reserve (466,737) (2,047,737)

12 (997,719) (4,533,743)

Total comprehensive loss for the year (2,759,988) (12,234,058)

Attributable to:

Equity shareholders of the Company (2,973,695) (11,697,447)

Holders of perpetual capital securities 32 98,066 89,284

Non-controlling interests 115,641 (625,895)

Total comprehensive loss for the year (2,759,988) (12,234,058)

The notes on pages 105 to 189 form part of these financial statements.

CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

101

As at 31 December 2023

31 December

2023

31 December

2022

Note HK$’000 HK$’000

Non-current assets

Property, plant and equipment 14 463,967 521,718

Investment properties 14 5,584,819 4,898,173

Investments in associates 16 17,709,713 18,002,564

Investments in joint ventures 17 932,964 926,157

Equity investments designated at fair value through

other comprehensive income 18 5,032,899 5,405,184

Financial assets at fair value through profit or loss 19 26,496,579 32,898,680

Advances to customers 20 – 360,891

Finance lease receivables – 18,703

56,220,941 63,032,070

Current assets

Financial assets at fair value through profit or loss 19 4,315,462 2,176,224

Advances to customers 20 3,070,573 2,902,542

Inventories 21 1,529,339 1,383,814

Debtors, deposits, prepayments and others 22 1,929,105 1,984,185

Trading securities 23 2,916,448 4,098,142

Finance lease receivables 17,976 –

Restricted deposits 24 – 664,102

Cash and cash equivalents 24 9,588,078 8,235,532

23,366,981 21,444,541

Current liabilities

Trading securities 23 (237,500) (532,071)

Creditors, deposits received and accrued charges 25 (2,962,495) (3,523,042)

Bank loans 26 (10,995,928) (11,925,501)

Bonds payable 28 (6,069,140) (2,481,148)

Other financial liabilities 27 (472,414) (441,187)

Lease liabilities 30 (13,273) (35,688)

Provision for taxation (582,592) (585,193)

(21,333,342) (19,523,830)

Net current assets 2,033,639 1,920,711

Total assets less current liabilities 58,254,580 64,952,781

102

As at 31 December 2023

Consolidated Statement of Financial Position | Continued

31 December

2023

31 December

2022

Note HK$’000 HK$’000

Non-current liabilities

Bank loans 26 (7,607,680) (8,991,471)

Bonds payable 28 (7,724,360) (9,515,580)

Other financial liabilities 27 (6,768,868) (6,407,464)

Lease liabilities 30 (10,593) (29,279)

Deferred tax liabilities 29 (2,037,293) (2,131,886)

(24,148,794) (27,075,680)

NET ASSETS 34,105,786 37,877,101

CAPITAL AND RESERVES

Share capital 31 9,618,097 9,618,097

Reserves 21,371,624 24,871,106

Attributable to:

Equity shareholders of the Company 30,989,721 34,489,203

Holders of perpetual capital securities 32 2,209,566 2,341,083

Non-controlling interests 906,499 1,046,815

TOTAL EQUITY 34,105,786 37,877,101

Approved and authorised for issue by the Board of Directors on 22 March 2024 and signed on behalf of the Board by:

Lin Chun Wang Yun

Director Director

The notes on pages 105 to 189 form part of these financial statements.

CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

103

For the year ended 31 December 2023

Attributable to equity shareholders of the Company

capital

Option

premium

reserve

Investment

revaluation

reserve

Goodwill

reserve

Capital

reserve

Exchange

reserve

Retained

earnings Total

Perpetual

capital

securities

Non-

controlling

interests

Total

equity

Note HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

As at 1 January 2022 9,618,097 1,242 4,979,155 (664,792) (96,162) 2,145,494 30,953,291 46,936,325 2,341,161 1,759,044 51,036,530

Net movement by non-controlling

shareholders – – – – 18,210 – – 18,210 – (86,334) (68,124)

Dividends paid 11 – – – – – – (758,364) (758,364) – – (758,364)

Distribution to holders of perpetual

capital securities 32 – – – – – – – – (89,362) – (89,362)

Share of capital reserve of associates – – – – (9,521) – – (9,521) – – (9,521)

Loss for the year – – – – – – (7,443,299) (7,443,299) 89,284 (346,300) (7,700,315)

Other comprehensive loss

for the year – – (981,160) – – (3,272,988) – (4,254,148) – (279,595) (4,533,743)

As at 31 December 2022 and

as at 1 January 2023 9,618,097 1,242 3,997,995 (664,792) (87,473) (1,127,494) 22,751,628 34,489,203 2,341,083 1,046,815 37,877,101

Net movement by non-controlling

shareholders – – – – (131) – – (131) – (255,957) (256,088)

Dividends paid 11 – – – – – – (505,576) (505,576) – – (505,576)

Issuance of perpetual medium term

notes 32 – – – – – – – – 2,184,880 – 2,184,880

Redemption of senior perpetual

capital securities 32 – – – – – – (21,557) (21,557) (2,325,540) – (2,347,097)

Distribution to holders of perpetual

capital securities 32 – – – – – – – – (88,923) – (88,923)

Share of capital reserve of

associates – – – – 1,477 – – 1,477 – – 1,477

Loss for the year – – – – – – (1,922,639) (1,922,639) 98,066 62,304 (1,762,269)

Other comprehensive loss

for the year – – (372,285) – – (678,771) – (1,051,056) – 53,337 (997,719)

As at 31 December 2023 9,618,097 1,242 3,625,710 (664,792) (86,127) (1,806,265) 20,301,856 30,989,721 2,209,566 906,499 34,105,786

The notes on pages 105 to 189 form part of these financial statements.

CONSOLIDATED STATEMENT OF

CASH FLOWS

104

For the year ended 31 December 2023

2023 2022

Notes HK$’000 HK$’000

NET CASH INFLOW FROM OPERATING ACTIVITIES 41(a) 3,176,928 4,059,563

INVESTING ACTIVITIES

Purchase of property, plant and equipment (4,618) (4,911)

Proceeds from disposal of property, plant and equipment 291 599

Proceeds from partial disposal of an associate – 76,649

Investment in an associate (2,042) –

Investments in joint ventures – (5,820)

Decrease/(increase) in restricted cash 232,930 (28,723)

Decrease/(increase) in restricted deposits 664,102 (664,102)

Bank interest received 172,695 97,779

Dividends received from investments 330,656 372,497

Dividends received from associates and joint ventures 309,984 485,554

NET CASH INFLOW FROM INVESTING ACTIVITIES 1,703,998 329,522

NET CASH INFLOW BEFORE FINANCING ACTIVITIES 4,880,926 4,389,085

FINANCING ACTIVITIES

Issuance of shares of subsidiaries to non-controlling shareholders 2,759 145,962

Redemption of non-controlling shareholders’ shares (376,660) (341,327)

Proceeds from bank loans 19,986,431 17,395,279

Proceeds from issuance of bonds and resale of bonds repurchased 4,374,600 4,242,930

Repayment of bank loans (22,276,922) (18,200,113)

Repayment and repurchase of bonds (2,422,404) (4,017,583)

Issuance of perpetual medium term notes 2,184,880 –

Redemption of senior perpetual capital securities (2,325,540) –

Repayment of lease liabilities (38,562) (43,096)

Repayment of notes payable – (27,000)

Dividends paid to non-controlling shareholders (1,056) (26,260)

Dividends paid (505,576) (758,364)

Distribution to holders of perpetual capital securities (88,923) (89,362)

Interest paid (1,625,732) (1,063,451)

NET CASH OUTFLOW FROM FINANCING ACTIVITIES (3,112,705) (2,782,385)

NET INCREASE IN CASH AND CASH EQUIVALENTS 1,768,221 1,606,700

CASH AND CASH EQUIVALENTS

Beginning of year 7,945,641 6,894,260

Exchange rate adjustments (182,745) (555,319)

End of year 9,531,117 7,945,641

ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS

Bank balances and cash – general accounts 8,354,387 7,098,486

Non-pledged time deposits with original maturity of less

than three months when acquired 1,233,691 1,137,046

Restricted cash (56,961) (289,891)

End of year 24 9,531,117 7,945,641

The notes on pages 105 to 189 form part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

105

For the year ended 31 December 2023

1. PRINCIPAL ACTIVITIES

China Everbright Limited (the “Company”) is incorporated in Hong Kong with its shares listed on The Stock Exchange of

Hong Kong Limited. The Company considers Honorich Holdings Limited, a company incorporated in the British Virgin

Islands, to be the immediate holding company of the Company and Central Huijin Investment Ltd. (“Huijin”) to be the

ultimate holding company of the Company. Huijin is a state-owned investment company incorporated in accordance with

China’s Company Law. Huijin was established in December 2003 and mandated to exercise the rights and the obligations

as an investor in major state-owned financial enterprises, on behalf of the State Council. In September 2007, the Ministry

of Finance issued special treasury bonds and acquired all the shares of Huijin from the People’s Bank of China. The

acquired shares were injected into China Investment Corporation (“CIC”) as part of its initial capital contribution.

However, Huijin’s principal shareholder rights are exercised by the State Council. The members of Huijin’s Board of

Directors and Board of Supervisors are appointed by and are accountable to the State Council. No financial statements

were prepared by these companies available for public use.

The principal activity of the Company is investment holding. The Company, through its subsidiaries, associates and joint

ventures, is principally engaged in investment activities and the provision of financial services.

2. MATERIAL ACCOUNTING POLICIES

(a) Statement of compliance

These financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting

Standards (“HKFRSs”), which include all applicable individual Hong Kong Financial Reporting Standards, Hong Kong

Accounting Standards (“HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants

(“HKICPA”), and the Hong Kong Companies Ordinance. These financial statements also comply with the applicable

disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. A

summary of the material accounting policies adopted by the Group is set out below.

The HKICPA has issued certain amendments to HKFRSs that are first effective or available for early adoption for the

current accounting period of the Group. Note 3 provides information on any changes in accounting policies resulting from

the initial application of these developments to the extent that they are relevant to the Group for the current and prior

accounting periods reflected in these financial statements.

(b) Basis of preparation of the financial statements

The consolidated financial statements for the year ended 31 December 2023 comprise the Company and its subsidiaries

(together referred to as the “Group”) and the Group’s interests in associates and joint ventures.

The measurement basis used in the preparation of the financial statements is the historical cost basis except that the

following assets and liabilities are stated at their fair value as explained in the accounting policies set out below:

— investment properties (note 2(h)); and

— financial instruments classified as trading securities, financial assets at fair value through profit or loss, equity

investments designated at fair value through other comprehensive income, financial liabilities at fair value through

profit or loss and derivative financial instruments (notes 2(f) and 2(n)).

The preparation of financial statements in conformity with HKFRSs requires management to make judgements, estimates

and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses.

106

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

2. MATERIAL ACCOUNTING POLICIES (continued)

(b) Basis of preparation of the financial statements (continued)

Non-current assets and disposal group held for sale are stated at the lower of the carrying amount and fair value less

costs to sell (see note 2(ab)(i)).

The estimates and associated assumptions are based on historical experience and various other factors that are believed

to be reasonable under the circumstances, the results of which form the basis of making the judgements about the

carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from

these estimates.

The accounting estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the

period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of HKFRSs that have significant effect on the financial statements

and major sources of estimation uncertainty are discussed in note 43.

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed, or has rights, to

variable returns from its involvement with the entity and has the ability to affect those returns through its power over the

entity. When assessing whether the Group has power, only substantive rights (held by the Group and other parties) are

considered.

An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control

commences until the date that control ceases. Intra-group balances, transactions and cash flows and any unrealised

profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements.

Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to

the extent that there is no evidence of impairment.

Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in

respect of which the Group has not agreed any additional terms with the holders of those interests which would result in

the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial

liability. For each business combination, the Group can elect to measure any non- controlling interests either at fair value

or at the non-controlling interests’ proportionate share of the subsidiary’s net identifiable assets.

Non-controlling interests are presented in the consolidated statement of financial position within equity, separately from

equity attributable to the equity shareholders of the Company. Non-controlling interests in the results of the Group are

presented on the face of the consolidated statement of profit or loss and the consolidated statement of comprehensive

income as an allocation of the total profit or loss and total comprehensive income for the year between non-controlling

interests and the equity shareholders of the Company. Loans from holders of non- controlling interests are presented as

financial liabilities in the consolidated statement of financial position.

Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity

transactions, whereby adjustments are made to the amounts of controlling and non-controlling interests within

consolidated equity to reflect the change in relative interests, but no adjustments are made to goodwill, and no gain or

loss is recognised.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

107

2. MATERIAL ACCOUNTING POLICIES (continued)

When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary,

with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date

when control is lost is recognised at fair value, and this amount is regarded as the fair value on initial recognition of a

financial asset (see note 2(f)) or, when appropriate, the cost on initial recognition of an investment in an associate or joint

venture (see note 2(d)).

In the Company’s statement of financial position, an investment in a subsidiary is stated at cost less impairment losses

(see note 2(I)), unless classified as held for sale (or included in a disposal group that is classified as held for sale) (see

note 2(ab)(i)).

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in

deciding who controls the entity, such as when any voting rights relate to administrative tasks only, and key activities are

directed by contractual agreement. Structured entities often have restricted activities and a narrow and well defined

objective. Involvement with unconsolidated structured entities is disclosed in note 38.

(d) Associates and joint ventures

An associate is an entity in which the Group or the Company has significant influence, but not control or joint control,

over its management, including participation in the financial and operating policy decisions.

A joint venture is an arrangement whereby the Group or the Company and other parties contractually agree to share

control of the arrangement, and have rights to the net assets of the arrangement.

An investment in an associate or a joint venture is accounted for in the consolidated financial statements under the equity

method. Under the equity method, the investment is initially recorded at cost and adjusted thereafter for the post

acquisition change in the Group’s share of the investee’s net assets and any impairment loss relating to the investment

(see note 2(I)). Goodwill arising from the acquisition of associates or joint ventures is included as part of the Group’s

investments in associates or joint ventures. The Group’s share of the post-acquisition, post-tax results of the investees

and any impairment losses for the year are recognised in the consolidated statement of profit or loss, whereas the

Group’s share of post-acquisition post-tax items of the investees’ other comprehensive income is recognised in the

consolidated statement of comprehensive income.

When the Group’s share of losses exceeds its interest in the associate or the joint venture, the Group’s interest is

reduced to nil and further losses are not recognised except to the extent that the Group has incurred legal or constructive

obligations or made payments on behalf of the investee. For this purpose, the Group’s interest in the investee is the

carrying amount of the investment under the equity method together with the Group’s long-term interests that in

substance form part of the Group’s net investment in the associate or the joint venture.

Unrealised profits and losses resulting from transactions between the Group and its associates and joint ventures are

eliminated to the extent of the Group’s interest in the investee, except where unrealised losses provide evidence of an

impairment of the asset transferred, in which case they are recognised immediately in profit or loss.

If an investment in an associate becomes an investment in a joint venture or vice versa, the retained interest is not

remeasured. Instead, the investment continues to be accounted for under the equity method.

108

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

2. MATERIAL ACCOUNTING POLICIES (continued)

(d) Associates and joint ventures (continued)

When an investment in an associate or a joint venture is held by, or is held indirectly through, an entity that is a venture

capital organisation, or a mutual fund and similar entities, such investment is measured at fair value through profit or loss

in the Group’s consolidated statement of financial position.

In all other cases, when the Group ceases to have significant influence over an associate or joint control over a joint

venture, it is accounted for as a disposal of the entire interest in that investee, with a resulting gain or loss being

recognised in profit or loss. Any interest retained in that former investee at the date when significant influence or joint

control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial

asset (see note 2(f)).

In the Company’s statement of financial position, investments in associates and joint ventures are stated at cost less

impairment losses (see note 2(l)), unless classified as held for sale (or included in a disposal group that is classified as

held for sale) (see note 2(ab)(i)).

(e) Goodwill

Goodwill represents the excess of:

(i) the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interests in the

acquiree and the fair value of the Group’s previously held equity interest in the acquiree; over

(ii) the net fair value of the acquiree’s identifiable assets and liabilities measured as at the acquisition date.

When (ii) is greater than (i), then this excess is recognised immediately in profit or loss as a gain on a bargain purchase.

Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to

each cash-generating unit, or groups of cash generating units, that is expected to benefit from the synergies of the

combination and is tested annually for impairment (see note 2(l)). In respect of associates or joint ventures, the carrying

amount of goodwill is included in the carrying amount of the interest in the associate or joint venture and the investment

as a whole is tested for impairment whenever there is objective evidence of impairment (see note 2(l)).

On disposal of a cash generating unit, an associate or a joint venture during the year, any attributable amount of

purchased goodwill is included in the calculation of the gain or loss on disposal.

Goodwill on acquisitions that occurred prior to 1 January 2001 was eliminated against goodwill reserves. Such goodwill is

released from goodwill reserves to retained earnings when all or part of the business to which the goodwill is related is

disposed of.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

109

2. MATERIAL ACCOUNTING POLICIES (continued)

(f) Investments and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other

comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow

characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not

contain a significant financing component or for which the Group has applied the practical expedient of not adjusting the

effect of a significant financing component, the Group initially measures a financial asset at its fair value, plus in the case

of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a

significant financing component or for which the Group has applied the practical expedient are measured at the

transaction price determined under HKFRS 15 in accordance with the policies set out for “Revenue recognition” below

(note 2(u)).

In order for a financial asset to be classified and measured at amortised cost or fair value through other comprehensive

income, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal

amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through

profit or loss, irrespective of the business model.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to

generate cash flows. The business model determines whether cash flows will result from collecting contractual cash

flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a

business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets

classified and measured at fair value through other comprehensive income are held within a business model with the

objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the

aforementioned business models are classified and measured at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group

commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that

require delivery of assets within the period generally established by regulation or convention in the marketplace.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortised cost (debt instruments)

Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to

impairment. Gains and losses are recognised in the statement of profit or loss when the asset is derecognised, modified

or impaired.

110

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

2. MATERIAL ACCOUNTING POLICIES (continued)

(f) Investments and other financial assets (continued)

Equity investments designated at fair value through other comprehensive income

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity investments

designated at fair value through other comprehensive income when they meet the definition of equity under HKAS 32

Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-

instrument basis.

Gains and losses on these financial assets are never recycled to the statement of profit or loss. Dividends are recognised

as Dividend income in the statement of profit or loss when the right of payment has been established, it is probable that

the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be

measured reliably, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial

asset, in which case such gains are recorded in other comprehensive income. Equity investments designated at fair value

through other comprehensive income are not subject to impairment assessment.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net

changes in fair value recognised in the statement of profit or loss.

This category includes derivative instruments and equity investments which the Group had not irrevocably elected to

classify at fair value through other comprehensive income. Dividends on equity investments classified as financial assets

at fair value through profit or loss are also recognised as dividend income in the statement of profit or loss when the right

of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the

Group and the amount of the dividend can be measured reliably. Interest income arising from the financial assets at fair

value through profit or loss is recognised as net gains or net losses in the statement of profit or loss.

A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and

accounted for as a separate derivative if the economic characteristics and risks are not closely related to the host; a

separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the

hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with

changes in fair value recognised in the statement of profit or loss. Reassessment only occurs if there is either a change

in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a

reclassification of a financial asset out of the fair value through profit or loss category.

A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately. The

financial asset host together with the embedded derivative is required to be classified in its entirety as a financial asset at

fair value through profit or loss.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

111

2. MATERIAL ACCOUNTING POLICIES (continued)

(g) Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily

derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:

— the rights to receive cash flows from the asset have expired; or

— the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the

received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either

(a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither

transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through

arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it

has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the

asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuing involvement. In

that case, the Group also recognises an associated liability. The transferred asset and the associated liability are

measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the

original carrying amount of the asset and the maximum amount of consideration that the Group could be required to

repay.

(h) Investment properties

Investment properties are land and/or buildings which are owned or held under a leasehold interest (see note 2(k)) to

earn rental income and/or for capital appreciation. These include land held for a currently undetermined future use and

property that is being constructed or developed for future use as investment property.

Investment properties are stated at fair value at the end of the reporting period, unless they are still in the course of

construction or development at the end of the reporting period and their fair value cannot be reliably measured at the

time. Any gain or loss arising from a change in fair value or from the retirement or disposal of an investment property is

recognised in profit or loss. Rental income from investment properties is accounted for as described in note 2(u).

(i) Other property and equipment

The following items of property and equipment are stated in the consolidated statement of financial position at cost less

accumulated depreciation and impairment losses (see note 2(l)):

— buildings held for own use which are situated on leasehold land, where the fair value could be measured separately

from the fair value of the leasehold land at the inception of the lease (see note 2(k)); and

— other items of equipment comprising leasehold improvements, furniture, fixtures and equipment, and motor

vehicles.

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the

difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on

the date of retirement or disposal.

112

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

2. MATERIAL ACCOUNTING POLICIES (continued)

(j) Depreciation

Depreciation is calculated to write off the cost or valuation of items of property, plant and equipment, less their estimated

residual value, if any, using the straight line method over their estimated useful lives as follows:

— Interests in leasehold land held for own use under operating leases is depreciated over the unexpired terms of

leases

— Buildings situated on leasehold land are depreciated over the shorter of the unexpired terms of leases and their

estimated useful lives, being not more than 50 years after the date of purchase

— Leasehold improvements over the shorter of 5 years and the lease terms

— Furniture, fixtures and equipment 3 to 20 years

— Motor vehicles 5 years

— Right-of-use assets over the shorter of the lease terms and the estimated useful lives

Where parts of an item of property and equipment have different useful lives, the cost of the item is allocated on a

reasonable basis between the parts and each part is depreciated separately. Both the useful life of an asset and its

residual value, if any, are reviewed annually.

(k) Leased assets

The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if

the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases

of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing

the right to use the underlying assets.

(a) Right-of-use assets

Right-of-use assets are recognised at the commencement date of the lease. Right-of-use assets are measured at

cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease

liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs

incurred, and lease payments made at or before the commencement date less any lease incentives received.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease terms and the estimated

useful lives of the assets. If ownership of the leased asset transfers to the Group by the end of the lease term or

the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the

asset.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

113

2. MATERIAL ACCOUNTING POLICIES (continued)

(k) Leased assets (continued)

Group as a lessee (continued)

(b) Lease liabilities

Lease liabilities are recognised at the commencement date of the lease at the present value of lease payments to

be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments)

less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts

expected to be paid under residual value guarantees. The lease payments also include the exercise price of a

purchase option reasonably certain to be exercised by the Group and payments of penalties for termination of a

lease, if the lease term reflects the Group exercising the option to terminate the lease. The variable lease

payments that do not depend on an index or a rate are recognised as an expense in the period in which the event

or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease

commencement date because the interest rate implicit in the lease is not readily determinable. After the

commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for

the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a

modification, a change in the lease term, a change in lease payments or a change in assessment of an option to

purchase the underlying asset.

The Group applies the short-term lease recognition exemption to its short-term leases of office premises. When

the Group enters into a lease in respect of a low-value asset, the Group decides whether to capitalise the lease on

a lease-by-lease basis. Lease payments on short-term leases and leases of low-value assets are recognised as an

expense on a straight-line basis over the lease term.

Group as a lessor

When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each of its leases

as either an operating lease or a finance lease.

Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset

are classified as operating leases. When a contract contains lease and non-lease components, the Group allocates the

consideration in the contract to each component on a relative stand-alone selling price basis. Rental income is accounted

for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its

operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying

amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are

recognised as revenue in the period in which they are earned.

Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee

are accounted for as finance leases. At the commencement date, the cost of the leased asset is capitalised at the

present value of the lease payments and related payments, including the initial direct costs, and presented as a receivable

at an amount equal to the net investment in the lease.

114

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

2. MATERIAL ACCOUNTING POLICIES (continued)

(l) Impairment of assets

(i) Impairment of financial assets

The Group recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value

through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the

contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective

interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit

enhancements that are integral to the contractual terms.

Simplified approach

For trade receivables that do not contain a significant financing component or when the Group applies the practical

expedient of not adjusting the effect of a significant financing component, the Group applies the simplified approach in

calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but instead recognises a

loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based

on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic

environment.

For trade receivables that contain a significant financing component, the Group chooses as its accounting policy to adopt

the simplified approach in calculating ECLs with policies as described above.

General approach

For other financial assets recognised at amortised cost, ECLs are recognised in two stages. For credit exposures for

which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses

that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures

for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit

losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased significantly

since initial recognition. Depending on the nature of the financial instrument, the assessment of a significant increase in

credit risk is performed on either an individual basis or a collective basis. When the assessment is performed on a

collective basis, the financial instrument is grouped based on similar credit risk characteristics. When making the

assessment, the Group compares the risk of default occurring on the financial instrument as at the reporting date with

the risk of default occurring on the financial instrument as at the date of initial recognition and considers reasonable and

supportable information that is available without undue cost or effort, including historical and forward-looking information.

The Group considers that there has been a significant increase in credit risk when contractual payments are more than 30

days past due.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

115

2. MATERIAL ACCOUNTING POLICIES (continued)

(l) Impairment of assets (continued)

(i) Impairment of financial assets (continued)

General approach (continued)

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain

cases, the Group may also consider a financial asset to be in default when internal or external information indicates that

the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit

enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering

the contractual cash flows.

Financial assets at amortised cost are subject to impairment under the general approach and they are classified within

the following stages for measurement of ECLs except for trade receivables and contract assets which apply the

simplified approach as detailed below.

Stage 1 — Financial instruments for which credit risk has not increased significantly since initial recognition and for which

the loss allowance is measured at an amount equal to 12-month ECLs

Stage 2 — Financial instruments for which credit risk has increased significantly since initial recognition but that are not

credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime

ECLs

Stage 3 — Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-

impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

(ii) Impairment of other assets

Internal and external sources of information are reviewed at the end of each reporting period to identify indications that

the following assets may be impaired or, except in the case of goodwill, an impairment loss previously recognised no

longer exists or may have decreased:

— Property, plant and equipment, including right-of-use assets (other than properties carried at revalued amount);

— Intangible assets;

— Investments in subsidiaries, associates and joint ventures in the Company’s statement of financial position; and

— Goodwill.

If any such indication exists, the asset’s recoverable amount is estimated. In addition, for goodwill, intangible assets that

are not yet available for use and intangible assets that have indefinite useful lives, the recoverable amount is estimated

annually whether or not there is any indication of impairment.

116

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

2. MATERIAL ACCOUNTING POLICIES (continued)

(l) Impairment of assets (continued)

(ii) Impairment of other assets (continued)

Calculation of recoverable amount

The recoverable amount of an asset is the greater of its fair value less costs of disposal and value in use. In assessing

value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that

reflects current market assessments of the time value of money and the risks specific to the assets. Where an asset

does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined

for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

Recognition of impairment losses

An impairment loss is recognised in profit or loss if the carrying amount of an asset, or the cash-generating unit to which

it belongs, exceeds its recoverable amount. Impairment losses recognised in respect of cash-generating units are

allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and

then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the

carrying value of an asset will not be reduced below its individual fair value less costs of disposal (if measurable), or value

in use, (if determinable).

Reversals of impairment losses

In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable change in the

estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed.

A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no

impairment loss been recognised in prior years. Reversals of impairment losses are credited to profit or loss in the year in

which the reversals are recognised.

(m) Accounts receivable and other receivables

A receivable is recognised when the Group has an unconditional right to receive consideration. A right to receive

consideration is unconditional if only the passage of time is required before payment of that consideration is due. If

revenue has been recognised before the group has an unconditional right to receive consideration, the amount is

presented as a contract asset (see note 2(v)).

Receivables are stated at amortised cost using the effective interest method less allowance for credit losses (see note

2(l)(i)).

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

117

2. MATERIAL ACCOUNTING POLICIES (continued)

(n) Financial liabilities

(i) Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and

borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of

directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, derivative financial instruments and interest- bearing

bank and other borrowings.

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.

This category also includes derivative financial instruments entered into by the Group that are not designated as hedging

instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they

are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the

statement of profit or loss. The net fair value gain or loss recognised in the statement of profit or loss does not include

any interest charged on these financial liabilities.

Financial liabilities at amortised cost (loans and borrowings)

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the

effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at

cost. Gains and losses are recognised in the statement of profit or loss when the liabilities are derecognised as well as

through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an

integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in the

statement of profit or loss.

(ii) Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the

terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of

the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is

recognised in the statement of profit or loss.

118

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

2. MATERIAL ACCOUNTING POLICIES (continued)

(o) Inventories

Inventories are stated at specifically identified cost, including capitalised borrowing costs directly attributable to the

development of the properties, exchange differences arising from foreign currency borrowings are capitalised to the

extent that they are regarded as an adjustment to interest costs, aggregate cost of development, materials and supplies,

wages and other direct expenses, less any allowance considered necessary by the directors.

Inventories are stated at the lower of cost and net realisable value. Net realisable value is based on estimated selling

prices less any estimated costs to be incurred to completion and disposal.

(p) Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash on hand and at banks and short-term

highly liquid deposits with a maturity of generally within three months that are readily convertible into known amounts of

cash, subject to an insignificant risk of changes in value and held for the purpose of meeting short-term cash

commitments.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and at

banks, and short-term deposits as defined above, less bank overdrafts which are repayable on demand and form an

integral part of the Group’s cash management.

For cash subject to restriction, assessment is made on the economic substance of the restriction and whether they meet

the definition of cash and cash equivalents.

(q) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its

liabilities.

Perpetual capital securities issued by the Company contain no contractual obligation to deliver cash or another financial

asset; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially

unfavourable to the Company; and the securities issued are non-derivative instruments that will be settled in the

Company’s own equity instruments, but include no contractual obligation for the Company to deliver a variable number of

its own equity instruments. The Company classifies the securities issued as an equity instrument. Fees, commissions

and other transaction costs of the securities issuance are deducted from equity. The dividends on the securities are

recognised as profit distribution at the time of declaration.

(r) Employee benefits

(i) Short term employee benefits and contributions to defined contribution retirement plans

Salaries, annual bonuses, paid annual leave, contributions to defined contribution plans and the cost of non- monetary

benefits are accrued in the year in which the associated services are rendered by employees. Where payment or

settlement is deferred and the effect would be material, these amounts are stated at their present values.

(ii) Termination benefits

Termination benefits are recognised at the earlier of when the Group can no longer withdraw the offer of those benefits

and when it recognises restructuring costs involving the payment of termination benefits.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

119

2. MATERIAL ACCOUNTING POLICIES (continued)

(s) Income tax

Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and

movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to

items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are

recognised in other comprehensive income or directly in equity respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively

enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences, respectively, being the

differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.

Deferred tax assets also arise from unused tax losses and unused tax credits.

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable

that future taxable profits will be available against which the asset can be utilised, are recognised. Future taxable profits

that may support the recognition of deferred tax assets arising from deductible temporary differences include those that

will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same

taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected

reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can

be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary

differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those

differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are

expected to reverse in a period, or periods, in which the tax loss or credit can be utilised.

The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from

goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor

taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in

subsidiaries to the extent that, in the case of taxable differences, the Group controls the timing of the reversal and it is

probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it

is probable that they will reverse in the future.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the

carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting

period. Deferred tax assets and liabilities are not discounted.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent

that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilised.

Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Additional income taxes that arise from the distribution of dividends are recognised when the liability to pay the related

dividends is recognised.

120

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

2. MATERIAL ACCOUNTING POLICIES (continued)

(s) Income tax (continued)

Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and

are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax

liabilities, if the Company or the Group has the legally enforceable right to set off current tax assets against current tax

liabilities and the following additional conditions are met:

— in the case of current tax assets and liabilities, the Company or the Group intends either to settle on a net basis, or

to realise the asset and settle the liability simultaneously; or

— in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority

on either:

— the same taxable entity; or

— different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities

or assets are expected to be settled or recovered, intend to realise the current tax assets and settle the

current tax liabilities on a net basis or realise and settle simultaneously.

Dividend and interest income received by the Company or the Group may be subject to withholding tax imposed in the

country of origin. Dividend and interest income is recorded gross of such taxes and the corresponding withholding tax is

recognised as tax expense.

(t) Provisions, contingent liabilities and onerous contracts

Provisions are recognised for liabilities of uncertain timing or amount when the Group or the Company has a legal or

constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be

required to settle the obligation and a reliable estimate can be made. Where the time value of money is material,

provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated

reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is

remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or

more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is

remote.

An onerous contract exists when the Group has a contract under which the unavoidable costs of meeting the obligations

under the contract exceed the economic benefits expected to be received from the contract. Provisions for onerous

contracts are measured at the present value of the lower of the expected cost of terminating the contract and the net

cost of continuing with the contract.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

121

2. MATERIAL ACCOUNTING POLICIES (continued)

(u) Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of goods or services is transferred to the customers

at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or

services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the

Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is

estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount

of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is

subsequently resolved.

When the contract contains a financing component which provides the customer with a significant benefit of financing

the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of

the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction

between the Group and the customer at contract inception. When the contract contains a financing component which

provides the Group with a significant financial benefit for more than one year, revenue recognised under the contract

includes the interest expense accreted on the contract liability under the effective interest method. For a contract where

the period between the payment by the customer and the transfer of the promised goods or services is one year or less,

the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in

HKFRS 15.

Construction services

Revenue is recognised when the control over the residential and commercial projects has been transferred to the

customer. At contract inception, the Group assesses whether the Group transfers control of the residential and

commercial projects over time or at a point in time by determining if:

— its performance does not create an asset with an alternative use to the Group;

— the Group has an enforceable right to payment for performance completed to date.

The residential and commercial projects undertaken by the Group do not have an alternative use for the Group due to

contractual restriction and the Group does not have an enforceable right to payment for performance completed to date.

Accordingly, revenue is recognised only when the legal title passes to the buyer or when the equitable interest in the

property vests with the buyer upon signing of the property handover notice by the buyer, whichever is earlier.

Revenue is measured at the transaction price agreed under the contract. Estimates of revenues, costs or extent of

progress towards completion are revised if circumstances change. Any resulting increases or decreases in estimated

revenues or costs are reflected in the profit or loss in the period in the which the circumstances that give rise to the

revision become known by management.

Provision of consultancy and management services

Revenue from the provision of consultancy and management services is recognised over the scheduled period on a

straight-line basis because the customer simultaneously receives and consumes the benefits provided by the Group.

122

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

2. MATERIAL ACCOUNTING POLICIES (continued)

(u) Revenue recognition (continued)

Revenue from other sources

Rental income is recognised on a time proportion basis over the lease terms. Variable lease payments that do not depend

on an index or a rate are recognised as income in the accounting period in which they are incurred.

Other income

Interest income is recognised on an accrual basis using the effective interest method by applying the rate that exactly

discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when

appropriate, to the net carrying amount of the financial asset.

Dividend income is recognised when the shareholders’ right to receive payment has been established, it is probable that

the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be

measured reliably.

(v) Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group

performs by transferring goods or services to a customer before the customer pays consideration or before payment is

due, a contract asset is recognised for the earned consideration that is conditional. Contract assets are subject to

impairment assessment, details of which are included in the accounting policies for impairment of financial assets as

described in note 2(l).

(w) Contract liabilities

A contract liability is the obligation to transfer goods or services to a customer for which the Group has received a

consideration (or an amount of consideration that is due) from the customer. If a customer pays the consideration before

the Group transfers goods or services to the customer, a contract liability is recognised when a payment is received or a

payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract

liabilities are recognised as revenue when the Group performs under the contract.

(x) Contract costs

Other than the costs which are capitalised as inventories, property, plant and equipment and intangible assets, costs

incurred to fulfil a contract with a customer are capitalised as an asset if all of the following criteria are met:

(a) The costs relate directly to a contract or to an anticipated contract that the entity can specifically identify.

(b) The costs generate or enhance resources of the entity that will be used in satisfying (or in continuing to satisfy)

performance obligations in the future.

The capitalised contract costs are amortised and charged to the statement of profit or loss on a systematic basis that is

consistent with the transfer to the customer if the goods or services to which the asset relates is recognised. Other

contract costs are expensed as incurred.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

123

2. MATERIAL ACCOUNTING POLICIES (continued)

(y) Translation of foreign currencies

Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction dates.

Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at

the end of the reporting period. Exchange gains and losses are recognised in profit or loss, except those arising from

foreign currency borrowings used to hedge a net investment in a foreign operation which are recognised in other

comprehensive income.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using

the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities denominated in foreign

currencies that are stated at fair value are translated using the foreign exchange rates ruling at the dates the fair value

was measured.

The results of foreign operations are translated into Hong Kong dollars at the exchange rates approximating to the foreign

exchange rates ruling at the dates of the transactions. Statement of financial position items, including goodwill arising on

consolidation of foreign operations acquired on or after 1 January 2005, are translated into Hong Kong dollars at the

closing foreign exchange rates at the end of the reporting period. The resulting exchange differences are recognised in

other comprehensive income and accumulated separately in equity in the exchange reserve. Goodwill arising on

consolidation of a foreign operation acquired before 1 January 2005 is translated at the foreign exchange rate that applied

at the date of acquisition of the foreign operation.

On disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation

is reclassified from equity to profit or loss when the profit or loss on disposal is recognised.

(z) Borrowing costs

Borrowing costs are expensed in profit or loss in the period in which they are incurred, except to the extent that they are

capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes

a substantial period of time to get ready for its intended use or sale.

(aa) Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received

and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income

on a systematic basis over the periods that the costs, for which it is intended to compensate, are expensed.

124

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

2. MATERIAL ACCOUNTING POLICIES (continued)

(ab) Non-current assets and disposal group held for sale and discontinued operations

(i) Non-current assets held for sale

A non-current asset (or disposal group) is classified as held for sale if it is highly probable that its carrying amount will be

recovered through a sale transaction rather than through continuing use and the asset (or disposal group) is available for

sale in its present condition. A disposal group is a group of assets to be disposed of together as a group in a single

transaction, and liabilities directly associated with those assets that will be transferred in the transaction.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all the assets and liabilities of that

subsidiary are classified as held for sale when the above criteria for classification as held for sale are met, regardless of

whether the Group will retain a non-controlling interest in the subsidiary after the sale. The relevant asset can be

classified as current asset if it meets the criteria to be classified as held for sale.

Immediately before classification as held for sale, the measurement of the non-current assets (and all individual assets

and liabilities in a disposal group) is brought up-to-date in accordance with the accounting policies before the

classification. Then, on initial classification as held for sale and until disposal, the non-current assets (except for certain

assets as explained below), or disposal groups, are recognised at the lower of their carrying amount and fair value less

costs to sell. The principal exceptions to this measurement policy so far as the financial statements of the Group and the

Company are concerned are deferred tax assets, assets arising from employee benefits, financial assets (other than

investments in subsidiaries, associates and joint ventures) and investment properties. These assets, even if held for sale,

would continue to be measured in accordance with the policies set out elsewhere in note 2.

Impairment losses on initial classification as held for sale, and on subsequent remeasurement while held for sale, are

recognised in profit or loss. As long as a non-current asset is classified as held for sale, or is included in a disposal group

that is classified as held for sale, the non-current asset is not depreciated or amortised.

(ii) Discontinued operations

A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly

distinguished from the rest of the Group and which represents a separate major line of business or geographical area of

operations, or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of

operations, or is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified

as held for sale (see (i) above), if earlier. It also occurs if the operation is abandoned.

Where an operation is classified as discontinued, a single amount is presented on the face of the consolidated statement

of profit or loss, which comprises:

— the post-tax profit or loss of the discontinued operation; and

— the post-tax gain or loss recognised on the measurement of fair value less costs to sell, or on the disposal, of the

assets or disposal group(s) constituting the discontinued operation.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

125

2. MATERIAL ACCOUNTING POLICIES (continued)

(ac) Fair value measurement

The Group measures its investment properties, trading securities, derivative financial instruments, financial assets at fair

value through profit or loss and equity investments designated at fair value through other comprehensive income at fair

value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer

a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is

based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal

market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or

liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a

liability is measured using the assumptions that market participants would use when pricing the asset or liability,

assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic

benefits by using the asset in its highest and best use or by selling it to another market participant that would use the

asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available

to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within

the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value

measurement as a whole:

Level 1 — Fair value measured using only Level 1 inputs i.e., unadjusted quoted prices in active markets for identical

assets or liabilities at the measurement date

Level 2 — Fair value measured using Level 2 inputs i.e., observable inputs which fail to meet Level 1, and not using

significant unobservable inputs. Unobservable inputs are inputs for which market data are not available

Level 3 — Fair value measured using significant unobservable inputs

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines

whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each

reporting period.

126

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

2. MATERIAL ACCOUNTING POLICIES (continued)

(ad) Related parties

For the purposes of these financial statements, a party is considered to be related to the Group if:

(a) A person, or a close member of that person’s family, is related to the Group if that person:

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or the Group’s parent.

(b) An entity is related to the Group if any of the following conditions applies:

(i) The entity and the Group are members of the same Group (which means that each parent, subsidiary and

fellow subsidiary is related to the others);

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of

a Group of which the other entity is a member);

(iii) Both entities are joint ventures of the same third party;

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity

related to the Group;

(vi) The entity is controlled or jointly controlled by a person identified in (a);

(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management

personnel of the entity (or of a parent of the entity); and

(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to

the Group or to the Group’s parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced

by, that person in their dealings with the entity.

(ae) Segment reporting

Operating segments, and the amounts of each segment item reported in the financial statements, are identified from the

financial information provided regularly to the Group’s most senior executive management for the purposes of allocating

resources to, and assessing the performance of, the Group’s various lines of business and geographical locations.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have

similar economic characteristics and are similar in respect of the nature of products and services, the nature of production

processes, the type or class of customers, the methods used to distribute the products or provide the services, and the

nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they

share a majority of these criteria.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

127

3. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the following revised HKFRSs for the first time for the current year’s financial statements.

Amendments to HKAS 1 and

HKFRS Practice Statement 2

Disclosure of Accounting Policies

Amendments to HKAS 8 Definition of Accounting Estimates

Amendments to HKAS 12 Deferred Tax related to Assets and Liabilities arising from a Single

Transaction

Amendments to HKAS 12 International Tax Reform — Pillar Two Model Rules

The nature and the impact of the revised HKFRSs that are applicable to the Group are described below:

(a) Amendments to HKAS 1 require entities to disclose their material accounting policy information rather than their

significant accounting policies. Accounting policy information is material if, when considered together with other

information included in an entity’s financial statements, it can reasonably be expected to influence decisions that

the primary users of general purpose financial statements make on the basis of those financial statements.

Amendments to HKFRS Practice Statement 2 Making Materiality Judgements provide non-mandatory guidance on

how to apply the concept of materiality to accounting policy disclosures. The Group has disclosed the material

accounting policy information in the financial statements.

(b) Amendments to HKAS 8 clarify the distinction between changes in accounting estimates and changes in

accounting policies. Accounting estimates are defined as monetary amounts in financial statements that are

subject to measurement uncertainty. The amendments also clarify how entities use measurement techniques and

inputs to develop accounting estimates. Since the Group’s approach and policy align with the amendments, the

amendments had no impact on the Group’s financial statements.

the scope of the initial recognition exception in HKAS 12 so that it no longer applies to transactions that give rise to

equal taxable and deductible temporary differences, such as leases and decommissioning obligations. Therefore,

entities are required to recognise a deferred tax asset (provided that sufficient taxable profit is available) and a

deferred tax liability for temporary differences arising from these transactions. The amendments had no impact on

the Group’s financial statements.

(d) Amendments to HKAS 12 International Tax Reform — Pillar Two Model Rules introduce a mandatory temporary

exception from the recognition and disclosure of deferred taxes arising from the implementation of the Pillar Two

model rules published by the Organisation for Economic Co-operation and Development. The amendments also

introduce disclosure requirements for the affected entities to help users of the financial statements better

understand the entities’ exposure to Pillar Two income taxes, including the disclosure of current tax related to Pillar

Two income taxes separately in the periods when Pillar Two legislation is effective and the disclosure of known or

reasonably estimable information of their exposure to Pillar Two income taxes in periods in which the legislation is

enacted or substantively enacted but not yet in effect. The Group has applied the amendments retrospectively.

The amendments did not have significant impact to the Group.

128

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

4. TURNOVER, INCOME FROM CONTRACTS WITH CUSTOMERS, INVESTMENTS AND OTHER SOURCES

Turnover from operations represents the aggregate of service fee income, sales of inventories, interest income, dividend

income, rental income from investment properties, rental income from finance leases and gross sale proceeds from

disposal of trading securities of secondary market investments, in which the turnover of derivatives is defined as the

absolute net profit or loss.

Income from contracts with customers, investments and other sources recognised during the year is as follows:

2023 2022

HK$’000 HK$’000

Income from contracts with customers

Recognised over time

Management fee income 182,189 266,018

Rental income from investment properties 213,733 185,582

Recognised at a point in time

Consultancy fee and performance fee income 376,838 390,477

Sales of inventories 19,268 998

792,028 843,075

Net loss from investments

Interest income

Financial assets not at fair value through profit or loss

Bank deposits 172,695 97,779

Advances to customers 361,129 350,010

Debt investments 125,852 115,933

Dividend income

Financial assets at fair value through profit or loss and trading securities 661,210 1,751,476

Equity investments designated at fair value through other

comprehensive income 330,656 372,497

Realised (loss)/gain on investments

Net realised gain on financial assets at fair value through profit or loss 129,242 130,419

Net realised loss on trading securities (142,400) (84,225)

Unrealised loss on investments

Change of unrealised loss on financial assets at fair value

through profit or loss (2,317,516) (8,462,156)

Change of unrealised gain/(loss) on trading securities 189,812 (171,734)

Others

Realised gain on partial disposal of an associate – 14,306

Realised loss on disposal of a joint venture (171) –

(489,491) (5,885,695)

Income/(loss) from other sources

Net gain/(loss) on revaluation of investment properties 760,263 (92,839)

Written back of impairment loss on inventory 179,704 –

Rental income from finance leases 4,110 5,548

Gain on disposal of property, plant and equipment 90 99

Exchange differences, net (2,144) (82,204)

Others 160,300 93,989

1,102,323 (75,407)

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

129

5. IMPAIRMENT LOSSES

2023 2022

HK$’000 HK$’000

Impairment losses on:

— Inventories – 606,747

— Advances to customers 367,759 263,930

— Debtors, deposits, prepayments and others 360,245 72,871

— Finance lease receivables 3,687 24,040

— Property, plant and equipment – 14,553

731,691 982,141

Impairment losses on:

— Investments in associates 64,151 1,128,501

795,842 2,110,642

6. OPERATING EXPENSES

2023 2022

HK$’000 HK$’000

Depreciation and amortisation expenses 55,000 66,597

Lease payments not included in the measurement of lease liabilities 2,433 3,201

Auditor’s remuneration 16,000 16,129

Management fee, consultancy fee, advisor fee and performance fee 72,591 101,595

Office expenses 43,462 41,159

Bank charges 39,383 36,502

Employee expenses (wages, bonuses and allowances) 256,035 272,573

Legal and professional fee 53,834 49,241

Other operating expenses 368,485 332,770

907,223 919,767

7. FINANCE COSTS

2023 2022

HK$’000 HK$’000

Interest expense on bank loans and other borrowings 1,640,407 1,106,379

Interest expense on lease liabilities 3,284 2,936

1,643,691 1,109,315

The effective interest rate of bank loans and other borrowings was approximately 4.70% (2022: 3.25%) per annum during

the year ended 31 December 2023.

130

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

8. DIRECTORS’ AND FIVE HIGHEST PAID INDIVIDUALS’ EMOLUMENTS

(a) Directors’ emoluments:

Directors’ emoluments disclosed pursuant to section 383(1) of the Hong Kong Companies Ordinance and Part 2 of the

Companies (Disclosure of Information about Benefits of Directors) Regulation are as follows:

For the year ended 31 December 2023

Directors’

fee

Salaries,

allowances

and benefits

in kind

Discretionary

bonuses

Retirement

scheme

contributions

2023

Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Executive directors

Zhang Mingao – 1,601 – 64 1,665

Wang Yun (note 1) – 1,034 – 47 1,081

Yin Yanwu – 1,516 – 53 1,569

Wang Hongyang (note 2) – 493 – 6 499

Non-executive directors

Yu Fachang – – – – –

Pan Wenjie – – – – –

Fang Bin – – – – –

Independent non-executive directors

Chung Shui Ming, Timpson 200 328 – – 528

Lin Zhijun 200 300 – – 500

Law Cheuk Kin, Stephen 200 314 – – 514

600 5,586 – 170 6,356

Note:

1. Ms. Wang Yun was appointed as an Executive Director with effect from 5 May 2023.

2. Mr. Wang Hongyang resigned as an Executive Director with effect from 5 May 2023.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

131

8. DIRECTORS’ AND FIVE HIGHEST PAID INDIVIDUALS’ EMOLUMENTS (continued)

(a) Directors’ emoluments: (continued)

For the year ended 31 December 2022

Directors’

fee

Salaries,

allowances

and benefits

in kind

Discretionary

bonuses

Retirement

scheme

contributions

2022

Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Executive directors

Zhang Mingao – 1,810 – 64 1,874

Wang Hongyang – 2,003 – 18 2,021

Yin Yanwu – 2,292 – 18 2,310

Zhao Wei (note 1) – 2,030 – 36 2,066

Non-executive directors

Yu Fachang (note 2) – – – – –

Pan Wenjie – – – – –

Fang Bin – – – – –

Independent non-executive directors

Chung Shui Ming, Timpson 200 378 – – 578

Lin Zhijun 200 350 – – 550

Law Cheuk Kin, Stephen 200 371 – – 571

600 9,234 – 136 9,970

Notes:

1. Dr. Zhao Wei resigned as the Chairman of the Board and an Executive Director with effect from 21 June 2022.

2. Mr. Yu Fachang was appointed as the Chairman of the Board and a Non-executive Director with effect from 21 June 2022.

132

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

8. DIRECTORS’ AND FIVE HIGHEST PAID INDIVIDUALS’ EMOLUMENTS (continued)

(b) Five highest paid individuals’ emoluments

2023 2022

HK$’000 HK$’000

Salaries and other emoluments 10,475 12,403

Bonuses – 2,760

Retirement scheme contributions 90 185

10,565 15,348

2023 2022

Number of directors – –

Number of employees 5 5

5 5

Their emoluments were within the following bands:

Number of individuals

2023 2022

HK$2,000,001 to HK$2,500,000 5 –

HK$2,500,001 to HK$3,000,000 – 3

HK$3,000,001 to HK$3,500,000 – 1

HK$3,500,001 to HK$4,000,000 – 1

5 5

During the year, no emoluments were paid to the five highest paid individuals (including directors and employees) as an

inducement to join the Group or as compensation for loss of office (2022: Nil).

Bonus payment is determined pursuant to the incentive schemes and relevant policies of the Group.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

133

9. INCOME TAX EXPENSES/(CREDIT)

The provision for Hong Kong profits tax is calculated at 16.5% (2022: 16.5%) of the estimated assessable profits for the

year. Taxation for overseas subsidiaries is calculated at the appropriate current rates of taxation in the relevant tax

jurisdictions.

The amount of taxation recognised in the consolidated statement of profit or loss represents:

2023 2022

HK$’000 HK$’000

Current taxation

— Hong Kong profits tax 4,012 10,963

— Overseas taxation 166,461 67,207

— (Over)/under-provision in prior years (4,676) 20,201

Deferred taxation

— Deferred taxation relating to the origination and

reversal of temporary differences (89,418) (1,021,798)

Income tax expenses/(credit) 76,379 (923,427)

Reconciliation between income tax expenses/(credit) and accounting (loss)/profit at applicable tax rates:

2023 2022

HK$’000 HK$’000

Loss before taxation (1,685,890) (8,623,742)

Calculated at the rates applicable to loss in the tax jurisdictions concerned (425,338) (1,839,480)

Tax effect of income not subject to taxation (1,145,444) (812,191)

Tax effect of expenses not deductible for taxation purposes 1,222,756 1,514,982

Tax effect of utilisation of previously unrecognised losses (1,256) (6,159)

Tax effect of tax losses and other deductible temporary

differences not recognised 430,337 199,220

(Over)/under-provision of taxation in prior years (4,676) 20,201

Income tax expenses/(credit) 76,379 (923,427)

10. PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS

Profit for the year of the Company attributable to equity shareholders of the Company of HK$1,352,296,000 (2022: loss

attributable to equity shareholders of the Company of HK$969,812,000) has been dealt with in the financial statements of

the Company.

134

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

11. DIVIDENDS

(a) Dividends payable to equity shareholders of the Company attributable to the year

2023 2022

HK$’000 HK$’000

— Interim dividend declared and paid of HK$0.15

(2022: HK$0.15) per share 252,788 252,788

— Final dividend proposed after the end of the reporting

period date of HK$0.10 (2022: HK$0.15) per share 168,525 252,788

421,313 505,576

The Board proposed a final dividend of HK$0.10 per share for the year ended 31 December 2023 (2022: HK$0.15 per

share). The proposed final dividend is not reflected as dividend payable in the financial statements.

(b) Dividends payable to equity shareholders of the Company attributable to the previous financial

year, approved and paid during the year

2023 2022

HK$’000 HK$’000

— Final dividend in respect of the previous financial year,

approved and paid during the year, of HK$0.15

(2022: HK$0.30) per share 252,788 505,576

12. OTHER COMPREHENSIVE LOSS

Tax effects relating to each component of other comprehensive income

2023 2022

Before tax

amount

Tax

credit

Net of tax

amount

Before tax

amount

Tax

credit

Net of tax

amount

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Net movement in investment revaluation

reserve of equity investments designated

at fair value through other comprehensive

income (372,285) – (372,285) (981,160) – (981,160)

Share of other comprehensive loss and

effect of foreign currency translation

of associates (145,321) – (145,321) (1,419,859) – (1,419,859)

Share of other comprehensive loss and

effect of foreign currency translation

of joint ventures (13,376) – (13,376) (84,987) – (84,987)

Other net movement in exchange reserve (466,737) – (466,737) (2,047,737) – (2,047,737)

(997,719) – (997,719) (4,533,743) – (4,533,743)

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

135

13. LOSS PER SHARE

Basic and diluted loss per share

The calculation of basic and diluted loss per share for the year ended 31 December 2023 is based on the loss attributable

to equity shareholders of the Company of HK$1,922,639,000 (2022: loss attributable to equity shareholders of the

Company of HK$7,443,299,000) and the weighted average number of 1,685,253,712 shares (2022: 1,685,253,712

shares) in issue during the year.

14. PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTIES

(a) Reconciliation of carrying amount

Interests in

leasehold

land held

for own

use under

operating

leases

Buildings

held for

own use

carried

at cost

Leasehold

improvements

Furniture,

fixtures,

equipment

and motor

vehicles

Other

properties

leased for

own use Total

Investment

properties

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Cost or valuation:

At 1 January 2022 506,080 61,854 124,299 92,051 218,464 1,002,748 5,352,758

Additions – – 3,967 4,870 17,097 25,934 94,279

Disposals – – – (6,282) (31,202) (37,484) –

Net loss on revaluation – – – – – – (92,839)

Exchange adjustments (21,849) – (6,934) (1,700) (10,204) (40,687) (456,025)

As at 31 December 2022 484,231 61,854 121,332 88,939 194,155 950,511 4,898,173

Representing:

Cost 484,231 61,854 121,332 88,939 194,155 950,511 –

Professional valuation – – – – – – 4,898,173

484,231 61,854 121,332 88,939 194,155 950,511 4,898,173

Cost or valuation:

At 1 January 2023 484,231 61,854 121,332 88,939 194,155 950,511 4,898,173

Additions – – 1,116 2,143 15,156 18,415 –

Disposals – – (9,367) (1,483) (90,714) (101,564) –

Net gain on revaluation – – – – – – 760,263

Exchange adjustments (3,374) – 271 (292) (1,147) (4,542) (73,617)

As at 31 December 2023 480,857 61,854 113,352 89,307 117,450 862,820 5,584,819

Representing:

Cost 480,857 61,854 113,352 89,307 117,450 862,820 –

Professional valuation – – – – – – 5,584,819

480,857 61,854 113,352 89,307 117,450 862,820 5,584,819

136

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

14. PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTIES (continued)

(a) Reconciliation of carrying amount (continued)

Interests in

leasehold

land held

for own

use under

operating

leases

Buildings

held for

own use

carried

at cost

Leasehold

improvements

Furniture,

fixtures,

equipment

and motor

vehicles

Other

properties

leased for

own use Total

Investment

properties

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Accumulated depreciation:

At 1 January 2022 138,546 21,527 40,124 74,032 130,977 405,206 –

Charge for the year 8,115 1,532 7,746 10,769 38,435 66,597 –

Written back on disposals – – – (5,782) (31,202) (36,984) –

Impairment loss recognised

in profit or loss – – 14,553 – – 14,553 –

Exchange adjustments (8,990) (101) (433) (4,783) (6,272) (20,579) –

As at 31 December 2022 137,671 22,958 61,990 74,236 131,938 428,793 –

At 1 January 2023 137,671 22,958 61,990 74,236 131,938 428,793 –

Charge for the year 7,864 1,430 5,989 5,477 34,240 55,000 –

Written back on disposals – – (9,367) (1,278) (72,459) (83,104) –

Exchange adjustments (1,428) (71) 1,355 (834) (858) (1,836) –

As at 31 December 2023 144,107 24,317 59,967 77,601 92,861 398,853 –

Net book value:

As at 31 December 2023 336,750 37,537 53,385 11,706 24,589 463,967 5,584,819

As at 31 December 2022 346,560 38,896 59,342 14,703 62,217 521,718 4,898,173

(b) The Group’s interests in leasehold land and buildings and investment properties situated in Hong Kong and Mainland

China were appraised as at 31 December 2023 by RHL Appraisal Limited, Savills Real Estate Valuation (Guangzhou)

Limited and Colliers International (Hong Kong) Limited, independent professional valuers who have, among their staff

fellows of the Hong Kong Institute of Surveyors or the China Institute of Real Estate Appraisers and Agents, recent

experience in the location and category of property being valued. These properties were appraised on an open market

basis and investment properties are carried in the consolidated statement of financial position at market value.

As at 31 December 2023, had the Group’s interests in leasehold land and buildings, which were carried at cost less

accumulated depreciation, been carried at fair value, their carrying amount would have been HK$985,759,000 (2022:

HK$1,054,972,000). Since such fair value is determined using significant unobservable inputs, it will be categorised as

Level 3 under the fair value hierarchy as defined in HKFRS 13 Fair Value Measurement.

The fair value of the Group’s interests in leasehold land and buildings in Hong Kong and Mainland China is determined

using the direct comparison approach based on prices realised on actual sales and/or asking prices of comparable

properties. The valuations take into account the characteristics of the properties which include the size, scale, nature,

character and location. Premiums or discounts will be applied based on characteristics of the properties.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

137

14. PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTIES (continued)

(b) (continued)

In the opinion of the Directors, the Group’s existing use of its interest in leasehold land and buildings equates to the

highest and best use of the assets.

Investment properties of HK$4,599,631,000 (2022: HK$4,551,165,000) of the Group are rented out under operating

leases; HK$750,366,000 (2022: HK$303,939,000) are under construction and will be rented out upon completion of the

construction.

All properties held under operating leases that would otherwise meet the definition of investment properties are

classified as investment properties.

During the years ended 31 December 2023 and 31 December 2022, the Group did not acquire any assets through

business combination.

The analysis of the net book value of right-of-use assets by class of underlying asset is as follows:

2023 2022

Note HK$’000 HK$’000

Interests in leasehold land held for own use, carried at

depreciated cost in Hong Kong, with remaining lease term of: (i)

— 50 years or more 231,505 233,679

231,505 233,679

Interests in leasehold land held for own use, carried at

depreciated cost outside Hong Kong, with remaining lease term of: (i)

— between 10 and 50 years 105,245 112,881

105,245 112,881

Other properties leased for own use, carried at depreciated cost 24,589 62,217

24,589 62,217

Interests in leasehold investment properties, at fair value in

Hong Kong, with remaining lease term of:

— 50 years or more 10,700 10,800

10,700 10,800

Interests in leasehold investment properties, at fair value

outside Hong Kong, with remaining lease term of:

— between 10 and 50 years 5,574,119 4,887,373

5,574,119 4,887,373

(i) Interests in leasehold land held for own use

The Group is the registered owner of these property interests. Lump sum payments were made upfront to acquire

leasehold land from their previously registered owners, and no ongoing payments will be made under the terms of the

land leases, other than payments based on rateable values set by the relevant government authorities.

138

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

14. PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTIES (continued)

(d) Fair value measurement of properties

(i) Fair value hierarchy

The following table presents the fair value of the Group’s properties measured at the end of the reporting period on a

recurring basis, categorised into the three-level fair value hierarchy as defined in HKFRS 13 Fair Value Measurement. The

levels into which a fair value measurement is classified and determined with reference to the observability and

significance of the inputs used in the valuation technique are as follows:

• Level1valuations:FairvaluemeasuredusingonlyLevel1inputsi.e.,unadjustedquotedpricesinactivemarkets

for identical assets or liabilities at the measurement date

• Level2valuations:FairvaluemeasuredusingLevel2inputsi.e.,observableinputswhichfailtomeetLevel1,and

not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available

• Level3valuations:Fairvaluemeasuredusingsignificantunobservableinputs

Fair value measurements categorised into

Fair value Level 1 Level 2 Level 3

HK$’000 HK$’000 HK$’000 HK$’000

Recurring fair value measurement

Investment properties:

As at 31 December 2023 5,584,819 – – 5,584,819

As at 31 December 2022 4,898,173 – – 4,898,173

During the year ended 31 December 2023, there were no transfers into or out of Level 3 (2022: Nil). The Group’s policy

is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.

(ii) Information about Level 3 fair value measurements

Valuation technique Unobservable input Range

Relationship of unobservable

inputs to fair value

Investment property

— Hong Kong

Direct comparison

approach

Premium/(discount) on characteristic

of the properties

-14% to 1%

(2022: -13% to 1%)

The higher the premium,

the higher the fair value.

Investment properties

— Mainland China

Direct comparison

approach

Weighted average price

per square meter

RMB4,640 to

RMB34,000

(2022: RMB5,870 to

RMB34,000)

The higher the weighted average price per

square meter, the higher the fair value.

Income approach Discount rate Nil*

(2022: 6% to 6.7%)

The higher the discount rate,

the lower the fair value.

Occupancy rate Nil*

(2022: 51% to 100%)

The higher the occupancy rate,

the higher the fair value.

Rental growth rate 1%

(2022: 1% to 8%)

The higher the rental growth rate,

the higher the fair value.

Capitalisation rate 3.5% to 4%

(2022: 3.5% to 4%)

The higher the capitalisation rate,

the lower the fair value.

Term and reversion rate 4.8% to 5.8%

(2022: Nil*)

The higher the term and reversion rate,

the lower the fair value.

* Certain investment properties in Mainland China were fully developed at year-end, and the Group has changed its valuation

techniques for these investment properties accordingly.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

139

14. PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTIES (continued)

(d) Fair value measurement of properties (continued)

(ii) Information about Level 3 fair value measurements (continued)

The fair value of investment property in Hong Kong is determined using the direct comparison approach to value the

property in the existing state, and uses the market basis assuming sale with immediate vacant possession and by making

reference to comparable sales evidence. The valuations take into account the characteristics of the property which

included the location, size, shape, view, floor level, year of completion and other factors collectively.

The fair value of investment properties in Mainland China is determined by multiple approaches including direct

comparison approach and income approach, and uses the market basis assuming sale with immediate vacant possession

and by making reference to comparable sales evidence. The valuations take into account the characteristics of the

properties which included the location, size, floor level, year of completion and other factors collectively. Higher

premiums for properties with better characteristics will result in a higher fair value measurement.

The movements during the year in the balance of these Level 3 fair value measurements are as follows:

2023 2022

HK$’000 HK$’000

Investment properties

At 1 January 4,898,173 5,352,758

Additions – 94,279

Net gain/(loss) on revaluation of investment properties 760,263 (92,839)

Exchange adjustments (73,617) (456,025)

At 31 December 5,584,819 4,898,173

Net gain on revaluation of investment properties is recognised as part of the “Income from other sources” (note 4) in the

consolidated statement of profit or loss.

140

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

15. INVESTMENTS IN SUBSIDIARIES

The following list contains only the particulars of subsidiaries which principally affected the results, assets or liabilities of

the Group.

Name of subsidiary

Place of

incorporation/

operation Class of shares

Particulars of

issued and

paid up capital/

registered

capital

Percentage of

equity interest

held by

the Company Principal activities

CEL Venture Capital (Shenzhen)

Limited

The PRC

Not applicable HK$5,170,000,000 100% Provision of investment

advisory services and

investment

CEL Management Services Limited Hong Kong Ordinary 2 Shares

HK$2

100% Provision of management

services

China Everbright Assets

Management Limited

Hong Kong Ordinary 5,000,000 Shares

HK$5,000,000

100%

Provision of asset

management services

China Everbright Finance Limited Hong Kong Ordinary 100,000,000 Shares

HK$100,000,000

100% Money lending

China Everbright Financial

Investments Limited

Hong Kong Ordinary 1,000,000 Shares

HK$1,000,000

100% Investment

China Everbright Industrial

Investment Holdings Limited

Cayman Islands Ordinary 10,000 Shares

US$10,000

100% Investment

China Everbright Investment

Management Limited

Hong Kong Ordinary 5,000,000 Shares

HK$5,000,000

100% Provision of investment

management services

Fortunecrest Investment Limited British Virgin

Islands

Ordinary 1 Share

US$1

100% Property investment

Janco Development Limited Hong Kong Ordinary 2 Shares

HK$2

100% Property investment

()

The PRC* Not applicable RMB125,300,000 100%

Project investment

()

The PRC

Not applicable RMB1,202,703,325.05 100% Investment

The PRC* Not applicable RMB3,100,000,000 100%

Project investment

Everbright (Qingdao) Investment

Co., Limited

The PRC

Not applicable US$160,000,000 100% Investment

The PRC* Not applicable RMB500,000,000 100%

Investment

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

141

Name of subsidiary

Place of

incorporation/

operation Class of shares

Particulars of

issued and

paid up capital/

registered

capital

Percentage of

equity interest

held by

the Company Principal activities

The PRC* Not applicable RMB100,000,000 100%

Fund management

The PRC

Not applicable US$50,000,000 100%

Investment

The PRC* Not applicable RMB1,835,000,000 100%

Investment

CEL Israel Holdings Limited British Virgin

Islands

Ordinary 1 Share

US$1

100%

Investment holding

China Everbright Global Investment

Advisors Company Limited

Hong Kong Ordinary 5,000,000 Shares

HK$5,000,000

100%

Provision of advisory

services

Everbright Hero GP Limited Cayman Islands Ordinary 1 Share

US$1

100%

Fund management

Everbright Hero, L.P. Cayman Islands Not applicable Not applicable 90.16%

Investment

()

The PRC

Not applicable RMB200,000,000 100%

Provision of investment

management services

Diamond Wealth Global Limited British Virgin

Islands

Ordinary 100 Shares

US$100

100%

Investment holding

Pioneer Act Investments Limited British Virgin

Islands

Ordinary 1 Share

US$1

100%

Investment holding

CEL Global Investment LP Limited Cayman Islands Ordinary 1 Share

US$1

100%

Investment holding

CEL Elite Limited Hong Kong Ordinary 1 Share

HK$1

100%

Treasury management

The PRC* Not applicable RMB310,000,000 100%

Fund management

China Golden Opportunities Fund III,

L.P.

Cayman Islands Not applicable Not applicable 75.09%

Investment

CEL New Economy Fund, L.P. Cayman Islands Not applicable Not applicable 64.84%

Investment

()

The PRC

Not applicable RMB5,100,000,000 50.94%

Investment

15. INVESTMENTS IN SUBSIDIARIES (continued)

142

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

Name of subsidiary

Place of

incorporation/

operation Class of shares

Particulars of

issued and

paid up capital/

registered

capital

Percentage of

equity interest

held by

the Company Principal activities

()

The PRC

Not applicable RMB2,000,000,000 49.91%

Investment

()

The PRC

Not applicable RMB2,500,000,000 33.31%

Investment

()

The PRC

Not applicable RMB1,000,000,000 39.8%

Investment

(1)

Subsidiaries held indirectly.

(2)

has been renamed as with effect from 23 February 2023.

Limited liability companies (wholly-foreign-owned enterprise) registered under PRC law.

Limited liability companies (equity joint venture enterprise) registered under PRC law.

* Limited liability companies registered under PRC law.

Limited partnership enterprises registered under PRC law.

The list of subsidiaries above included certain consolidated structured entities of which the Group has capital

commitment of HK$4,868,718,000 (2022: HK$4,762,750,000) to provide capital to support the operating and investing

activities. The Group has no intention and did not provide any other financial support to these consolidated structured

entities during the year.

Acquisition of non-controlling interests

During the years ended 31 December 2023 and 2022, there were no material acquisition of non-controlling interests.

16. INVESTMENTS IN ASSOCIATES

(a) Investments in associates

2023 2022

HK$’000 HK$’000

Carrying value, net (note) 17,709,713 18,002,564

Market value of shares listed in mainland China 17,512,550 17,515,712

Market value of shares listed in Hong Kong 1,028,806 1,227,199

Note:

As at 31 December 2023, the Group’s net carrying value of its investment in Everbright Jiabao Co., Ltd (“Everbright Jiabao”), an associate

of the Group, amounted to HK$1,786,636,000 (2022: HK$2,475,081,000).

During the year ended 31 December 2023, the Group has engaged an external specialist to estimate the value-in-use of Everbright Jiabao

using a discounted cash flow model. As at 31 December 2023, the accumulated impairment losses charged to profit or loss in prior years

related to Everbright Jiabao amounted to HK$1,598,827,000 (2022: HK$1,598,827,000).

The pre-tax discount rates applied in the cash flow projection of different key business operations of Everbright Jiabao ranged from 8.0%

to 13.0% (2022: 8.0% to 12.8%) and the perpetual growth rate was 1.5% (2022: 2.0%).

15. INVESTMENTS IN SUBSIDIARIES (continued)

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

143

16. INVESTMENTS IN ASSOCIATES (continued)

(b) As at 31 December 2023, particulars of the principal investments in associates of the Group are as

follows:

Name of associate

Place of

incorporation/

operation Principal activities

Percentage of

equity interest

held by

the Company

Everbright Securities Company Limited

(“Everbright Securities”)

The PRC Securities operations (note 1) 20.73%

China Aircraft Leasing Group Holdings

Limited

(“CALC”)

Cayman Islands Investment holding (note 2) 38.08%*

Everbright Jiabao

###

The PRC Real estate development/real estate

asset management (note 3)

29.17%*

China Everbright Senior Healthcare

Company Limited (“Everbright

Senior Healthcare”)

Hong Kong Providing senior health care services

(note 4)

49.29%*

(note 5)

Market value of the listed shares in mainland China as at 31 December 2023 was equivalent to HK$16,267,262,000 (2022:

HK$15,914,497,000).

Market value of the listed shares in Hong Kong as at 31 December 2023 was HK$1,028,806,000 (2022: HK$1,227,199,000).

###

Market value of the listed shares in mainland China as at 31 December 2023 was equivalent to HK$1,245,288,000 (2022:

HK$1,601,215,000).

* Held indirectly

Note 1: Everbright Securities is the Group’s cornerstone investment, with an investment cost of HK$1,497,149,000 (2022:

HK$1,497,149,000). During the year ended 31 December 2022, the Group’s equity interest in Everbright Securities was

decreased from 20.83% to 20.73% as a result of partial disposal.

Note 2: CALC is the Group’s key investee engaged in providing full life-cycle aircraft leasing solutions. During the year ended 31

December 2022, the Group’s equity interest in CALC was increased from 37.91% to 38.08% as a result of CALC’s share buy-

back.

Note 3: Everbright Jiabao is the Group’s major investee engaged in real estate development and asset management in mainland China.

Note 4: Everbright Senior Healthcare is the Group’s key investee to provide integrated senior health care services including elderly health

care, geriatric treatment, rehabilitation and community services in mainland China.

Note 5: As at 31 December 2023, the Group did not control the board of directors of Everbright Senior Healthcare. Upon the completion

of the procedures of share subscription by an investor with investment amount of RMB50 million, the Group’s equity interest in

Everbright Senior Healthcare stands at 49.29% on a fully diluted basis.

144

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

16. INVESTMENTS IN ASSOCIATES (continued)

Supplementary financial information in respect of an individually material associate extracted from its financial statements

is as follows:

Everbright Securities

2023 2022

HK$’000 HK$’000

Gross amounts of the associate

Current assets 239,808,808 247,731,036

Non-current assets 46,404,632 41,491,640

Current liabilities (188,609,201) (178,757,275)

Non-current liabilities (22,749,573) (37,940,517)

Perpetual subordinated bonds (10,472,585) (10,633,877)

Non-controlling interests (889,475) (872,752)

Equity attributable to equity shareholders of the associate 63,492,606 61,018,255

Operating income 11,140,032 12,517,585

Profit from operating activities 4,775,865 3,763,079

Other comprehensive income 195,127 (128,344)

Total comprehensive income 4,970,992 3,634,735

Dividend received from the associate 222,153 253,728

Reconciled to the Group’s interest in the associate

Gross amounts of net assets of the associate 63,492,606 61,018,255

Group’s effective interest 20.73% 20.73%

Group’s share of net assets of the associate 13,159,636 12,649,524

Carrying amount in the Group’s consolidated financial statements 13,159,636 12,649,524

Aggregate information of the associates that are not individually material:

2023 2022

HK$’000 HK$’000

Aggregate carrying amount of associates that are not individually material

in the consolidated statement of financial position 4,550,077 5,353,040

Aggregate amounts of the Group’s share of those associates:

Loss for the year (650,049) (71,339)

Other comprehensive income/(loss) 3,286 (230,675)

Total comprehensive (loss)/income (646,763) (302,014)

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

145

17. INVESTMENTS IN JOINT VENTURES

(a) Investments in joint ventures

2023 2022

HK$’000 HK$’000

Carrying value, net 932,964 926,157

(b) As at 31 December 2023, details of the Group’s principal investments in joint ventures are as

follows:

Name of joint venture

Place of

incorporation/

operation Principal activities

Percentage of

equity interest

held by the

Company

Wuxi Ronghong Guolian Capital Co., Ltd. The PRC Venture capital and investment advisory

services (note 1)

50.0%*

The PRC Fund management services (note 2) 48.0%*

CEL Capital Prestige Asset Management

Co., Ltd.

The PRC Assets management services (note 3) 49.0%*

* Held indirectly

Note 1: Wuxi Ronghong Guolian Capital Co., Ltd. is a joint venture of the Group to provide investment advisory services to a joint venture

fund in mainland China.

Note 2: is a joint venture of the Group to provide fund management services to an industrial

sector investment fund in mainland China.

Note 3: CEL Capital Prestige Asset Management Co., Ltd. is a joint venture of the Group and an asset management institution established

under approval of the China Securities Regulatory Commission.

All of the above joint ventures are accounted for using the equity method in the consolidated financial statements.

18. EQUITY INVESTMENTS DESIGNATED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

2023 2022

HK$’000 HK$’000

At fair value:

Listed equity securities

— outside Hong Kong 5,032,899 5,405,184

The Group designated the investment in China Everbright Bank Company Limited (“China Everbright Bank”) as financial

assets at fair value through other comprehensive income because the Group intends to hold for the long-term strategic

purposes. The investment cost of the Group’s investment in China Everbright Bank is HK$1,407,189,000 (2022:

HK$1,407,189,000).

No disposal was made during the year ended 31 December 2023, and there were no transfers of any cumulative gain or

loss within equity relating to this investment (2022: Nil).

146

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

19. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

2023 2022

HK$’000 HK$’000

Non-current assets

At fair value:

Unlisted equity securities/collective investment schemes*

— outside Hong Kong 20,789,666 26,301,921

Unlisted preference shares

— outside Hong Kong 5,361,456 6,250,280

Unlisted debt securities

— outside Hong Kong 345,457 346,479

26,496,579 32,898,680

Current assets

At fair value:

Listed equity securities

— in Hong Kong 1,106,006 596,727

— outside Hong Kong 885,741 735,000

Unlisted equity securities/collective investment schemes*

— outside Hong Kong 2,212,737 391,198

Unlisted debt securities

— outside Hong Kong 110,978 453,299

4,315,462 2,176,224

* Included in the balance of unlisted equity securities/collective investment schemes are the Group’s interests in unconsolidated

structured entities amounting to HK$18,742,839,000 (2022: HK$21,559,069,000).

As at 31 December 2023, the Group’s listed and unlisted equity securities amounting to a fair value of

HK$19,346,709,000 (2022: HK$22,011,177,000) were investments in associates and joint ventures. The Group was

exempted from applying the equity method to these investments and they were measured as financial assets at fair

value through profit or loss.

As at 31 December 2023, the Group had certain unlisted financial assets at fair value through profit or loss recorded at a

purchase price which was below the fair value at inception that would be determined at that date using a valuation

technique. According to the Group’s accounting policy, the difference yet to be recognised in the consolidated statement

of profit or loss at the beginning and the end of the year is as follows:

2023 2022

HK$’000 HK$’000

As at 1 January 227,136 251,951

Released during the year (216,855) (4,472)

Exchange adjustment (3,152) (20,343)

As at 31 December 7,129 227,136

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

147

20. ADVANCES TO CUSTOMERS

2023 2022

HK$’000 HK$’000

Non-current assets

Term loans to customers

— secured – 5,859

— unsecured – 458,082

– 463,941

Current assets

Term loans to customers

— secured 1,205,585 1,310,647

— unsecured 2,831,273 2,090,961

4,036,858 3,401,608

Total term loans to customers 4,036,858 3,865,549

Less: Impairment allowance (966,285) (602,116)

Net carrying value 3,070,573 3,263,433

Certain term loans to customers are secured by unlisted securities or leasehold land and properties in Hong Kong and

mainland China with third parties guarantees.

Term loans to customers are categorised into the following internal credit risk grades:

The Group classifies the credit risk levels of term loans to customers into “Low” (credit risk in excellent condition),

“Medium” (credit risk in normal condition), and “High” (credit risk in severe condition), based on the quality of loans. The

credit risk level is used for the purpose of the Group’s internal credit risk management.

“Low” refers to borrowers with excellent credit quality, or bridge loans with tenor less than 6 months. There is no

sufficient reason to doubt the obligations to repay or there are no other behaviours breaching the debt contracts that

would significantly impact on the repayment. “Medium” refers to borrowers who are currently meeting their repayment

obligations and full repayment of interest and principal is not in doubt. “High” refers to borrowers who are vulnerable to

non-payment according to the debt contract terms, or having significant impact on the repayment of debt according to

contract terms. “Default” is triggered when a repayment obligation is in default; or borrowers are in the stage of filing of

a bankruptcy petition or taking of similar action.

Analysis of the gross carrying amount by the Group’s internal credit rating and year end classification are as follows:

As at 31 December 2023

Stage 1 Stage 2 Stage 3 Total

Internal rating grade HK$’000 HK$’000 HK$’000 HK$’000

Medium 5,854 – – 5,854

High – 1,697,398 – 1,697,398

Default – – 2,333,606 2,333,606

5,854 1,697,398 2,333,606 4,036,858

148

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

20. ADVANCES TO CUSTOMERS (continued)

As at 31 December 2022

Stage 1 Stage 2 Stage 3 Total

Internal rating grade HK$’000 HK$’000 HK$’000 HK$’000

Medium 1,661,642 – – 1,661,642

High 262,500 21,484 – 283,984

Default – – 1,919,923 1,919,923

1,924,142 21,484 1,919,923 3,865,549

Analysis of the gross carrying amount and the corresponding impairment allowance are as follows:

Stage 1 Stage 2 Stage 3 Total

HK$’000 HK$’000 HK$’000 HK$’000

As at 1 January 2022 3,415,641 34,515 299,996 3,750,152

New assets originated or purchased 918,900 – – 918,900

Assets derecognised or repaid (607,835) (13,056) – (620,891)

Transfer from stage 1 to stage 3 (1,619,927) – 1,619,927 –

Exchange difference (182,637) 25 – (182,612)

As at 31 December 2022 and

1 January 2023 1,924,142 21,484 1,919,923 3,865,549

New assets originated or purchased 1,178,812 – – 1,178,812

Assets derecognised or repaid (972,106) – – (972,106)

Transfer from stage 1 to stage 2 and

stage 3 (2,112,156) 1,675,938 436,218 –

Exchange difference (12,838) (24) (22,535) (35,397)

As at 31 December 2023 5,854 1,697,398 2,333,606 4,036,858

The movements in the impairment allowance on term loans to customers are as follows:

Stage 1 Stage 2 Stage 3 Total

HK$’000 HK$’000 HK$’000 HK$’000

As at 1 January 2022 27,050 11,140 299,996 338,186

Other changes (including new assets

and derecognised assets) (15,830) (4,430) 284,190 263,930

As at 31 December 2022 and

1 January 2023 11,220 6,710 584,186 602,116

Other changes (including new assets

and derecognised assets) (11,207) 328,253 50,713 367,759

Exchange difference (8) (40) (3,542) (3,590)

As at 31 December 2023 5 334,923 631,357 966,285

Except for the above impairment allowance of HK$966,285,000 (2022: HK$602,116,000), there were no other significant

loans to customers, that were aged, requiring significant impairment provision as at 31 December 2023 and 2022.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

149

21. INVENTORIES

2023 2022

HK$’000 HK$’000

Properties under development 135,079 137,038

Completed properties 1,394,260 1,246,776

1,529,339 1,383,814

22. DEBTORS, DEPOSITS, PREPAYMENTS AND OTHERS

2023 2022

HK$’000 HK$’000

Accounts receivable 832,251 746,357

Deposits, prepayments, interest and other receivables and others 1,614,138 1,395,422

2,446,389 2,141,779

Less: Impairment allowance (517,284) (157,594)

1,929,105 1,984,185

Accounts receivable are mainly amounts due from brokers, collectable in cash within one year and divestment proceeds

receivable.

The carrying amount of debtors, deposits, prepayments and others approximated to their fair value as at 31 December

2023 and 31 December 2022.

Their recoverability was assessed with reference to the credit status of the debtors, and impairment allowance of

HK$517,284,000 as at 31 December 2023 (2022: HK$157,594,000).

The movements in the impairment allowance for debtors, deposits, prepayments and others are as follows:

Stage 1 Stage 2 Stage 3 Total

HK$’000 HK$’000 HK$’000 HK$’000

As at 1 January 2022 – – 84,723 84,723

Other changes (including new assets

and derecognised assets) 1,790 1,634 69,447 72,871

As at 31 December 2022

and 1 January 2023 1,790 1,634 154,170 157,594

Other changes (including new assets and

derecognised assets) (1,790) 28,724 333,311 360,245

Exchange difference – (5) (550) (555)

As at 31 December 2023 – 30,353 486,931 517,284

150

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

23. TRADING SECURITIES

2023 2022

HK$’000 HK$’000

Current assets

At fair value:

Listed equity securities

— in Hong Kong 84,316 226,434

— outside Hong Kong 2,970 205,023

Listed debt securities

— in Hong Kong 1,029,391 900,612

— outside Hong Kong 1,688,699 2,589,566

Unlisted debt securities 89,910 137,290

Derivatives

— listed – 330

— unlisted 21,162 38,887

2,916,448 4,098,142

Current liabilities

At fair value:

Listed equity securities

— in Hong Kong (87,561) (247,271)

— outside Hong Kong (117,580) (67,638)

Listed debt securities

— in Hong Kong – (133,934)

— outside Hong Kong – (42,088)

Listed funds (4,421) (4,729)

Derivatives

— listed (22) (127)

— unlisted (27,916) (36,284)

(237,500) (532,071)

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

151

24. CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS

2023 2022

HK$’000 HK$’000

Cash on hand, savings and current accounts 8,354,387 7,098,486

Fixed deposits with banks 1,233,691 1,137,046

Cash and cash equivalents in the consolidated statement of

financial position 9,588,078 8,235,532

Less: Restricted cash (56,961) (289,891)

Cash and cash equivalents in the consolidated statement of cash flows 9,531,117 7,945,641

Restricted deposits – 664,102

Restricted bank balances of HK$56,961,000 (31 December 2022: HK$45,598,000) were pledged to banks for sales of

mortgaged properties to customers and interest reserve account on borrowings.

There were no restricted bank balances (31 December 2022: HK$244,293,000) pledged to bonds payable.

There were no restricted deposits (31 December 2022: HK$664,102,000) pledged to a bank to secure a banking facility

granted to the Group in relation to the litigation as disclosed in note 46.

25. CREDITORS, DEPOSITS RECEIVED AND ACCRUED CHARGES

2023 2022

HK$’000 HK$’000

Creditors, deposits received and accrued charges 2,962,495 3,523,042

152

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

26. BANK LOANS

2023 2022

HK$’000 HK$’000

Maturity details are as follows:

Within 1 year 10,995,928 11,925,501

1 to 2 years 5,701,040 1,657,847

2 to 5 years 1,480,539 6,920,820

Over 5 years 426,101 412,804

18,603,608 20,916,972

As at 31 December 2023, the bank loans were secured as follows:

2023 2022

HK$’000 HK$’000

Bank loans:

— secured 2,161,399 2,325,589

— unsecured 16,442,209 18,591,383

18,603,608 20,916,972

As at 31 December 2023, the bank loans were secured by:

(a) Mortgage over certain investment properties with carrying value of approximately HK$4,542 million (31 December

2022: approximately HK$4,362 million);

(b) There were no mortgage over property, plant and equipment to secure certain bank loans (31 December 2022:

HK$23 million);

approximately HK$383 million); and

(d) The pledge of equity interests in subsidiaries with carrying value of approximately HK$1,475 million (31 December

2022: approximately HK$1,563 million).

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

153

27. OTHER FINANCIAL LIABILITIES

2023 2022

Note HK$’000 HK$’000

Current:

Financial liabilities to third party investors (a) 472,414 441,187

Non-current:

Financial liabilities to third party investors (a) 6,768,868 6,407,464

(a) Financial liabilities to third party investors were incurred by the Group’s fund management business. The Group issues fund units to

third party investors to raise funds through the establishment of investment funds. After the end of the exit period of the

investment funds (or the period extended pursuant to the fund agreements and approved by the investors), the Group shall

distribute the principal of the fund units and the return thereof to the investors pursuant to the fund agreements, provided that the

distribution amount shall be determined in accordance with the fund’s performance. The Group does not guarantee the principal

and return of third party investors’ interests in the investment funds.

28. BONDS PAYABLE

2023 2022

HK$’000 HK$’000

As at 1 January 11,996,728 13,037,445

New issuance and resale of bonds repurchased during the year 4,374,600 4,242,930

Repayments and repurchase during the year (2,422,404) (4,017,583)

Exchange adjustment (155,424) (1,266,064)

As at 31 December 13,793,500 11,996,728

2023 2022

HK$’000 HK$’000

Maturity details are as follows:

Within 1 year 6,069,140 2,481,148

1 to 2 years 3,310,440 6,157,140

2 to 5 years 4,413,920 3,358,440

13,793,500 11,996,728

As at 31 December 2023, the bonds payable were secured as follows:

2023 2022

HK$’000 HK$’000

Bonds payable:

— secured – 242,188

— unsecured 13,793,500 11,754,540

13,793,500 11,996,728

As at 31 December 2023, no restricted bank balances were used to secure certain bonds payable (31 December 2022:

approximately HK$244,000,000).

154

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

29. DEFERRED TAXATION

The movements in the deferred tax liabilities recognised in the consolidated statement of financial position are as follows:

Fair value adjustment

for financial assets

at fair value through

profit or loss and

investment properties

Withholding tax on

subsidiaries’ and

associates’ profit Total

2023 2022 2023 2022 2023 2022

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 January (1,709,621) (2,940,885) (422,265) (434,228) (2,131,886) (3,375,113)

Credited/(charged) to profit or

loss 141,844 1,009,835 (52,426) 11,963 89,418 1,021,798

Exchange adjustments 5,175 221,429 – – 5,175 221,429

At 31 December (1,562,602) (1,709,621) (474,691) (422,265) (2,037,293) (2,131,886)

In accordance with the accounting policy set out in note 2(s), the Group has not recognised deferred tax assets, in

respect of tax losses of approximately HK$3,387 million (2022: approximately HK$3,371 million), as it is not probable that

future taxable profits against which the tax losses can be utilised will be available in the relevant entities. The tax losses

do not expire under current tax legislation except for those incurred by entities registered in the PRC where tax losses

can be carried forward for 5 years from the year in which such losses are incurred.

30. LEASE LIABILITIES

The Group as a lessee

The carrying amount of lease liabilities and the movements during the year are as follows:

2023 2022

HK$’000 HK$’000

As at 1 January 64,967 92,375

Additions 15,156 17,097

Disposal (18,254) –

Interest expense 3,284 2,936

Payments (38,562) (43,096)

Exchange adjustments (2,725) (4,345)

As at 31 December 23,866 64,967

Analysed into:

Current portion 13,273 35,688

Non-current portion 10,593 29,279

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

155

31. SHARE CAPITAL

(a) Share capital

2023 2022

No. of shares No. of shares

(’000) HK$’000 (’000) HK$’000

Ordinary shares issued and fully paid:

At 1 January and at 31 December 1,685,254 9,618,097 1,685,254 9,618,097

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote

per share at general meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual

assets.

(b) Capital management

The Group’s primary objectives in capital management are maximising shareholders’ return, matching of business

funding needs and maintaining the Group’s ability to continue as a going concern. Management regularly, or as changes

in circumstances warrant, reviews and manages the Group’s capital structure so as to maintain a proper balance amongst

shareholders’ returns, leveraging and funding requirement.

Adjusted net debt is defined as total debt, which includes interest-bearing loans and borrowings, notes payable and

bonds payable, plus unaccrued proposed dividends less cash and cash equivalents.

Adjusted capital comprises all components of equity, less unaccrued proposed dividends. In order to maintain or adjust

the ratio, the Group may adjust the amount of dividends paid to shareholders, issue new shares, raise new debt financing

or sell assets to reduce debt.

The adjusted net debt-to-capital ratio at 31 December 2023 and 2022 was as follows:

2023 2022

HK$’000 HK$’000

Current liabilities

Bank loans 10,995,928 11,925,501

Bonds payable 6,069,140 2,481,148

17,065,068 14,406,649

Non-current liabilities

Bank loans 7,607,680 8,991,471

Bonds payable 7,724,360 9,515,580

Total debt 32,397,108 32,913,700

Add: Proposed dividend 168,525 252,788

Less: Cash and cash equivalents in the consolidated statement of cash flows (9,531,117) (7,945,641)

Adjusted net debt 23,034,516 25,220,847

Total equity 34,105,786 37,877,101

Less: Proposed dividend (168,525) (252,788)

Adjusted capital 33,937,261 37,624,313

Adjusted net debt-to-capital ratio 68% 67%

156

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

31. SHARE CAPITAL (continued)

(b) Capital management (continued)

As at 31 December 2023, the Group’s liquidity remained healthy. The addition of financial resources is mainly attributable

to returns, through divestments and dividends, from investments. During the year, the Group has also made ongoing

investments over advances to customers, trading securities and financial assets at fair value through profit or loss. To

enhance shareholders’ returns, the Group continues to seek new investment opportunities while maintaining a healthy

capital structure.

The Company is not subject to externally imposed capital requirements. Certain subsidiaries of the Company are subject

to regulatory imposed capital and liquid capital requirements (see also note 39(b)). These subsidiaries have complied with

those requirements at all time during both the current and prior financial years.

32. PERPETUAL CAPITAL SECURITIES

Principal Distribution Total

HK$’000 HK$’000 HK$’000

As at 1 January 2022 2,325,540 15,621 2,341,161

Profit attributable to holders of perpetual

capital securities – 89,284 89,284

Distribution to holders of perpetual

capital securities – (89,362) (89,362)

As at 31 December 2022 and 1 January 2023 2,325,540 15,543 2,341,083

Issuance of perpetual medium term notes 2,184,880 – 2,184,880

Redemption of senior perpetual capital securities (2,325,540) – (2,325,540)

Profit attributable to holders of perpetual

capital securities – 98,066 98,066

Distribution to holders of perpetual

capital securities – (88,923) (88,923)

As at 31 December 2023 2,184,880 24,686 2,209,566

In 2020, the Company issued senior perpetual capital securities with the principal amount of US$300,000,000 (equivalent

to approximately HK$2,325,540,000). The distribution rate for the senior perpetual capital securities is 3.80% per annum

3 years from the date of issuance (i.e., 27 October 2023), and subsequently the distribution rate will be reset in every 3

calendar years. On 27 October 2023, the Company redeemed all of the outstanding senior perpetual capital securities of

the principal amount of US$300,000,000. The distribution of senior perpetual capital securities is accrued in accordance

with the distribution rate as set out in the subscription agreement, and such distribution shall be payable semi-annually in

arrears on 27 April and 27 October of each year.

In 2023, the Company issued perpetual medium term notes with the principal amount of RMB 2,000,000,000 (equivalent

to approximately HK$2,184,880,000). The distribution rate for the perpetual medium term notes is 3.60% per annum 3

years from the date of issuance (i.e., 8 September 2026), and subsequently the distribution rate will be reset in every 3

calendar years. The distribution of perpetual medium term notes is accrued in accordance with the distribution rate as set

out in the subscription agreement, and such distribution shall be payable annually in arrears on 11 September of each

year.

The senior perpetual capital securities and perpetual medium term notes have no maturity and the payments of

distribution can be deferred into perpetuity at the discretion of the Company. The instruments could only be redeemed at

the option of the Company. In substance, the senior perpetual capital securities and perpetual medium term notes were

considered as perpetual capital securities.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

157

33. STATEMENT OF FINANCIAL POSITION OF THE COMPANY

31 December

2023

31 December

2022

Note HK$’000 HK$’000

Non-current assets

Investments in subsidiaries 15 8,540,862 8,499,236

Amounts due from subsidiaries 13,844,180 15,457,474

Investment in an associate 1,497,149 1,497,149

Investment in a joint venture 1,143 1,143

Equity investments designated at fair value through

other comprehensive income 5,032,899 5,405,184

28,916,233 30,860,186

Current assets

Amounts due from subsidiaries 20,303,466 20,767,371

Debtors, deposits, prepayments and others 336,871 392,493

Cash and cash equivalents 729,323 864,106

21,369,660 22,023,970

Current liabilities

Amounts due to subsidiaries (6,957,286) (12,349,333)

Bank loans (6,020,000) (5,643,762)

Bonds payable (6,069,140) (2,238,960)

Creditors, deposits received and accrued charges (236,706) (230,007)

(19,283,132) (20,462,062)

Net current assets 2,086,528 1,561,908

Total assets less current liabilities 31,002,761 32,422,094

Non-current liabilities

Bank loans (5,292,209) (5,294,063)

Bonds payable (7,724,360) (9,515,580)

Deferred tax liabilities (333,963) (281,583)

(13,350,532) (15,091,226)

NET ASSETS 17,652,229 17,330,868

CAPITAL AND RESERVES

Share capital 31 9,618,097 9,618,097

Reserves 34 5,824,566 5,371,688

Perpetual capital securities 32 2,209,566 2,341,083

TOTAL EQUITY 17,652,229 17,330,868

Approved and authorised for issue by the Board of Directors on 22 March 2024 and signed on behalf of the Board by:

Lin Chun Wang Yun

Director Director

158

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

34. RESERVES

(a) The movements in the Company’s reserves during the year are as follows:

capital

Investment

revaluation

reserve

Retained

earnings Total

Note HK$’000 HK$’000 HK$’000 HK$’000

As at 1 January 2022 9,618,097 4,979,155 3,101,869 17,699,121

Dividends paid 11 – – (758,364) (758,364)

Loss for the year – – (969,812) (969,812)

Other comprehensive loss for the year – (981,160) – (981,160)

As at 31 December 2022 and

1 January 2023 9,618,097 3,997,995 1,373,693 14,989,785

Dividends paid 11 – – (505,576) (505,576)

Profit for the year – – 1,352,296 1,352,296

Redemption of Senior perpetual

capital securities – – (21,557) (21,557)

Other comprehensive loss for the year – (372,285) – (372,285)

As at 31 December 2023 9,618,097 3,625,710 2,198,856 15,442,663

(b) Nature and purpose of reserves

(i) Investment revaluation reserve

The investment revaluation reserve comprises the cumulative net change in the fair value of equity investments

designated at fair value through other comprehensive income held at the end of the reporting period and is dealt with in

accordance with the accounting policies in note 2(f).

(ii) Exchange reserve

The exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements

of foreign operations as well as the effective portion of any foreign exchange differences arising from hedges of the net

investments in these foreign operations. The reserve is dealt with in accordance with the accounting policies set out in

note 2(y).

(iii) Goodwill reserve

The goodwill reserve comprises goodwill on acquisitions that occurred prior to 1 January 2001. The reserve is dealt with

in accordance with the accounting policies set out in note 2(e).

(iv) Capital reserve

The capital reserve comprises specific allocation of amounts transferred from retained earnings due to regulatory

requirements. It also includes the share of statutory reserves of associates.

(v) Distributability of reserves

As at 31 December 2023, the aggregate amount of reserves available for distribution to equity shareholders of the

Company, as calculated under the provisions of Part 6 of the Hong Kong Companies Ordinance (Cap. 622), was

HK$2,198,856,000 (2022: HK$1,373,693,000). After the end of the reporting period, the directors proposed a final

dividend of HK$0.10 per share (2022: HK$0.15 per share), amounting to HK$168,525,000 (2022: HK$252,788,000) (note

11). This dividend has not been recognised as a liability at the end of the reporting period.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

159

35. MATURITY PROFILE

The maturity profile of the Group’s certain financial instruments as at the end of the financial year, based on the

contractual discounted payments, is as follows:

As at 31 December 2023

Indefinite On demand

Less than

3 months

3 to

less than

12 months 1 to 5 years

Over

5 years Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Liabilities

— Bank loans – – (1,139,468) (9,856,460) (7,181,579) (426,101) (18,603,608)

— Other financial liabilities – (436,688) (35,726) – (2,766,029) (4,002,839) (7,241,282)

— Trading securities (237,500) – – – – – (237,500)

— Bonds payable – – – (6,069,140) (7,724,360) – (13,793,500)

— Lease liabilities – – (3,312) (9,961) (10,593) – (23,866)

(237,500) (436,688) (1,178,506) (15,935,561) (17,682,561) (4,428,940) (39,899,756)

As at 31 December 2022

Indefinite On demand

Less than

3 months

3 to

less than

12 months 1 to 5 years

Over

5 years Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Liabilities

— Bank loans – – (1,097,598) (10,827,903) (8,578,667) (412,804) (20,916,972)

— Other financial liabilities – (136,623) (63,038) (241,526) (1,443,359) (4,964,105) (6,848,651)

— Trading securities (356,049) – (176,022) – – – (532,071)

— Bonds payable – – – (2,481,148) (9,515,580) – (11,996,728)

— Lease liabilities – – (8,554) (27,134) (29,279) – (64,967)

(356,049) (136,623) (1,345,212) (13,577,711) (19,566,885) (5,376,909) (40,359,389)

160

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

36. MATERIAL RELATED PARTY TRANSACTIONS

(a) Except as disclosed elsewhere in the financial statements, the following transactions were

entered with related parties during the year:

2023 2022

HK$’000 HK$’000

Management fee income from:

— a joint venture 678 647

— associates exempted from applying the equity method and were

recognised as financial assets at fair value through profit or loss 80,353 91,497

Consultancy and other service income from an associate* 428 831

Bank interest income from a fellow subsidiary/a related party bank 33,434 50,355

Dividend income from:

— associates exempted from applying the equity method and were

recognised as financial assets at fair value through profit or loss 280,847 1,255,199

— a fellow subsidiary/a related party bank 330,656 372,497

Bank loans interest expense to a fellow subsidiary/a related party bank 196,899 89,511

Consultancy fee to an associate and a fellow subsidiary/a related party bank* 11,377 14,733

Custodian services fee to a fellow subsidiary/a related party bank* 221 706

Remuneration of key management personnel

(including the Company’s directors):

— short-term employee benefits 7,996 15,272

— retirement scheme contributions 274 298

* These related party transactions also constitute continuing connected transactions as defined in Rules 14A of the Listing Rules.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

161

36. MATERIAL RELATED PARTY TRANSACTIONS (continued)

(b) Except as disclosed elsewhere in the financial statements, included in the consolidated statement

of financial position are the following balances with related parties:

2023 2022

HK$’000 HK$’000

Amounts due from associates and a fellow subsidiary/a related party bank

(included in debtors, deposits, prepayments and others) 152,881 81,852

Bank deposits with a fellow subsidiary/a related party bank

(including bank deposit in trust accounts) 2,449,018 2,773,125

Advances to:

— associates exempted from applying the equity method and were

recognised as financial assets at fair value through profit or loss 2,246,484 2,422,940

— an associate 1,048,306 603,400

Bank loans from a fellow subsidiary/a related party bank (3,490,000) (3,260,438)

Interests in collective investment schemes issued by a joint venture

(included in financial assets at fair value through profit or loss) 1,468,987 3,384,805

Amounts due from associates arising in the ordinary course of the securities trading business are unsecured, interest-

bearing and repayable on demand.

Bank deposits and loans with a fellow subsidiary/a related party bank arising from the ordinary course of business for

corporate financing. The bank deposits earn interest at floating rates based on daily bank deposit rates. The loans are

unsecured, interest-bearing, and have a maturity within 1 year.

All advances to associates arising in the ordinary course of the money lending business are interest-bearing and certain of

them are secured and unsecured respectively.

Interests in collective investment schemes are issued on market terms by a joint venture.

The Group operates in an economic regime currently predominated by entities directly or indirectly owned by the PRC

government through its government authorities, agencies, affiliations and other organisations (“State-owned Entities”).

Transactions with other State-owned Entities include, but are not limited to: lending and deposit taking; insurance and

redemption of bonds issued by other State-owned Entities; purchase, sale and leases of properties and other assets; and

rendering and receiving of utilities and other services. Among the above, transactions on lending and deposit taking,

leases of properties and receiving utilities are continuous throughout the year and were conducted in the ordinary course

of business, while the remaining types of transactions happened occasionally.

The Group is of the opinion that none of these transactions are material related party transactions that require separate

disclosures.

(d) Certain related party transactions above constitute connected transactions or continuing connected transactions as

defined in Chapter 14A of the Listing Rules. The disclosures required by Chapter 14A of the Listing Rules are provided in

the Directors’ Report.

162

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

36. MATERIAL RELATED PARTY TRANSACTIONS (continued)

(e) Loan to a Director

Loan to a director, disclosed pursuant to section 383(1)(d) of the Hong Kong Companies Ordinance and Part 3 of the

Companies (Disclosure of Information about Benefits of Directors) Regulation, is as follows:

Name of Director Wang Hongyang

HK$’000

Term of the loan

— Loan amount 6,000

— Duration and repayment terms Five (5) calendar years after the drawdown date

and subject to repayment on demand

— Interest rate Average amount of the actual external funding cost

of commercial bank debt of the Company which are

reviewed and adjusted in every six months until the

repayment date

— Security Charge over securities account

Balance of loan as at 31 December 2022 3,061

Maximum amount outstanding during 2022 6,164

Mr. Wang Hongyang resigned as an Executive Director with effect from 5 May 2023. Balance of the loan as at the date

of his resignation is HK$nil as the loan had been repaid during the year. The maximum amount outstanding during 2023

amounted to HK$3,063,000. No provision has been made on the balance during the year. Saved as disclosed above,

there were no loans to directors as at 31 December 2023.

37. COMMITMENTS

(a) Capital commitments

As at 31 December 2023, the Group had capital commitments as follows:

2023 2022

HK$’000 HK$’000

Contracted but not provided for:

— consolidated structured entities 4,868,718 4,762,750

— unconsolidated structured entities 5,520,919 5,449,397

— unlisted equity investments 179,253 324,756

10,568,890 10,536,903

The above amounts included capital commitments to consolidated and unconsolidated structured entities as disclosed in

note 15 and note 38 to the financial statements respectively.

CHINA EVERBRIGHT LIMITED

ANNUAL REPORT 2023

163

37. COMMITMENTS (continued)

(b) As at 31 December 2023, the undiscounted lease payments receivable by the Group in the future periods under non-

cancellable operating leases with its tenants are as follows:

2023 2022

HK$’000 HK$’000

Within 1 year 183,231 181,900

After 1 year but within 2 years 163,696 148,273

After 2 years but within 3 years 150,809 134,196

After 3 years but within 4 years 105,060 116,991

After 4 years but within 5 years 77,183 75,039

After 5 years 257,732 249,968

937,711 906,367

The fair values and the contractual or notional amounts of the Group’s trading derivatives outstanding at 31 December

2023 are detailed as follows:

Fair value

assets/(liabilities)

Contractual/

notional amounts

2023 2022 2023 2022

HK$’000 HK$’000 HK$’000 HK$’000

Assets derivative contracts 21,162 39,217 325,369 619,248

Liabilities derivative contracts (27,938) (36,411) 2,241,356 2,464,207

The financial instruments become favourable (assets) or unfavourable (liabilities) as a result of fluctuations in market

prices of the underlying instruments relative to their terms.

Notional amounts of these financial instruments provide a basis for comparison with instruments recognised on the

consolidated statement of financial position but do not necessarily indicate the amount of future cash flows involved or

the current fair value of the instruments and, therefore, are not a representation of the Group’s exposure to the credit or

price risks.

164

For the year ended 31 December 2023

Notes to The Financial Statements | Continued

38. INVOLVEMENT WITH UNCONSOLIDATED STRUCTURED ENTITIES

The table below describes the types of structured entities that the Group does not consolidate but in which it holds an

interest.

Type of structured entity Nature and purpose Interest held by the Group

Investment funds To generate fees from managing assets

on behalf of third party investors and

to make investment returns from

co-investing in the funds

• Managementfees

• Investmentsheldintheform

of limited partnership

interest of the funds

Collective investment schemes These vehicles are financed through the

issue of units to investors

• Investmentsinunitsissued

by the structured entity

As at 31 December 2023, the carrying value of interests held by the Group in unconsolidated structured entities

amounted to HK$18,742,839,000 (2022: HK$21,559,069,000), which were recognised in financial assets at fair value

through profit or loss in the consolidated statement of financial position.

As at 31 December 2023, the carrying values of interests held by the Group in unconsolidated structured entities

managed by the Group and not managed by the Group were HK$5,187,996,000 (2022: HK$6,067,597,000) and

HK$13,554,843,000 (2022: HK$15,491,472,000) respectively.

The maximum exposure to loss is the carrying value of the assets held.

Other than the invested and committed capital, the Group has no intention to provide financial or other support to the

structured entities.

39. FINANCIAL INSTRUMENTS

Risk management is of fundamental importance to the business operation of the Group. The major types of risk inherent

in the Group’s business are credit risk, liquidity risk, interest rate risk, currency risk and equity price risk. The Group’s risk

management objectives are to maximise shareholders’ value and to reduce volatility in earnings while maintaining risk

exposures within acceptable limits.

The Group’s work in the area of risk management is executed by the Risk Management, Legal and Compliance

Department and is led by the Vice President of the Group in charge of Risk Management, Legal and Compliance

Department. This functional structure can assess, identify and document the Group’s risk profile to ensure that the

business units focus, control and systematically avoid potential risks in various business areas. The following is a brief

description of the Group’s approach in managing these risks.

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ANNUAL REPORT 2023

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39. FINANCIAL INSTRUMENTS (continued)